Singer and Singer and Anor

[2009] FamCA 1276

FAMILY COURT OF AUSTRALIA

SINGER & SINGER AND ANOR [2009] FamCA 1276

FAMILY LAW – PROPERTY – Interim – Valuations – Litigation funding

Family Law Act 1975 (Cth)

APPLICANT: Ms Singer

RESPONDENT: Mr X Singer

SECOND RESPONDENT: Mr Y Singer

FILE NUMBER: MLF 7095 of 1997

DATE DELIVERED: 30 December 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 21 DECEMBER 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR ACKMAN QC WITH MS MACMILLAN SC

SOLICITOR FOR THE APPLICANT: LANDER & ROGERS

COUNSEL FOR THE RESPONDENT: MR BARTFELD QC

SOLICITOR FOR THE RESPONDENT: TAUSSIG CHERRIE & ASSOCIATES

COUNSEL FOR THE INTERVENOR: MR O'SHANNESSY

SOLICITOR FOR THE INTERVENOR: MIDDLETONS

Orders

1. That the husband and the second respondent Y Singer do all things necessary and sign any necessary document to:

   (a)provide Ms E, Accountant, with a letter of engagement in the terms of the document marked “A” attached to the application filed on 17 December 2009 by the wife;

   (b)authorise Ms E in writing to engage Mr B to value the real estate referred to in the letter dated 24 October 2008 annexed to the said application and marked “B”;

   (c)provide in a timely fashion to Ms E, all documents and information requested by her for the purposes of her valuation; and

   (d)provide the solicitors for the wife with copies of all documents delivered to Ms E pursuant to this order.

2. That the second respondent Y Singer, pay to Ms E the sum of $22,000 and thereafter, all invoices delivered by Ms E in accordance with the terms of her engagement in accordance with paragraphs 1 and 3 of the orders made on 17 April 2008 and paragraph 3 of the orders made on 5 October 2009.

3. By consent of the husband and the wife, each do all things and sign any necessary document to appoint H Firm as the single expert witness to prepare valuations in respect of:

   (a)N property; and

   (b)the wife’s interest in T property.

4. That Ms D be appointed as the single expert witness for the purposes of valuing the husband’s interest in A Group and/or X Singer Holdings Pty Ltd or other business interests of the husband.

5. That the husband pay or cause to be paid to the wife’s solicitors within 21 days, the sum of $320,000 by way of litigation funding for the wife relating to these proceedings and the characterisation of the payment be reserved to the trial judge.

6. That the husband and the second respondent Y Singer do all things necessary and sign any necessary documents to:

   (a)permit the husband at his option, to secure any borrowings required by him for the purposes of making the payment referred to in paragraph (5) upon any of the assets and/or the undertakings of any of the entities comprised in the X and Y Group;

   (b)permit the second respondent to pay all and any fees and expenses due and payable to Ms E and Mr B;

   (c)cause the X and Y Group to pay any and all interest upon such borrowings.

7. By consent of the husband and the wife, the husband and the wife each within 60 days, provide to the other:

   (a)a statement as to their respective superannuation entitlements from the trustees of any fund of which they may be a member; and

   (b)a list of documents in accordance with Rule 13.20 of the Family Law Rules 2004;

8. That the husband provide for inspection by the wife within 60 days the documents referred to in paragraph (i) to (vi) inclusive of the wife’s amended application filed 17 December 2009 in the possession or control of the husband.

9. That within 60 days, the wife make available for inspection by the husband the following:

   (a)      the wife’s bank and credit card statements for the past two years;

   (b)all documents evidencing how the wife has applied the dividends received by her from the X and Y Group since separation; and

   (c)documents evidencing the source from which the wife’s legal fees have been paid during the last five years.

10. That the husband:

    (a)deliver to the wife at his expense, Victorian registration plate Number 4; and

    (b)further comply with his obligation pursuant to paragraph (9) of the orders of 18 November 2003 to transfer ownership of plate No 4 to the wife at his expense.

11. That the parties have liberty to apply for trial directions upon certification by each practitioner that the matter is ready for final hearing.

12. That the wife’s application filed 17 December 2009 and the respective responses of the husband and the second respondent filed 21 December 2009 are otherwise dismissed.

13. That any application for costs arising out of these orders be by way of written submission filed and served by 4.00pm on 25 January 2010 and any response thereto be filed and served by 4.00pm on 5 February 2010 and the matter otherwise be adjourned for determination in chambers unless the parties otherwise agree on the terms of any such order.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel, including senior counsel to attend.

IT IS NOTED that publication of this judgment under the pseudonym Singer & Singer is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 7095  of 1997

MS SINGER

Applicant

And

MR X SINGER

Respondent

And

MR Y SINGER
Second Respondent

REASONS FOR JUDGMENT

1. This matter comes before me on an application filed by the wife on 28 September 2009.  Much of that application has become irrelevant. 

2. On 17 December 2009, the wife filed an amended application.  On 21 December 2009 the husband (by leave) and the third party who is the husband’s brother (by leave) filed amended responses to the application of the wife.

3. This case has been extant for 12 years.  These interim issues hopefully will enable the matter to ultimately be finalised in the months ahead.

4. There are six issues for determination. 

5. In addition to the application and responses, the parties relied on affidavit material.  The wife relied on an affidavit filed 17 December 2009, a financial statement filed the same day and an affidavit by her solicitor Craig Henderson filed the same day.  In the application in September to which I referred, the wife also relied upon an affidavit of Mr Henderson.

6. The husband relied upon his affidavit filed by leave on 21 December 2009. 

7. The second respondent relied upon his affidavit filed (by leave) on 21 December 2009. 

8. The husband and the second respondent are brothers who for many years have been involved in the sales industry and between them, have a number of corporate entities.

9. On 17 April 2008, Watt J made an order by consent of the parties that the brother be joined.  Notwithstanding the brother has his own corporate entities, it was not suggested that those entities needed to be joined separately nor that the brother would have difficulty complying with any order made as a result of the entities.

A Group

1. A Group is an entity conducted by the husband.  It is separate from the business conducted between the brothers.  In 2003, the parties noted on an order of this Court that A Group had no value.  No-one could then have anticipated that so much time would go by requiring a review of the matter.

2. The wife now desires that A Group be valued.  It is asserted by the husband that the business simply makes losses.

3. The issue for determination is the question of who should value A Group.

4. In her application, the wife nominated three valuers and her preference was Ms D.  The husband’s response was that orders should be made for either Ms D or Mr L.  From the husband’s perspective, the solution was to be determined by which of the two would give a cheaper quote and in the event of identical quotes for the costs then by a toss of the coin.

5. It is common ground that each of the experts has the relevant qualifications.

6. Mr Ackman QC on behalf of the wife said that the practitioners did not know of Mr L but I note that Mr L was mentioned in correspondence in November.

7. The appointment of a single expert witness is covered by Chapter 15 of the Family Law Rules 2004.

8. Rule 15.46 enables a court to make orders requiring the parties to confer for the purposes of agreeing on who is to be appointed as a single expert witness.  That conference seems to have occurred and despite many minds, no agreement has been reached.  The rule then goes on to say that if the parties cannot agree then they can provide the court with a list of names and relevant costs.  In this case, the names have been provided but not the costs because the exercise is complex. 

9. Importantly, Rule 15.46(c) provides that a court can make an order appointing a single expert witness from the list prepared by the parties or in some other way.

10. The common thread running through each of the parties’ cases is Ms D.  Each therefore has confidence in her expertise.  The only issue relates to costs.  Having regard to the delays involved in getting the case before the Court and the time that the parties have had to extract some idea about those costs, I do not see it as the overriding consideration.  In my view, it is better to get on with the exercise factoring in the prospect that there may be some dispute between the experts as to what time they will need.  In my view therefore the appropriate person to appoint is Ms D.

Photographs and furniture removal orders.

1. On 17 June 2008, by consent of the parties, the Court made orders that the wife arrange delivery of all “still photographs taken during the marriage” to the husband for the purposes of him selecting those that he required “to be copied”.

2. I note that that order was to be implemented within 30 days.

3. It appears common ground that it has not occurred.

4. What the wife has now done no doubt with some effort is to put all of the relevant photographs on a CD ROM.  That does not appear to satisfy the husband.

5. The second order that was made on 17 June 2008 read as follows:

   The husband arrange and pay for the cost of a handy man to remove and dismantle the said furniture and the husband be at liberty to oversee such works…

   That order does not appear to have been implemented either.

6. Senior counsel Ms Macmillan who appeared with Mr Ackman for the wife indicated that the parties had fallen into dispute about the role of the handy man.  As I said at the time, it is rather demeaning of the parties because the issue is whether or not the handy man has to replace skirting board as a consequence of pulling out a bed. 

7. No enforcement action appears to have been taken by either party and the wife’s only application was to discharge the orders.

8. In my view, there is no basis for me to alter the existing orders leaving them for trial.  The orders were made after careful thought.  Neither party was troubled about not enforcing them.  They can remain until the issue is determined more comprehensively at trial.  If either party wishes to enforce their rights under those orders, they are entitled to do so.

The $37,500 disparity

1. On 18 November 2003, the parties appeared before Mushin J.  All were represented by counsel.  They consented to orders that day.  Relevantly, paragraph 10 of the orders reads: 

   That the husband pay to the wife the sum of $37,500 representing an adjustment in relation to the value of the number plates, such payment to be stayed until final order (and adjusted to reflect the percentage division in any final order). 

2. Some six years later, the parties have reached agreement upon the value of the relevant number plates.  There are four of them.  They, and their values are:

   No 1  $325,000

   No 2  $275,000

   No 3  $275,000

   No 4  $190,000

3. It will be seen therefore that the parties have agreed that the four number plates total in value $1,065,000.  It has been agreed between the parties that the number plates will be transferred to the wife as a partial distribution of property.

4. In 2003, the adjustment between the parties in respect of the number plates was $37,500.  It is now asserted that the disparity is $67,500 as a result of the adjustment agreed between the parties.

5. What the wife now seeks is that rather than the order of Mushin J remain until the final order, the wife should have her money now. 

6. The basis behind the change of heart is that significant time has passed and the wife is now in the position where she is under some pressure to come up with funds to pay her lawyers.  I will refer to her application for litigation funding below.  However, as was pointed out by senior counsel for the husband, each of the parties has had dividend access totalling something in the vicinity of $800,000 in recent years.

7. Notwithstanding the wife’s current impecuniosity, I see no reason to say that the delay is a significant change of circumstances to warrant altering the orders to which the parties consent in 2003. 

Discovery

1. Each of the parties sought discovery from the other in relation to a variety of documents.  Those documents can clearly only assist the parties in respect of the prospect of settlement of the matter and ultimately getting it ready for trial.  There is the significant valuation of the major group of companies involving the husband and his brother still to be undertaken and the parties canvassed the possibility that the case might be heard before the end of 2010. 

2. The dispute between the parties relates to the completion of the discovery obligations.  The husband wanted 60 days and the wife 21 days.  Sitting in this Court only days prior to Christmas, wherein lawyers are constantly indicating that they will be absent for significant parts of the summer holidays, 60 days sounds very sensible to me. 

The valuation of Ms E

1. The major dispute in this case revolves around the valuation of the enterprise conducted between the two brothers.

2. On 5 October 2009, at the request of the husband and wife, I made orders that Ms E be appointed to value the entities comprising the X and Y group of companies.  The consent of the second respondent was not forthcoming and counsel at the time told me that there was no issue about Ms E but it depended upon Ms E’s consent to undertaking the task and providing details as to the relevant costs that would be incurred. 

3. What has occurred since then is that the parties had a dispute about the nature of the instructions to be given to Ms E and questions were raised about her potential costs.

4. The third party’s position is that the group of companies, in other words the husband and his brother through their respective corporate entities, should pay $30,000 and it be capped at that sum.  Importantly, the third party sought an order that the $30,000 be repaid by the husband and the wife.

5. The documents before the Court show that the third party is seeking orders that the husband transfer his interest in the enterprise to the third party upon the completion of the valuation exercise.  I agree therefore with Mr Bartfeld QC on behalf of the husband that the third party has a vested interest in the valuation let alone resolving the issue overall. 

6. The third party’s position was that Ms E is a single expert witness and therefore the underlying philosophy of the rules are that each party should pay one half. 

7. Up until the orders were made by me in October 2009, the single expert witness who had been anticipated and expected was a Mr I.  Mr I according to Mr Ackman QC had declined to act.  That precipitated the orders I made. 

8. Ms E who is now the appointed single expert witness anticipates that she will have to engage a valuer of the real estate.  In addition to the costs that she expects to incur, there will be the costs of the real estate valuer who has been nominated as Mr B. 

9. It is important therefore to look back historically at what the parties had done.  On 17 June 2008, the parties appeared before Watt J and consented to an order as follows:

   [Mr B] be appointed as the single expert real estate valuer to value the real estate of the [X and Y] Group (and potentially the real estate, if any in [G] Pty Ltd and [F] Pty Ltd) as and when requested to do so by Mr [I], the costs to be borne by the [X and Y] Group at first instance, subject to any other order made at trial for adjustment.  (my emphasis).

10. On 17 April 2008, orders were made by consent of the parties as follows;

    1.That in accordance with the provisions of paragraph 2 of the Orders made by this Honourable Court on 18 December 2007, the parties do all things necessary and sign all such documents as are required to appoint Mr [I], as the single expert to undertake the valuation referred to in the Orders.

    …

    3.That the costs of all valuations be paid by the [X and Y] Group at first instance, subject to any other order made at trial for adjustment. (my emphasis)

11. The question therefore remains as to what has occurred that might change the position in relation to the payment of the costs.

12. The third party in an affidavit filed 21 December 2009 said that he was anxious to ensure that the costs were not excessive particularly in relation to the fact that Ms E was located in Sydney instead of Melbourne. 

13. Ms E has advised that her fees will be in the vicinity of $150,000 to $175,000 plus expenses.  The third party estimated that that represented a seven fold increase in the estimate of fees over that provided by Mr I.  The third party pointed out that he provided his consent based upon what he was told by Mr I.  He believed the fees would not exceed $30,000.

14. The third party then set out the relevant financial circumstances of the organisation of which he and his brother have control. 

15. Having regard to the way in which the orders were drawn and agreed between the parties, the ultimate entitlement to argue about who should be responsible for these fees is still a matter that can be determined at trial.  The valuation of the various entities is the most fundamental issue in these proceedings.  As I have pointed out, the third party has a vested interest because he seeks to have control by taking over the husband’s share.

16. In the circumstances, I see no reason to vary the existing orders that the single expert witness’ fees be paid by the group and the ultimate determination of who should be responsible for those fees be a matter for trial.

Litigation funding order

1. The wife sought a litigation funding order of $320,000.  No issue was taken with the quantum or for that matter the need.  The argument in this case is where the money is to come from. 

2. The wife’s position was that there is a balance sheet of $34 million of the entities which includes real property showing figures which were conceded to be historical values.  There are also retained earnings of $5.5million.

3. Alternatives to forcing the entity to fund the litigation were that the wife could use the number plates to which I have already referred and the home in which she is living which is apparently registered in the name of the husband.  As such, it could be that the husband could borrow against his entitlement to the property. 

4. Mr Ackman on behalf of the wife said that the wife was 67 years of age and in poor health and she wanted to retain as many of the assets as possible for her future.

5. The evidence seems clear that the significant amount of money outstanding relates to unpaid counsel’s fees as well as for her solicitor.  As for the future, Mr Ackman said that he expected the trial to take between five and ten days depending upon whether the matter is a valuation dispute or not. 

6. The husband’s position was that he had funded his own case and that each of the parties had received significant distributions by way of dividends from the group.

7. Mr O’Shannessy on behalf of the third party pointed to the fact that this was to be time-consuming and an expensive exercise but that there is a significant funding difficulty for the entities because on 13 January 2009, the group along with the third party as guarantor had entered into a “negative pledge” by way of a deed with St George Bank Limited.  The conditions of that negative pledge are clearly protective of the interests of St George Bank Limited and preclude unauthorised borrowings but none of those matters seem to me to be relevant in this case. 

1. In Bing and Bing (2007) FLC 93-318 the Full Court (Kay, Coleman and Cronin JJ) said:

   The mere assertion that there are no immediately available funds to provide to the applicant to enable him or her to continue on with the proceedings cannot simply be accepted at face value.  If it is apparent that one of the parties controls a vast pool of assets (irrespective of whether those assets are readily capable of liquidation) then the Court has a broad enough discretion to enable an order to be made for the provision of funds by the holder of those assets to enable the other party to continue on with litigation.

2. If it is clear that there are significant assets then the sort of difficulties raised by Mr O’Shannessy on behalf of the third parties become an issue for enforcement.  On the face of the balance sheet tendered in evidence, there is an equity of something like $34 million.  I do not know what it is that the husband should receive out of that sum.  The whole purpose of the valuation exercise to which I have earlier referred is to address that issue.  It is implausible however that the valuation would be likely to be less than the balance sheet figure and in those circumstances, I am entitled to conclude that the husband has a significant interest in the group.  As I understand the position it is conceded that the husband has a 50 per cent interest.  The dilemma is how that fund can be accessed having regard to the various restrictions upon the liquidity within the group including that to which I have earlier referred as the negative pledge.  That however is a matter for enforcement and I see no reason why I should descend into guessing into the complications and problems associated with accessing the funds.

3. The source of power to make an order for a payment for litigation funding in this case lies in either s 79 or s 80 of the Act.

4. As was said by the Full Court in Zschokke and Zschokke (1996) FLC 92-693, s 79 is best used as a once-only exercise of power. It can be used to require the party who controls most of the assets of the parties to provide the other party with funds to conduct his or her case. The understanding if not specifically ordered is that such a payment would be taken into account in the final settlement.

5. In this case, the precise size of the pool is not yet known but on what I have set out earlier, the wife has at least $1 million worth of property now in the number plates which she desires to keep for investment purposes. The proposed litigation funding sum is modest in the context of the wife’s entitlement.

6. The appropriate head of power therefore in this case is s79.

7. That being so, the applicant needs to be able to point to the various aspects of the section to ensure that there is evidence to justify the court making such an order.

8. Section 79 requires that a court not make an order unless it is just and equitable to do so and in assessing that fairness, the court must take into account the matters in s 79(4).

9. In this case, I am satisfied that there is sufficient evidence to enable me in a limited way to say that the wife has contributed over the long marriage within the descriptions set out in s 79.

10. When dealing with an interim dispute, the Full Court in Zschokke referred to the need to examine the financial position of the respondent and his capacity to meet his own litigation costs and then consider whether there is an inability on the part of the applicant to pay her costs.

11. The added and unusual feature of this case is that there is a connected third party to whom both parties effectively look for the litigation funding for the wife because of his financial strength or control of the assets.

12. Mr O’Shannessy of counsel for the third party referred to the provisions of Part VIIIAA of the Act as a consideration but I disagree. The head of power here is s 79. The third party is a party to the proceedings and therefore within the jurisdiction of the court to make orders. Those orders can be for the purposes of implementing a regime for the payment of money from the husband’s entitlement over which the third party has control. The third party is entitled to the necessary protection to recover any consequent losses against the husband as a result of having to comply with the court’s order. As such, this is not an application or exercise of power reliant upon Part VIIIAA.

13. There is nothing in the Act to assist in determining what is an appropriate approach to an interim property division; if the power is recognised then the matter becomes one of the exercise of discretion.

14. In Strahan and Strahan [2009] FamCAFC 166, the Full Court clarified some of the aspects that had caused difficulty in making interim property orders.

15. In Strahan, Thackray J agreed with the outcome determined by Boland and O’Ryan JJ. His Honour said: 

    In every defended case one of the parties will claim they are entitled to a payment or transfer of property from the other party.  In many cases the other party will acknowledge they are likely to be ordered to transfer property or make a payment.  That, however, could not of itself be sufficient to make it appropriate for the Court to make an interim order.  Circumstances may change radically during the course of proceedings, as has been seen with recent severe fluctuations in the market.  The personal circumstances of the parties may change dramatically.  Furthermore, although a party may anticipate ultimately being ordered to transfer property or make a payment, they may legitimately expect to obtain an order for costs against the other party which will be satisfied from funds or property that would otherwise have been transferred.

16. These sorts of considerations provide a strong basis upon which the Court should maintain its traditional stance that there should ordinarily be only one hearing of disputes concerning alteration of property issues. 

17. Thackray J then pointed to the appropriate approach to these types of application as being:

    (F)irst identify circumstances that make it appropriate to give consideration to exercising (the) power to make an interim order.  It is at this stage that the Court has regard to the policy consideration that it is generally in the interest of the parties and the Court for there to be only one exercise of the s 79 power.  However, once the Court has determined that the interests of justice require it to exercise the power, the conditions on which the power is to be exercised are governed only by the obligation to make an order that is “appropriate” and to ensure that the proposed order is “just and equitable” by reference to the matters set out in s 79(4).  

18. In this case, I accept that it is appropriate to exercise the power because the wife is facing significant legal costs for what her counsel described may be a 5 to 10 day trial. It is a relevant consideration to note that there are significant outstanding fees to counsel. In some cases, lawyers are expected to wait for their fees but are entitled to have them secured. Here, it is relevant that these proceedings have been protracted and been made more complex because of the corporate relationship between the two brothers from which the husband has difficulty extricating himself. That delay has added to the costs and expenses and there is no interest brought to my attention that could be used as security for costs. It is the husband’s position and that of the third party, that the wife could sell the number plates as a way of raising money for her costs. That would defeat the wife’s desired purpose of keeping the number plates as an investment. Whilst “beggars cannot be choosers”, there is no other apparent avenue for the wife to go to obtain an alternative form of litigation funding. In the context of the apparent entitlement of the wife, the sale of the number plates would be unreasonable.

19. I am satisfied therefore that as the application for an interim order has been made, I should exercise the relevant s 79 power.

20. I am also satisfied as I earlier said that there is sufficient evidence albeit limited, to say that the wife is entitled to a property order.

21. The final step then is to determine what is appropriate.

22. The husband’s position is one of ambivalence but to the extent that I rejected (as I have) the requirement for the wife to sell the number plates, he would support the view that the money should come from the corporate entities.

23. The third party position was that there would be an impact on unknown people as to an extent, of unknown proportions. However, what is not in dispute is that the husband has a real and, in dollar terms, significant entitlement in the entities. The question of how that money is obtained is a matter of enforcement. The question of its impact on the third party and others is a matter to be taken up between them and the husband. They could certainly obtain appropriate indemnities as they are being asked to implement a financial strategy to enable the husband to fulfil his obligations out of his entitlement.

24. The making of the order must be just and equitable. I find it is just and equitable as between the husband and the wife for the reasons to which I have referred. As regards the third party, I do not see these orders as being unreasonable.

25. Finally, I accept the submission of senior counsel for the Wife that it is not appropriate to seek to control the extraordinary level of costs incurred in this litigation by denying only one of the parties access to funds.  In this regard it is important to keep in mind that the wife is proposing to spend funds that the husband acknowledges are hers.  In my view, that is her prerogative – and a matter between her and her legal advisors.

I certify that the preceding Eighty Four (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  30 December 2009