Zhu & Xie (No 2)
[2023] FedCFamC1F 615
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zhu & Xie (No 2) [2023] FedCFamC1F 615
File number(s): DGC 920 of 2021 Judgment of: STRUM J Date of judgment: 20 July 2023 Catchwords: FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – Payment of monies sought at interim stage for litigation funding – Where the applicant seeks a payment pursuant to s 79 or pursuant to s 117 of the Family Law Act 1975 (Cth) – Where there is power to make an interim order pursuant to s 117 against the second and third respondents – Where quantum sought exceeds scale costs on a party/party basis – Where such an order would amount to an indemnity costs order – Where it would not be appropriate to make an indemnity costs order, notwithstanding the possible ability of the respondents to tax the amount of such payment after trial – Where the amount sought by the applicant, if ordered by way of partial property settlement pursuant to s 79 is less than the sum the first respondent proposes he receive on a final basis – Order for partial property settlement made. Legislation: Family Law Act 1975 (Cth) ss 79, 90AE, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Federal Circuit and Family Court of Australia, Central Practice Direction – Family Law Case Management, 1 September 2021, updated 28 November 2022 para 5.18
Cases cited: Bing & Bing (2007) FLC 93-318; [2007] FamCA 418
Prantage & Prantage (2013) FLC 93-544; [2013] FamCAFC 105
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Division: Division 1 First Instance Number of paragraphs: 17 Date of hearing: 20 July 2023 Place: Melbourne Counsel for the Applicant: Ms Tulloch with Mr Gray Solicitor for the Applicant: CCS Lawyers Counsel for the First Respondent: Mr Robinson Solicitor for the First Respondent: O’Sullivan & Ruffilli Counsel for the Second and Third Respondents: Mr Marchetti Solicitor for the Second and Third Respondents: Rowan Skinner & Associates Lawyers ORDERS
DGC 920 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ZHU
Applicant
AND: MS XIE
First Respondent
MR QUI
Second Respondent
MR BAI
Third Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
20 JULY 2023
THE COURT ORDERS THAT:
1.Within 14 days the First Respondent wife pay, or cause to be paid, to the Applicant husband, by way of partial property settlement, the sum of $320,000.
2.The Applications in a Proceeding filed by the First Respondent wife on 7 June 2023 and by the Second and Third Respondents on 5 July 2023, seeking their costs thrown away by reasons of Applicant husband’s amended statement of claim be adjourned to and consolidated those with the trial of these proceedings.
3.The Applicant husband’s Application in a Proceeding filed 3 May 2023 and the Responses thereto filed by the First Respondent wife and by the Second and Third respondents be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zhu & Xie has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
DELIVERED EX TEMPORESTRUM J:
By an Application in a Proceeding filed on 3 May 2023, the applicant husband sought, relevantly, that the first respondent wife or the second or third respondents (the wife’s sons by a prior marriage) pay to him the sum of $350,000 by way of partial property settlement. No time limit was specified in the application. The effect of that would be that if I were minded to make it, payment would be due and payable as soon as the order was made. Through his Outline of Case document, the husband has varied his application in the following respects:
(a)he now seeks the modestly reduced sum of $320,000;
(b)he seeks that payment of that sum be made within 14 days; and
(c)he clarifies that he seeks the payment on two bases, either pursuant to s 79 or pursuant to s 117 of the Family Law Act 1975 (Cth) (“Act”), which are, respectively, the property adjustment and costs powers.
Only the husband has prepared an Outline of Case; and the wife and the second and third respondents have not seen fit to comply with paragraph 5.18 of the Central Practice Direction of the Court.
By their Responses to the husband’s Application in a Proceeding, the wife and the second and third respondents merely seek the dismissal thereof.
Insofar as the husband seeks the order pursuant to s 117, I have power to make such an order against any or all of the respondents.
However, I expressed concern in my exchanges with counsel for the husband that the quantum sought would result in me making an indemnity costs order, against which the Full Court has cautioned, including in Prantage & Prantage (2013) FLC 93-544. Counsel for the husband took me to a passage in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) at [97], in which Boland and O’Ryan JJ said that:
In Kendling the Full Court suggested at [48] that it is not necessary to require “itemised bills of costs” or that the costs “be at scale” or that a taxation or assessment under the Family Law Rules 2004 (Cth) (“the Rules”) is required.
And their Honours continued that:
This is consistent with what Brereton J said in Paris King Investments if the source of power relied upon is s 117. The Full Court however did suggest that if the amount paid is “ultimately to form part of a costs order” then in that context it could be subject to a taxation or assessment.
Not only am I bound by what the Full Court said in Strahan, but I respectfully agree with it. However, that does not answer the issue, namely, that counsel for the husband would still need to persuade me, in the exercise of my discretion, that such circumstances exist as to justify a departure from party/party costs at the scale prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), if such an order were to be made. It is not that I do not have the power to make an order for costs, by way of litigation funding, on an indemnity basis; rather, it is that I have a discretion whether or not to do so and it would be incumbent upon counsel for the husband to persuade me that circumstances exist that would warrant me doing so. Irrespective of the fact that an indemnity costs order made at an interim stage, by way of litigation funding, could subsequently be the subject of a taxation, it nevertheless must be appropriate, at this juncture in the proceedings, for me to make such an order.
Given the concessions made by counsel for the wife, in particular, as well as counsel for the second and third respondents, I am of the view that the safer course for me to adopt is to make an order pursuant to s 79 of the Act. Whilst I can understand how the husband puts his case in relation to the second and third respondents, I cannot determine this issue today and, therefore, I have no power, as things presently stand, to make any substantive order against the second and third respondents in the s 79 proceedings or pursuant to s 90AE of the Act.
The husband contends that the pool of assets available for division between the wife and him at trial is in the order of $20 million, of which he seeks 40 per cent. The wife contends that the pool available for division between the husband and her at trial is in the order of $3.2 million, and she proposes that he receive 20 per cent thereof. Much of the difference between the wife’s pool, on the one hand, and that of the husband, on the other, depends on how I ultimately treat the husband’s claims against the second and third respondents at trial, but that is not a matter for today.
On the wife’s case, namely, that the husband receive 20 per cent of a pool of $3.2 million, he would receive $640,000. He has had, to date, $200,000. If I were to make the order in the sum of $320,000, as he now seeks, he would have the benefit of $520,000, which would be $120,000 less than the wife’s own proposal.
The wife, through her counsel, sensibly conceded that it is just and equitable for me to make an order under s 79 at this interlocutory stage. Further, in my view, there is no need to consider, in any detail, s 79(4) factors, albeit that I have read the husband’s assertions in relation to the contributions he says he made during the marriage. This is in circumstances where, if the further sum of $320,000 is paid to him, in addition to that of $200,000 already received by him, he will still have received, at the interlocutory stage, less than the wife concedes, on her own case, he should receive at trial.
The issue, then, is that the husband seeks that the payment be made forthwith or, at most, in 14 days’ time. The wife sought, in her submissions, a period of three to four months to make the payment, to enable the sale of a property to fund same. In Bing & Bing (2007) FLC 93-318 at [27], the Full Court said that the source of payment is a question for enforcement, rather than a question of whether or not an order for payment should be made.
The property proposed to be sold, to which the wife refers, is situated in Town E and is registered in the sole name of the third respondent (“Town E property”). She cannot control the sale thereof, nor can I (at least presently) order it to be sold.
The husband points to the fact that the wife sold another property, which was part of the assets that would have been available for division between the wife and him, and that from proceeds of sale thereof she paid a sum in excess of $500,000 to the third respondent. Further, he points to what he asserts to be a round-robin series of transactions that have occurred, such that the funds have made their way into a bank account ending in the numbers …49 (“…49 account”), which is in the sole name of the third respondent and from which the husband contends the third respondent could draw. However, that is an issue for trial.
The evidence of the third respondent is that he is willing to assist his mother to make the payment but, initially, his proposal was that it not come from the …49 account but from the proceeds of sale of the Town E property, as he did not want the principal and interest on the drawings to be paid by him. As I observed in the course of my exchanges with his counsel, he could draw on the …49 account in the short term, and repay that account from the proceeds of sale of the Town E property in three to four months, if it took that long to sell the property. However, unless I make an order under s 117, as I have observed above, I have no power to make an order against the third respondent under Pt VIII or Pt VIIIAA of the Act. Further, it is not for the Court, at this stage, to direct the third respondent how to arrange his affairs, although that might be what eventually transpires if the husband’s claims against his brother and him are made out a trial.
Ultimately, I cannot, and there is no need for me to, determine how the wife should make the partial property settlement payment to the husband, whether it be from her own funds or with the assistance of the third respondent. Given my concerns in relation to an indemnity costs order and the concessions made on behalf of the wife in relation to the husband’s overall property entitlements, if an order is to be made, I am satisfied that it should be made pursuant to s 79, rather than s 117 of the Act. I shall make an order that the wife pay to the husband the sum of $320,000 by way of partial property settlement.
After some exchanges with counsel for the second and third respondents, he asked me to stand the matter down so that he could obtain instructions from the third respondent. When the matter resumed, he told me that the third respondent would make funding available to the wife to pay the partial property settlement to the husband in two tranches: $150,000 within 14 days and the balance of $170,000 by 30 November 2023. One would reasonably have thought that would have been a sensible resolution, which would be embraced by the husband and wife. Indeed, counsel for the husband sensibly told me that he would accept payment of the partial property settlement in the two tranches and in that timeframe. However, remarkably, the third respondent’s proposal was rejected by the wife (who, it will be recalled, is his mother). Inexplicably, I was told by her counsel, on instructions, that she no longer wished to avail herself of the assistance offered by her son. In the circumstances, I shall order the wife to pay, or cause to be paid, to the husband, the sum of $320,000, by way of partial property settlement within 14 days. She has no-one to blame, other than herself.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 2 August 2023
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