Vang & Chung (No 3)
[2024] FedCFamC1F 101
•28 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Vang & Chung (No 3) [2024] FedCFamC1F 101
File number: SYC 1433 of 2020 Judgment of: HARPER J Date of judgment: 28 February 2024 Catchwords: FAMILY LAW – INTERIM PROPERTY ADJUSTMENT – Where wife seeks interim property settlement of $856,000 – Where wife is yet to formulate her claim for final relief under Part VIII of the Family Law Act 1975 (Cth) (“the Act”) – Where the assets of the parties are presently uncertain – Where Court cannot find that husband has vast undisclosed assets in Country YY on an interim basis – Where husband may have some undisclosed shareholdings in Country YY – Where primary asset in Australia was sold at auction for over $14,000,000 – Where the husband’s father has a registered first mortgage against the property securing $14,864,805 – Where wife seeks to impugn validity and set aside the registered mortgage – Where wife’s case that the mortgage was a sham is not presently supported by the probabilities of the evidence – Where property pool is otherwise modest and relationship was short – Where risk that interim property adjustment could not be recouped if necessary at final hearing – Application dismissed.
FAMILY LAW – LITIGATION FUNDING – Where wife seeks a lump sum payment for the purpose of litigation funding – Where husband does not have position of relative strength but has capacity to fund his own legal costs – Where wife claims to be unable to meet her legal costs – Where she gave no clear evidence as to her predicted legal costs – Where wife asserts need for extensive legal costs to fund investigations in Country YY – Where Court not satisfied the foreshadowed investigations are necessary or consistent with the overarching purpose – Where litigation funding sought is disproportionate to the possible outcomes of the proceedings – Application dismissed.
FAMILY LAW – PRACTICE AND PROCEDURE – Leave to institute spousal maintenance proceedings pursuant to s 44(3) of the Family Law Act 1975 (Cth) (“the Act”) – Operation of ss 25, 50 and 132 in the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) – Discussion of definition of “institute” “proceedings” and “family law and child support proceedings” – Where s 50 of the FCFCOA prescribes that family law and children support proceedings must be instituted in Federal Circuit and Family Court of Australia (Division 2) – Where proceedings relating to maintenance are a separate matrimonial cause to property proceedings – Where matrimonial cause seeking property adjustment were commenced within time and transferred to Federal Circuit and Family Court of Australia (Division 1) pursuant to the FCFCOA Act – Where wife sought to leave to institute application for spousal maintenance well outside of prescribed time and subsequent to the transfer of the property proceedings to Division 1 by way of an Application in a Proceeding – Where s 44(3) requires the applicant to seek leave of “the court in which the proceedings are to be instituted” – Whether this Court does not have jurisdiction to determine the application to institute spousal maintenance proceedings where those proceedings must be commenced in Division 2 – Whether this Court has jurisdiction to hear an application for spousal maintenance where leave to institute is sought in Division 1 – Consideration of whether application for leave pursuant to s 44(3) to institute spousal maintenance matrimonial cause is not a “family law and child support proceedings” and may be instituted in Division 1 pursuant to s 62 of the FCFCOA Act –Where Court would not grant leave to wife to commence proceedings pursuant to s 44(3) even if it had jurisdiction to determine the application for leave.
Legislation: Commonwealth of Australia Constitution Act 1900 (Cth) ss 75, 76
Corporations Act2001 (Cth) s 58AA
Family Law Act 1975 (Cth) Pts VIII, XIB, ss 4(1), 39, 44, 44(3), 44(4), 72, 73, 74, 75(2), 76, 77, 79, 80(1)(h), 102Q(1), 106B, 117(2)
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 7, 25, 50, 51, 62, 67, 68, 132, 149
Federal Court (Corporations) Rules 2000 (Cth)
Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) rr 1.04, 2.50
Real Property Act 1900 (NSW) ss 42, 57(2)(b)
Explanatory Memorandum, Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Bill 2019 (Cth)
Federal Circuit and Family Court of Australia Central Practice Direction – Family Law Case Management, 28 November 2022 cl 5.22
Cases cited: Anson & Meek (2017) FLC 93-816; [2017] FamCAFC 257
Arcand & Boen (2021) FLC 94-046; [2021] FamCAFC 155
Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57; [2006] HCA 46
AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 97 ALJR 674; [2023] HCA 26
Bevan & Bevan (2014) FLC 93-572; [2014] FamCAFC 19
Bing and Bing (2007) FLC 93-318; [2007] FamCA 418
Bosanac v Commissioner of Taxation (2022) 275 CLR 37; [2022] HCA 34
Bourke v Bourke (Final Hearing Costs) (2010) 43 Fam LR 139; [2010] FamCA 199
Bunyon & Lewis (No 3) [2013] FamCA 888
Branchflower and Branchflower (1980) FLC 90-857
Camden v Laue (2018) FLC 93-840; [2018] FamCAFC 91;
Carlson & Carlson (2019) FLC 93-934; [2019] FamCAFC 245
Chang v Su (2002) FLC 93-117; [2002] FamCA 156
Clayton v Bant (2020) 272 CLR 1; [2020] HCA 44
Edmunds & Edmunds (2018) FLC 93-847; [2018] FamCAFC 121
Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12
Ferretto and Ferretto (1986) FLC 91-770
Gadzen & Simkin (2018) FLC 93-871; [2018] FamCAFC 218
Good and Good (1982) FLC 91-249
Greer & Mackintosh [2013] FamCAFC 16
Grunseth & Wighton (2022) FLC 94-099; [2022] FedCFamC1A 132
Hardwick & Hardwick (No 2) (2022) FLC 94-126; [2022] FedCFamC1A 216
Hazeldell Ltd v Commonwealth (1924) 34 CLR 442; [1924] HCA 36
Haseloff & Kormann [2013] FamCA 1019
Hedley & Hedley (2009) FLC 93-413; [2009] FamCAFC 179
Hullet & Benton (2022) FLC 94-072; [2022] FedCFamC1A 13
Jabara & Gaber (2021) FLC 94-057; [2021] FedCFamC1A 26
New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26
Nevins v Urwin (2022) FLC 94-084; [2022] FedCFamC1A 57
Norton & Locke (2013) FLC 93-567; [2013] FamCAFC 202
Osferatu & Osferatu [2012] FamCA 408
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643
Public Service Association of South Australia Inc v Industrial Relations Commission (SA) (2012) 249 CLR 398; [2012] HCA 25
Riemann & Riemann (No 3) [2017] FamCA 911
R v Ross-Jones; Ex parte Green (1984) 156 CLR 185; [1984] HCA 82
Sharp v Sharp (2011) 50 Fam LR 567; [2011] FamCAFC 150
Simonds (Deceased) & Coyle (2019) FLC 93-895; [2019] FamCAFC 47
Somerton & Wells [2013] FCWA 59
Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Vadisanis & Vadisanis (2014) FLC 93-593; [2014] FamCAFC 97
Walker and Walker (1984) FLC 91-564
Wei & Xia (No 5) [2023] FedCFamC1F 679
Weir and Weir (1993) FLC 92-338
Welland and Hawthorn (2021) 64 Fam LR 520; [2021] FedCFamC1A 43
Whitford and Whitford (1979) FLC 90-612
Woolley and Woolley (1980) FLC 90-900
Yule v Junek (1978) 139 CLR 1; [1978] HCA 4
Zagari & Habib [2010] FamCAFC 159
Zschokke & Zschokke (1996) FLC 92-693; [1996] FamCA 79
Division: Division 1 First Instance Number of paragraphs: 121 Date of hearing: 22 January 2024 Place: Sydney Counsel for the Applicant: Mr Blackah Solicitor for the Applicant: G & D Lawyers Counsel for the First Respondent: Mr Gardiner Solicitor for the First Respondent: Broun Abrahams Burreket Counsel for the Proposed Second Respondent: Ms Abdelraheem Solicitor for the Proposed Second Respondent: Mangioni Biggs + Co ORDERS
SYC 1433 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS VANG
ApplicantAND: MR CHUNG
First Respondent
MR D
Proposed Second Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
28 FEBRUARY 2024
THE COURT ORDERS THAT:
1.Paragraphs 1 to 9 of the applicant’s Amended Application in a Proceeding filed on 22 January 2024 (“the application”) be dismissed.
2.The costs of the application stand reserved.
THE COURT NOTES THAT:
A.Paragraphs 10 and 11 of the application remain listed for interim hearing before me at 10.00 am on 4 March 2024.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vang & Chung has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are property proceedings under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) between the applicant wife, Ms Vang (“the wife”) and the respondent husband, Mr Chung (“the husband”).
The parties met in 2014. The wife contends the parties commenced cohabitation in early 2015 while the husband claims cohabitation commenced in mid-2015. The difference is immaterial for the purpose of this judgment. It was not in contention that they were married in 2017.
The wife claims the parties separated on 31 August 2018. The husband claims separation occurred around 29 September 2017, only a few months after the marriage took place. The wife in her affidavit also gave evidence that she and the husband had an argument on 24 September 2017, in Country YY. She then returned to Australia and received a message from the husband that his parents would never allow the marriage. He claimed this message ended the relationship. She states she then returned to Country YY to be with the husband in October 2017. Her evidence is unclear whether the parties cohabited after October 2017. The husband claims they did not, although he agreed she returned to Country YY in about October 2017 without his prior knowledge.
For the purposes of this interlocutory judgment, I accept that the relationship most likely came to an end between October 2017 and August 2018. One reason for it ending was that the husband acquiesced and conformed to his parents’ disapproval of the marriage.
An order for divorce was granted in 2019.
There are no children of the relationship.
The wife commenced these proceedings on 3 March 2020. It is unnecessary to set out the procedural history in any great detail for the purposes of this judgment.
The proceedings were transferred to this Court on 15 December 2022.
After transfer, the wife, whilst self-represented, has filed numerous Applications in a Proceeding, seeking a range of orders, including litigation funding, spousal maintenance, partial property settlement and the joinder of the husband’s father (“the father”) as a second respondent on 15 May 2023, 12 June 2023 and 6 June 2023. This conduct caused a Senior Judicial Registrar to make an order on 15 September 2023 requiring the wife to seek leave of the Court prior to the listing of any further interim applications in accordance with cl 5.22 of the Federal Circuit and Family Court of Australia, Family Law Case Management – Central Practice Direction, 28 November 2022.
On 23 October 2023, the outstanding applications were listed for interim hearing on 22 January 2024.
On 14 November 2023 the wife’s further Amended Application in a Proceeding filed on 7 November 2023 was listed for determination on 22 January 2024. Orders were also made for 50 per cent of the net sale proceeds of E Street, Suburb F (“E Street”) to be paid to the father or as he directed, with the balance to be held in his solicitors’ trust account until further order or 4.00 pm on 22 January 2024. I will explain the factual background to these orders shortly. The wife has filed an appeal against one of these orders. The appeal is listed to be heard on 29 February 2024. On 21 December 2024, Rees J stayed part of these orders until 22 January 2024.
On 22 January 2024 the stay was extended by consent until 29 February 2024. The wife was also ordered to file and serve Points of Claim precisely articulating the material facts and contentions upon which she relies for the purpose of any claim she proposes to make against the husband’s father as second respondent. She filed her Points of Claim on 12 February 2024.
Before explaining the issues the subject of this judgment, it is first helpful to record the factual background to the purchase of E Street.
H Street and E Street
E Street was purchased in late 2017. The husband is the registered proprietor. According to the wife, the funds came from the sale of another property in Suburb F, H Street (“H Street”), which was purchased in early 2012, before the parties had met.
The husband was also the registered proprietor of H Street. According to the husband, he was 21 years old in 2012, the purchase price of H Street was $20,000,000 and he had no capacity to pay such a large sum. At the time he had no assets and was working for an industrial company earning about $42,000 per annum. Rather his case is that his parents provided the entire purchase price and acquisition costs including stamp duty. The property was unencumbered, and his parents paid all costs associated with the property after acquisition. The wife’s evidence recorded statements alleged to have been made by the husband to her that he and his family were rich and well connected. He provided her with a copy of his curriculum vitae, apparently either before cohabitation or during the relationship, which claimed he was employed by a private equity fund between 2010 and 2012.
At the time of the purchase of H Street, the husband contends that the father told him that he had lent the money to him for the purchase and required it to be repaid. According to the wife’s own evidence, the husband told her either before or during cohabitation “[m]y father invested in Australia so he could then sponsor me to get permanent residency” (Wife’s affidavit filed 8 January 2024, paragraph 42) The wife tendered evidence which showed that the funds for the purchase price of H Street came from a company called Y Pty Ltd, this was marked Exhibit “A”. The husband was a director of Y Pty Ltd between mid-2014 and early 2019. The father is now the sole director. There is no evidence that the husband was a director of Y Pty Ltd at the time H Street was acquired. The wife annexed an ASIC search of Y Pty Ltd dated 1 April 2022 to her affidavit filed 8 January 2024 (Annexure “A1”). It showed that the company has issued 100 fully paid shares all beneficially owned by PP Group, which has a registered office in Country RR. There was no evidence of the shareholders or directors of PP Group. However, the ASIC search discloses that there has been no change in shareholdings of Y Pty Ltd since mid-2012 when a directors’ resolution of a small company “controlled by a foreign company” was registered.
For the purposes of this judgment, the evidence satisfies me that the husband generally acted in accordance with his parents’ wishes. Indeed, the wife seemed to accept this to be the case in her affidavit. Without finally determining the issue, for present purposes I accept he could not have provided the funds for the purchase of H Street in 2012. I am not persuaded the evidence supports a conclusion, even at an interlocutory stage, that the husband had any interest in or controlled Y Pty Ltd at the time H Street was acquired, as the wife seems to contend. I do not accept the husband “owned” Y Pty Ltd. On the contrary, the wife’s own evidence (above at [16]) supports an inference that Y Pty Ltd was and is owned by the father. The husband was 21 years’ old, and it is more likely he was earning modestly as he claims. For present purposes, I accept it is more likely that the funds to purchase H Street were provided by Y Pty Ltd, which was likely owned and controlled by the father in 2012.
At the time H Street was sold the spouse parties were living in the property. The husband claimed the sale settled in late 2017, after separation. But this cannot be correct. The husband annexed to his affidavit a deposit slip and copy of a bank cheque showing that over $21 million was paid to the father personally, not Y Pty Ltd, in mid-2017 (Husband’s affidavit filed 15 January 2024, Annexure “[MC]-2”). For the purposes of this judgment, I accept that the sale settled in or about mid-2017. More to the point, the husband gave evidence that he himself received no part of the sale proceeds. There was no evidence that he did. It is however part of the wife’s claim that the husband beneficially owned the sale proceeds of over $21 million.
E Street was purchased in mid-2017 for over $10,000,000 roughly contemporaneously with the settlement of the sale of H Street. According to the wife, the husband said to her in mid-2017 “I plan to buy a smaller house in [Suburb F] for us to live in when we are in Australia” (Wife’s affidavit filed 8 January 2024, paragraph 94). Settlement occurred in late 2017. The husband gave evidence that the purchase price and other acquisition costs totalling $11,800,000 were met by a loan from his father, as had happened with H Street. The husband’s case was that the wife was not aware of this purchase at the time. She claimed that the funds to purchase E Street came from the proceeds of sale of H Street, which had been paid to the father. There was also no dispute that at settlement of the purchase a mortgage in favour of the father was registered on the title as dealing …69Q, on its face securing a loan of the purchase price advanced by the father. As discussed further below, the wife seeks to impugn the validity of the mortgage as a sham and to set it aside.
There was no dispute that the father in 2018 was, and remains, incarcerated in Country YY. He is difficult to contact. It was the husband’s evidence that his relationship with the father deteriorated in 2017 prior to this happening.
Since its purchase, the husband claimed that E Street has been rented and the rental income was used to meet the mortgage repayments. Between June 2020 and February 2021 the rent was paid into an account in his father’s name held at the National Australia Bank. Between February 2021 and November 2021 the rental income was received and held in the estate agent’s trust account. Since November 2021, the husband has been receiving the rent in an account held in his own name.
The rental income has been over $20,000 per month since October 2022 pursuant to a residential tenancy agreement. The husband annexed a copy of this agreement to his affidavit (Annexure “[MC]-8”). It has some peculiarities. No tenant is named. The signature of the tenant is obscured. In any event, there was no dispute that the husband has been receiving the rental income and using it to meet his own expenses, including legal fees. Consequently, there was no dispute he has used the rental income as his own money since November 2021.
The husband claims he has made no repayments in accordance with the E Street mortgage since February 2021. Consequently, it has been in default for a considerable period.
In August 2023 the husband was served with a notice under s 57(2)(b) of the Real Property Act 1900 (NSW) on his father’s behalf by reason of the default in making mortgage payments and requiring repayment of the monies owing under the mortgage. The outstanding mortgage balance was said to be $14,864,805. The husband failed to make the required repayments and the father as mortgagee has exercised a statutory power of sale. E Street was sold at auction in late 2023 with a sale price of over $14,000,000. It sems clear that the sale price will be insufficient to discharge the secured debt in full. The wife did not seek to set aside the sale or challenge it as not a bona fide arms’ length sale.
Settlement of the sale of E Street is to take place in mid-2024.
The order made on 14 November 2023 and the subject of the wife’s appeal, mentioned above, provided for the release of 50 per cent of the net proceeds of sale of E Street to the mortgagee, the father, with such amount “not to exceed the amount of the loan owing and outstanding” to the father as mortgagee. In light of the sale price achieved in late 2023, there appears to be no possibility that 50 per cent of the net proceeds of sale will exceed the mortgage debt, and the balance will be held in trust by the solicitors of the father.
APPLICATION ON 22 JANUARY 2024
Returning to the applications of the wife, she filed and relied upon a Case Outline on 18 January 2024 which set out 11 orders which she sought. These were materially different to the orders sought in her many earlier applications. Accordingly, I directed the wife to file and serve a properly engrossed Application in a Proceeding which made clear what orders she sought, on the basis that the earlier applications should be dismissed, to which the wife agreed. The wife filed an Amended Application in a Proceeding on 22 January 2024. Orders were therefore made dismissing the earlier applications.
In summary, the wife sought a raft of interim orders expressed in the alternative. Primarily she sought an order for the payment to her of the rental income from E Street until settlement of the sale, less any management costs and a lump sum payment of $856,000 from the proceeds of sale of E Street. In the event that the Court made her proposed orders, she sought that the determination of part or all of the monies paid to the wife as partial property adjustment, maintenance, litigation funding and or costs be adjourned to the final hearing. In the alternative she sought a spousal maintenance payment of $1,000 per week until the settlement of the sale of E Street, and thereafter as litigation funding. Upon settlement of E Street she sought a payment of $856,000, of which $111,000 is to be characterised as lump sum maintenance and the balance as partial property settlement for litigation funding.
She also sought joinder of the father as a Second Respondent and leave of the Court pursuant to s 44(3) of the Act to pursue her spousal maintenance claim. No leave is required for an interim property adjustment order.
On 22 January 2024, the wife did not press her application for joinder of the father. Rather, she foreshadowed that her claims against him would be articulated in a Points of Claim, which would include an application to set aside the mortgage …69Q. Orders were then made by consent for her to file and serve such a document by 4.00 pm on 12 February 2024. The costs of the father were reserved. At that point in the hearing, the father was excused from further attendance.
On 22 January 2024 counsel for the wife articulated her likely claim to be that Y Pty Ltd was the alter ego of the husband, the father’s mortgage was not genuine and was liable to be set aside. Consequently, the Court should conclude that the proceeds of sale of E Street are beneficially owned by the husband.
It is helpful at this point to set out in summary the wife’s claims which involve the father as the proposed second respondent. By her Points of Claim filed 12 February 2024, the wife alleges the husband was the beneficial owner of H Street, provided the purchase price and was entitled to receive the entire proceeds of its sale. Alternatively, she alleges Y Pty Ltd was the beneficial owner, alter ego of the husband and therefore, again, H Street was beneficially owned by the husband. She then claims the purchase of E Street was funded in truth by the husband using the proceeds of the sale of H Street, the mortgage executed in favour of the father was a sham, in that it purported to secure a non existent loan, and was intended to, or irrespective of intention was likely to, defeat orders of this Court. The wife claims declarations that the remaining sale proceeds of E Street are property of the husband and liable to adjustment orders pursuant to s 79 of the Act. She seeks further orders for the father to account for and pay into a controlled monies account the remaining proceeds from the sale of H Street pending further order of the Court.
It should also be noted here that the wife has not yet articulated her claim for final property adjustment pursuant to s 79 of the Act. She argued that until she has had further disclosure and received funds to undertake forensic investigations of the husband’s interests in Country YY, Country AB and Country RR she cannot formulate her final relief.
In light of the manner in which the hearing evolved, as described, this judgment deals only with the wife’s claims for spousal maintenance and partial property settlement or litigation funding. However, for reasons which will appear I am persuaded the father is a necessary party and his joinder should be ordered. However, I will not make such an order at this stage unless the wife decides to press for such joinder.
Delaying until the final hearing the characterisation of an interlocutory payment to a party, although often done, is problematic because there are distinct bases under the Act to make such orders and each basis necessarily carries with it a characterisation. For example, the discretion and power to order partial property settlement lies in s 79 and s 80(1)(h) of the Act. The power to order litigation funding can lie in s 117 of the Act. But in Zschokke & Zschokke (1996) FLC 92-693 (“Zschokke”) the Full Court held that regardless of “whether the matter was determined as an interim property settlement order under s 80(1)(h), or as an interim costs (or security for costs) order under s 117(2), or indeed even a maintenance order” (at 83,217), three elements should be present, which I have borne in mind in determining the wife’s application:
(a)A position of relative strength on the part of the respondent;
(b)A capacity on the part of the respondent to meet his or her own legal costs; and
(c)An inability on the part of the applicant to meet his or her legal costs.
The wife relied upon a Case Outline filed 18 January 2024, her affidavit and financial statement filed 8 January 2024. The husband relied upon his Case Outline filed 16 January 2024, his affidavit and financial statement filed 15 January 2024.
Neither party tendered a balance sheet, even in draft form. I will describe the property interests of the parties as at the date of this judgment in the course of these reasons, as best as I can glean them, based upon the evidence and their financial statements.
INSTITUTING PROCEEDINGS FOR SPOUSAL MAINTENANCE
Before turning to the facts and arguments of the parties concerning the substance of the wife’s application for maintenance, it is necessary to discuss a range of difficult questions posed by s 39 and s 44 of the Act and s 50 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”). After the hearing concluded on 22 January 2024, the Court sought submissions from the parties on the operation and interaction of these sections. None were received.
For reasons which will become clear, it is necessary to commence with two observations, the second of which requires some explication. First, as is well known, it is the “first” duty of the Court to consider itself whether it has jurisdiction (Hazeldell Ltd v Commonwealth (1924) 34 CLR 442 at 446; Public Service Association of South Australia Inc v Industrial Relations Commission (SA) (2012) 249 CLR 398 at [54]; New South Wales v Kable (2013) 252 CLR 118 at [34]). Jurisdiction cannot be conferred on the Court by acquiescence or agreement of the parties (Bunyon & Lewis (No 3) [2013] FamCA 888 at [148]). This Court, although a court of limited statutory jurisdiction, “has the authority and duty to decide whether a controversy brought before it lies within the limits of its jurisdiction” (R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 193–194, 213, 215–216, and 223; Norton & Locke (2013) FLC 93-567).
Secondly, proceedings between parties to a marriage with respect to maintenance are defined in the Act as a separate matrimonial cause. It has long been settled therefore that maintenance proceedings are of a different kind to property settlement proceedings (Ferretto and Ferretto (1986) FLC 91-770; Branchflower and Branchflower (1980) FLC 90-857). Proceedings with respect to maintenance fall within para (c) of the definition of “matrimonial cause” in s 4(1) of the Act. Sections 72 to 77 give the Court a wide discretion and powers to order maintenance and broadly define the parameters of this matrimonial cause. Proceedings between parties to a marriage with respect to their property are a distinct and further “matrimonial cause” falling within para (ca) of the definition (s 4(1) of the Act). Sections 75, 78 and 79 broadly define its parameters. The reasons of the majority (Keifel CJ, Bell and Gageler JJ) in Clayton v Bant (2020) 272 CLR 1 at [22]–[25] explain that each matrimonial cause has a distinct statutory basis.
It is important to emphasise that the wife first introduced a matrimonial cause for maintenance after the proceedings were transferred to this Court.
The definitions of the various “matrimonial causes” equates them with “proceedings”. Such proceedings are defined by the separate juristic nature of a given matrimonial cause, not the individual applications made in respect of the matrimonial cause. In Yule v Junek (1978) 139 CLR 1, Murphy J said at 19:
… However, the definition of matrimonial cause treats the various proceedings, whether for principal relief (dissolution or nullity or declaration of validity of dissolution or annulment) or not (for example, proceedings with respect to maintenance, property, custody, guardianship or maintenance of or access to a child of the marriage), as separate proceedings although they are related in some cases …
(Emphasis in original)
See also Somerton & Wells [2013] FCWA 59 at [98] and Hullet & Benton (2022) FLC 94-072 at [33]–[34].
It has therefore also long been settled that this means that a matrimonial cause instituted within time for property settlement orders may not be amended to include a matrimonial cause for maintenance out of time without leave pursuant to s 44(3) (Woolley and Woolley (1980) FLC 90-900; Good and Good (1982) FLC 91-249; Hedley & Hedley (2009) FLC 93-413 at [95]). The power to permit an amendment pursuant to r 2.50 of the Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) (“the Rules”) does not overcome this necessity (Vadisanis & Vadisanis (2014) FLC 93-593 at [114]–[125]).
Section 39 of the Act deals with the institution of matrimonial causes in relevant courts. When the wife commenced these proceedings on 3 March 2020, she instituted a matrimonial cause seeking relief pursuant to s 79 of the Act, that is, a matrimonial cause within para (ca) of the definition. At that time s 39 expressly conferred jurisdiction on this Court in matrimonial causes. The FCFCOA Act came into force on 1 September 2021. This enactment changed the name of this Court from the Family Court of Australia to the Federal Circuit and Family Court of Australia (Division 1) and the Federal Circuit of Australia to the Federal Circuit and Family Court of Australia (Division 2).
More importantly, simultaneous other amendments to the Act removed mention of this Court from s 39 of the Act, and limited the conferral of jurisdiction in matrimonial causes to Division 2 and certain other courts, not presently relevant.
However, the Full Court has confirmed that this Court retains jurisdiction to hear and determine proceedings pending in it before 1 September 2021, that is, “legacy cases” (Nevins v Urwin (2022) FLC 94-084 (“Nevins”)). Clearly, this Court has jurisdiction to hear and determine the wife’s matrimonial cause seeking property adjustment pursuant to s 79 because it was pending as at 1 September 2021. But no matrimonial cause for maintenance was pending as at that date.
As pointed out in Nevins, one objective of the legislative changes made on 1 September 2021 was to create a single point of entry for family law or child support proceedings and “[t]hat objective was achieved by the removal of original jurisdiction from Division 1 and, in lieu thereof, its investiture with original jurisdiction in only those causes of action transferred to it from Division 2” (at [5]).
So s 25 of the FCFCOA Act now provides:
(1) The Federal Circuit and Family Court of Australia (Division 1) has original jurisdiction:
(a) if a matter, being the subject of a family law or child support proceeding, is transferred to the Court by the Court under section 51—as set out in paragraphs 132(1)(a), (b), (c) and (d); or
(b) if a matter, being the subject of a family law or child support proceeding, is transferred to the Court by the Federal Circuit and Family Court of Australia (Division 2) under section 149—as set out in paragraphs 132(1)(a), (b), (c) and (d); or
(c) as is conferred on the Court, or in respect of which proceedings may be instituted in the Court, by any other Act.
It can be seen that in addition to jurisdiction derived from transfers to this Court from Division 2, s 25(1)(c) refers to jurisdiction “conferred on the Court, or in respect of which proceedings may be instituted in the Court, by any other Act”. The reference to “any other Act” includes any other federal statute, such as the Act, other than the FCFCOA Act. Apart from the Act, an example is the Corporations Act2001 (Cth) (“the Corporations Act”) which defines “Court” to include this Court (s 58AA).
Section 44 of the Act is another provision that regulates how proceedings in relation to marriages are “instituted” under the Act. For present purposes s 44 relevantly provides:
Except as otherwise prescribed by the regulations or by the applicable Rules of Court, proceedings under this Act shall be instituted by application.
…
(3) Where, … :
(a) a divorce order has taken effect; or
(b) a decree of nullity of marriage has been made;
proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial cause in subsection 4(1) … shall not be instituted, except by leave of the court in which the proceedings are to be instituted or with the consent of both of the parties to the marriage, after the expiration of 12 months after:
(c)in a case referred to in paragraph (a)—the date on which the divorce order took effect; or
(d)in a case referred to in paragraph (b)—the date of the making of the decree.
The court may grant such leave at any time, even if the proceedings have already been instituted.
Several points should be made here about s 44(3). It constitutes a statutory prohibition on “instituting” the nominated matrimonial causes, including spouse maintenance, outside defined limitation periods except with the leave of the court. It also constitutes an exceptional statutory ability for parties to confer on a relevant court jurisdiction, in the sense of authority to adjudicate the nominated matrimonial causes, by consent.
As pointed out earlier, there was no dispute the wife sought to institute her matrimonial cause seeking maintenance well outside the prescribed limitation period. She sought to do so for the first time by an Application in a Proceeding filed on 12 June 2023, not by any formal amendment of her Initiating Application seeking to add a further matrimonial cause for maintenance. There was no dispute that she requires leave pursuant to s 44(3) to institute her proceedings for maintenance. There is no consent by the husband which could confer jurisdiction and obviate the need for an exercise of discretion to grant leave.
Subsection 44(4)(a) and (b) then prohibit the grant of leave unless the Court is satisfied either that hardship would be caused to the applicant for maintenance if leave were not granted or as at the date 12 months from the date of the parties’ divorce the applicant would have been unable to support herself without an income tested pension, allowance or benefit. The Court thus has no power or discretion to grant leave unless one of the subparagraphs is satisfied. If such satisfaction is achieved, the court then retains a residual discretion to grant leave or not, and the onus remains on the applicant to persuade the Court the discretion should be exercised in their favour (Arcand & Boen (2021) FLC 94-046 at [38]–[40] (“Arcand & Boen”); Welland v Hawthorn (2021) 64 Fam LR 520 at [16]).
It is then necessary to consider the terms of s 50 of the FCFCOA Act. This imposes a specific statutory prohibition on instituting “family law or child support proceedings” in this Court. It provides as follows:
(1)A person must not institute family law or child support proceedings (other than appellate proceedings) in the Federal Circuit and Family Court of Australia (Division 1).
Note: For the institution of proceedings other than family law or child support proceedings, see section 62.
(2)If proceedings are instituted in the Federal Circuit and Family Court of Australia (Division 1) in contravention of subsection (1), then:
(a) unless the proceedings are transferred to the Federal Court, the proceedings are, by force of this subsection, transferred to the Federal Circuit and Family Court of Australia (Division 2); and
(b)the proceedings are taken to be as valid as they would have been if subsection (1) had not been enacted.
“Proceeding” in s 7 of the FCFCOA Act is defined to mean, in relation to a court, “a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connection with, a proceeding, and also includes an appeal”.
It is clear from the Explanatory Memorandum to the Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Bill 2019 (Cth) that the purpose of s 50 of the FCFCOA Act is to aid the objective of:
177. … achieving a single point of entry for first instance family law matters, as these matters will need to be initiated in the FCFC (Division 2) and can be transferred to the FCFC (Division 1) in accordance with clauses 51 and 149, and consistent with case management processes.
The expression “family law or child support proceedings” is defined in s 7 of the FCFCOA Act to mean:
proceedings in respect of which the Federal Circuit and Family Court of Australia (Division 2) has original jurisdiction under section 132.
Relevantly, s 132 of the FCFCOA Act provides:
Original jurisdiction--family law or child support matters
(1)The Federal Circuit and Family Court of Australia (Division 2) has original jurisdiction:
(a)with respect to matters in respect of which proceedings may be instituted under the Family Law Act 1975 ; or
…
This describes an aspect of federal jurisdiction to decide “matters” falling within the subject matters in s 75 and s 76 of the Commonwealth Constitution. It is not necessary to explore this to any extent here except to note it is also well settled that a “matter” does not mean a particular legal proceeding between the parties or a bare description of the subject matter falling within a head of federal judicial power in s 75 and s 76; rather it comprises all claims within the scope of a single justiciable controversy (AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 97 ALJR 674 at [31], [110]). Therefore, the relevant federal matter is not to be equated, or assumed to be co-extensive, with a particular matrimonial cause as defined in the Act, although a matrimonial cause may be a proceeding in relation to a matter. Ss 51 and 149 of the FCFCOA Act refer to a transfer of “a proceeding” not a “matter”. In Camden v Laue (2018) FLC 93-840 at [167] the Full Court confirmed that a court is seized of a matter in the exercise of federal jurisdiction, it has authority to adjudicate and the parameters of the jurisdiction are the parameters of the matter which might involve differing causes of action. But authority to adjudicate is anterior to the existence of powers to grant particular relief (Fencott v Muller (1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ). The power to grant particular relief in the form of spouse maintenance arises in a proceeding invoking the provisions of the Act which constitute the matrimonial cause. It seems to me that a transfer of a proceeding from Division 2 to this Court pursuant to s 51 or s 149 of the FCFCOA Act, is intended to place matrimonial causes relating to the “matter” before this Court, which intention can also be drawn from the wording of s 25 of the FCFCOA Act. Those sections grant a power to transfer a “proceeding” and the relevant “proceeding” is constituted by the matrimonial causes which have already been instituted in Division 2 at the time of transfer. It should be pointed out that Division 2 otherwise retains jurisdiction in relation to the matter by reason of s 39 of the Act.
It is not necessary or desirable here to attempt some exhaustive taxonomy of proceedings which fall within the collocation “family law or child support proceedings” as defined in the FCFCOA Act. Whatever other proceedings may fall within the definition, it is plain in my view that the matrimonial causes nominated in s 44(3) of the Act must be such proceedings.
The question therefore arises as to how the terms of s 44(3) of the Act and s 50 of the FCFCOA Act are to be construed to operate together. Section 44(3) prohibits the institution of the nominated matrimonial causes, except with the leave of “the court in which the proceedings are to be instituted”, while s 50 prohibits the institution of the same matrimonial causes in this Court at all.
The verb “institute” should be construed consistently in both sections. It is specifically defined in s 102Q(1) for the purposes of Pt XIB in relation to vexatious proceedings. However, that is a special statutory context. Here the verb should be construed in its ordinary meaning. The online Oxford English Dictionary offers the definition “[t]o set in operation, set on foot, initiate, ‘start’”. This definition is sufficient to articulate the verb’s ordinary meaning, and its meaning in both s 44(3) and s 50 of the Act. Filing an application to “institute” a matrimonial cause for maintenance in my view quite clearly must be done in Division 2 by force of s 50(1).
However, the application presently under consideration is anterior to the matrimonial cause, being for leave to institute the matrimonial cause. One question, therefore, is whether an application for leave pursuant to s 44(3) is itself a proceeding within the expression “family law or child support proceedings”. If so, bringing the application for leave in this Court breaches s 50(1) and has been automatically filed in Division 2 by reason of s 50(2). The consequence would be that this Court has no jurisdiction to determine the wife’s application for leave.
Bearing in mind the definition of “proceeding” in the FCFCOA Act, at first blush it is hard to see why an application for leave pursuant to s 44(3) does not fall within this definition, being at the very least an incidental proceeding in connection with the existing matrimonial cause for property adjustment which is with respect to the relevant federal matter.
But there is a line of authority in this Court which has construed similar definitions of “proceedings” in the Act narrowly, with result that an application for leave to institute proceedings pursuant to s 44(3) is not an incidental proceeding in the course of, or in connection with, an existing proceeding; rather such an application constitutes a proceeding merely with respect to leave itself to institute a matrimonial cause (see Simonds (Deceased) & Coyle (2019) FLC 93-895 at [50]—[56] (“Simonds”)). In that sense the application for leave to institute the matrimonial cause is to be understood as separate from the matrimonial cause itself.
The definition of “proceedings” in the Act and “proceeding” in the FCFCOA Act are very similar and should be construed in the same way. Consistently with this line of authority therefore, the wife’s application for leave pursuant to s 44(3) itself is not incidental to any existing proceeding in this Court, and does not fall within “family law or child support proceedings” as used in s 50.
But it is instructive to observe the present situation is materially the same to that which the Court considered in Simonds. There the wife attempted to institute a de facto financial cause out of time for maintenance, with leave, after the husband had died. Murphy J pointed out the Court no longer had any jurisdiction to entertain such a cause because the husband had died. Here the Court retains jurisdiction in the legacy proceedings, but by reason of the combined effect of the amendments to s 39 of the Act mentioned earlier (and I should add, the repeal of s 31 in 2021) and ss 25(1)(a) and (b), 50 and 132 of the FCFCOA Act, this Court has no jurisdiction conferred by the Act to adjudicate any matrimonial cause which was not pending as at 1 September 2021 unless it was transferred from Division 2. That has not happened in relation to the wife’s claim to spouse maintenance. Accordingly, this Court also has no jurisdiction to adjudicate the matrimonial cause for maintenance in respect of which the wife seeks leave.
There are two other ways the position can be analysed. It should be noted that s 62 of the FCFCOA Act provides that proceedings other than “family law and child support proceedings” may be instituted in this Court “without the need for pleadings”. The purpose of this provision is not entirely clear. It may simply make express the long standing position in this Court that pleadings are not necessary. But by reason of the effect of s 50, s 62 must be read as limited to proceedings which are not of “family law and child support proceedings”. It is not obvious what proceedings then may be instituted without pleadings. One answer may be proceedings instituted under another federal statute conferring jurisdiction on this Court, such as the Corporations Act. But the question then arises concerning the interaction of s 62 and the Federal Court (Corporations) Rules 2000 (Cth). It is not necessary to delve any further into these potential issues, except to say this example highlights the ambiguity. It is sufficient to observe if the application for leave to institute the wife’s claim to maintenance, as discussed, does not fall within the definition of “family law and child support proceedings” s 62 could also be construed to permit its institution of proceedings in this Court “without pleadings”.
Alternatively, a possible construction of s 44(3) is that it confers on this Court a limited jurisdiction or authority to decide the question of leave. In other words, it constitutes a conferral by another federal Act of a limited original jurisdiction on this Court within s 25(1)(c) of the FCFCOA Act. This view can be supported by the words in s 44(3) “the court in which the proceedings are to be instituted”, construed as a reference to not only the court in which the proceedings are to be instituted, but also the court which is to determine the question of leave. Here that court is this Court. According to this the view, this Court has jurisdiction conferred upon it in accordance with s 25(1)(c) to the limited extent of deciding the question of leave.
But in my view neither possibility makes any material difference here. Even assuming this Court has the jurisdiction to determine the limited question of leave, there is no avoiding the conclusion that this Court would never exercise the discretion to grant leave in the present circumstances. Clearly, on any view the Court would not entertain an application for leave to institute a matrimonial cause in respect of which it cannot have jurisdiction without a transfer from Division 2. Further, irrespective of any other reason, the Court would not grant leave where to do so would result in “family law or child support proceedings” being instituted in this Court in breach of s 50(1), and any such proceedings would be automatically transferred to Division 2 by reason of s 50(2) in any event.
The wife should have instituted her matrimonial cause for maintenance, including an application for leave, in Division 2, not this Court, and sought a transfer to this Court. I should add that, although this conclusion appears to impose additional cost and a cumbersome procedural burden on the wife, it is entirely consistent with the overall objective of a single point of entry.
Inevitably, therefore, in my view the wife’s application for leave to institute her claim for maintenance fails because there is presently no conceivable circumstance in which this Court would exercise a discretion to grant leave, even if had jurisdiction to do so, which I doubt. The wife’s claim for spouse maintenance should be dismissed.
This is sufficient to dispose of the wife’s application for leave. However, since I received no assistance by way of submissions from the parties on the issues discussed above, and against the possibility my views about the operation of s 50 are wrong, I consider it appropriate to express my conclusions about the wife’s application for leave as it was argued. It is also desirable to do so because the wife’s claim for partial property settlement, which remains to be determined, arises from a matrimonial cause pending in this Court as at 1 September 2021 and, as noted, does not require leave. A number of the same considerations relevant to the wife’s maintenance claim are also relevant to the question of partial property settlement.
I also conclude the wife’s application for leave to institute a maintenance claim should be dismissed, even as it was argued.
SECTION 44(3)
Turning to the provisions of s 44 of the Act, the wife made clear in her submissions that she did not contend s 44(4)(b) was satisfied. She relied upon a case of hardship if leave was not granted.
The wife bears the onus of establishing hardship, and if she does so, the wife then must persuade the court that it should exercise its discretion to grant leave. Hardship does not arise from the loss of the right to bring the relevant proceedings but from the consequences of the loss of that right. This requires consideration of the quality of the proposed claim. If hardship is demonstrated, numerous factors can influence the exercise of the residual discretion, including the length of the delay, the adequacy of reasons for the delay, and the prejudice the respondent would suffer if the application for extension of time was granted (Gadzen & Simkin (2018) FLC 93-871 at [29]—[37], [40]; Arcand & Boen at [40]).
The likely costs of the litigation constitute one factor to be considered in determining whether or not hardship would be alleviated by the grant of leave (Whitford and Whitford (1979) FLC 90-612 (“Whitford”); Walker and Walker (1984) FLC 91-564).
The wife’s claim for spouse maintenance requires her to establish, pursuant to s 72 of the Act, that she is unable to support herself adequately whether, relevantly (there being no child of the marriage) by reason of age, or physical or mental incapacity for gainful employment, or any other adequate reason having regard to the matters in s 75(2). In considering the quality of the wife’s claim the Court must weigh her case against that of the husband’s and form a view as to whether there is in fact a sufficient probability of success, that would, if leave were granted, alleviate hardship (Edmunds & Edmunds (2018) FLC 93-847 at [48]). More recently, in Skelton v Lindop (2022) 64 Fam LR 617 at [17]—[21] (“Skelton”), Austin J sitting as the Full Court pointed out that the test is demonstrating a “sufficient likelihood of success” to prove hardship rather than likely success at trial on the balance of probabilities, which requires a higher standard of satisfaction, citing Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57 at [65] and [69]. I accept this is the correct test (Hardwick & Hardwick (No 2) (2022) FLC 94-126 at [28]) and it binds the determination of interlocutory applications (Skelton at [19]). The wife’s untested evidence is taken at its highest for this purpose (see Whitford).
The wife has an undergraduate and postgraduate qualification. She is presently halfway through a further qualification. She has incurred substantial costs in completing her tertiary qualifications and says she has borrowed $250,000 from her mother. According to her evidence, the wife worked before and during the marriage and after separation, apart from a period between April and September 2020. Since September 2020 she was and still is employed as a professional at an Australian company, the name of which she refuses to disclose. She receives a salary of $2436 per fortnight after tax.
The wife has suffered bouts of depression since 2017. She was diagnosed with a critical condition, which she did not name, in late 2022 which has required surgery and ongoing treatment, including ultrasounds.
The wife purchased a one-bedroom apartment in Suburb K in early 2021. The purchase price was $650,000 and she borrowed $130,000 from her mother to fund the purchase. She also borrowed $520,000 from the Commonwealth Bank of Australia at a fixed rate of 1.99 per cent which will apply until the end of 2024. The monthly repayments are $1,920, and the outstanding mortgage balance is $484,334. In her Financial Statement filed 8 January 2024 the wife claims the value of her Suburb K unit remains at $650,000.
The wife in her Financial Statement claims weekly expenses of $1,475 excluding any mortgage payments but including a number of discretionary items such as holidays and hobbies.
There is no care of a child involved. The wife has gainful employment and her evidence shows she has no incapacity for gainful employment.
The Court also looks to any other adequate reason to conclude she is unable to support herself adequately having regard to the matters in s 75(2). It has long been held that a dependence on funds from relatives indicates an inability to support oneself adequately. The wife has relied upon her mother for financial support. However, the financial support given by her mother included funds to acquire real property.
The wife contends that the husband has access to vast financial resources. She argues the husband has “disposed of significant property” meaning H Street and E Street. This argument relies upon the inference that both H Street and E Street were paid for by the husband. The wife’s case in this regard in truth relies upon the assumption of a collusive arrangement between the husband and his father since 2012. The available evidence at this interlocutory stage does not support that inference. For present purposes, she bears the onus of persuading the Court she has a sufficient probability of success in establishing the truth of this contention on a final basis. I do not accept that she has done so.
As discussed, H Street was purchased in 2012 when the husband was a young man, and before the parties even met. The only evidence about the purchase of H Street is given by the husband. Although the husband became the registered proprietor of H Street, the more plausible inference is that the father provided funds either himself or through Y Pty Ltd. There is no plausible evidence to the contrary of his version. The wife provided no evidence which even by inference could suggest the husband at the age of 21 could have access to $20,000,000 to pay for H Street. The evidence, although untested, rebuts any presumption of advancement in favour of the son and would support a “purchase price” resulting trust in the father’s favour because the actual intention of the father was to own H Street beneficially and not make any gift to the husband (Bosanac v Commissioner of Taxation (2022) 275 CLR 37 at [12], [51], [57]–[58] and [114]–[116]).
The intercession of Y Pty Ltd as the source of funds is not inconsistent with these conclusions. It may indeed be a red herring. The ASIC search tendered by the wife supports the inference that PP Group was the sole shareholder of Y Pty Ltd from its registration in 2012. Despite the assertion of the wife that the husband owned Y Pty Ltd, there is no evidence which supports an inference that either of Y Pty Ltd or PP Group should be found to be the alter ego of the husband. As at 2012, there is no plausible reason why this would have been the case. There is no evidence which supports the inference that it later became the case.
The central point is that the wife in my view has not established she has a sufficient probability of succeeding in proving the proceeds of sale of H Street were ever the property of the husband, or even if they were, they were used to retire a loan made to him by his father for the purpose of the purchase. This is important because, as noted, it is her case that the purchase of E Street was funded from the proceeds of sale of H Street.
The husband’s evidence is that the E Street purchase was funded by the father through a loan secured by a registered mortgage. The wife points to no plausible evidence that the purchase monies came from any other source or from any funds owned by the husband. For present purposes, it can be accepted that the money lent to the husband by the father became the husband’s property and that the proceeds of sale may be beneficially owned by him. But this simply created a debt which was secured by a mortgage, which is a first registered mortgage. Upon registration of the mortgage, the mortgagee receives an indefeasible title, subject to exceptions specified in s 42 of the Real Property Act 1900 (NSW), which include fraud, or recognised equitable interests. Registration validates all the terms and conditions of the registered mortgage which “delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest” to the registered mortgagee (PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 679). The Court cannot simply ignore the rights of a legitimate mortgagee in favour of a spouse party (s 75(2)(ha) of the Act).
The wife claims the mortgage is a sham, on the assumption of a collusive arrangement between the husband and the father. She argues the mortgage and sale of E Street are part of a scheme to remove marital assets from the jurisdiction of the Court. But there is insufficient persuasive evidence at present which would support the inference that the loan and mortgage were sham transactions when they were entered into in 2017, or undertaken to defeat orders of this Court.
On the contrary, the father’s relationship with the husband had become strained. In the context of the wife’s application for leave, it is plausible that he wanted the security of a mortgage if he lent the son enough money to buy E Street at that time. The father was not incarcerated until 2018. The wife may resort to s 106B of the Act, but at present she has not particularised any case that when the mortgage was entered into it was intended to, or irrespective of intention, likely to defeat anticipated orders of the Court under the Act. The requirement is to establish the likelihood of an existing or anticipated order being defeated by the disposition at the time it was made (Bourke v Bourke (Final Hearing Costs) (2010) 43 Fam LR 139 at [45]; Haseloff & Kormann [2013] FamCA 1019 at [58]; Riemann & Riemann (No 3) [2017] FamCA 911 at [39]–[49]). There were no proceedings instituted under Pt VIII of the Act in June 2017. According to the wife’s case, the parties had not even separated when the purchase settled in late 2017, although the husband had indicated the relationship was over at the end of the previous month. Nonetheless, the evidence of both spouse parties was consistent that neither was in Australia when the E Street purchase settled.
It should also be observed that, putting the mortgage to one side, on the husband’s case, supported at present by the evidence, he still has a liability to his father for the funds lent to purchase E Street. This liability would presumably have to be included on the matrimonial balance sheet.
The outstanding secured debt is $14,864,805 when the original loan, according to the husband, was $11,800,000 and the rent from the property was for a time used to pay the mortgage. However, the only evidence suggests that between February 2021 and November 2021, mortgage payments were not made to the father’s account and after November 2021 the husband received the rent himself. There was no dispute that since that time the husband has been taking the rent for his own purposes and has not paid the mortgage. This plausibly accounts for the size of the outstanding debt, on the present state of the evidence.
For the purposes of s 44(3), on the basis of the evidence before me, I am not persuaded the wife has a sufficient probability of success in proving E Street is not subject to a valid mortgage in favour of the father, the discharge of which will require the entire proceeds of sale to the mortgagee. Despite her Points of Claim, she has put forward no sufficiently persuasive evidence supporting an arguable basis why the mortgage should be impugned or set aside. She claims in part this is a result of the husband’s non-disclosure. But as discussed above, even at an interlocutory stage the probabilities are not in favour of her claims of a collusive arrangement between father and son. I accept the husband’s version of the circumstances surrounding the purchase of E Street is more inherently plausible for the purpose of assessing the wife’s application for leave. At present, I take the view that the mortgage should be treated as valid and enforceable. Consequently, the proceeds of sale will not form part of the property pool of the parties to the marriage.
However, since the husband is the registered proprietor of E Street, I accept the rent received from the property should be treated as the husband’s property. These rent payments will cease when the sale of the property settles in mid-2024. At most the husband will have access to further rent payments totalling about $80,000 until settlement of the sale in mid-2024.
The husband is using the rent from E Street to pay his legal fees. He is also paying a range of costs such as agents’ commission, rates, cleaning and general maintenance for E Street, from the rent.
Consequently, on the present state of the evidence the only property available for division in Australia appears to be the wife’s Suburb K unit and superannuation, and the balance of the rent from E Street, some cash in bank accounts of both parties and the husband’s superannuation. Both parties claim liabilities owed to their mothers. Aside from E Street, the wife seemed to accept that the husband presently has no other assets in Australia.
The wife gave evidence of the husband’s interests in companies in Country YY, particularly shareholdings which appear to have very substantial paid up capital. According to her evidence she has already obtained a range of reports and other information about these companies. The husband denied any knowledge these interests. There was evidence that the husband holds money in Country YY bank accounts, but he claims that this money is owned by his mother. The wife submitted there is “a strong flavour of non-disclosure about the husband’s case” (Wife’s Case Outline filed 18 January 2024, p.6). It is then the wife’s contention that she should receive a substantial interim property adjustment order to investigate more about the husband’s Country YY, Country AB and Country RR corporate interests.
For his part, the husband gave some evidence that the wife has had property interests in Country YY, including a property which she sold in early 2021. According to the husband the wife claims this property was purchased using money from her mother, and when it was sold she repaid the sale proceeds to her mother. He claims she made inadequate disclosure about this transaction.
It is hard to know at this stage of the proceedings how much weight to place on the existence of assets in Country YY. At a final hearing it may be possible to infer the husband has failed to disclose assets in Country YY (Wei & Xia (No 5) [2023] FedCFamC1F 679 at [175]). But other than as specifically mentioned in these reasons, I am generally unable to draw the necessary inferences and make a finding for the purposes of this interlocutory determination. It is also relevant to note that this Court would not be able to enforce any of interim spouse maintenance orders against any property interests of the husband in Country YY nor would they be available for division under property adjustment orders of this Court.
I return to the question whether if leave is not granted to apply for spouse maintenance, the wife will suffer hardship. I am not persuaded that she will. If leave is not granted, since I have found she has not established a sufficient probability of success in relation to E Street, the consequence would be that she will not be permitted to pursue a claim for $1,000 per week and a lump sum from an unspecified source. Her claim to a weekly amount of spousal maintenance could be satisfied out the rent received by the husband but since this will cease in mid-2024, I do not accept it could fund the claimed spouse maintenance for two years. On the present state of the evidence, I accept that the wife has shown a sufficient probability of success in demonstrating the husband has some unspecified shareholdings in Country YY. But this is not the same as demonstrating he controls vast financial resources. I am unable to conclude that any lump sum payment of spouse maintenance could be satisfied out of any assets of the husband in Australia. The wife has her salary and owns her Suburb K unit. Therefore s 44(4)(a) is not satisfied and no leave can be granted.
This conclusion also makes further consideration of the wife’s claim for spouse maintenance unnecessary. However, I should record what my conclusions would be on the exercise of discretion even if my conclusion about the absence hardship is wrong.
The Court retains a residual discretion concerning the grant of leave even if s 44(4)(a) is satisfied. Prejudice to the respondent and delay are important in this regard. In Sharp v Sharp (2011) 50 Fam LR 567 the Full Court said:
97.Merely because the respondent to an application for leave does not point to particular prejudice that might arise if leave were granted, does not dispose of the question. The law presumes prejudice to flow to a person sought to be joined in litigation after the effluxion of the relevant time limits. Even if the court came to the view that there was no significant prejudice to the respondent, the court may consider whether in all of the circumstances of the case, it is just and reasonable to grant the extension sought. The New South Wales court of Appeal in McLean v Sydney Water Corporation [2001] NSWCA 122, per Giles JA (Hodgson and Stein JA agreeing) said at [22] that:
[22] ... Prejudice engendered by delay and unlikelihood of a fair trial will be highly material, and if there is prejudice and unlikelihood of a fair trial that will tell strongly, often conclusively, against the grant of an extension of time. It does not follow that in the absence of prejudice (other than general prejudice) and unlikelihood of a fair trial it will be just and reasonable to grant an extension of time.
In T & T [2013] EWHC B3 (Fam), cited with approval by the Full Court in Bevan & Bevan (2014) FLC 93-572 at [87], albeit in a different context:
87 … the courts have repeatedly said, both at first instance and on appeal, that where there has been long delay in seeking a financial remedy so as to give the other party the reassurance that there will be no further claim against him or her, this entitles the court to dismiss the application for financial provision.
The wife had 12 months from 22 November 2019 to bring a spouse maintenance application without leave, that is, 23 November 2020 at the latest. There was no dispute that the wife delayed such application until 16 June 2023, a period of two and a half years. She explained the delay by claiming that she was not advised of any time limit by the two previous solicitors’ firms who represented her. She claimed her first lawyers advised her not to make a claim for spouse maintenance at the time she commenced proceedings on 3 March 2020 “even though I did not have a job and was struggling to pay my costs of living” (Wife’s affidavit filed 8 January 2024, paragraph 49). She then claimed her next lawyers advised her in about April 2021 to focus on a security for costs application by the husband rather than spouse maintenance.
It seems plain from her own evidence that the wife received legal advice twice not to bring a spouse maintenance application. There is no evidence of this apart from the wife’s assertion. No evidence was called from any solicitor. But taking her evidence at its highest, the wife followed her legal advice but does not state that if she had been told about the time limit, she would have pressed such an application despite the legal advice.
I do not find the wife’s explanation of delay to be persuasive nor has she shown it would be in the interests of justice for the husband to be faced with such a claim after a delay of two and half years.
I repeat my conclusions above at [76]–[81]. I am not persuaded the wife has demonstrated she is unable to support herself adequately. Since I conclude the wife can adequately support herself, her claim to spouse maintenance would likely fail, after consuming court resources, judicial time, and causing the respondent additional expense. This is itself a reason not to exercise the discretion in her favour.
In the exercise of discretion I would refuse the wife leave to bring her spouse maintenance claim.
INTERIM PROPERTY ADJUSTMENT
The wife does not require leave to bring her application for interim property adjustment.
I repeat my conclusions above at [86]–[101]. I also note that the wife seeks a lump sum of $856,000 to fund her legal costs, including the costs of undertaking forensic investigations of the husband’s property interests in Country YY, Country AB and Country RR.
There is a two-stage process to applications for interim partial property settlement. Firstly, the procedural step, which is the question of whether the court should exercise discretion to entertain and determine the application, and secondly the substantive step, namely the nature of the order which should be made (Strahan & Strahan (2011) FLC 93-466 (“Strahan”)). The Court has a wide unfettered discretion and power under s 79 and s 80(1)(h) of the Act to make an interim order adjusting property interests. The Court must be satisfied it is appropriate, just and equitable to make such an order. This includes a cautious approach and satisfaction that any order made will not exhaust the power under s 79, the interim order is capable of reversal or adjustment at final hearing and the remaining property will be sufficient to meet the legitimate expectations of both parties (see Osferatu & Osferatu [2012] FamCA 408 at [41]; Medlow & Medlow (2016) FLC 93-692). The Court takes a “broad brush” approach to the parties’ financial circumstances, by identifying their property interests then considering s 79(4) matters, s 79(4)(e) and contributions (Carlson & Carlson (2019) FLC 93-934: Jabara & Gaber (2021) FLC 94-057).
I have set out in broad terms above the property interests of the parties, as they appear at present from the evidence, and noting that no balance sheet was provided by either party. It is otherwise difficult to identify in any comprehensive way the parties’ property interests. I have also expressed the view that I am unable to make an interim finding that the husband has vast undisclosed assets in Country YY, although he may have some unspecified shareholdings. The relationship was short. I accept the submission of the wife that she has a case based on contributions but it is difficult to discern their extent and detail.
But this simply exposes central problems in her property settlement claim. On any view the relationship lasted no longer than somewhere between two and three years. On the wife’s case, the husband made enormous initial contributions, in excess of $20 million. On her case his financial contributions during the relationship were also far greater than hers, taking account of E Street. Even if it be assumed in the wife’s favour that during the relationship the parties’ contributions were equal, where the marriage is relatively short, initial contributions can take on a critical importance (Anson & Meek (2017) FLC 93-816 at [181] (adopted by the Full Court in Grunseth & Wighton (2022) FLC 94-099 at [73]). A short marriage is also a factor which weighs in favour of an asset by asset approach to the property pool (Zagari & Habib [2010] FamCAFC 159 at [83]; Greer & Mackintosh [2013] FamCAFC 16 at [101]). This has some importance because although there is evidence of the husband’s shareholdings in Country YY, it is dated after separation and there is no evidence the wife made any contribution to companies or shares in Country YY in which the husband has an interest. It is not self evident at this stage of the proceedings that it would be just and equitable to make any property adjustment order in favour of the wife.
Although, as already explained, the wife’s case to impugn the registered mortgage in favour of the husband’s father is not presently supported by the probabilities of the evidence, I do not conclude at this stage her allegations about the mortgage have no reasonable prospect of success. In any event, the present injunctive relief protects half the proceeds of sale of E Street pending final determination or further order. On the basis of the current evidence, it is difficult to see how this would not be sufficient to satisfy any property adjustment in favour of the wife at final hearing in light of the short relationship. If the wife’s claims about the proceeds of sale of E Street and the mortgage are not successful and the proceeds do not form part of the property pool, the pool in Australia is modest, including her own property. As a result, if an order for property adjustment was made now as claimed by the wife there is a risk it could not be recouped, in whole or in part if necessary, at final hearing. I am not persuaded the wife has established that it would be proper, just and equitable to make any interim property adjustment in her favour, at least at present. The wife’s application will be refused.
LITIGATION FUNDING
The wife seeks as a further alternative the payment of a lump sum or $1,000 per week for litigation funding. The power to order litigation funding pursuant to s 117 of the Act is well recognised. The Court must be satisfied that there are circumstances justifying a costs order (s 117(2)). There should also be evidence of the wife’s likely legal costs in the litigation (Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 at [30]–[32]). Turning to the matters referred to in Zschokke, although the husband claims not to have a position of relative strength, I accept there is some limited evidence supporting the conclusion that he does and he appears to have some capacity to meet his own legal costs. The wife claims an inability to meet her legal costs. However, she gave no clear evidence about her likely future litigation costs. She annexed a cost disclosure agreement from her former solicitors dated 20 December 2022 which estimated her fees to be $500,000 (Wife’s affidavit filed 8 January 2024, Annexure “L”). Given its date and the fact that she is now represented by a different firm, this cost disclosure has limited weight.
She claims a need for extensive legal costs to fund investigations in Country YY, Country AB and Country RR. It is open to the Court to make an order for litigation funding where investigation is necessary and one party has control of a vast pool of assets. In Bing and Bing (2007) FLC 93-318 at 81,478 the Full Court observed:
… The very issues that need to be fully investigated namely the extent of the asset pool and the financial resources of the parties cannot be adequately investigation without the provision of appropriate funds. 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 be simply 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 with the litigation …
But according to the wife’s own evidence she has already undertaken significant investigations in Country YY at considerable expense. I am not persuaded the wife has demonstrated a need for further litigation funding for the same purpose. For example, it is open to the Court to find that indeterminate undisclosed property is held by one of the parties and to make such property orders without reference to the overall pool (see Weir and Weir (1993) FLC 92-338 at 79,593-4; Chang v Su (2002) FLC 93-117 at [70]). The wife can agitate arguments of that sort without further expensive investigation of assets in Country YY or Country RR over which this Court can make no enforceable property orders.
Sections 67 and 68 of the FCFCOA Act and r 1.04 of the Rules mandate an overarching purpose to facilitate the just resolution of disputes according to law as quickly, inexpensively, and efficiently as possible. Parties are obliged to conduct the proceedings consistently with the overarching purpose. In my view, in light of the evidence about the property pool in Australia, the short relationship and the limitations on the jurisdiction of the Court over assets in Country YY, an order for lump sum costs for litigation as sought by the wife, to be used to undertake further extensive investigation of assets in Country YY, is disproportionate to the possible outcomes in these proceedings.
CONCLUSION
I accept that on the basis of the wife’s Points of Claim the father is a necessary party. If the wife seeks to press for his joinder, his incarceration in Country YY may however pose a problem for service, but such difficulties can be addressed if they arise. Otherwise, I will dismiss paragraphs 1 to 9 of the wife’s application.
I certify that the preceding one hundred and twenty-one numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 28 February 2024
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