Yeats and Yeats

[2008] FamCA 430

FAMILY COURT OF AUSTRALIA

YEATS & YEATS [2008] FamCA 430

FAMILY LAW – COSTS – Interim costs order
FAMILY LAW – SPOUSE MAINTENANCE – Interim spouse maintenance order

Family Law Act 1975 (Cth)

Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578

APPLICANT: Mrs Yeats

RESPONDENT: Mr Yeats

FILE NUMBER: SYC 1755 of 2007

DATE DELIVERED: 6 May 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Le Poer Trench

HEARING DATE: 2 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campbell

SOLICITOR FOR THE APPLICANT: Greg Walsh & Co

COUNSEL FOR THE RESPONDENT: Mr Aldridge

SOLICITOR FOR THE RESPONDENT: Murphys Lawyers Civil

Orders

1. The husband is to pay to the wife the sum of $100,000 by way of interim/partial property settlement. Such funds are to be paid to the solicitors for the wife to be applied by them for the purpose of funding the wife’s defence in criminal charges brought by the Crown in relation to alleged actions by the wife during the time she worked at the W Business.

2. Any balance of the fund paid pursuant to order 1 herein is to be paid to the wife by her solicitors only upon conclusion of those criminal proceedings, including any appeal.

3. The husband is to pay to the wife the sum of $100,000 by way of interim costs. Such funds are to be paid to the solicitors for the wife to be applied by them for the purpose of funding the wife’s proceedings under the Family Law Act.

4. Any balance of the fund paid pursuant to order 3 herein is to be paid to the wife by her solicitors only upon conclusion of those family law proceedings, including any appeal.

5. Pending further order, the husband is to pay to the wife the sum of $1000 per week by way of interim spouse maintenance.

6. I note the wife seeks two (2) costs orders, one in respect of the applications which I have determined today and the other in relation to proceedings generally. 

7. By the close of business 14 May 2008, the wife is to file any further written submissions she wishes to make in respect of the costs applications. Such document is to be provided to my Associate, and to the solicitors for the husband.

8. Within a further period of ten (10) days after receipt of those submissions, the husband is to file and serve any written submissions in reply. Such document is to be provided to my Associate.

9. I reserve my decision in relation to those costs.

10. Upon the determination of the outstanding costs applications referred to in these orders the matter is to be forthwith transferred to the Supreme Court of New South Wales to be consolidated with proceedings in that Court.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1755 of 2007

MRS YEATS

Applicant

And

MR YEATS

Respondent

REASONS FOR JUDGMENT

1. This is an application by the wife for interim orders as amended on the day of the hearing by exhibit W1. 

2. In her application the wife seeks $1000 per week spouse maintenance and a partial property order under s.79 for a payment of $400,000 being provision for costs. 

3. The wife in her affidavit, sworn 28 April 2008, discloses that she has income of $479 per fortnight as a payment from the Department of Social Security. 

4. In her financial statement filed on 12 March 2007 the wife set out her actual expenditure required to support herself. That document did not have regard to s.75(2)(g) of the Family Law Act 1975 (Cth). 

5. In the wife's affidavit sworn 28 April 2008 she attached a schedule of reasonable living expenses which totals $2210. 

6. The wife was removed from the W Business, which she says she managed, on 17 July 2006.  She says that since that time she has sought medical attention and has been prescribed medication.  As at 28 April 2008 she said she still experienced panic attacks and extreme anxiety.  She feels she has lost confidence in herself.  She feels worthless and she breaks down and cries.  She finds it difficult to go out in public.  She does not feel that she could work.  She has not sought employment as she has no confidence she could hold down a job.

7. On 23 March 2007 the wife obtained a medical certificate from Dr L.  At that time he reported her suffering from anxiety, depression, panic attacks and agoraphobia.  He said she was unfit for work from 22 March 2007 to 22 June 2007.  Effexor was prescribed.  He also planned psychological counselling for the wife.  This is set out in annexure G to the wife's affidavit sworn 25 February 2008.

8. The wife is 52 years of age.  The parties met in 1989 and were married in April 1992.  The wife has had four children.  None of the children are the husband's.  At the time of cohabitation the wife had no assets.  The husband had substantial assets including the W Business, a business in the hospitality industry.  Shortly after meeting the parties commenced to live in a de facto relationship.  The wife worked in the W Business during cohabitation.  This is a fact which is disputed by the husband. 

9. Between about 1993 and 1996 the wife said she also worked in the R Business, another hospitality business.  I am not clear on the evidence from the husband whether or not that is disputed.  This was a business partly owned by the husband.  For a period of about six months the wife said she worked in an establishment known as the K Business which the husband partially owned.  Again, it is not clear to me from the husband's evidence whether he agrees she worked in that business or not.  Certainly he attributes the failure of the business to the wife.

10. In late 1999 or early 2000 the parties separated.  Following the separation the wife managed the W Business at a weekly wage of $1000.  The husband's evidence is that was when her role as an employee in fact commenced.  She was an acting licensee.  She had accommodation on site free of charge. 

11. The wife currently lives in a rented two bedroom unit which she shares with her sister and her sister's husband.  She would like to rent a residence of her own.  Such a desire in the circumstances of this case does not seem unreasonable. 

12. Prior to the events of 17 July 2006 the wife said she had the exclusive use of a 2005 Nissan motor vehicle.  Again, some aspects of this are in dispute.  It was a relatively new model car.  Currently she has no vehicle. 

13. Whilst cohabiting with the husband the wife says the parties leased residences as well as having the W Business residence.  One unit at L was rented for $650 per week.  It was well furnished.  It overlooked the beach.  After separation a property at C was rented which the wife was able to use three days a week.  That property was rented for $700 per week.  It was comfortably furnished. 

14. Following the separation premises at S were rented for $650 per week.  It was leased in both parties' names. The wife stayed there three nights per week. 

Costs

1. The wife has annexed to her affidavit a costs agreements between herself and her solicitors in relation to the Supreme Court proceedings, the Family Law Act proceedings and the criminal proceedings she is involved in.  In her affidavit filed on 27 February 2008 the wife said she has incurred legal fees with her solicitor of $100,000 and counsel's fees of $50,000 to $60,000. 

2. On 23 October 2007 the wife was charged with “make false instrument”, “use false instrument” and “obtain money by deception”.  She has pleaded not guilty.  The matter is to be heard on 12 and 13 May at Burwood Local Court and may continue thereafter. 

3. Prior to 17 July 2006 the wife was employed by J Pty Ltd on a package of about $90,000 per annum.  It is common fact that the husband is the beneficial owner of J Pty Ltd. 

4. The husband opposes the orders sought by the wife. In his Financial Statement sworn on 19 October 2007 he discloses an income of $1500 per week.  He discloses assets of $12.5 million and liabilities of $8.8 million.  He is 63 years of age.  He had been previously married.  He did not resolve the property matters with his former spouse until August of 2004. 

5. The husband claims he did not commence his relationship with the wife until mid 1991.  This differs from the wife's contention.  He says cohabitation commenced in mid 1991.  He alleges a separation in late 2000.  He claims the wife did not work during the cohabitation.  He said she became an employee of the husband in the W Business from 2001.  The husband claims the wife defrauded him or J Pty Ltd or a combination of both. 

6. The wife has commenced proceedings in the Supreme Court of New South Wales against the husband, the New South Wales Police, J Pty Ltd and a solicitor, Mr A.  The wife seeks damages in those proceedings of an unspecified amount. 

7. The husband claims the wife has defrauded himself and J Pty Ltd of the sum of $800,000.  He has lodged a cross-claim for $800,000 in the Supreme Court.  He further alleges the criminal proceedings relate to a sum of $77,000. 

8. The husband contests many of the facts about the parties' cohabitation which have been put forward by the wife in her affidavit material. 

Interim Spouse Maintenance Order

1. Sections 72, 74 and 75 of the Act set out the principal provisions relating to spouse maintenance.   To reach a position of being able to make an order as sought by the wife the following pathway needs to be followed:

   i)To determine whether the wife is unable to support herself adequately because of physical or mental incapacity for appropriate gainful employment or for any other adequate reason having regard to s.75(2).

   ii)To determine the husband’s capacity to pay. 

What sum does the wife need to support herself adequately? 

1. In her affidavit sworn on 28 April 2008 the wife annexes a list of what she calls reasonable living expenses.  The expenses add up to $2210. Whether the expenses are reasonable needs to be judged by reference to s.75(2) and in particular, s.75(2)(d)(g) and (o).  In the list of expenses claimed by the wife my attention was drawn by the husband's counsel to a claim for expenses associated with the use of a car.  I was taken to the wife's own evidence where she said she had lost her driver's licence.  There is no other submission made about the excessiveness of the wife's reasonable expenses. 

2. In her affidavit the wife sets out the financial circumstances of the cohabitation.  During the cohabitation the parties occupied residential premises outside of the hospitality business run by the husband and his associated companies.  The parties are at issue as to whether the wife worked in the business during the cohabitation.  They agree that post-separation the wife did manage the W Business. 

3. The wife says she had free accommodation of a modern and comfortable standard.  The accommodation had been renovated during the cohabitation or shortly following same.  There was also a house at C which the wife was able to use up to three nights a week and another at S.  The wife drew a wage of $1000 per week from the hospitality business.

4. I accept the wife's evidence in this regard; this being the hearing of an application for interim orders and as such no cross-examination took place.  The evidence of the wife, on its face, does not seem unacceptable.  The wife gave evidence about the amount paid for rental for the properties used by the parties as above mentioned. 

5. The wife currently shares accommodation; being a two-bedroom unit, with her sister and brother-in-law.  In the circumstances of the case she should be able to rent her own accommodation.  The rental she forecasts does not seem unreasonable. 

6. The husband lives in the D Business with his partner and her 16 year old daughter.  He estimates his food costs of $100 per week and those of his partner the same.  His total expenses are $2235.  He says he meets the shortfall between income ($1500) and expenses from his savings.  The husband has assets which he estimates to be worth $12.5 million and liabilities of $8.8 million.  He has therefore, on his own admission, $3.6 million worth of net assets. 

What is the wife’s capacity to support herself?

1. The wife is 53 years of age.  She claims to be unfit for the only work she is qualified for; namely in the hospitality industry.  She says that the events of 17 July 2006 had traumatised her and affected her health and confidence.  The husband was critical of the wife in that she had not provided any updated medical evidence. The evidence she has provided I have set out in these reasons thus far. 

2. Putting the wife's evidence at its highest, I do accept that the wife is unable to work at this time and therefore she is unable to support herself adequately in her current circumstances. 

Does the husband have the capacity to pay? Is he reasonably able to do so?

1. The husband's financial circumstances are before the Court contained in his Form 13 Financial Statement and affidavits sworn 19 October 2007 and 28 April 2008.  As stated earlier, he has assets totalling $12.5 million.  This includes $1,045,000 in publicly listed shares.  He has a luxury car valued at $150,000.  He said that in 2007 tax year he received dividends from J Pty Ltd of $50,000, AMP share dividends of $25,000 and other dividends from public companies of $3000.  The accounts of J Pty Ltd for the 2006 and 2007 tax years have not been completed.  In light of that disclosure it is difficult for me to understand the husband's representation that his only income available to him from J Pty Ltd in the 31 June 2007 year was a $50,000 dividend.

2. It is also difficult to see how an income of $78,000 produces a tax liability of $80,000 as asserted by the husband, especially as he says most of his income is from franked dividends. 

3. The husband is owed $1.7 million by Y Pty Ltd.  He has a share portfolio said to be worth $1.045 million.  The husband has not disclosed any detail of the movement in any of the loan accounts he has with any of his associated corporate interests.  In his affidavit sworn 28 April 2008, the husband says in paragraph four that his expenses exceed his income by $735 per week. He meets the shortfall from savings.  However, his Form 13 Financial Statement shows no savings capable of meeting such an expense. 

4. The husband was able to borrow $750,000 from Y Pty Ltd to acquire a share portfolio.  It seems odd that he would have to borrow any money from that company when that company owes him $1.7 million on a loan account.  In short, I can have no confidence that the husband has made a full and frank disclosure to the Court about his true financial position.  That being the case I am comfortable in concluding that the husband does have the capacity to reasonably meet a payment to the wife of $1000 per week spouse maintenance pending further order.

Conclusion on Interim Spouse Maintenance

1. In the circumstances, I do not see the wife's application for $1000 per week interim spouse maintenance as excessive.  It is totally reasonable in the context of the case and an order for her support in that sum should be made. 

Payment of the wife’s costs/ interim property application

1. The wife’s application before the Court calls for payment of $300,000 for the provision of costs for the Family Law proceedings and $100,000 for payment of costs in relation to the criminal proceedings the wife is facing.  The application is sought pursuant to s.79.  It is sought as an interim property order.  The wife relies on the decision of Paris King Investment Pty Ltd v Rayhill [2006] NSWSC 578.

2. To the extent that the case is authority for the power of the Court to make an order for interim property orders, I am directed to paragraph 33 of the judgment.  In that paragraph the following appears:

   “But many of the foregoing considerations are less important, though not necessarily irrelevant, where what is relied on as a source of power is not s 117 or s 74, but an interim property order under s 79 and s 80(1)(h). In that respect, the Full Family Court said in Zschokke (780–781) that while the requirements of s 79(2) and (4) must be observed in the same manner as for any interim property order, if it appeared that the applicant would likely receive by way of property settlement a sum sufficient to cover the advance, then an interim order may be made [Zschokke, 780–781; see also In the Marriage of Harris (1993) 16 Fam LR 579 at 586].”

3. Of particular note are the words: "[i]f it appeared that the applicant would likely receive by way of property settlement a sum sufficient to cover the advance then an interim order may be made."    It is the above words which the husband has seized upon in his submissions.  It is his contention that if the husband was successful in his cross-claim in the Supreme Court it must be seen as at least possible if not probable that such a result would achieve a sum greater than that likely to be achieved by the wife under the Family Law Act. 

4. It is the husband's case that the wife has fraudulently removed assets of the corporate entities controlled by him.  He annexes a copy of his cross-claim.  No evidence has been placed before the Court or before me which would enable me to form any preliminary view about the substance of the husband's cross-claim in the Supreme Court or the likelihood of success.  I am left therefore to consider that which has been placed before the Court in relation to the Family Law Act proceedings. 

5. At the commencement of the 10 or 11 year cohabitation the husband was a wealthy man and the wife a person of no substantial assets.  There is a dispute about the contribution made by the wife to the husband's assets during the cohabitation.  The wife alleges a substantial contribution and the husband alleges virtually no contribution towards the husband's assets and the marriage as a whole. 

6. Following separation it was conceded by the husband that the wife was employed in the W Business until 17 July 2006.  During this period the husband provided other benefits to the wife in addition to her employment.  At the current time the husband concedes net assets he owns of $3.6 million.  The wife's counsel contends that if the husband has disclosed $3.6 million the probabilities are that it will subsequently prove to be much higher.  That may be the case but it is not a matter that I can take into account.

7. Taking a broad view, I think it reasonable to conclude that the wife will achieve a result greater than that sought by her in her application for a partial/interim property order and in those circumstances the authorities would support an order being made as sought by the wife. 

8. If I be wrong in the above conclusion then I would need to consider the alternative application made orally in Court before me for a costs order under s.117(2) for $300,000 in relation to the Family Law Act proceedings. 

9. The wife has established to my satisfaction that she has no capacity to fund legal costs for a property case she is facing under the Family Law Act.  The husband has all the resources and assets of the marriage under his control.  He has engaged family law solicitors of high repute and he has retained senior counsel and junior counsel.  The wife should be able to play on a level playing field where there are assets of the magnitude referred to in the evidence before me. 

10. Looking at s.117(2A) it is clear that the husband has substantial assets.  I am satisfied that the husband could provide up to $300,000 as sought by the wife should I so order.  At this stage of the proceedings the financial circumstances of the parties is the most significant matter to be considered under s.117(2A).  It was submitted by the husband that there is an element of perversity at work in the situation where the husband alleges substantial fraud by the wife against him and at the same time has to provide her with some of his assets to fight that claim. 

11. It was submitted that this would give rise to an injustice if the husband was able to prove his case and then face a situation where any order against him to pay a property adjustment was less than his verdict for fraud.  I acknowledge that as a possibility.  But, on the other hand, it would be equally unjust to the wife if she was unable to properly and equally be represented in the Family Law case and because of that was unable to achieve a just result.

1. I conclude therefore that the wife is entitled to an interim costs order in her favour which can be re-visited in the ultimate trial and be the subject of property adjustment to compensate the husband, should the justice of the case ultimately require that. 

How much should the Interim Costs and/ or Interim Property Order be?

The family law costs

1. It is reasonable that the wife have a fund of money to draw upon to meet her outstanding Family Law Court costs and to pay for further costs in the short term.  The forecasted hefty expenses of valuation will usually be attended to by the appointment of a single expert.  In a case such as this it would not be uncommon for the Court to order that the husband meet the costs of the single experts in the first place.  As such, I do not see the necessity at this time to provide funds to the wife to enable her to engage her own experts.  I think, in the circumstances, that a figure of $100,000 to be paid to the wife's solicitor's trust account to be applied only to costs for the Family Law proceedings would be sufficient and in the future the wife could seek further amounts should that prove necessary.

Conclusion on Applications for Interim Property Settlement and Interim Costs

Interim Property

1. I conclude that the wife should be paid the sum of $100,000 by the husband by way of interim/partial property settlement.  The funds should be paid to the wife's solicitors to be applied by them to fund the wife's defence in criminal charges brought by the Crown in relation to alleged actions by the wife during the time she worked at the W Business. 

2. Once those proceedings are concluded, including any appeal, the balance of the fund can be paid to the wife.  The reason for this type of injunction on the wife is to avoid the circumstances of money being spent in other areas by the wife and then the Court having to consider an additional application for advanced property division orders to meet further costs associated with the criminal proceedings. 

Interim Costs

1. I conclude that the husband should pay the wife the sum of $100,000 for costs in the Family Law proceedings with the funds to be retained by the wife's solicitors for application to her costs.  The injunction against payment to the wife for use other than the payment of her costs, is to avoid the necessity of further applications by the wife for additional costs where part of funds provided to her by this order was applied otherwise than for the purpose of costs.

2. Further, as I have stated earlier, the husband should pay the wife the sum of $1000 per week by way of spouse maintenance pending further order.

3. The proceedings before the Court which now remain outstanding are principal proceedings in relation to property matters between the parties, the wife having lodged her application for final orders on 12 March 2007 and the husband filing a response on 19 October 2007. 

4. One of the applications outstanding before the Court is an application of the husband, contained in the response dated 19 October 2007, for the substantive applications for property settlement under s.79 to be adjourned until following the conclusion of proceedings in other jurisdictions and specifically proceedings referred to as the New South Wales Supreme Court proceedings commenced by a Statement of Claim in 2007 and criminal proceedings in the Local Court against the wife. 

5. The matters in relation to the criminal proceedings do not concern me greatly but so far as the Supreme Court proceedings are concerned, the evidence before the Court is that those proceedings are proceedings in which the wife is seeking damages against a number of persons, amongst which are the husband and J Pty Ltd. The claim pursued by the wife, as I understand it, arises out of the circumstances which occurred on 17 July 2006. 

6. As against those proceedings, the husband has filed a cross-claim seeking $800,000 as a remedy in relation to alleged fraud by the wife against the husband and/or J Pty Ltd and/or associated entities, of which, the husband is a beneficial owner. 

7. So far as the property proceeding in this Court is concerned, I think, reasonably forecasting as best I can, it is most unlikely that this Court would proceed to hear the property application whilst there are still outstanding in the Supreme Court the proceedings commenced by the wife and/or the cross-claim commenced by the husband and others to which I have referred.

8. One of the conclusions that the Court must reach in relation to a property application is to identify the property and financial resources of the parties.  With an outstanding claim of $800,000 against the wife and with the potential for unlimited damages to be paid to the wife pursuant to her proceedings in the Supreme Court, it seems to me that the best place for the totality of the proceedings to be determined is in the Supreme Court.  That is, the Family Law proceedings along with the Supreme Court proceedings.  It makes sense for the proceedings to be determined together.  If it was possible to transfer the proceedings from the Supreme Court to join in with the proceedings in this Court it might possibly be appropriate.  However, in the Supreme Court proceedings there are parties who are effectively strangers to the case between the husband and the wife, namely the New South Wales Police and a solicitor, Mr A.  Those parties would predictably oppose the transfer of the Supreme Court proceedings to this court. In those circumstances it would probably, on balance, be a better use of the Court's resources if the matters were all determined in the Supreme Court.

9. Accordingly, I conclude, that the proceedings should be transferred to the Supreme Court and I will shortly so order. 

10. In relation to the order for the transfer of the proceedings to the Supreme Court I will make an order for that transfer to occur following my determination of the outstanding costs applications.

11. I will direct that the wife make any further submissions she wishes to make in respect of those cost applications by providing me with written submissions by the close of business next Wednesday, 14 May, and providing a copy of those to the husband's solicitors and to Mr Aldridge and direct that the husband file any submissions in reply within a further period of 10 days thereafter. I reserve my decision in relation to those costs. 

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench.

Associate: 

Date:  13 June 2008