Verdon & Verdon

[2020] FamCA 824

FAMILY COURT OF AUSTRALIA

VERDON & VERDON [2020] FamCA 824

FAMILY LAW – EXPERT EVIDENCE – husband’s application to rely on an adversarial witness – application granted.

FAMILY LAW – PART PROPERTY – several prior orders already made – wife seeking $500,000 – husband agreeing to pay $348,288.63 – just and equitable to make order for $500,000 so as to enable wife to pay all legal costs previously incurred and a further sum.

FAMILY LAW – LITIGATION FUNDING – wife seeking a further amount on top of $500,000 – husband proposing a dollar-for-dollar order – review of authorities – held, litigation funding’s purpose is for meeting costs actually incurred and not for costs yet to be incurred – review of authorities – dollar-for-dollar order doubted – application for litigation funding order refused.

Evidence Act 1995 (Cth) s 135
Family Law Act 1975 (Cth) ss 74, 79, 80, 114, 117
Family Law Rules 2004 (Cth) rr 1.12, 15.42, 15.49(2), 15.51, 15.52
Statute of Gloucester 1278, 6 Edw 1

Atkins & Hunt [2018] FamCA 14
Bing & Bing [2007] FamCA 418
Breen v Breen (1990) 65 ALJR 195
Cachia v Hanes (1994) 179 CLR 403
Cao & Trong (No 2) [2019] FamCA 941
Casley & Casley (Costs) [2010] FamCAFC 189
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FLR 225
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Esdale v Schenk (2012) 46 Fam LR 547
Fitzgerald v Fish (2005) 33 Fam LR 123
G & T (2003) 32 Fam LR 101
Gabel & Yardley (2008) 40 Fam LR 66
Gronow v Gronow (1979) 144 CLR 513
Guild & Stasiuk [2020] FamCA 348
Hamod v New South Wales [2011] NSWCA 375
I Limited & Chester and Ors (Costs) [2011] FamCAFC 51
In the Marriage of Burridge (1980) 6 Fam LR 513
In the Marriage of Harris (1993) 16 Fam LR 579
In the Marriage of Hogan (1986) 10 Fam LR 681
In the Marriage of Poletti (1990) 15 Fam LR 794
In the Marriage of Ramsey (No 2) (1983) 8 Fam LR 1005
In the Marriage of Slapp (1989) 13 Fam LR 158
In the Marriage of Wilson (1989) 13 Fam LR 205
In the Marriage of Zschokke (1996) 20 Fam LR 766
Iphostrou & Iphostrou [2011] FamCA 20
Jamine & Jamine (Costs) [2010] FamCAFC 191
Judd & Treasure [2018] FamCA 50
Klearchos & Klearchos [2015] FamCAFC 217
Lindon v Commonwealth (No 2) (1996) 70 ALJR 541
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Marshall v Director-General, Department of Transport (2001) 205 CLR 603
McLean v McLean (unreported) 30 January 2003
McNamara (McGrath) v Consumer, Trader and Tenancy Tribunal (2005) 221 CLR 646
Metwally v University of Wollongong (1985) 59 ALJR 481
Mullane v Mullane (1983) 158 CLR 436
New Zealand Flax Investments Ltd v Federal Commissioner of Taxation (1938) 61 CLR 179
Nguyen v Nguyen (1990) 169 CLR 245
Ogden Industries Pty Ltd v Lucas [1970] AC 113
Oscar & Traynor [2008] FamCAFC 158
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
Paul & Kylie (Costs) [2010] FamCAFC 190
Penfold v Penfold (1980) 144 CLR 311
Quayle & Perceval [2018] FamCA 664
Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184
Salvage & Fosse [2020] FamCAFC 144
Selena & Montez [2017] FamCA 583
Shelbourne v Shelbourne (2019) 60 Fam LR 183
Stanford v Stanford (2012) 247 CLR 108
Stephens & Stephens and Anor (Enforcement) (Costs) [2010] FamCAFC 172
Strahan v Strahan (Interim Property Orders) (2009) 42 Fam LR 203
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Tamaniego & Tamaniego (Costs) [2011] FamCAFC 30
Tang & Fei (Costs) [2011] FamCAFC 29
Taylor v Taylor (1979) 143 CLR 1
Thorne v Kennedy (2017) 263 CLR 85
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259
Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598
Wilkie v Brown [2016] NSWCA 128

APPLICANT: Mr Verdon

RESPONDENT: Ms Verdon

FILE NUMBER: MLC 12735 of 2017

DATE DELIVERED: 30 September 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Wilson J

HEARING DATE: 7 September 2020

DATE OF FINAL SUBMISSIONS: 24 September 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms M. Vohra SC

SOLICITOR FOR THE APPLICANT: Accord Family Law

COUNSEL FOR THE RESPONDENT: Ms R. Stoikovska SC

SOLICITOR FOR THE RESPONDENT: Schembri & Co Lawyers

Orders

1. On or before 4pm on 7 October 2020 the parties are to bring in an agreed minute that gives effect to these reasons. 

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Verdon & Verdon has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 12735  of 2017

Mr Verdon

Applicant

And

Ms Verdon

Respondent

REASONS FOR JUDGMENT

Introduction

1. This proceeding was commenced in December 2017.  The trial date previously fixed for 31 August 2020 was vacated by consent on 7 August 2020 and the proceeding is now listed for trial on 26 April 2021 before me.  Despite this proceeding moving through its interlocutory phases at a leisurely pace and despite my endeavours to have the case tried as soon as possible, the parties continue to present obstacles to that end, one of which is illustrated in the debate before me on 7 September 2020.

2. Two seemingly innocuous applications came before me yet they took a whole day in debate for reasons I found difficult to discern.  The applications were –

   a)the husband’s application for leave to rely on the report of an expert who had not been appointed as a single expert, which application the wife opposed; and

   b)the wife’s application for litigation funding and a part property settlement, which application the husband opposed.

Synopsis

1. For the reasons that follow the following should apply –

   a)the husband has leave to rely upon the report of Mr B;

   b)the wife’s application for a partial property order under s 79 of the Family Law Act is granted to the extent of $500,000;

   c)the wife’s application for litigation funding should be refused.

Relevant factual setting

1. The husband, as applicant, is currently 57 years of age and the wife, as respondent, is 55 years of age.  The date on which they commenced living together was differently given by them (she contending 2004 while he contended February 2005), they married in early 2008 and finally separated in August 2017.  The wife has pressed for an equal division of assets and liabilities.[1]  The wife has a daughter from a previous relationship.  The mother and her daughter currently live in the former matrimonial home.  The husband currently lives in an apartment in a complex developed by the parties.  The husband has two children from a previous marriage.  All children are currently aged between 28 and 25.

   [1] Paragraph 2 of the wife’s response to the husband’s initiating application filed 20 December 2017.

2. The legal and equitable interests in property that fall to be divided in this case include shares in companies, interests in trusts and real estate.  The real estate concerned is the former matrimonial home and an apartment in the apartment complex they developed.  The trusts involved are –

   a)C Trust, the trustee of which and appointer being the wife;

   b)Verdon Superannuation Fund of which the parties are members; and

   c)D Superannuation Fund of which the husband and all three children are members.

3. Several companies are involved in this case.  They include –

   a)E Pty Ltd in respect of which the wife as trustee of the C Trust owns shares;

   b)F Pty Ltd in which the parties are equal shareholders and of which they are directors; and

   c)H Pty Ltd of which the husband is the sole director, secretary and shareholder.

4. H Pty Ltd is a co-owner of the apartment complex.  It is also the holder of 50% of the issued shares in the capital of G Pty Ltd.  The other 50% shareholding in G Pty Ltd is held by G PLC, a UK company.  The wife stated in her affidavit made 19 December 2017 that available information in relation to H Pty Ltd’s financial circumstances revealed that H Pty Ltd’s shares in G Pty Ltd were valued at almost $5,000,000.  The wife stated that such an attribution of value was conservative as those shares were likely to be worth considerably more.

5. The wife estimated that the former matrimonial home was likely to be valued at about $2,700,000 as at December 2017.

6. Relevantly to the application concerning expert evidence, by application in a case filed on behalf of the wife on 20 December 2017 the wife sought the appointment of single expert witnesses to value –

   a)the apartment complex;

   b)the former matrimonial home; and

   c)H Pty Ltd’s shares in G Pty Ltd.

7. The husband made an affidavit on 22 January 2018 in which he deposed to certain matters relating to property interests.  The following is a brief recital of the more important matters that arose from the husband’s affidavit –

   a)his previous marriage ended in divorce in late 2005;

   b)he has two children with his first wife, an adult son who has worked for a major international firm and an adult daughter who is studying healthcare;

   c)his first wife retained their former matrimonial home in Suburb J;

   d)between 2006 and 2011 the applicant, the respondent and the respondent’s daughter lived in a home in Suburb K funded by the applicant and registered solely in his name;

   e)trusts with which the husband was associated owned real property in Suburb L generating rental income for the benefit of the husband;

   f)the two Suburb L properties were sold during 2008 and 2009 deriving $6.4m to which the husband’s entities were entitled to half, namely $3,200,000;

   g)the Suburb K property was sold in 2011 for $745,000;

   h)the former matrimonial home was purchased for $2,220,000 in March 2012 using funds provided solely by the husband;

   i)the former matrimonial home was registered in the respondent’s name on advice “to attempt to protect assets”, so the husband stated;

   j)real estate owned in Suburb Y was sold for $555,000 in 2014, the funds being applied to the development of the apartment complex in which the applicant currently resides;

   k)H Pty Ltd purchased the land on which the apartment complex was constructed for $1.8m in 2009;

   l)The husband said he undertook the entirety of the development of the apartment complex by H Pty Ltd and he said the respondent was not interested in that activity; and

   m)H Pty Ltd’s development of the apartment complex was almost complete when the parties separated in 2017.

8. In his affidavit the husband provided estimates of the value of assets in the wife’s name or possession and of the value of assets in his sole name.  Based on those estimates, the husband said –

   a)the value of assets in the wife’s name or possession was $3,985,413;

   b)the value of assets registered in the husband’s sole name was $12,534,209; and

   c)superannuation of both parties was $723,474.

9. The husband tallied the values of assets in his name and those assets in the wife’s name and deduced that approximately 75% was in his favour and approximately 25% was in the wife’s favour.

10. On 25 January 2018 this proceeding was heard before Johns J who adjourned all applications to 1 February 2018.  Slightly earlier, on 19 January 2018 the wife amended her application in a case to seek spousal maintenance in the weekly amount of $5,625 and an interim property settlement in the sum of $300,000.

11. On 1 February 2018 Johns J further adjourned all applications to 13 February 2018.

12. On 13 February 2018 consent orders were made by Johns J.  Those orders included –

    a)weekly spousal maintenance payments from H Pty Ltd in favour of the wife of $2,000;

    b)a part property settlement in favour of both parties in the sum of $125,000;

    c)the appointment of M Valuers as a single expert to value the apartment complex; and

    d)the appointment of Mr N of O Pty Ltd as a single expert to value the parties’ interests in H Pty Ltd, F Pty Ltd and C Trust.

13. On 19 July 2018 the wife made a further affidavit.  In it she set out the valuations given by M Valuers and O Pty Ltd as follows –

    a)H Pty Ltd has an estimated value of between $14,100,000 and $16,200,000;

    b)the apartment complex has an estimated value of $11,450,000 if strata titled and $9,350,000 if not;

    c)H Pty Ltd’s half interest in G Pty Ltd is estimated to be $7,000,000;

    d)the former matrimonial home is estimated to be valued at $3,550,000;

    e)F Pty Ltd has an estimated value of $141,000;

    f)H Pty Ltd owes the husband by way of secured indebtedness the sum of $1,123,209; and

    g)superannuation entitlements are estimated to be $805,000.

14. The wife said she needed additional spousal maintenance as she is unable to meet her expenses with $2,000 per week.  She said her current weekly expenses run at $4,395 per week.  She said she suffers a shortfall of $2,395 each week when she deducts her actual expenses from the $2,000 she receives.

15. In her application in a case sealed by the court on 24 July 2018, the wife sought three main orders.  They were –

    a)Payment of spousal maintenance of $4,395 per week;

    b)$200,000 by way of litigation funding; and

    c)$50,000 to be characterised by the trial judge.

16. In support of her three applications mentioned in the immediately preceding paragraph, the wife’s solicitor made an affidavit on 19 July 2018.  The following were the more important matters that arose from his affidavit –

    a)the wife had paid over $55,000 to the deponent’s firm in legal fees referrable to a mediation;

    b)the wife’s previous solicitors rendered fees to the wife in the sum of $112,259.94 for legal services between August 2017 and March 2018;

    c)to the date of the making of the affidavit, the wife paid her previous solicitors, her current solicitors and her accountant the sum of $197,381.82 in connection with this litigation;

    d)the wife’s current solicitors estimated they would render fees to trial of nearly $300,000;

    e)the deponent stated that his firm’s fees in respect of which the wife seeks $200,000 may very well be up to $300,000;

    f)the wife is not eligible for legal aid; and

    g)the deponent proposes to retain silk and junior counsel and a forensic accountant.

17. Aside from whatever else may emerge from that affidavit, the wife has been put to extraordinarily high legal expenses in a very short period of time.

18. In response to the wife’s proposal for litigation funding, the husband proposed a different regime that involved increasing H Pty Ltd’s borrowings by $500,000.  It involved applying the additionally borrowed amount of $500,000 as to $250,000 to the wife and the same sum to the husband, each amount to be characterised as a part property settlement.  The husband supported his response to an application in a case sealed 30 August 2018 with his affidavit made 1 August 2018.  Relevantly paraphrased, he said the following –

    a)he disagreed that the wife should receive $250,000 as a part property settlement and a further $50,000 uncharacterised;

    b)he said he was willing to consent to payment of $300,000 so long as that entire sum was characterised as a part property settlement and he received a part property settlement of the same amount;

    c)he said his legal fees were likely to be the same as the respondent’s for a full trial;

    d)where those sums ($600,000) will come from is a vexed question;

    e)H Pty Ltd’s rental income is between $24,000 and $32,000 per month;

    f)from that monthly income H Pty Ltd must pay the respondent’s monthly maintenance of $8,660, taxes estimated to be $11,200 and loan repayments estimated to be $22,000;

    g)funding of the payment the wife seeks could be achieved by H Pty Ltd incurring additional borrowings or by the wife incurring borrowings secured against the former matrimonial home;

    h)he seeks an order dismissing the wife’s spousal maintenance increase;

    i)the net pool in this case, with superannuation is almost $19,000,000;

    j)O Pty Ltd’s valuation of H Pty Ltd fails to take into account that the husband does not have a controlling interest in G Pty Ltd in respect of which O Pty Ltd has estimated a discount on the value of the husband’s G Pty Ltd shares could apply;

    k)capital gains tax ramifications will arise if the husband is required to procure the sale of shares in G Pty Ltd, or the apartment complex;

    l)the wife is able to work for E Pty Ltd; and

    m)no equity exists in the apartment complex.

19. On 5 September 2018 Johns J heard a consent application, pursuant to which Johns J ordered each party to execute all necessary documents to cause H Pty Ltd to extend its existing loan facility with Westpac thereby borrowing an additional $600,000.  Of that additional amount, the parties agreed to disburse –

    a)$300,000 to the wife as a part property payment; and

    b)$300,000 to the husband as a part property payment.

20. That was the second part property settlement.

21. Johns J made no order for the case to next return before a judge or registrar, which may have added to the delay in getting this case to trial.

22. On 18 March 2019 the Deputy Chief Justice made orders in the nature of disclosure for the most part and otherwise adjourned unresolved matters for directions on 8 August 2019.

23. The Deputy Chief Justice heard the husband’s application in a case filed 25 June 2019 on 8 August 2019.  More consent orders were made for O Pty Ltd to undertake a single expert valuation of a variety of entities.  They were identified in paragraph 2(a)-(e) of the orders of McClelland DCJ made on 8 August 2019.  Mr N of O Pty Ltd was the agreed single expert valuer.  The parties also agreed to appoint Mr P of M Valuers as a single expert to value the apartment complex and the former matrimonial home.  The parties also agreed to appoint Mr Q of R Pty Ltd as a single expert in relation to the likely costs of subdividing the apartment complex.

24. The Deputy Chief Justice entertained the husband’s application for permission to retain Mr N of O Pty Ltd to value E Pty Ltd as well as H Pty Ltd as at August 2017.  If the husband elected to retain Mr N to do that the cost was to be at the husband’s expense. 

25. This case then came into my docket and I assumed control of its management thereafter.  On 6 September 2019 consent orders were made for the engagement of Warren Joel as a single expert to value personal effects, mainly in the nature of jewellery.  The proceeding was listed for directions on 3 February 2020.  Earlier than that day, on 16 January 2020 the parties emailed my chambers with agreed variations to dates previously ordered, none of which was substantial.  That led to a chambers order being made on 17 January 2020. 

26. On 4 February 2020 I gave leave for the husband to rely on the affidavit of Mr T of G PLC, made 3 February 2020.

27. The trial of this proceeding should have commenced on 2 March 2020.  The parties were not ready to commence at trial on that date.  I called the parties back on 10 February 2020.  Their counsel told me the case was not ready.  I vacated the trial date of 2 March 2020 on 10 February 2020.  I refixed the trial for 31 August 2020.  Junior counsel for the applicant and Ms Stoikovska SC for the respondent told me they wished to debate the question of relying on Mr N’s evidence in his capacity as an adversarial witness rather than as an agreed single expert.  I fixed 23 April 2020 for the hearing of that issue.  I also made orders in the nature of further trial directions. 

1. By mid-April 2020 the COVID pandemic had impacted trials in this court.  As a result, on 22 April 2020 (that is to say the day before the day allocated for the hearing of the question about Mr N’s status as an adversarial witness) I called over this case and adjourned the further hearing of it to 14 May 2020.  On 22 April 2020 consent orders were made after the solicitors for the parties wrote about the wife’s application for an adversarial witness.  In the preamble to my orders, the following appears –

   UPON THIS PROCEEDING being listed for mention on 14 May 2020 by orders made by me on 22 April 2020 AND UPON THE PARTIES applying to chambers with a minure of consent orders AND UPON BEING INFORMED that if the husband consents to the wife’s application for an adversarial expert, the husband is at liberty to nominate whether Mr N is declared the husband’s adversarial expert and in the event that the husband makes such a nomination, the rules pertaining to single expert witnesses shall no longer apply and the husband thereafter is responsible for Mr N’s costs together with the costs of Mr N’s updated report in paragraph 4 herein AND UPON BENG FURTHER INFORMED that the parties are presently considering the question of arbitration as a means of dispute resolution, and will inform my chambers whether they agree to the proceeding being arbirtrated I ORDER BY CONSENT as follows –

   1.Paragraph 3 of my orders made on 10 February 2020 (“February 2020 orders”) is discharged.

   2.By 4pm on 13 May 2020 the wife file and serve any application in a case seeking to reply upon an adversarial expert in relation to the valuation completed by Mr N of O Pty Ltd dated 3 February 2020 (“wife’s application”), such application to include an affidavit containing the report completed by her proposed adversarial expert.

   3.By 5pm on 13 May 2020 the husband shall, through his lawyers, provide to Mr N the following –

   a.a copy of the wife’s application and all supporting affidavit material;

   b.all material provided to and relied upon by the proposed adversarial expert;

   cthe proposed adversarial expert’s initial report of 4 February 2020; and

   d.financial accounts for G Pty Ltd for the financial year ending 31 March 2020, together with updated budget forecasts for the financial year ending 31 March 2021.

   4.        By 5pm on 13 May 2020 the parties shall jointly instruct –

   a.Mr N to complete a further updated single expert valuation report in relation to all entities in which the parties have an interest including but not limited to H Pty Ltd ACN … (being the owner of G Pty Ltd), F Pty Ltd, D Superannuation Fund, Verdon Superannuation Fund and the C Trust the husband to pay the costs of updating Mr N’s valuation at first instance, the wife’s half cost of the valuation to be adjusted from her final property entitlements; and

   b.M Valuers to complete updated valuations of all real estate previously valued by M Valuers at joint expense, the husband to pay the costs of updating the M Valuers valuation at first instance, and the husband have liberty to seek the wife’s half cost of the valuation be adjusted from her final property entitlements.

   5.The husband is liberty to consider the wife’s application and inform the wife through her solicitors in writing within seven business days of receipt of the wife’s application and supporting evidence if the husband consents to the wife’s application for the appointment of an adversarial expert.

   6.In the event that the parties reach agreement that the wife is to have leave to adduce evidence from an adversarial expert, then by 5pm on 20 May 2020, the parties jointly in writing advise chambers that the parties have reached agreement in relation to the appointment of the wife’s proposed adversarial expert, seeking that his Honour consider and if appropriate, make orders in chambers pertaining to the appointment of the wife’s adversarial expert pursuant to r 15.49 of the Family Law Rules.

   7.In the event the event that there is agreement on the appointment of adversarial expert, the parties shall do all things necessary to each instruct the wife’s proposed adversarial witness and Mr N confer in relation to their respective views of the values of the entities, and prepare to provide to the parties, by 5pm on 26 June 2020, a memorandum addressed to the Honourable Justice Wilson setting out the following –

   a.        the matters upon which they agree and disagree;

   b.in relation to matters of disagreement, why each expert maintains that his opinion is to be preferred over the opinion of the other; and

   c.an identification of a substantial body of opinion held by the wife’s adversarial expert which is contrary to that held by Mr N (if any).

   8.In the event that the parties do not agree that the wife is to have leave to adduce evidence from the wife’s proposed adversarial expert, then is matter be listed for a half day interim hearing, to be heard by video-link on Microsoft Teams on a date to be fixed prior to 5 July 2020.

   9.The husband is at liberty to use video-link for his witness from Mr T for the purposes of his cross-examination.

   10.Each party has liberty to apply to my chambers at short notice for a telephone conference in relation to the matters subject of these orders.

   11.      Paragraph 4 of my February 2020 orders is discharged.

   12.All other orders in the February 2020 orders remain in full force and effect.

2. On 7 August 2020 the parties again appeared before me.  In opening the debate Ms Stoikovska SC who represented the wife told me –

   a)joint experts were to have produced a record of a conference held on 26 June 2020 but they failed to do so;

   b)the question of retaining an adversarial witness had been flagged;

   c)the trial date of 31 August 2020 was in jeopardy; and

   d)the parties needed one day to debate before me all issues concerning whether an adversarial witness should be allowed to give evidence.

3. On 7 August 2020 I made orders vacating the trial previously fixed to proceed on 31 August 2020 and re-fixed the trial for six days commencing on 26 April 2021, there being no earlier openings in my docket capable of accommodating a six day trial.  Certain procedural orders were made requiring outlines of argument to support the contested interlocutory application brought by the husband pursuant to his application in a case dated 6 August 2020 that I directed be heard on 7 September 2020.  The parties duly complied in filing their case outlines by the times stipulated. 

The sum of the expert evidence to that point

1. By 7 September 2020 a burgeoning volume of expert evidence had emerged in this litigation.  It was as follows –

   a)the affidavit of Mr U made 20 August 2020;

   b)the joint memorandum of experts dated 22 July 2020;

   c)the expert accountant’s report prepared by Mr B of V Accountants dated 31 July 2020;

   d)the valuation report of the apartment complex of M Valuers Pty Ltd dated 3 May 2018 exhibited to the affidavit of Mr P sworn 16 July 2019;

   e)the affidavit of Mr N affirmed 15 July 2019 exhibiting the report of O Pty Ltd made 11 May 2018;

   f)the affidavit of Mr W affirmed 3 August 2020 to which he exhibited his report dated 4 May 2020;

   g)the affidavit of the respondent made 12 May 2020 to which she exhibited correspondence in February 2020 between O Pty Ltd and Schembri & Co and between X Accountants and Schembri & Co; and

   h)the single expert affidavit of Mr N affirmed 3 September 2020 exhibiting the O Pty Ltd report dated 3 September 2020.

2. Both parties filed applications in a case in relation to the issue of expert evidence.  They sought very different results.  In the husband’s application in a case dated 7 August 2020 he sought the following orders –

   1.Pursuant to rule 15.52 of the Family Law Rules 2004 (“the Rules”) the husband be permitted to adduce evidence in from Mr B, V Accountants as the husband’s adversarial expert.

   2.The husband will immediately do all things as may be required to provide to the single expert Mr Phil Mr N of O Pty Ltd (“Mr N”) the report of Mr B of 28 July 2020 (“Mr B report”).

   3.The wife will immediately do all things as may be required to provide to her adversarial expert Mr W of X Accountants (“Mr W”) the report of Mr B.

   4.Pursuant to the Rules, the parties shall immediately instruct Mr B, Mr N and Mr W confer in relation to their respective views of the values of the entities and prepare to provide to the parties as soon as possible, no later than by 5.00pm within 7 days of the date of these orders a memorandum addressed to the Honourable Justice Wilson setting out the following –

   a.        The matters upon which they agree and disagree;

   b.In relation to matters of disagreement, why each expert maintains that his opinion to be preferred over the opinion of the other; and

   c.A identification of a substantial body of opinion held by the wife’s adversarial expert and the husband’s expert which is contrary to that held by Mr N (if any) (“the joint memorandum”).

   5.The orders of 4 February regarding the filing of material be and are hereby discharged and this Honourable Court make orders as to the filing of material as this Honourable Court deems fit including:

   a.        The husband’s filing of updated material;

   b.        The wife’s filing of material

   c.        The husband’s filing of material in reply;

   d.        The filing of case outline material;

   e.        such other orders as this Honourable Court deems fit.

3. In the wife’s application in a case dated 12 May 2020 she sought leave to rely on the report of 4 May 2020 from Mr W.  Her application was in the following terms –

   1.The Respondent Wife is permitted to adduce evidence from and to tender an expert witness report dated 4 May 2020 prepared by Mr W of X Accountants Australia as to the value of the following entities:

   a.        H Pty Ltd;

   b.        F Pty Ltd;

   c.        C Trust;

   d.        Verdon Superannuation Fund; and

   e.        D Superannuation Fund.

4. According to the joint memorandum of experts dated 22 July 2020, six expert reports have been prepared in this case.  They were listed as follows –

   a)the 11 May 2018 report of Mr N;

   b)the 20 January 2020 report of Mr N;

   c)the 3 February 2020 report of Mr N;

   d)the 26 June 2020 report of Mr N;

   e)the 3 February 2020 report of Mr W; and

   f)the 8 July 2020 report of Mr W.

5. The affidavit of Mr U affirmed 20 August 2020 did not feature in the experts’ joint memorandum.

6. In the first tranche of written submissions of senior counsel for the husband, Ms Vohra SC indicated she relied on several sources of evidence in support of her client’s application.  Those were –

   a)the husband’s affidavit filed 7 August 2020;

   b)the husband’s affidavit filed 31 August 2020;

   c)his trial affidavit insofar as he verified the chronology in Ms Vohra’s recital of relevant chronological occurrences in her case outline; and

   d)the affidavit of Mr N made 3 September 2020 exhibiting his 26 June 2020 report.

The husband’s 7 August 2020 affidavit

1. In paragraph 1 of that affidavit the husband stated that he made his affidavit in support of his application for the appointment of Mr B of V Accountants as the husband’s adversarial witness.  The husband provided a very useful factual narration against which his application was set.  The following is a distillation of the matters to which he deposed in his affidavit filed 7 August 2020 –

   a)Mr N was appointed in late 2017, jointly by the wife and the husband as a single expert to complete a valuation of assets relevant to their matrimonial asset pool;

   b)the wife subsequently revealed that Mr W of X Accountants (“X Accountants”) had undertaken tasks preliminary to preparing material with a view to becoming the wife’s adversarial witness in opposition to Mr N’s February 2020 report;

   c)on 3 February 2020 the wife, through her counsel informed the court that the proposed expert would take up to six weeks to prepare his report;

   d)in consequence, the trial of this proceeding was fixed for 31 August 2020 and a directions hearing was scheduled in May 2020;

   e)on 14 May 2020 orders were made for the wife to file her application for leave to rely on her own adversarial witness and for Mr N to update his January 2020 report;

   f)in compliance with this court’s May 2020 orders, the parties instructed Mr N to update his report;

   g)Mr P of M Valuers was requested to update his valuation reports on real estate;

   h)Messrs Mr N and Mr W said they needed the updated report of Mr P in order to finalise their reports;

   i)by late June 2020 Mr P had not provided his updated real estate valuation so Mr N provided his updated report to the parties that became his June 2020 report;

   j)Mr N postulated two valuations of the entities he was requested to value and on two differing hypotheses he concluded that the appropriate valuations were $16,668,000 or $14,514,000;

   k)the husband took the view that Mr N needed to be questioned about –

   i)the multiple of any discount if a minority discount were to be applied to the G Pty Ltd valuation; and

   ii)comparable sales evidence relating to the valuation of G Pty Ltd;

   l)Mr W’s updated report was provided to the husband’s solicitors on 8 July 2020;

   m)it revealed valuations on two scenarios, namely –

   i)under scenario 1 the low valuation was $22,676,000, the mid valuation was $24,158,000 and the high valuation was $25,640,000; and

   ii)under scenario 2, the low valuation was $20,626,000, the mid valuation was $22,108,000 and the high valuation was $23,590,000;

   n)the husband undertook a comparison between the Mr N valuations and the Mr W valuation that revealed still further variant valuations, namely –

   i)according to Mr N, in scenario 1 the mid valuation was $16,668,000 and in scenario 2 the mid valuation was $14,514,000;

   ii)according to Mr W, in scenario 1 the mid valuation was $24,158,000 and in scenario 2 the mid valuation was $22,108,000;

   o)Mr B prepared a report made July 2020;

   p)the husband compared the reports of Mr N, Mr W and Mr B and the valuations stated by each under scenario 1, namely –

   i)Mr N – $16,668,000;

   ii)Mr W – $24,158,000; and

   iii)Mr B – $16,876,000;

   q)the husband compared the reports of Mr N, Mr W and Mr B and the valuations stated by each under scenario 2, namely –

   i)Mr N – $14,514,000;

   ii)Mr W – $22,108,000; and

   iii)Mr B – $14,826,000.

   r)the differences in valuations between the three is mainly attributable to the valuations each gives to G Pty Ltd, although Mr B and Mr N are more closely aligned than is Mr W with Mr B and Mr N;

   s)the explanation for the differences in their valuations relates to –

   i)balance sheet items where Mr N excludes tax credits and bank balances whereas Mr B includes those items;

   ii)Mr N adopts $3,500,000 whereas Mr B adopts $3,000,000 for future maintainable earnings;

   iii)so far as the multiple on future maintainable earnings is concerned, Mr N adopts a range between 3.5 to 4 whereas Mr B adopts a range between 3 and 3.5; and

   iv)so far as the minority discount was concerned in relation to the G Pty Ltd shares, such discount being necessitated by reason of the husband’s lack of control over those shares, Mr N adopted a discount of between 15% and 20% if the court finds it appropriate to apply one whereas Mr B said it was appropriate to apply the discount and he adopted a range of between 25% and 30%.

2. The husband said the differences he identified arising out of the matters addressed in the paragraph mentioned immediately above was in the order of $8m.

3. The husband said that Mr B had identified what he perceived to be major flaws to the conclusions reached by both Mr W and Mr N.  That led the husband to state two major matters, which he expressed in the following terms –

   (a)If I am not able to adduce his evidence and have this before the Court then I will be relying on his opinion to challenge both Mr N and Mr W. If his criticisms are accepted by the Court and Mr N and Mr W’s conclusions are undermined, and if Mr B is not able to be an expert witness in these proceedings, the Court will have no reliable expert evidence as to the value of the entities upon which it can make findings; and

   (b)Further, all the experts base their conclusions on the figures for G PLC on the March 2020 figures (March 2020 being the end of the UK financial year) and budgets for G Pty Ltd for 2021 and 2022. As such if the trial cannot proceed in August 2020, the reports will not be out of date or require revision for a later trial date.

4. It was against that factual backdrop that the husband brought his application to rely on the evidence of Mr B notwithstanding the existence in this case of a bountiful amount of single expert evidence of the valuation of H Pty Ltd.

The wife’s affidavit made 19 August 2020

1. In opposing the husband’s application the wife made an affidavit on 19 August 2020.  It is readily apparent from that affidavit that the wife applied a high-level examination of the totality of the evidence available from Mr N, Mr W and Mr B.  So far as Mr N’s evidence was concerned, she distilled the whole of it by stating that Mr N valued entities contained within the matrimonial pool of assets and liabilities to be between $14,515,000 and $16,668,000 whereas Mr W, upon undertaking the same examination said the values were between $22,676,000 and $25,640,000.  She did not address the Mr B evidence at all.  That seemed to me to be a significant omission in her evidence.  On her behalf Ms Stoikovska SC submitted that the wife will be significantly prejudiced if the husband is granted the leave he seeks in relation to the Mr B evidence.  Ms Vohra SC submitted that no details were proffered of the prejudice the wife asserts she will suffer.

2. It must not be overlooked that the wife herself sought orders enabling her to adduce evidence from an adversarial witness.  It must also be kept in mind that the trial fixed for 2 March 2020 was aborted by reason of the wife’s foreshadowed application for leave to her to rely on her own adversarial witness.

Relevant legal principles

1. The evidence in this case of an accountancy nature, of a share valuation nature and that relating to real estate valuation is squarely “expert evidence”. As such, it attracts the application of Part 15.5 of the Family Law Rules as well as evidentiary principles espoused in such cases as Makita (Australia) Pty Ltd v Sprowles[2] in the Court of Appeal of the Supreme Court of New South Wales and Dasreef Pty Ltd v Hawchar[3] in the High Court of Australia. 

   [2] (2001) 52 NSWLR 705.

   [3] (2011) 243 CLR 588.

2. The purpose of Part 15.5 is explained in Rule 15.42. It is useful to record the provisions of that rule, in terms –

   Purpose of Part 15.5

   The purpose of this Part is:

   (a)to ensure that parties obtain expert evidence only in relation to a significant issue in dispute;

   (b)to restrict expert evidence to that which is necessary to resolve or determine a case;

   (c)to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness;

   (d)to avoid unnecessary costs arising from the appointment of more than one expert witness; and

   (e)to enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if necessary in the interests of justice.

1. There can be no doubt, at least in my mind, that for the purposes of Rule 15.42(a) the expert evidence under consideration in this application relates to “a significant issue in dispute”.  In this case I have formed the view, for the purposes of Rule 15.42(c), that the interests of justice will in fact be compromised if the accountancy evidence in this case is restricted to a single expert witness.  I am also of the view that the interests of justice are best served for the purposes of Rule 15.42(e) that the husband should be permitted to retain Mr B and to adduce evidence from Mr B in the form of evidence that is otherwise than evidence from a single expert witness.  Further, for the purposes of Rule 15.42(d) I take the view that in this case questions of the costs of obtaining expert evidence is not “unnecessary” nor is it desirable or necessary to prefer only evidence to be given in this case by a single expert.

2. The complexities of fact, and with that the commensurate monetary consequences, of confining expert evidence in this case to single expert evidence is too great to refuse the husband the leave he seeks in his application to rely on his own expert evidence.

3. That then invited consideration of Rule 15.51. That rule requires a party to apply for the court’s permission to adduce evidence at a trial from an expert witness, not being a single expert witness. Mr B is not a single expert witness. Leave is required before his evidence may be adduced. Rule 15.52(2) sets out the steps anterior to the grant of leave that an applicant must show for leave to be granted to rely on the expert witness. Here, in my view the steps prescribed by Rule 15.52(2) have been addressed. Relevantly, the husband deposed to the wife refusing her consent to rely on the evidence of Mr B.

4. Rule 15.52(3) sets out the considerations that the court may (importantly, not “must”) take into account before permission is given to grant leave.  None is mandatory.  None is determinative in resolving the question whether to grant the relevant permission under Rule 15.51(1).

5. Of the more important matters raised by Rule 15.52(3), sub-rule (d) is of critical importance to the facts of this case. The sums in issue are very large. The accountancy issues and the relevant principles on which the witnesses Mr N, Mr W and Mr B are proceeding are seriously complex. On one reading of the reports of each, it can be sensibly contended that the points raised by the husband are very much in issue, namely, whether adequate consideration has been given by Mr W and Mr N to –

   a)balance sheet items;

   b)future maintainable earnings;

   c)the appropriate multiple on future maintainable earnings; and

   d)the appropriate discount due to lack of control over the G Pty Ltd shares.

6. It is apparent that the single experts already selected have produced conclusions with very substantial variances. The utility of their evidence given those variables is thereby diminished especially having regard to their considerations of the matters set out in the immediately preceding paragraph. Further, their evidence is of less utility where they have, or may have failed to properly address appropriate considerations such as those to which the husband refers and which are mentioned in the four alphabetical subparagraphs in the paragraph immediately above. I take the view that Mr B is more than adequately possessed of specialised knowledge to enable him to give the expert evidence he has addressed in his reporting for the purposes of Rule 15.52(3)(f). Lest it be necessary to say as much, his evidence will be essential having regard to the “value, complexity and importance of the case”.

7. In her submissions opposing the grant of permission sought by the husband to rely on Mr B’s evidence, Ms Stoikovska SC raised several issues that must be considered by me.  Among them were the following –

   a)pursuant to s 135 of the Evidence Act she said the report should not be allowed because its prejudicial value outweighs its probative value;

   b)the costs and delay occasioned to the wife by letting the impugned evidence in was a significant factor;

   c)the differences between the values attributed by Messrs Mr N and Mr B is no more than $200,000[4];

   d)it is a peculiar position for the husband to adopt of propounding the Mr N report when concurrently the husband wishes to adduce evidence in opposition to it;

   e)the amount of $200,000 in a pool of over $21m represents a difference in the order of 1%;

   f)if permission is granted to rely on the new report, the case will be lengthened and costs will increase;

   g)it is relevant to focus on the requirement in Rule 15.49(2) that makes provision for there being a substantial body of opinion contrary to any opinion given by the single expert witness;

   h)in applying that rule there is no substantial body of opinion contrary to that given by the single expert; and

   i)it is also relevant to have regard to the statement in Rule 15.49(2) that another expert knows of matters not known to the single expert witness that may be necessary for determining the issue or some other special reason exists for adducing evidence from another expert.

   [4] If correct, which in my view it was not, such a submission might have been powerful.

8. In debate with Ms Stoikovska SC a deal of the exchange was directed to the strictures of Rule 15.51 when compared to Rule 1.12 under which the judge has power to apply the rules with immense flexibility.  The debate was recorded in the following terms –

   HIS HONOUR:   That seems to be a pretty well-reasoned construction of that rule.  Okay.  Thank you.  The second question goes to this:  in the – yes, there it is – 15.51(1), there’s a mandatory requirement that says a party must apply for the court’s permission to tender a report other than a single expert.

   MS STOIKOVSKA:   Yes.

   HIS HONOUR:   Okay.  That appears to impose a mandatory obligation.  As to how one…

   MS STOIKOVSKA:   Yes.

   HIS HONOUR:…makes that application and the matter is to be taken into account, it unfolds in other aspects of that rule. But how does one square up that mandatory obligation with the complete blank canvas as to discretion given by rule 1.12, which allows the rule to dispensed with any aspect of the Rules, whether on its own initiative or otherwise, the court takes a view that it’s appropriate to do so? In other words, it seems to – I just don’t understand how those two rules sit comfortably next to one another. There’s a mandatory requirement in 15.51, yet there’s an overall overarching discretionary requirement in 1.12 which seems to me to be consistent with the way rules are dealt with by Supreme and Federal Courts across the country. But I would be very grateful for your submissions on that, if you can help.

   MS STOIKOVSKA: Your Honour, I must confess that I’m certainly not in a position to – or certainly I don’t know of one, in truth, and I’m not in a position to cite any case where that apparent almost inconsistency, if you like, is – or certainly tension – has been addressed. But I would have to admit to your Honour that whether it affects my client or not, certainly on other and previous occasions when I have had matters in respect to other provisions of the Rules, judges have utilised that discretion that the court has to act in a way that it believes is just and proper in a given circumstance and override other parts of the Rules. So, your Honour

   HIS HONOUR:   Yes.  It seems to – it’s really quite curious, isn’t it, that there would be this…

   MS STOIKOVSKA:   It is.

   HIS HONOUR:…express stipulation that seems to be immutable, mandatory, not to be negotiated, no deviation, and yet there’s the broad 1.12 that says a trial judge or a judge can do pretty much whatever he, she or it wants.  It’s odd.

   MS STOIKOVSKA:   I cannot disagree with your Honour.  It is an obvious tension, yes.

9. Consistent with my obligations in Stanford v Stanford[5] to ascertain the legal and equitable interests of the parties, I need to make a finding about the value of H Pty Ltd’s half interest in G Pty Ltd.  I was suspicious that the wife’s characterisation of the monetary value of that difference being as little as $200,000 may not be correct.  So I explored with Ms Stoikovska the factual and accountancy basis for her contentions in that regard.  Ms Stoikovska recognised that the difference between Mr N’s valuation and that of Mr W was in the order of $8,000,000.  Ms Stoikovska submitted as follows –

   MS STOIKOVSKA:   The difference between the valuation of Mr N and the valuation of Mr W are the significant big difference of nearly eight million.  The difference – and this is the point we make;  this is why we say it is so bizarre and extraordinary – that the difference between the single expert and Mr B, who the husband now says should – he should be permitted to utilise, the difference between the two of them is only 200,000.  So that’s why we say, when at the end of the day your Honour has to make – when all the evidence falls before you, when your Honour has to make a determination which value your Honour might prefer, or indeed your Honour may have some third path depending on the evidence the witnesses provide to your Honour, what is the utility of retaining both Mr N and now bringing in Mr B, when at the end of the day the difference between them is only one per cent? 

   [5] (2012) 247 CLR 108.

10. To my mind, that seemingly “bizarre and extraordinary” state of affairs illustrated quod erratum demonstrandum that the admission of the entirety of the expert evidence was essential in this case.  It is entirely conceivable that one or more experts have proceeded on consistent factual assumptions.  On the other hand, it is equally conceivable that the experts have proceeded consistently on some but not all factual assumptions.  Where their process of reasoning differs, it is essential for me to know and why.  After all, the magnitude of the difference is vast – $8,000,000.  Precisely how one expert arrives at the figure he does whereas another arrives at the figure he does is obviously of critical importance in this case.  Without knowing in very great detail the actual step-by-step process of reasoning in the chain of reason and logic as was canvassed by the Court of Appeal of the Supreme Court of New South Wales in Makita (Australia) Pty Ltd v Sprowles[6] and by the High Court in Dasreef Pty Ltd v Hawchar[7] I will be none the wiser by being told that an $8m difference exists between certain experts whereas other experts who appear to adopt similar reasoning differ to only a modest extent.

    [6] (2001) 52 NSWLR 705.

    [7] (2011) 243 CLR 588.

11. This case is likely to produce wholly unreliable evidence unless the evidence of the witness Mr B is introduced.

12. I do not share Ms Stoikovska’s sense of foreboding that the trial will be unduly prolonged or the cost of it will be unfairly escalated by the introduction of the evidence of the witness Mr B.  If anything, an order shutting out the husband from adducing Mr B’s evidence would carry with it the very real risk that the expert evidence in this case is lop-sided or it fails to advance a properly balanced forensically maintainable position.  Even at this interlocutory stage of the case I hold real doubts that the single expert evidence will not lead me into error.  Whatever may be the rigorous steps in Rule 15, those rules are always subject to the power conferred by Rule 1.12. 

13. In those circumstances I allow the evidence of Mr B to be adduced.  The precise form of the order will be a matter for the parties’ silks to formulate.  I request they provide an email with that order within seven days.

Part property settlement or an advance of funds howsoever described

1. The wife sought the sum of $500,000 by way of litigation funding pursuant to s 117 of the Family Law Act. 

2. Ms Stoikovska submitted that the husband agreed to provide a lump sum of $348,288.63 with additional dollar-for-dollar funding. 

3. The written submissions of the parties did not provide a particularly informative statement of the parties’ respective contentions.  Their contentions were considerable better developed verbally.  However, on investigating the authorities to which counsel took me I formed the view that further submissions were required.  After an exchange with counsel on 17 September 2020 I required counsel to formulate their further written submissions and to file and serve them by 24 September 2020.  Counsel did so, for which I express my gratitude.

4. The dispute seemed to revolve around the amount to be provided to the wife, the characterisation of it and the method by which the additional funds were to be provided.  The parties’ positions were as follows –

   a)the wife sought an order in the nature of a part property order in the sum of $500,000 whereas the husband agreed to $348,288.63;

   b)the wife sought the further sum of $500,000 by way of an order in the nature of litigation funding under s 117 of the Family Law Act whereas the husband characterised the sum he was willing to pay – $348,288.63 – as a part property settlement with no additional $500,000 as litigation funding; and

   c)if funding beyond $348,288.63 was to be ordered, the husband proposed payment on a dollar-for-dollar basis for any sum beyond $348,288.63.

5. At the forefront of his opposition to the wife’s application for the provision of funds at this interlocutory phase was the husband’s threefold contention.  When distilled, it amounted to the following –

   a)applying the principles in Stanford v Stanford,[8] in order for the wife to succeed in obtaining any part property order she was required to demonstrate that it is just and equitable for the legal and equitable interests in property to be divided and, so the husband said, she failed to demonstrate that it was just and equitable to make such an order;

   b)the wife is the registered proprietor of an unencumbered interest in very valuable real estate that could be used to generate whatever funds she needs for her ongoing expenses in this litigation and she also receives $2,000 per week by way of spousal maintenance; and

   c)if the wife receives $348,288.63 by way of part property settlement, she can use that to meet her legal fees, she will not need $500,000, and to the extent that she says she needs ongoing money to meet her legal expenses, a dollar-for-dollar basis provides a measured and rational basis of proceeding prospectively.

   [8] (2012) 247 CLR 108.

6. The wife resisted the dollar-for-dollar proposal, contending that by its very nature, those costs are not amenable to quantification and their payment date is uncertain.

7. It is necessary to approach the resolution of the wife’s application for funding partly by reference to the amount sought.  She asks for $500,000.  The husband will pay $348,288.63.  That leaves $120,000 of the sum sought.  The husband argues that if characterised as a part property settlement it is not just and equitable to make an order so characterised because –

   a)the wife brought nothing to the marriage;

   b)arguments about contributions will be intense;

   c)the wife is the registered proprietor of the former matrimonial home and she already receives $2,000 per week as spousal maintenance; and

   d)rather than ordering the difference between the sum sought of $500,000 and $348,288.63 offered (namely $151,711.37) the better way is dollar-for-dollar funding of the sort canvassed by Watts J in Atkins & Hunt[9] and by Hannam J in Judd & Treasure.[10]

   [9] [2018] FamCA 14.

   [10] [2018] FamCA 50.

8. The wife did not favour any order in the nature of dollar-for-dollar funding.  In her written submissions on point Ms Stoikovska wrote as follows –

   11.The rational for that is patently clear. It is undesirable for a litigant (in this case the wife) to be at the mercy of the other litigant both continuing to retain lawyers, and to pay them. Furthermore, the wife’s capacity to meet her legal fees (including expert fees) is necessarily uncertain. There are also questions of ongoing enforcement, given that in effect such an order operates piecemeal, and the inevitable increase of legal fees (not to mention stress) as the operation of the order requires constant monitoring.

   12.In circumstances therefore where the husband does not dispute:

   (a)the power to make the order

   (b)his capacity to meet the order;

   (c)the appropriateness of making a litigation funding order (c.f. the dispute as to the appropriateness of the form of order);

   that the quantum of the order is improper or otherwise in some way exceeds the wife’s otherwise entitlement (if ultimately ‘added back’ for the purpose of s.79 considerations) it is submitted that the order ought to clearly be made as sought by the wife.

9. Ms Stoikovska’s injection of the word “clearly” was hyperbole in my view.  The position was anything but clear.

10. Instead, the wife cast her application as a part property application or an application under s 117. In support of her part property application she argued as follows –

    a)the property interests to be divided in this case are of or in excess of $21m in value;

    b)the marriage is of 13 years’ duration;

    c)at cohabitation the asset pool was valued at $3.8m, on the husband’s arithmetic;

    d)on the husband’s evidence the pool has increased in value by over $17m;

    e)the wife’s part property claim of $500,000 equates to 2% of the available pool;

    f)it is doubtful that the husband could successfully contend that a payment to the wife of $500,000 exhausts the wife’s entitlements under s 79 of the Family Law Act;

    g)the size of the sum sought by the wife is modest having regard to the value and magnitude of the property interests to be altered in this case;

    h)“in truth she is only asking to be able to spend her own money without being subject to the control of the husband”;[11]

    i)there is no prejudice to the husband; and

    j)the payment of $500,000 represents only a small portion of what will ultimately be adjusted in favour of the wife.

    [11] Paragraph 21 of Ms Stoikovska’s written submissions.

11. So far as the wife’s adult daughter was concerned, it was apparent from the affidavit material filed on the return of this application that the wife is meeting many of her adult daughter’s monetary expenses.  The husband asserted that the weekly sum of $2,000 for spousal maintenance is for the wife’s support, not for her adult daughter. 

12. In response, in both written and verbal submissions, the wife directed comments about each of the couple’s children living rent free.  Ms Stoikovska wrote the following[12] –

    Further, it is both understandable (and inherently human) for a mother in today’s age to financially assist her ‘20 something’ daughter, and the criticism of her doing so in defence of a part property application does the husband no favours.

    [12] Paragraph 23 of her written submissions.

13. Precisely what was to be made of such a submission was far from apparent.  I was unwilling to take judicial notice of the phenomenon of the “20 something daughter” as urged in that submission.

14. In reference to another paragraph of the husband’s 31 August 2020 affidavit, the wife’s counsel made a submission about the depths to which the parties had descended in this case.  It was as follows[13] –

    What that paragraph does illustrate however, is the depths the husband will go to in order to advance his case and deny the wife anything she does not compel by forceful court application.

    [13] Paragraph 25 of her written submissions.

15. Ms Vohra’s contentions in opposition to the part property application were fourfold.  In no particular order they were –

    a)the wife owns a $3.55m house;

    b)she receives $2,000 weekly in spousal maintenance;

    c)to pay the sum sought by the wife the husband will be required to borrow; and

    d)the wife had not demonstrated her need for the large sum she seeks.

1. It was also put that the wife could raise funds against the security of the house of which she is the registered proprietor.  But it was common cause that she does not work and, on that and other grounds, she needed spousal maintenance.  Precisely how she could service any such borrowings was not addressed by either party.  Whether she could even meet a bank’s lending criteria in order to obtain a loan remains to be seen.  The issue was not explored in the evidence.

2. In this case a live issue arose in relation to the source of the funds from which the wife’s claim for a partial property settlement was to be derived.  Ms Stoikovska seemed to recognise the problem that confronted her client.  She also acknowledged that multiple successive partial property settlement applications raised other complexities.  In this case the parties agreed to a joint partial property settlement of $300,000 on 5 September 2018.  Each received payment of that sum.  An earlier sum had also been agreed and paid.

Multiple sequential part property settlement applications

1. At one time, in the learning under the Family Law Act, a partial property settlement was to be ordered only once. That learning was premised on the rationale that s 79 orders operate as final orders, finally determining the rights of the parties in relation of their property and that an exercise of jurisdiction under s 79 in a manner intended to be a final exercise exhausts the court’s power under s 79. That was the gravamen of the decision of the High Court in Taylor v Taylor.[14]  Other decisions followed such as In the Marriage of Slapp[15] where the court held as follows –

   It is not open to a court to make a substantive variation to orders previously made under s 79. That proposition can today no longer be doubted. It is based upon the principle, endorsed by the High Court in the case of Taylor v Taylor (1979) 5 Fam LR 289 that an order under s 79 is a once and for all proposition.

   [14] (1979) 143 CLR 1.

   [15] (1989) 13 Fam LR 158.

2. Then followed the emergence of debate about the legitimacy of the making of an interim order under s 79, taking effect as a “partial property order” despite the expressions recorded above from Taylor and Slapp.  Between 1989 when Slapp was decided and 1993 when the decision in In the Marriage of Harris[16] was decided, a practice had flourished in this court of making interim or partial property orders under s 79. In Harris the question of the court’s power to make an interim or partial property order was canvassed by Nicholson CJ, Fogarty & Moore JJ. In propounding the existence of power to make an interim or partial property order, counsel contended in that case that s 80 conferred the requisite power. Conversely, counsel arguing against the existence of power to make an interim or partial property order contended that s 80 was not an independent head of power and that under s 79, the court was confined to making an order under s 79 that was “final and complete” (those were the words recorded by the court at p 584 of the report).

   [16] (1993) 16 Fam LR 579.

3. The court upheld the power to make interim or partial property orders.  It is useful to record the reasoning there given –

   Because of the finality of s 79 orders, a view may have developed over the years that only one such order may be made within the s 79 exercise. The fact that an order which is intended to be a final exercise of s 79 is final in the sense that it exhausts that jurisdiction is clear: see for example Taylor v Taylor (1979) 143 CLR 1 ; 5 Fam LR 289 ; [1979] FLC 90-674 .

   This is subject to three qualifications which may for the present purposes be described as follows:

   (a)The general or inherent power of the court to review, as a matter of natural justice, orders made in the absence of a party: see Taylor v Taylor, supra ; In the Marriage of Wilkes (1981) 7 Fam LR 58; [1981] FLC 91-060 .

   (b)The provisions of s 79(5) and (6) under which, in the circumstances there described, the court may adjourn the proceedings and make an “interim order”.

   (c)Section 79 which enables a court to vary or set aside a property order in the circumstances referred to in that provision.

   However, it does not follow that in appropriate circumstances the court, in the course of s 79 proceedings, may not make orders which are, and are intended to be, interim or partial. Section 80 applies to Pt VIII and therefore to s 79. There is nothing in s 79 which suggests that the legislature intended to exclude it from the operation of s 80 in an appropriate case and there is no valid reason why the court should read into s 79 any such limitation. Section 80 is intended to be a wide, enabling provision and there is no justification for imposing limitations upon its normal or ordinary meaning and operation when applied to s 79.

   Whilst s 80 has generally been treated as not containing independent heads of power (in the sense of jurisdiction) and whilst the s 79 exercise must be performed within the framework of the principles and criteria in s 79, s 80 adds to the armoury of s 79 by providing various ways in which the general power in s 79 may be exercised in individual cases. The circumstances in which these powers may be exercised may be limited in s 79 proceedings but that is a different consideration and is referred to hereafter.

4. The court in Harris devoted attention to the difference between an “interim property order” on the one hand and a “partial property order” on the other hand.  Applying the reasoning of Nygh J in In the Marriage of Burridge,[17] the court examined Nygh J’s conclusion that “there cannot be such a thing as an “interim property order””. The court also examined Nygh J’s thesis that a “partial order” for property once made will, once made, dispose of the money in a particular fund and therefore settle the rights of the parties once and for all but the balance of the funds remains unaffected by an order under s 79. Of those so-called distinctions, the court in Harris said the following –

   The distinction which Nygh J drew in Burridge between an “interim” and a “partial” order appears to be that an interim order is one which operates until the final hearing but may then be submerged into the final order whereas a partial property order is a property order complete in itself but dealing with part only of the property and not intended to be a final determination of the proceedings.

   We do not doubt that the court has power in a proper case in s 79 proceedings to make what may be conveniently described as an interim order, that is an order dealing with some of the property of the parties prior to the final hearing. We do not consider that it is necessary to draw a distinction in terminology between an “interim” order and a “partial” order.

   [17] (1980) 6 Fam LR 513.

5. The court went on to make three observations about the matters to be considered in a partial property settlement case.  They were –

   a)the exercise of power should be confined to cases where the circumstances presented at that time are compelling because generally, the interest of the parties and the court are better served by there being one final hearing of the s 79 proceeding;

   b)even though the hearing is interim, it is an exercise of power conferred by s 79 so it must be performed within those parameters;

   c)it is likely to be an imprecise exercise hence the power must be exercised conservatively “and the judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so”.

6. It was once thought that the High Court’s decision in Mullane v Mullane[18] represented a definitive pronouncement to the effect that this court has jurisdiction to make one only order under s 79. Support for that was garnered by another decision of Nygh J in In the Marriage of Ramsey (No 2).[19]  Yet on a proper examination of Mullane v Mullane[20] it is readily apparent that the court was there addressing the overlay between an application for an order for exclusive occupation of property and the injunction power in s 114 with the alteration of property interests power in s 79 and the provisions regarding maintenance in s 74. That led the court to make the following observation –

   It follows, then, that s. 79 does not authorize a mere modification of a liberty to enjoy property. An order which merely excludes one spouse from the enjoyment of property, albeit for many years, in order to permit its better enjoyment by the other does not alter an interest in that property, though a spouse acquiring an interest in property under a s. 79 order may be entitled, in virtue of that interest, to exclude the other from its enjoyment. Where the section refers to a settlement of property, it should be understood as using that expression in a sense which is closely related to the meaning which the expression bears in the law of real and personal property.

   [18] (1983) 158 CLR 436.

   [19] (1983) 8 Fam LR 1005.

   [20] (1983) 158 CLR 436.

7. The debate about interim, partial and final property orders continued to vex this court in its appellate jurisdiction.  Two of the more important recent decisions warrant close examination.  The first was Gabel & Yardley[21] and the second was Strahan v Strahan (Interim Property Orders).[22]  Taking Gabel & Yardley first, the court held as follows –

   60.We conclude that the critical issue is whether or not the court’s power to make orders for settlement of property has been exhausted or “spent” rather than the effect on property with respect to which orders are made in the partial exercise of the power. The fact that the beneficial ownership of a particular item of property may have been affected by “interim” or “partial” orders made pursuant to s 79 of the Act does not in our view preclude such orders from being “interim” for the purpose of the superannuation amendments.

   [21] (2008) 40 Fam LR 66.

   [22] (2009) 42 Fam LR 203.

8. Further, the plurality said that until one exercise of the power under s 79 had been completed upon the making of orders with respect to the totality of “the property” of the parties to the marriage, the power under s 79 had not been exhausted. Instead, that power had been applied partially or in an interim manner.

9. In this court the 2009 decision in Strahan v Strahan (Interim Property Orders) is, according to current orthodoxy, regarded as one of the most definitive statements of principle on the exercise of power under s 79 to make interim or partial property orders. The following comes from the plurality’s reasons –

   118.We agree with the submissions of senior counsel for the wife in relation to the approach to be taken to the hearing of an application for an interim property settlement order. There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act. This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, “circumstances may arise before there can be a final hearing” where the power is exercised. Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.

10. Only one exercise of power under s 79 was involved, even though several partial property orders could be made. This was another relevant observation of the plurality –

    132.In relation to the first stage, in our view, when considering whether to exercise the power under ss 79 and 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.

11. In Cao & Trong (No 2)[23] I distilled the relevant principles mostly from Strahan.  They were as follows –

    [23] [2019] FamCA 941.

    34.In relation to interim property orders, certain guiding principles are applicable to the facts of this case.  They include the following –

    a)the majority of the court in Strahan & Strahan[24] held that when consideration is being given to the appropriateness of an order being made for an interim property settlement order, more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party;

    b)balance must be given to the risks of unduly limiting the final orders that can be made against the circumstances said to show that it is just and equitable to make interim orders;

    c)in Strahan it was held that the first stage of any consideration of an application for a partial property settlement order requires a determination of whether the interests of justice require the exercise of power under s 79 and s 80(1)(h) on an interim basis;

    d)compelling circumstances need not be shown by an applicant for a partial property settlement order, as was held in Strahan;

    e)ordinarily an order under s 79 is made once only after a final hearing, as was held in Strahan at [132];

    f)consideration must be given to the reversibility of the order, as was held in In the Marriage of Zschokke[25] and Gabel & Yardley;[26]

    g)in addition, a court entertaining an application for a partial property settlement should consider the need for and effect of interim orders weighed against the risks that the exercise of the power on an interim basis will interfere with the power of the court to make just and equitable orders on a final basis;

    h)further, a court entertaining an application for a partial property settlement order should consider whether the order is just and equitable according to at least a preliminary view of the likely range of outcomes;

    i)further, a court entertaining an application for a partial property settlement order should balance the risks by considering not only the quantum of the orders but also the risk of unduly limiting the final orders that can be made or even potentially defeating parties’ claims; and

    j)a court entertaining an application for a partial property settlement should take into account that a party should not be denied the ability to liquidate assets where there are real needs for those resources such as meeting debts due to creditors.

    [24] (2009) 42 Fam LR 203.

    [25] (1996) 20 Fam LR 766.

    [26] (2008) 40 Fam LR 66.

12. Elsewhere the following appears –

    The Full Court has cautioned single judges hearing interim applications against making findings of fact that should more properly be made at trial once all the evidence has been adduced and all relevant witnesses have been cross-examined.

13. Here, Ms Stoikovska recognised that on 5 September 2018 each party received $300,000 by way of part property payments. Some authorities in this court show reluctance at making more than one partial property settlement. That is not to say an absolute prohibition exists against making more than one partial property settlement. If circumstances demonstrate that it is proper to make a second or subsequent partial property order then, so long as the necessary criteria are shown, it is open to the court to make a second or later partial property order. Reversibility of the order is an important consideration. Yet the mere fact that the applicant for the order is likely to be awarded an order in the nature of alteration of property orders under s 79 does not, in and of itself, entitle the party applying for the order to obtain the relief he or she seeks.

14. In this case the value of the assets is imprecise at this stage.  Yet it seems likely to be in the order of $21m.  The applicant seeks $500,000 by way of part property, representing something in the order of 2.5% of the total asset base.  If that order is made, it is reversible as the wife owns real estate of almost $4m in value.  She could be ordered to sell that, if necessary.

15. One question is whether the wife has proved that she has need of a part property settlement of $500,000.  She deposes in her affidavit to her financial circumstances including how she is in receipt of social welfare payments.  She receives $2,000 by way of spousal maintenance per week.  She says she has unpaid legal bills and more substantial legal bills looming.  The husband says he is only able to meet an outlay of the magnitude the wife seeks by way of further borrowings.  He says he should not be required to do that.  Hence, he says that once the wife takes the $348,288.63 he offers, any sums thereafter should be on a dollar-by-dollar basis.

The hearing on 17 September 2020

1. Having set about writing my reasons after the debate on 7 September 2020, several unanswered issues emerged on which it seemed to me that the parties should be invited to make further submissions.  Aside from my overall uncertainty about the quantum of the total amount sought by the wife (that is to say, whether it was half a million dollars or one million dollars), I asked counsel for further submissions on three main issues, namely –

   a)the legal basis for an application under s 117 for litigation funding and reconciling the authorities to which Watts J adverted in Atkins & Hunt[27] with the authorities to which Hannam J adverted in Judd & Treasure[28] (those decisions being only a few weeks apart);

   b)the legal basis for a part property order if such an order compels the party against whom the order operates to borrow substantially in order to comply with that part property order; and

   c)the key binding authorities in relation to the dollar-for-dollar funding proposed by the husband.

   [27] [2018] FamCA 14.

   [28] [2018] FamCA 50.

2. It is necessary to take each in turn.

Ligation funding – the first issue

1. Turning first to the submissions made on behalf of the wife, in written submissions dated 24 September 2020 counsel addressed the legal basis for the s 117 application recording the authorities in accordance with my request for them to do so. In essence, in answer to that first question counsel for the wife submitted as follows –

   a)it is beyond doubt that s 117 is a recognised legal basis for the making of orders the effect of which is to address costs;

   b)neither party raised any debate about the power to make such an order;

   c)“that the court has jurisdiction”[29] is beyond doubt;

   d)a distinction must be drawn between the power to make a lump sum order in the nature of an interim litigation funding order as opposed to a dollar-for-dollar funding order, the former having been the “accepted practice for decades”,[30] citing In the Marriage of Zschokke,[31] Bing & Bing[32] and Strahan v Strahan;[33]

   e)the dollar-for-dollar form of order is within power, according to the preponderance of authority, although the cases do not speak in one voice on the subject;

   f)the wife does not favour a dollar-for-dollar order;

   g)according to Salvage & Fosse[34] the considerations that apply to applications under s 79 and s 117 are different and care must be taken in identifying the legal principles that apply to each;

   h)in this case the wife is contending for an alteration of property interests that equates to a 25% division of the total property in her favour and if that overall figure is in the order of $20 million, 25% thereof is $5 million so her request for $1 million is comfortably within that sum;

   i)in arriving at any amount for an order under s 117, the process prescribed by s 117(2A) must be followed;

   j)citing the observations of Brereton J in Paris King Investments Pty Ltd v Rayhill[35] an order under s 117 may properly be made in relation to costs already incurred but in respect of costs to be incurred that is in the discretion of the judge as to payment and quantum; and

   k)recognising that in Atkins & Hunt Watts J did not agree with the observations of McClelland J in Selena & Montez,[36] counsel submitted that according to Salvage & Fosse the Full Court has said power to make the relevant order exists.

   [29] These were the words in paragraph 2 of the wife’s 24 September 2020 submissions.

   [30] See paragraph 3 of those submissions.

   [31] (1996) 20 Fam LR 766.

   [32] [2007] FamCA 418.

   [33] (2009) 42 Fam LR 203.

   [34] [2020] FamCAFC 144.

   [35] [2006] NSWSC 578.

   [36] [2017] FamCA 583.

1. On the first question, namely the application of s 117 and reconciling the authorities canvassed in Atkins & Hunt and in Judd & Treasure, counsel for the husband provided very useful written submissions.  The following is a fair distillation of the main points made in them –

   a)in total the wife seeks payment to her of $1 million, half as a partial property settlement and half as litigation funding;

   b)as for the partial property settlement whereas the wife seeks $500,000 the husband has offered $348,288.63 pursuant to s 79 and 80 and the husband attributes that figure of $348,288.63 to be the total of the wife’s existing legal fees and expert’s fees;

   c)as to the sum of $500,000 for litigation funding, the wife relies on the power to make a litigation funding order under s 117 as to which the husband proposes a dollar-for-dollar regime taking operation in addition to the $348,288.63 order in the nature of a partial property order;

   d)applying the reasoning of Watts J in Salvage & Fosse, the four sources of power to make an interim litigation funding order are –

   i)a property order under s 79 and 80(1)(h);

   ii)a costs order under s 117(2);

   iii)a maintenance order under s 74; or

   iv)an injunction under s 114(2);

   e)no debate emerged in this case about the power to make an order for litigation funding under s 117;

   f)McClelland J in several decisions including Selena & Montez[37] as well as Quayle & Perceval[38] has held that s 117 is not a source of power in relation to anticipated future legal costs;

   [37] [2017] FamCA 583.

   [38] [2018] FamCA 664.

   g)the authority of In the Marriage of Zschokke[39] and Strahan v Strahan[40] make plain that s 117 confers the necessary power to make an order for litigation funding;

   h)a dollar-for-dollar funding order is made in pursuance of s 117;

   i)Judd and Atkins are reconcilable on the basis that –

   i)Judd looks to the authorities generally in relation to making litigation funding orders pursuant to s 117; and

   ii)Atkins looks at authorities in the specific context of a dollar-for-dollar order as an identifiable species of litigation funding under s 117;

   j)here, the husband has proposed the payment to the wife of $348,288.63 being her legal fees already paid and those for which she is presently liable, the relevant sections pursuant to which that payment is to be made being s 79 and 80(1)(h) but not under s 117 and thereafter a dollar-for-dollar order in relation to future fees, the relevant enabling provision being s 117;

   k)citing Strahan v Strahan as well as Salvage & Fosse, a litigation funding order may be made in reliance upon s 79 and s 80(1)(h); and

   l)other first instance authority in Esdale v Schenk[41] has held that applications for litigation funding are “almost invariably” brought under the power to make an interim property order rather than under the costs power.

   [39] (1996) 20 Fam LR 766.

   [40] (2009) 42 Fam LR 203.

   [41] (2012) 46 Fam LR 547.

Consideration of the litigation funding issue

1. It was common cause between the parties in this case that the power to make an order in relation to the wife’s costs already incurred was s 79 and 80(1)(h). To that end, the husband has proposed that he pays the wife’s legal costs already incurred as to $348,288.63 on a part-property basis.

2. But that only addresses a portion of the one million dollars sought by the wife.

3. The wife has forcefully pressed for the balance between the million dollars sought and the sum conceded by the husband ($348,288.63) to be ordered under s 117. The authorities are divided on the power under s 117 to make a costs order when those costs have not been incurred. In one camp are the cases that say it is not legally maintainable to make a costs order under s 117 where those costs have not been incurred. In that camp are the decisions of McClelland J in Selena and Quayle. Conversely, in the other camp are decisions of Watts J where orders were made under s 117 even though costs were not yet incurred. In that camp are the decisions in Atkins and in the separate judgment of Watts J when sitting as a member of the Full Court in Salvage.

4. It became necessary to examine the reasoning of each in each decision.

Selena & Montez and Quayle & Perceval

1. McClelland J (as the Deputy Chief Justice then was) examined the issue in the context of costs actually incurred.  His Honour cited the decision of the plurality of the High Court in Cachia v Hanes[42] which held as follows –

   It has not been doubted since 1278, when the Statute of Gloucester ((4) 6 Edw.I c.1.) introduced the notion of costs to the common law, that costs are awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation (emphasis added).[43]  

   [42] (1994) 179 CLR 403.

   [43] Ibid (at [11]).

2. McClelland J pointed out that subsequent decisions including Re JJT; ex parte Victoria Legal Aid[44] have embraced the formulation in Cachia v Hanes including I Limited & Chester and Ors (Costs),[45] Paul & Kylie (Costs),[46] Casley & Casley (Costs),[47] Oscar & Traynor,[48] Stephens & Stephens and Anor (Enforcement) (Costs),[49] Tang & Fei (Costs),[50] Jamine & Jamine (Costs)[51] and Tamaniego & Tamaniego (Costs).[52]

   [44] (1998) 195 CLR 184.

   [45] [2011] FamCAFC 51.

   [46] [2010] FamCAFC 190.

   [47] [2010] FamCAFC 189.

   [48] [2008] FamCAFC 158.

   [49] [2010] FamCAFC 172.

   [50] [2011] FamCAFC 29.

   [51] [2010] FamCAFC 191.

   [52] [2011] FamCAFC 30.

3. McClelland J pointed out that while several decisions in this court have used s 117(2) orders for ligation funding with a view to achieving an outcome that evens the playing field, nevertheless the presumption in s 117(1) operates as was made plain (albeit by another single judge at first instance) in Esdale.  McClelland J further held that had his Honour been persuaded to not apply the presumption sought, the amount sought by the applicant for litigation funding took the form of an order for indemnity costs.  His Honour applied the reasoning in In the Marriage of Hogan[53] where it was held that the making of an open ended order for costs was an error by the trial judge.

   [53] (1986) 10 Fam LR 681.

4. McClelland J also made observations about s 117 in Quayle & Perceval.[54]  There, his Honour –

   [54] [2018] FamCA 664.

   a)referred to his Honour’s earlier statement in Selena & Montez to the effect that s 117 is not a source of power for this court to make a litigation funding order in respect of anticipated legal costs as opposed to an order for security for costs;

   b)expressed difficulty in understanding how the court in In the Marriage of Zschokke[55] gained confidence from the observations of the High Court in Breen v Breen[56] in view of the High Court’s dismissal of the application for special leave to appeal;

   c)held that in In the Marriage of Zschokke the court adopted a construction of s 117 that “in my view, gives it an overly expansive operation, beyond its intended purpose”;

   d)held that the court’s approach in In the Marriage of Zschokke was contrary to later authority in the High Court in Re JJT; ex parte Victoria Legal Aid;[57]

   e)repeated the holding of Cachia v Hanes[58] to the effect that costs orders were made for professional legal costs actually incurred in the conduct of litigation;

   f)followed the observations of the High Court in New Zealand Flax Investments Ltd v Federal Commissioner of Taxation[59] in relation to the way the word “incurred” was to be construed;[60]

   g)held that future expenses in respect of services that have not yet been provided are no more than impending, threatened or expected within the conception of New Zealand Flax;[61] and

   h)considered that Full Court authority that has held that s 117 empowers a judge of this court to make a litigation funding order is inconsistent with the decision of the High Court in Re JJT.

Atkins and Salvage

[55] (1996) 20 Fam LR 766.

[56] (1990) 65 ALJR 195.

[57] (1998) 195 CLR 184, 219.

[58] (1994) 179 CLR 403, 410.

[59] (1938) 61 CLR 179.

[60] Of course, a danger exists in applying the interpretation given to one word when used in different legislation, as I pointed out in Guild & Stasiuk [2020] FamCA 348, citing Lord Upjohn in Ogden Industries Pty Ltd v Lucas [1970] AC 113 and in the High Court decisions in McNamara (McGrath) v Consumer, Trader and Tenancy Tribunal (2005) 221 CLR 646, Marshall v Director-General, Department of Transport (2001) 205 CLR 603 and Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259.

[61] Op cit.

1. In the other camp of cases is Atkins & Hunt and in the single judgment of Watts J in Salvage & Fosse.[62] As with the line of reasoning of McClelland J in the cases surveyed above in relation to McClelland J’s view that an order for costs other than those actually incurred has no source in s 117, it became necessary to examine the line of reasoning adopted by Watts J to the opposite conclusion.

   [62] [2020] FamCAFC 144.

2. In Atkins & Hunt, Watts J was concerned with the wife’s application for payment of $412,000 by way of an interlocutory order. Watts J held that the power to make such an order as an interim property order or as a dollar-for-dollar order was s 117(2) of the Family Law Act.  His Honour’s path of reasoning may be distilled as follows –

   a)under s 117(2) the court may make such interlocutory order as it considers just; and

   b)his Honour addressed dollar-for-dollar orders.

3. Watts J did not address any of the High Court authorities to which McClelland J adverted nor did Watts J analyse the cases that McClelland J analysed concerning future costs as opposed to costs already incurred.

4. It then became necessary to examine the separate judgment of Watts J in Salvage.  The majority did not address –

   a)s 117;

   b)the debate in the cases about the difference between costs actually incurred as opposed to costs to be incurred; or

   c)the High Court decisions examined by McClelland J.

5. No guidance is to be derived from the plurality reasons in Salvage. 

6. It must be said that Watts J did refer to certain High Court authority.  However it was limited to –

   a)Stanford v Stanford;[63]

   [63] (2012) 247 CLR 108.

   b)Penfold v Penfold[64] in the context of s 117(1) yielding to s 117(2);

   [64] (1980) 144 CLR 311.

   c)Thorne v Kennedy[65] in the context of undue influence and conscionability;

   d)Lindon v Commonwealth (No 2)[66] in the context of “an arguable case”; and

   e)Breen v Breen;[67]

   f)Suttor v Gundowda Pty Ltd;[68]

   g)Gronow v Gronow;[69]

   h)Metwally v University of Wollongong;[70]

   i)Nguyen v Nguyen;[71]

   j)Colgate Palmolive Co v Cussons Pty Ltd;[72]

   k)Re JJT; Ex parte Victoria Legal Aid;[73] and

   l)Whisprun Pty Ltd v Dixon;[74]

   [65] (2017) 263 CLR 85.

   [66] (1996) 70 ALJR 541.

   [67] (1990) 65 ALJR 195.

   [68] (1950) 81 CLR 418.

   [69] (1979) 144 CLR 513.

   [70] (1985) 59 ALJR 481.

   [71] (1990) 169 CLR 245.

   [72] (1993) 46 FLR 225.

   [73] (1998) 195 CLR 184.

   [74] (2003) 77 ALJR 1598.

7. Of the High Court decisions in Breen v Breen[75] and Re JJT; ex parte Victoria Legal Aid,[76] Watts J made certain observations at paragraph 58.  They were as follows –

   In a financial case involving de facto spouses, an order for litigation expenses will most usually be made relying upon the property power. If unavailable, for example because of the need to determine jurisdictional facts, the next most obvious source of power is s 117(2) of the Act (see Breen v Breen (1990) 65 ALJR 195) (“Breen”); Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at [2], [10], [60]–[62]; Zschokke and Strahan).

   [75] (1990) 65 ALJR 195.

   [76] (1998) 195 CLR 184.

8. No discussion ensued about Cachia or Re JJT, save for Watts J’s reference to the latter case in paragraph 58.  In other words, there is considerable merit in the critique made by McClelland J that the learning in Cachia and Re JJT from the High Court on costs in the nature of litigation funding orders that concern future costs has not been the subject of express consideration by the Full Court.  I agree with his Honour. 

9. Despite the fact that I entertain very real doubt that this court is empowered by s 117(2) of the Family Law Act to make an interlocutory costs order in the nature of a litigation funding order in respect of future costs, in this case both parties submitted that the court did in fact possess the requisite power.  In those circumstances this case is not the correct vehicle to consider the point further and I decline to do so in the discrete application for litigation funding.

10. On behalf of the husband, counsel argued that only two issues in relation to a litigation funding order exist, namely the quantum and form of the order.  The wife was opposed to a dollar-for-dollar order.

11. Under the rubric of question three I have addressed the issue of a dollar-for-dollar order.

A partial property order that requires a party to borrow in order to meet the order – the second issue

1. On this issue the parties advanced certain propositions that were common to each.  One was the applicant of the decision of the Full Court in Bing & Bing.[77]

   [77] [2007] FamCA 418.

2. That said, it became necessary to address the contentions of the wife and husband separately.

3. On behalf of the wife two factual matters were urged by counsel.  They were –

   a)by reason of the husband’s failure to disclose how his inheritance is to be provided and why he may be unable to draw upon it, he does not say how he intends to meet any dollar-for-dollar order or lump sum order; and

   b)nowhere does the husband state, in terms, that he will be required to borrow funds to meet the orders sought by the wife and it is an error, so the wife’s counsel says, to suppose that any order for the payment of any of the amount sought by the wife will have the effect of “compelling” the husband to borrow funds.

4. In reliance upon Bing & Bing, the wife submitted that it is a matter for the husband as to how he meets any order made against him on this application.  The wife’s counsel contended that the husband could borrow if he chose to do so and if he did choose to borrow, the extent of his borrowings were all within his control.  Counsel for the wife put the correct test, according to Strahan in the following terms –

   With respect, the correct question is whether in the interests of justice it is appropriate to make an order (Strahan at [132]), and then whether the order contemplated sits comfortably within what is just and equitable having regard to s.79 of the Act (Strahan at [135] – [141]).

5. Counsel for the wife submitted that the husband had capacity to borrow further yet he chose not to.  The submission was as follows –

   The Husband has previously consented to 2 interim lump sum payments to each of himself and the Wife (18 February 2018 & 5 September 2018) which were seemingly financed (either directly or indirectly – i.e. by drawings from Gembrook Pines which operates the existing Westpac overdraft facility) by borrowings. Put simply, the Husband has borrowed for himself and now seeks to place an impediment upon provision of funds to the Wife because he does not want to borrow further;

6. On behalf of the husband it was acknowledged that it is permissible for a partial property order to be made even where the practical effect of the order may require the party against whom the order is made to borrow.  The husband’s principle thesis in response to the wife’s part property application was as follows –

   Save for the issue of her legal fees (which are to be accounted for and paid on the husband’s proposal), the wife does not depose as to why she requires a partial property payment that goes beyond the payment of her legal fees. As per Strahan, she cannot rely upon the mere assertion that she is entitled to receive the property being sought on a final basis.

Consideration of second issue – borrowings

1. All counsel agreed that it was permissible for a partial property order to be made, even if in consequence one party was required to undertake borrowings so as to comply with the order made.  I agree with counsel for the husband that the real question is whether to make a partial property order at all having regard to the wife’s present financial circumstances.  I also agree that if I take the view that a further partial property order is appropriate, the amount to be ordered is crucial.

2. I have also considered whether the amount sought by the wife (the difference between the amount claimed of $1 million and the amount offered by the husband by way of further partial property settlement of $348,288.63) is better ordered as litigation funding on a dollar-for-dollar basis.  To do so would cure the misgivings I have about litigation funding being inappropriate in respect of future costs, that is to say costs that had not been actually incurred.  Accordingly, it became necessary to address the third issue canvassed in counsel’s written submissions provided on 24 September 2020.

Litigation funding on a dollar-for-dollar basis – the third issue

1. Counsel for the wife argued that such an order should not be made, as has already been narrated.  They argued –

   a)no authority binding on a trial judge puts beyond doubt that the court’s power to make a dollar-for-dollar order;

   b)the views expressed by Watts J in Atkins & Hunt are to be preferred; and

   c)the wife’s preference is for a lump sum to be made.

2. Counsel for the husband undertook the forensic and legal analysis that I sought in the discussion conducted on 17 September 2020. Counsel for the husband took me to eight authorities that have addressed the question of dollar-for-dollar litigation funding orders made in pursuance of s 117 of the Family Law Act.  They were in chronological order –

   a)G & T;[78]

   b)Iphostrou & Iphostrou;[79]

   c)Klearchos & Klearchos;[80]

   d)Selena & Montez;[81]

   e)Atkins & Hunt;[82]

   f)Judd & Treasure;[83]

   g)Quayle & Perceval;[84] and

   h)Shelbourne v Shelbourne.[85]

   [78] (2003) 32 Fam LR 101.

   [79] [2011] FamCA 20.

   [80] [2015] FamCAFC 217.

   [81] [2017] FamCA 583.

   [82] [2018] FamCA 14.

   [83] [2018] FamCA 50.

   [84] [2018] FamCA 664.

   [85] (2019) 60 Fam LR 183.

Consideration of the dollar-for-dollar order

1. It became necessary to distil the learning from those authorities particularly having regard to the observations of Watts J that a dollar-for-dollar order “is usually made only as an order of last resort”, a comment that counsel for the husband said was “not based on binding authority and could improperly limit the exercise of discretion.”

2. In reasoning that was perfunctory at best and from which a rational legal principle is difficult to discern, in G & T O’Reilly J held that a dollar-for-dollar order had the effect of creating a “level playing field”.  O’Reilly J seemed to rely on the wife’s disclosed assets of $15,000 and very modest income compared to the husband’s positon of retaining a specialist firm of solicitors and experienced junior counsel.  O’Reilly J said the following –

   In order to level the playing field, if the husband is paying money to his solicitors and to engage Counsel on his behalf, there is no reason why he ought not pay the same sum to the wife’s solicitors on the dollar for dollar basis.

3. On 18 January 2011 Cronin J dealt with a dollar-for-dollar litigation funding application in Iphostrou & Iphostrou.[86]  There Cronin J followed the “level playing field” appellation used by O’Reilly J in G & T and by O’Reilly J in an unreported decision called McLean v McLean (30 January 2003).  The factors leading to the conclusion that a so-called level playing field was necessary and the factors that indicated the existence of a “playing field” or a playing field that was not “level” were not given by Cronin J.  Very little in the way of guidance is to be found in Iphostrou & Iphostrou as to the metes and bounds of the “level playing field” concept. 

   [86] [2011] FamCA 20.

1. No authorities were considered by the Full Court in Klearchos & Klearchos[87] so it is not possible to conclude on what legal principle the trial judge’s decision to order litigation funding was overturned on appeal.

   [87] [2015] FamCAFC 217.

2. In Selena & Montez McClelland J did not address a dollar-for-dollar order.  However, his Honour did extract from the decision in Strahan v Strahan certain observations made by Nygh J in In the Marriage of Poletti[88] and in In the Marriage of Wilson[89] which according to later cases addressed what became known as issues antithetical to the existence of a level playing field.  They included a –

   situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case

   [88] (1990) 15 Fam LR 794.

   [89] (1989) 13 Fam LR 205.

3. Watts J handed down judgment in Atkins & Hunt on 18 January 2018. Several observations call for consideration arising from his Honour’s reasons. The first was at paragraph 31 of his Honour’s reasons where the following was said –

   A dollar for dollar order provides a set of machinery provisions to ensure that for any dollar the financially advantaged party spends on legal costs and disbursements on the case, the disadvantaged party is also provided a dollar to spend on their case. The wife seeks this order on the basis that such an order would, to some extent, “level the playing field”.

4. When applied to the circumstances of this case, that would involve the husband providing to the wife an identical sum of money as he spends on his own legal costs in this case. 

5. In Atkins Watts J held, in conformity with the observations of McClelland J in Selena, that a dollar-for-dollar order grounded in s 117(2) requires a consideration of the elements of s 117(2A) of the Family Law Act, although having regard to the observations in Fitzgerald v Fish[90] one only of the elements of s 117(2A) need to be evident to enliven an order under s 117(2). According to Poletti,[91] the financial circumstances of the parties is ordinarily a sufficient ground for consideration to validly invoke s 117(2). At paragraph 45 of his Honour’s reasons in Atkins Watts J held as follows –

   When making a dollar for dollar order under s 117(2), the focus will usually be in considering the disparity of the financial resources available to the respective parties, including their ability or lack of ability to meet their litigation expenses (s 117(2A)(a)) and the unusual features of the matter (s 117(2A)(g) of the Act).

   [90] (2005) 33 Fam LR 123.

   [91] (1990) 15 Fam LR 794.

6. His Honour then held that the making of a dollar-for-dollar order “is a discretionary order that is usually made only as a matter of last resort”.

7. A very short time later, and apparently not knowing[92] of the decision in Atkins on 6 February 2018 Hannam J handed down reasons for judgment in Judd & Treasure.[93]  In ordering a dollar-for-dollar regime, Hannam J adopted submissions made by counsel for the wife that a dollar-for-dollar order would “level the playing field” (her Honour’s words) having regard to the large disparity between the parties’ respective earning capacities and financial resources.  Hannam J made orders similar to the order Cronin J made in Iphostrou & Iphostrou.

   [92] The decision in Atkins was not cited in the reasons of Hannam J in Judd & Treasure.

   [93] [2018] FamCA 50.

8. In Quayle & Perceval,[94] McClelland J referred to Atkins & Hunt but not to Judd & Treasure yet McClelland J devoted considerable attention in his Honour’s reasons to the jurisprudential basis underpinning an order made under s 117(2) for litigation funding under s 117(2) on a dollar-for-dollar bass. In my view the reasoning of McClelland J is impeccable. Several passages warrant close attention. They include the following –

   a)citing the decisions of the Court of Appeal of the Supreme Court of New South Wales in Wilkie v Brown[95] and in Hamod v New South Wales,[96] McClelland J said that a dollar-for-dollar costs order is not logical, fair and reasonable;

   b)a dollar-for-dollar order does not permit an evaluation of whether the costs order is logical, fair or reasonable and it deprives the party adversely affected by the order of an opportunity to review the order;

   c)the dollar-for-dollar order does not specify the amount to be paid nor does it identify a process for determining the amount whether by agreement or assessment; and

   d)by reason of the absence of certainty, the possibility of review is compromised.

   [94] [2018] FamCA 664.

   [95] [2016] NSWCA 128.

   [96] [2011] NSWCA 375.

9. There is considerable force in those observations.

10. Some attempt was made to draw the threads together in the learning on a dollar-for-dollar litigation funding order in Shelbourne v Shelbourne.[97]  There the court held as follows –

    17.A dollar-for-dollar order is but one example of interim orders which oblige a party to fund the legal costs of their opponent, commonly referred to as a litigation funding order.  From the authorities, the following principles relevant to such orders can be distilled:

    (a)The source of power to make a litigation funding order includes s 74 of the Act (by way of interim spouse maintenance), s 79 and s 80 of the Act(1) (by way of interim property division) and s 117 of the Act (by way of interim costs order);

    (b)Different considerations will apply depending upon which head of power is sought to be engaged;

    (c)If s 117 of the Act is engaged, then the matters articulated in s 117(2A) are required to be considered, and the Court may make such an order as it considers appropriate, provided there are justifying circumstances. That said, at an interim hearing, findings in relation to all s 117(2A) factors may not be possible; and

    (d)Notwithstanding the head of power engaged, often the disparity of resources available to the parties to fund the litigation will be identified as demonstrating a desirability to establish a “level playing field”.

    [97] (2019) 60 Fam LR 183.

11. Whether a dollar-for-dollar litigation funding order is a last resort as Watts J held it was seems to have been omitted from the consideration given to the point in Shelbourne.  In Shelbourne the court was critical of the trial judge’s path of reasoning not being adequately exposed. 

Conclusions about the first, second and third issues

1. The wife sought $500,000 by way of partial property settlement and a further $500,000 as a lump sum by way of litigation funding.  The husband was willing to provide a partial property settlement of $348,288.63 and not beyond.  He said the wife had not demonstrated an entitlement to any sum beyond that amount.

2. The authorities make it plain that the precise provision must be identified pursuant to which an advance of the type sought is made.

3. So far as the $500,000 part property order was concerned the fact that more than one such order had already been made did not foreclose on the wife applying again for a partial property order.  She sought this time half a million dollars.  Beyond the amount of $348,288.63 the husband opposed any further amount as he said the wife has not shown why she needs a partial property settlement beyond meeting her legal fees already incurred.

4. Her claim for $500,000 was ambit.  She already receives $2000 per week for maintenance and lives in unencumbered accommodation that she owns.  Once the part property sum of $348,288.63 is paid, she will have very little in the way of outstanding legal expenses.  Her case is nearly ready for trial. 

5. I am willing to proceed on that basis that in accordance with principles long settled by Strahan, an order for the payment of $500,000 is just and equitable.  The source of the funds is a matter for the husband.  Even though the wife owns assets her cash flow is poor.  The effect of an order for $500,000 by way of further partial property settlement enables the wife to meet ongoing legal expenses in the lead up to trial. 

6. The further application for $500,000 as litigation funding is refused.  I take the view that the line of reasoning adopted by McClelland J in Selena & Montez and Quayle & Perceval is correct and is to be preferred over other learning on point.  Litigation funding orders are to meet costs actually incurred.  The New South Wales Court of Appeal has held that any costs order must be logical, fair and reasonable.  A dollar-for-dollar costs order merely enables the party in the allegedly inferior financial position and who contends a “level playing field” is required, to be paid an amount equivalent to the amount paid by the party in the allegedly superior financial position.  No account is taken of the logic, fairness or reasonableness of any amount disbursed under the dollar-for-dollar regime.  Further, the dollar-for-dollar mechanism operates as an indemnity for costs “to be incurred” and does not specify the amount to be paid nor does it identify a process for determining the amount to be paid.  It simply provides for one party to receive payment of an identical sum as the other is paid.  It may well be that Watts J had those concerns in mind when his Honour held that a dollar-for-dollar order was an order of last resort.  I decline to make the order sought.

7. As the learning essayed above reveals, partial property orders can be made on multiple occasions.  Each application must be determined on the merits that present themselves when the application is made.  If the wife brings a subsequent part property application it will need to be determined.

Form of order

1. It seems to me that the parties should have an opportunity to absorb the above comments and thereafter they should bring in an agreed minute that gives effect to these reasons.  I shall require that minute by 4pm on 7 October 2020.

I certify that the preceding one hundred and forty-seven (147) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 30 September 2020.

Associate: 

Date:  30 September 2020