Yin and Wao

[2009] FamCA 1362

FAMILY COURT OF AUSTRALIA

YIN & WAO [2009] FamCA 1362

FAMILY LAW – COSTS – interim – indemnity – reserved

Family Law Act 1975 (Cth)

APPLICANT: Ms Yin

RESPONDENT: Mr Wao

INDEPENDENT CHILDREN’S LAWYER: Jennifer Weate & Associates

FILE NUMBER: SYC 2949 of 2008

DATE DELIVERED: 7 October 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Judicial Registrar Loughnan

HEARING DATE: 7 October 2009

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Barkus Doolan Kelly

COUNSEL FOR THE RESPONDENT: Mr Friedlander

SOLICITOR FOR THE RESPONDENT: Sharah & Associates

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER Jennifer Weate & Associates

Orders

1. That any documents on which the father seeks to rely in relation to interim parenting issues be filed and served within fourteen (14) days from today’s date.

2. That any documents on which the mother seeks to rely in relation to the father’s interim parenting application be filed and served within 28 days thereafter.

3. The Court requested that the Docket Registrar conduct a case management event in relation to interim parenting issues at a time convenient to the Docket Registrar and the parties in or after the first week in December 2009.

4. The Court noted if the final hearing is projected to be within three (3) months of the date by which the interim proceedings are ready, the Court would not anticipate conducting a further interim parenting hearing.

5. The Independent Children's Lawyer is excused further attendance today.

6. That orders be made in terms of paragraphs 4, 8 and 9 (as amended) of the Further Amended Minute of Consolidated Orders marked Exhibit A as set out hereunder:

   “4.That by way of interim costs order against the husband, Barkus Doolan Kelly are hereby authorised to transfer the sum of $100,000 from the controlled monies account established in accordance with order 3 of the Orders made 19 May 2009 into their trust account.

   8.An order that the husband pay all the wife’s costs on an indemnity basis of and incidental to the wife’s Application in a case filed 19 August 2009, the appointment of Ms Rachel Slat, and of carrying out the order made 20 August 2009 and accessing data.

   9.An order that by way of implementation of Order 8, the wife’s solicitor is authorised to pay from the controlled moneys account established in accordance with Order 3 of the Orders made 19 May 2009 the amount on the invoice raised for costs charged by Ms Rachel Slat, employer Swaab Attorneys in relation to the appointment made at Order 3 of the Orders made 20 August 2009.” 

7. That in relation to the husband’s Amended Response filed by leave today, an order is made in terms of paragraph 3 as set out hereunder:

   “3.That the husband and the wife forthwith do all things necessary to cause to be paid to the husband the sum of $25,000.00 from the controlled monies account held by the wife’s solicitors to enable him to purchase a vehicle.”

8. That forthwith upon the purchase of a motor vehicle the husband provide to the solicitors for the wife any invoice or documents associated with that purchase and the husband is restrained, following the purchase of that vehicle, from encumbering or disposing of that motor vehicle without the prior written consent of the wife.

9. An order is made in terms of paragraph 5 of that Amended Response as set out hereunder, but changing the amount of $12,000.00 to $5,000.00:

   “5.That the husband and the wife forthwith do all things necessary to cause to be paid to the husband the sum of $5,000.00 from the controlled monies account held by the wife’s solicitors for the purchase of household necessities and clothing to set up a home for himself and the children.”

10. That the Amended Response be adjourned generally in relation to the order sought at paragraph 13.

11. That otherwise the Amended Response is dismissed.

12. That the application by the husband for spousal maintenance in the sum of $750.00 per week is dismissed.

13. That the costs of the parties be reserved.

14. That the application of the wife contained in paragraph 3 of Exhibit A is adjourned generally with liberty to restore on seven (7) days’ notice to the Court and to the other party.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2949 of 2008

MS YIN

Applicant

And

MR WAO

Respondent

REASONS FOR JUDGMENT

1. These are proceedings for various financial orders.  The matter has had something of a tortured history.  The proceedings have a 2008 start date and orders were made in June, July, August, September, October and December 2008 and then orders were made in May, July and two sets in August 2009.  There are parenting and financial issues before the court.  The first day of the contested trial has been expedited.  The parties have not been told when it will be.

2. Relatively recently, an Anton Piller order was granted and executed. There are applications outstanding, with orders sought by each of the parties.  The wife’s orders are expressed in a further amended minute of consolidated orders and that has happened because this lumpy matter has bumped through the duty list not being able to be adequately reached or dealt with on some occasions despite the fact of the orders that have been made in the past.

3. The husband responds with a Response dated yesterday in which he seeks a raft of orders. This hearing is conducted on the papers and I am not permitted to make a finding of fact about disputed issues of fact without independent evidence.

4. Orders have been made in the past for the sale of property and for the proceeds to be held in a controlled moneys account.  I think there might have been two such accounts.

5. On 19 May 2009, the parties asked this court to make orders that, upon the sale of a property at C, the net proceeds be placed in a controlled moneys account and from that account, the parties were to authorise $962 per week to the wife by way of spousal maintenance, $2172 per month to the husband to pay his rent, $1682 per month for the wife to pay for a motor vehicle and  $50,000 to each of the firms of solicitors for interim costs in respect of outstanding fees. 

6. The parties have two children, H and N, who are at E College and are about 9 and 7 years of age.

7. There are outstanding and accruing rates and unit levies in relation to all of the parties’ real estate, utilities and  mortgage shortfalls in respect of Australian real estate after the application of rent. There are outstanding accounts due to a single expert.

8. The parties were to apply the proceeds of sale of properties at S and D in a certain way.

9. I will run through the prayers for relief.  They are not expressed exactly the same way. The wife seeks that the husband’s application be dismissed and I will deal with that.  She seeks some orders about contents and apparently events have overtaken that application.  She seeks that arrangements be made for the appointment of an agent for a property in D in Victoria and, I am told, on behalf of the wife, that that matter is resolved or virtually resolved. She seeks, by way of interim costs, a further payment to her solicitors of $100,000 from the controlled moneys account.  There is evidence in relation to the costs incurred.  There is evidence in relation to estimates of work outstanding.  There is in evidence a costs agreement between the wife and her solicitor. 

10. There is a recent decision of the Full Court of Strahan and Strahan [2009] FamCAFC 166 where the Full Court looked again at the approach taken in interim property settlement proceedings. The court resiled from the approach identified in Harris and Harris (1993) FLC 92‑378. The principle from that latter authority that is still good law is that a court should be cautious before taking a step by way of interim property settlement that makes it impracticable to properly address the parties’ claims at a final hearing, whether that is because it causes the destruction of a piece of property that is sought in specie or whether it reduces a fund below that which would meet a proper claim.

11. In Strahan the Full Court also dealt with interim costs. In the context of the reasoning in Strahan there is little logic in the approaches outlined in Poletti and Poletti (Unreported, Family Court of Australia, Nygh J, 2 March 1990) and Zschokke and Zschokke (1996) FLC 92‑693. The idea of carefully meting out joint funds only in circumstances where a client will be left unrepresented; requiring that there be a complexity in the financial circumstances of the parties needing special examination by an expert; cases where the patrimony of the family is held by one party and the other party suffers a deficit of information and resources is not required by the legislation. What is almost invariably sought by a party in these cases is access to that party’s own money. Just because parties are caught up in property proceedings does not mean that life stops and all need for capital expenditure ceases. Where the orders sought do not jeopardise any claim in the case, why on earth should a party need to come cap in hand to the court and be required in further, expensive defended proceedings to justify access to some of their own money. Why should the Court be concerned whether the need was legal fees or fixing a refrigerator?

12. So, the wife seeks $100,000 in legal fees.  As Mr Friedlander said, this case is characterised by a great deal of lack of trust. The history of the proceedings, the number of court appearances, the fact that the hearing has been expedited are testament to the likelihood that more costs will be incurred. There is a fund. The wife needs access to the fund. Neither party suggests that the wife will not receive a further $100,000 out of the pool of assets. I will make that order.

13. In relation to the next order sought, the wife seeks that that part of the May orders that provided for the husband’s rental, not be continued. I am not going to interfere with the order.  I do not know why the parties agreed to it but they did.  There have been remarkable events in his recent history. One can be critical of the husband because he has not met his obligations of disclosure. However, there is no doubt that, in May, the parties thought the husband’s rent was a proper use of joint funds. Relevantly, the payment is not by way of spousal maintenance. It is a distribution to the husband out of joint moneys. He is using his own money to pay his rent.  If the parties were happy about that in May, I will leave it in place.

14. I think I was told there is an agreement in relation to instructions going to a single expert.

15. Next, an order is sought in relation to inspection of documents. That is not pressed.

16. Next, an order is sought in relation to the costs of the wife of her application which resulted in the issue of the Anton Piller order.  As I said during the course of submissions, it is almost invariable that such an order would be made, that there would be a costs orders arising from an Anton Piller order.  It is a draconian form of relief. Such an order risks an occurrence that Mr Friedlander asserts might have accidently happened here. It risks putting one party in possession of privileged material or private material of the other. Such an order is granted where the court is satisfied that there is a strong prima facie case, that there is likely to be material that will be destroyed or not made available unless the order is made and it is an order invariably made on an undertaking as to damages.  An independent solicitor is appointed to supervise so that there can be a record of what goes on.  It is extraordinary relief, not often granted and this order was granted and executed and there is nothing inconsistent with the case that was put before the court that I know about that suggests that the application was inappropriate. A costs order should be made. 

17. The costs are sought on an indemnity basis in relation to the application and the disbursement for the supervising solicitor and some other ancillary costs.  That means that there is a full indemnity.  In other words, that whatever the wife might recover by way of a party and party order which represents a partial indemnity assessed as reasonable and necessary, whatever she might be able to be recovered on a solicitor and own client basis, her actual costs, provided they were incurred, should be recovered and paid because such an application and such an order should not have been necessary.

18. The court has power to make an order, is to take into account the circumstances of the parties.  As to the parties’ income - the wife has a spousal maintenance order.  The husband declares, I think, $150 a week. The parties are said to have the order of two or three million dollars in assets. Thus there is a fund from which costs can ultimately be paid. 

19. I do not know of any offers of settlement under section 117C or in writing otherwise.  I do not know of any breach of court orders.  The wife was wholly successful.  It cannot be said, in terms of the section, that the husband was wholly unsuccessful in the application.  These were ex parte proceedings. 

20. As to the conduct of the parties, there is nothing in the conduct of that application that comes to attention.  As to other matter that would be relevant to the question of costs, the application arose because the wife came into possession of documents and information, I think by the device of having someone pretend to be a customer and try and undertake business with the husband, through a business the husband asserted was not trading.  The wife had that information and that supported the orders.

21. The husband’s case leaves him in a situation where he did not give timely advice to the wife.  Even if everything he now says is true, if he disclosed that to the wife when he could, which on his version of events, was in the middle of June, there may have been no justification for this order.  This seems to me an appropriate application and I will make the order.

22. Next, it is sought that that order be affected against the controlled moneys account. I will make that order.

23. Turning to the husband’s application, that is contained in his Response dated yesterday, filed by leave today.  Firstly, he wants the wife’s maintenance reduced by some dollars.  I am not going to interfere with the current order.  As I say, I do not know why the parties entered into the agreement in May. I do not know of any significant matter that has affected the calculation.  It is a very precise calculation $962.  There is simply no basis for making an amendment.  The threshold issue in respect of a variation of maintenance is found in section 83.  I must be satisfied that there has been a change of circumstances. I am not so satisfied.

24. Next, the husband seeks $25,000 from the account to purchase a motor vehicle.  He says he does not have a usable vehicle.  He borrows his mother’s motor vehicle.  He says his wife has an appropriate vehicle.  He says a commercial vehicle available to him:  (a) is not worth much;  and, (b) is not suitable for transporting the children. On the basis of the reasoning in Strahan, the orders should be made. This is a modest amount. It is not an amount that will be wasted, it will go into an asset. In order to preserve the value of the asset I will prevent the vehicle being encumbered.  I will make that order.

25. Next, the husband wants to use the wife’s motor vehicle until he purchases a vehicle. It does not take long to purchase a vehicle. The order he seeks is a recipe for problems. The parties enjoy a poor relationship to be euphemistic about it. It does not seem to me to be a sensible course to have them sharing a car.

26. Next, the husband wants a fund of $12,000 to purchase household necessities and clothing, to set up a home for himself.  In the several inches of material I went through, I do not recall now the detail of this claim. Again this is a relatively modest amount.  The husband has identified a need to replace things like winter clothing and so on. I will make provision for a payment of $5000.

27. Next, the husband wants the parties to pay $197,208.  There is not an immediately available fund to do that. He seeks to repay a debt that the wife does not accept.  In ordering that payment, the risk is that I am making an order that cannot be undone. The circumstances of the obligation are bizarre.  They have been discussed in the course of submissions but were not disclosed in a timely way. The effect of the husband’s case is: “Although I did not tell you about this debt, so you could make your inquiries about it, I would like you now to join with me in paying $197,000 to somebody.”  There is no evidence that the debt has been called in.  It is being serviced.  It is not necessary to make the payment. I will not facilitate the payment.

28. Some parenting orders are sought but that issue has been adjourned. 

29. The husband says he wants to pay his parents some money.  Again, it is a debt not conceded by the wife.  There is no evidence about any final demand being made for a payment.  It is not something that has to be done in the short term. If the payment was ordered I would be presuming on a finding at the final hearing.

30. Next, there is a strange application that the child support be payable out of the controlled moneys account. During submissions there was speculation about the source of power for such an order.  If the husband asks for that to come out of his share of joint funds, then it is really a machinery order in aid of him meeting his obligation. I am told that the liability is for a modest amount. I assume that he is assessed at the minimum rate. This is not a significant issue and I will not make the order.

31. Next, an order is sought by the husband for interim costs.  The only problem with this application, is that he has not made out any case.  One could infer that some costs have been incurred.  One could infer that they have to be met now. The problem is that the available fund is insufficient for the payment sought. As an overall proposition the parties could afford the payment the husband himself blocked the sale of a property relatively recently, notwithstanding that such a sale was initially requested by him. That in turn suggests that the demand for $197,208 to be paid to the L Factory was not pressing. The proceeds of sale of the property would have been a ready source of funds to pay that amount. For the same reason it suggests that any payment to his parents was not pressing.

32. Where there are no issues about the adequacy of the available pool of assets to meet the proper claims of the parties, Strahan is authority for the proposition that if parties have an expense whether it is to fix their refrigerator or to pay their lawyer, then they should be able to draw on their own funds to meet that expense. 

33. Here, there is no ready source of funds to meet the expenses the husband wants to address. There may need to be a sale of another property. The money has to come from somewhere. Thus there is no urgent need to deal with this issue. In the event that a fund comes into being, the husband can make a case about his need for costs. There should be evidence accounting for the costs that have been paid to date, the source of those funds and identifying any residual indebtedness for work already done. I propose to adjourn that application and it is a matter for the husband to bring that back. However, one of the tragedies of this case is that there are repeated interlocutory applications while the focus should be really on the final proceedings. We have dealt with many of those interim issues today.

34. There is an application by the husband to be paid $750 a week by way of spousal maintenance and there is no basis for that claim at all.  There is no reason why the wife would be obliged to provide him with support.  She, herself, is in receipt of spousal maintenance.  Even if one was to recast the application, so that it was not by way of spousal maintenance, we still have the basic problem of the husband’s case. The husband has not provided adequate disclosure.

1. It was the husband’s evidence that his business had failed and ceased to trade. It transpires that the husband engages in the same activity as that business, but on a commission only basis. He says that he is making some inroads through his commission income, into the asserted debt of about $197,000 Australian dollars.  That was not his revealed position when the parties put in place provision for living expenses in May. As to the asserted debt, as I have stated, the wife does not accept it as a joint debt. 

2. The husband’s case is unusual. The uncorroborated evidence of the husband contains an inherently unlikely set of facts. In any event he did not meet his obligation to provide proper disclosure to the wife. That is a fundamentally important obligation. The entire exercise of power under section 79 is frustrated by a lack of disclosure. The court has an overriding obligation to get to the truth of matters but that cannot be done at this stage. In those circumstances, the order stands and that application also is dismissed.

3. I will reserve the question of the costs of the parties.

4. In relation to the application of the wife contained in paragraph 3 of exhibit A, that application is adjourned generally with liberty to restore on seven days’ notice.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan.

Associate: 

Date: 7 December 2009