Zawadzki and Zawadzki

[2012] FamCA 1035

FAMILY COURT OF AUSTRALIA

ZAWADZKI & ZAWADZKI [2012] FamCA 1035

FAMILY LAW – PROPERTY - Application for interim payment of money for the Applicant Wife's anticipated litigation expenses - Whether order ought be made pursuant to s 117 or s 79 and so 80(1)(h) of the Family Law Act 1975 (Cth) - Where the Applicant Wife also seeks an amount for lump sum spousal maintenance - Whether the payment sought as spousal maintenance should be made pursuant to maintenance power or power to order interim property – characterisation at trial

Family Law Act 1975 (Cth)

Strahan & Strahan (2011) 93-466

APPLICANT: Ms Zawadzki

RESPONDENT: Mr Zawadzki

INDEPENDENT CHILDREN’S LAWYER: Ms R. Parry

FILE NUMBER: BRC 1604 of 2011

DATE DELIVERED: 10 December 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 10 December 2012

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Parker Family Law

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Brisbane Family Law Centre

Orders by Consent Until Further Order

Children’s Orders

1. Each party, Mr Zawadzki (“the father”) and Ms Zawadzki (“the mother”), their servants and/or agents be and are hereby restrained from removing or attempting to remove or causing or permitting the removal of the children, B, born … September 2006, and C, born … August 2008, from the Commonwealth of Australia, and it is requested that the Australian Federal Police give effect to this order by placing their names of the children on the Airport Watch List in force at all points of arrival and departure in the Commonwealth of Australia and maintain the children’s names on the Watch List until the Court orders their removal.

1. Neither the mother nor the father use the internet to post details of the court proceedings or which are likely to identify either party or the children who are the subject of these proceedings.

1. The mother and the father each be restrained from denigrating the other parent by use of the internet.

1. The mother and the father each be restrained from discussing these proceedings with the children, discussing the allegations/disclosures made by the children about the father or showing to the children any documents connected with these proceedings.

1. The mother ensure that the children attend with medical professionals, health professionals or other professionals as and when necessary, and if such appointment with a medical or health professional is made for the children, she will advise the father of such appointment within forty-eight (48) hours.

1. The Father’s Application in a Case filed on 8 October 2012 be dismissed.

Orders

Financial Orders

1. The sum of $60,000.00 from the funds held in Steadfast Solicitors’ trust account be forthwith released to the Applicant by way of trust account cheque in favour of the Applicant’s solicitor’s trust account.

2. Each party’s costs of the application be reserved to the trial Judge.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1604 of 2011

Ms Zawadzki

Applicant

And

Mr Zawadzki

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. There are substantive property and parenting proceedings between the parties to be heard in a trial set down for five days to commence on 4 March 2013. The substantive proceedings concern property settlement and, more particularly, the parenting proceedings which have been designated a Magellan matter. The parenting proceedings concern the two children, B, born in September 2006, and C, born in August 2008. They are currently in the primary care of the Mother.

2. Obviously, in the parenting proceedings, the outcome with respect to their future living arrangements will be determined by those proceedings and is not a matter upon which I can make any decision today, although the Respondent Father contends that he will be seeking an order for the boys to be living with him.

3. The Husband is 41 years of age and is currently unemployed. The Wife is 42 years of age and, likewise, is unemployed and is devoted to the care of the boys. The parties were both born in Europe and married in Europe in 1994 and moved to Australia on 25 November 1996 and they finally separated on 13 May 2008. There are three children of the marriage, the two of whom I have mentioned, and another child who is now an adult.

4. The current Application in a Case was filed on behalf of the Applicant Wife on 8 October 2012. By that application, the Wife seeks interim financial orders that the sum of $40,000.00 presently held in Steadfast Solicitor’s trust account on behalf of the parties be released to the Wife by way of her solicitor’s trust account to cover her anticipated legal expenses of the five day trial to commence, as noted, on 4 March 2013. There is also an application by the Wife that she receive $20,000.00 by way of lump sum spousal maintenance, or in the alternative, $20,000.00 be likewise released from that trust account held by the solicitors as an interim lump sum maintenance payment by the Husband to the Wife and there is also an application that the Husband pay the Wife’s costs of and incidental to this application, firstly on an indemnity basis, or in the alternative, fixed in the amount of $3,500.00.

5. As noted, the current application was filed on 8 October 2012, and I infer was brought to the notice of the Respondent Husband not long after that date. In the event, no Response or affidavit material opposing the application has been filed. There is a written submission on behalf of the Respondent Husband that has been filed, but no affidavit material or Response as such.

6. The Wife, by her application and supporting material, establishes that she is suffering currently from financial hardship.

7. In relation to the $40,000.00 lump sum that she seeks, in oral argument, the Respondent Husband agreed that the $40,000.00 could be paid to the Wife, provided that he, too, received $40,000.00 from the subject fund. The application for the additional $20,000.00 is opposed.

8. The Wife’s material establishes that there is, in terms of a balance of property, a total of about $170,000 held in cash in the trust account referred to. Whilst the parties differ about other values, it would seem that that is essentially the only remaining asset of substantial worth. The Respondent Husband also has about $28,000 in superannuation.

9. The material establishes that both parties have received payments in lump sum form from the proceeds of property that has been sold to date, but the harsh reality of the matter in terms of remaining property is as noted. In relation to the current position with respect to child support, whilst Exhibit 1 establishes that the Husband was paying child support in a reasonable sum, and indeed as at July of this year, reached a position where he was about $600 in credit, the fact of the matter is that he is presently paying about $7 a week in terms of support for the two boys. Plainly enough, that is wholly inadequate in terms of meeting their needs.

10. The absence of affidavit evidence from the Husband means that I cannot be satisfied as to reasons for him not working currently or in relation to his capacity to earn income. I am satisfied on the Wife’s material that she is currently not working in circumstances where she has the care of these two young children, but also in circumstances where she has health issues.

11. The Wife’s application demonstrates that she has spent approximately $60,000 in legal fees to date and expects to incur another $40,000 to prepare and prosecute the trial proceedings. Obviously, if $40,000 from the trust account is released to the Wife, there will remain about $130,000 available to be distributed so far as the final trial proceedings are concerned. The evidence of the Wife establishes the reasonableness as to the estimate of the further $40,000.00 she requires to prosecute the trial proceedings. The release of that sum is necessary in the sense of ensuring her current solicitors remain acting for her and to ensure her Counsel will be available for the trial.

12. So far as the $20,000.00 additional sum is concerned, the Wife’s material notes it is representative of approximately 16 months of payments at $300.00 per week, or just over two years’ worth of payments of $200.00.

13. As already noted, both parties have received since the sale of the former matrimonial home, substantial capital sums. The Wife contends that the material establishes, and it is not really in issue, that the Respondent Husband has received, since June 2011, a total of about $124,000, and indeed, since April of this year, has received $90,000. Whilst the Respondent Husband asserted from the bar table that he can account for these funds, the difficulty is that there is no evidence before the Court from him as to the manner in which he accounts for these funds, and on the Wife’s material, which is essentially uncontested, he has wholly failed to provide disclosure that has been sought in relation to his use of the funds referred to.

14. In circumstances where I heard some initial arguments and then stood the matter down to read the material, it was noted on the resumption that the Respondent had not provided any information in the interim to Mr Parker, who appears for the Wife, nor had he disclosed a current bank balance or the like to establish his present circumstances. The only material of relevance that I had before me from the Respondent Husband’s side is an historical Financial Statement, filed mid-year, and as was pointed out on behalf of the Wife, it discloses that of the expenses, $150.00 per week is being paid by the Respondent Husband, described as rent, to his present de facto partner, who appears with him today.

15. The Wife’s financial circumstances include, apart from the receipt of only $7 per week by way of child support currently, a fortnightly pension and other payments of social security. As noted, she is the primary carer of two young children aged six and four, and that will continue to be the case at least until the trial is heard and determined in March of next year. I note on the Wife’s material that she has previously been evicted from rental accommodation due to an inability, apparently, to pay rent, and has subsequently been reliant upon some benefaction from friends in terms of securing accommodation for herself and the children. On the current circumstances, her weekly rent is $360.00, with a weekly food bill of $250.00, and otherwise her material demonstrates an excess of expenses over the income available to her from social security. It is apparent on the Wife’s material that she does not have the capacity to borrow funds for the purpose of the forthcoming litigation, nor to borrow towards her living expenses. In this respect, I note that she has previously, at about the time of separation, taken out a personal loan for $10,000.00, which on her current evidence, is again at its maximum.

16. In relation to the proceedings today, the parties were able to reach agreement on an interim basis so far as parenting issues are concerned, but have been unable to agree on the financial relief that is sought.

17. The juridical basis for the Court to make orders with respect to the provision of litigation expenses include the power to make an order as to costs under s 117 of the Family Law Act 1975 (Cth) (“the Act”), the power to make interim property orders under s 79 and s 80(1)(h) of the Act, and the power to make maintenance orders. In the current case, in order to make an order pursuant to the costs power, I would need to consider three matters, namely whether there was a position of relative strength on the part of the Respondent, secondly, a capacity on the part of the Respondent to meet his litigation costs, and thirdly, an inability on the part of the Applicant to meet her litigation costs. It seems to me that the parties are both currently in a relatively poor position so far as financial strength is concerned, save in respect of the aspect that the Respondent has not explained, either by way of disclosure to the Wife nor by affidavit material before the Court, his use and expenditure of the capital sums that have been available to him.

18. So far as reliance upon the property power is concerned, it is to be noted that the Full Court of this Court reviewed that power relatively recently in the case of Strahan & Strahan (2011) FLC 93-466. There are two stages to an application in reliance upon that power. First, the Court should be satisfied whether it should exercise its discretion to entertain the application. In relation to that first stage, the Court needs to be satisfied that, on the overarching consideration, the appropriateness of exercising the power in the interests of justice. I am satisfied in this case that it is appropriate in the circumstances briefly described for the Court to consider exercise of its power to make an interim property order.

19. Having been so satisfied, I must consider, albeit briefly, the relevant matters required under s 79 of the Act in terms of determining the order to be made. There is dispute between the parties as to the prospective outcome of the property proceedings between them. No doubt I cannot determine that dispute today. The Wife contends that the final outcome will see her receive an apportionment of 75 per cent/25 per cent in her favour, albeit it was acknowledged that, overall, a likely outcome might be seen to be a 50 per cent/50 per cent outcome between both parties. For his part, the Respondent Husband contends that, from a starting point of the initial gross proceeds available to the parties from the sale of the home, amounts of $60,000.00 and $35,000.00 respectively ought be quarantined out of the funds available as being referable to, first, an inheritance received by the Respondent Husband as to $60,000.00, and as to $35,000.00, that being referable to a sale of a property he owned in Europe that was contributed to the relationship.

20. Apart from the difficulties in relation to that aspect, obviously the outcome so far as property orders to be made will largely be determined by reference to the parenting arrangements ultimately made, if not largely, at least that will be a relevant consideration for the Court, so, of necessity, the Court at this stage cannot predict with any great certainty the outcome. However, this was a lengthy marriage, and by necessary inference, each party made contributions to it over a lengthy period. There are, as already noted, three children of the relationship, including one of whom is now an adult. There is nothing on the material before me to suggest that consideration of contribution-based entitlements, other than the features that have briefly been mentioned, would separate the parties in terms of an outcome so far as contribution-based entitlements is concerned. With respect to s 75(2) factors, obviously there are child support issues separate to property proceedings, and that aside, the Wife has provided evidence before me as to her current and future likely circumstances so far as capacity to work is concerned, whilst the Respondent Husband has not provided such evidence.

21. In any event, in circumstances where the Father acknowledged in the course of hearing the application that the Wife should have $40,000.00, provided he received $40,000.00, it is necessarily implicit in such an acknowledgement that it is within the realms of entitlement or range of entitlements available to the Wife that she receive such funds. I am satisfied that in terms of the second or substantive stage in considering the jurisdiction under s 79, that it would be appropriate in the sense that it would just and equitable to make an order in relation to the $40,000.00 sought by the Wife as the source of power to make the order. It will be a matter for the judicial officer hearing the final proceedings to characterise such order or payment and the use of such funds as part of the final trial exercise. With respect to the $20,000.00 sought as and by way of the provision so far as living expenses are concerned, orders can obviously be made by way of lump sum spousal maintenance pursuant to the powers under Part VIII of the Act in terms of the right of a party to receive maintenance once a need is established.

22. The question of capacity can be answered also by reference to property of the parties, having regard to s 75(2)(b) of the Act. Alternatively, by way of an interim property order, provision could be made for payment of the amount, although in this context, the relevant question is whether there is a risk of an inability to reverse the order or its effects or to “claw back” the amount in circumstances where the remaining pool available to the parties is exceedingly modest.

23. On balance, I am satisfied that the Wife does establish the relevant need so far as her current financial circumstances are concerned. I am also satisfied that in the absence of evidence explaining the use of funds over the period, by inference, the Respondent has capacity, and even if he has in fact legitimately expended the funds, the fact that a further $20,000.00 comes from the trust account can likewise be a matter considered by the judicial officer finally hearing and determining the subject proceedings.

24. Given the requests for disclosure already referred to that have not been answered by the Respondent, it seems to me that the inference is available that there are remaining funds available to the Respondent, but as I note, even if I am wrong about that and the Respondent eventually establishes that he has legitimately expended all the funds available to him, there is still the capital fund available, together with his superannuation, which would be a focus of the final proceedings.

25. In all the circumstances, therefore, I am satisfied that an order ought be made in reliance upon the power to make interim property orders with respect to the total payment of $60,000.00 being made out of the trust account in favour of the Wife. I am also satisfied in respect of the $20,000.00 component of that, that if not legitimate as an interim property order, it can also be legitimate by reference to the power to make an interim lump sum maintenance order, on the basis that such provision is proper within the meaning of the relevant section. I am satisfied that a judicial officer hearing and determining the proceedings on a trial basis can characterise the relevant payments provided for by these orders legitimately, in the hearing and determination of the final proceedings.

26. It will be a matter for the Respondent Husband as to whether or not he seeks to bring an application between now and the trial in terms of seeking his orders in his favour so far as meeting his legal or other expenses in the period to trial. The obvious starting point to such an application, as noted in the course of the argument, will be the provision of disclosure demonstrating the use of funds that have been available to him in the period since they were received, in circumstances where it would seem he has not had the same obligations so far as legal expenses as the Wife where he has chosen for a significant time to represent himself.

27. So far as the application for costs is concerned, it seems to me that just as the characterisation of the funds needs to be left to the trial Judge, so, too, needs to be left the question of any costs, whether on an indemnity basis or on a party and party basis. I will therefore reserve each party’s costs of and incidental to the current application to the trial Judge.

28. I therefore make the orders as set out at the commencement of these reasons.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 10 December 2012.

Associate:

Date:  10 December 2012