[ 2013] FamCA 181

Family Law Act 1975 (Cth)

Breen v Breen (1990) 65 ALJR 195

Gabel v Yardley [2008] FamCAFC 162; (2008) 40 Fam LR 66

Iphostrou & Iphostrou and Ors [2011] FamCA 20

Mitchell (1995) FLC 92-601

Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166

SOLICITOR FOR THE INDEPENDENT CHILDREN'S LAWYER:

(1) That pursuant to Rule 12.10A, the final hearing of the proceedings between the husband and wife be given an expedited first day of hearing before a judge.

(2) That all extant applications for final orders are listed to a DIRECTIONS HEARING before the Honourable Justice Cronin at 2.15 pm on 8 May 2013 for the purposes of listing the matter for final hearing.

(3) That the parties and if represented, their legal practitioners, attend the first day of hearing.

(4) That notwithstanding applications/responses have already been filed:

• (a) by 4 pm on 26 April 2013, the Applicant file and serve on all other parties, an amended application setting out with precision the orders to be sought at trial; and

• (b) by 4 pm on 3 May 2013, the Respondent(s) file and serve on all other parties, an amended response setting out with precision the orders to be sought at trial.

(5) To the extent that the Independent Children's Lawyer has a firm position as to intended proposed orders, the Independent Children's Lawyer advise each party of those proposal and on the return date, present to the Court a copy of those orders.

(6) If discovery and disclosure has not been completed, each party by 4 pm on 26 April 2013 provide to the other party a list of all documents required for inspection and within 7 days thereafter, subject to any objection on the grounds of privilege, such documents be made available for and be inspected by the other party(ies).

(7) To the extent that any party wishes to participate in any form of negotiation or mediation prior to the final hearing, arrangements be made prior to the first day of hearing.

(8) That at the first day of hearing, each party represented by a lawyer have available to them and present to the Court, a statement setting out the costs incurred to that date, what amounts have been paid, from what source payments have been paid and what costs are expected to be incurred until the completion of the final hearing.

(9) That until further order, the husband spend time with the children T, L and M during term time during each alternate weekend from the conclusion of school on the Friday to the commencement of school on the following Monday and from the conclusion of school on Tuesday in each week until the commencement of school on Wednesday in each week.

(10) That by way of spousal maintenance and until further order, the husband pay to the wife $500 per week the first of such payments to be made on 27 March 2013.

(11) That by way of litigation funding and for the assistance of the wife's legal and accounting costs, the husband pay to the wife $80,000 by 4.00pm on 12 April 2013.

(12) That the said litigation funding be retained by Septimus Jones and Lee on behalf of the wife and such solicitors be responsible to maintain a record of all such expenditure relating to legal and accounting costs and at the reasonable request of the solicitors for the husband, such details shall be provided.

(13) That each party be at liberty to provide a request for the answers to specific questions in accordance with the Family Law Rules 2004 and such questions be provided and the answers given prior to the next return date.

(14) That the response of Ms Asri, the second respondent filed 3 October 2012 is struck out.

(15) That the said Ms Asri be discharged from the proceedings and her name be removed as a party.

(16) That the application in a case filed by the wife by the husband on 4 February 2013 and the response thereto by the wife on 14 February 2013 be otherwise dismissed.

(17) That pursuant to s.65DA(2) and s.62B, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.

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

1. On 20 December 2012, the Federal Magistrates Court of Australia transferred proceedings between Mr Miller (the husband), Ms Wati (the wife) and Ms Asri (the second respondent) to this Court. They involve both financial and property issues.

1. The reason for the transfer was said to be that the parties' initial expectation of the hearing taking up to five days was potentially going to blow out to perhaps eight days. I have reservations about the accuracy of those estimates. Furthermore, despite the fact that the proceedings had begun in October 2010 and had had a number of hearings, the case was said by the parties to have been ready for its final hearing. That was clearly not correct on the basis of discussions that I had in argument.

1. Before me on 7 March 2013 in a judicial duty list were the applications of the husband and the wife for a variety of orders. Curiously, the second respondent was absent. Indeed, on 6 August 2012, she was joined as a respondent and it is apparent from the order that it was at her request. Her entry to the proceedings was very late and she was ordered to pay costs. She was then also ordered to file material but has apparently failed to do so. That was despite a number of appearances after the August 2012 orders and at times when she was represented by lawyers.
2. Eventually, the solicitors on the record for the second respondent filed a Notice of Ceasing to Act. I was informed that there has been no further activity by the second respondent and she did not appear before me.
3. In the hearing before me, I had the advantage of an Independent Children's Lawyer whose position was clear. He sat patiently through the predominantly financial proceedings only to learn at the very end that the wife was not opposing the modest alteration to the parenting orders sought by the husband.

1. The proceedings began with confusion about who had served what affidavits and just what documents were being (and could be) relied upon by each party. As it transpired, neither party had been diligent about the Court ordered timetable yet each desired the Court to hear their issues because they could not be resolved. It is a timely reminder to have parties look at rule 11.02(1). Those problems were eventually overcome.
2. The husband sought orders relating to the following issues:
   • that the extant parenting orders be varied to extend his time with the three children from Sunday night to Monday morning;
   • that he be permitted to attend and observe extra curricula activities at the school of the children; and
   • the case be given a first day hearing before a judge as a matter of priority over other cases.

1. Right at the end of the hearing, the alteration to the parenting orders as sought by the husband was ultimately agreed by the wife but two observations must also be made. First, the family consultant who prepared a report for the Federal Magistrates Court had recommended the husband's position. Secondly, the wife has apparently adopted the husband's position for the trial but for some reason, would not accept an interim arrangement. The Independent Children's Lawyer's time was largely wasted.
2. In relation to the "observation" order sought by the husband, there was little evidence to support it. Curiously, and inconsistently with a position where each had confidence in the other about decisions of a long term nature for their children, both were intending at the final hearing to seek orders that they have equal shared parental responsibility. I have doubts about the responsibility of the Court simply "rubber stamping" such orders. The parties have little or no communication yet they propose to the Court that they can carry out their obligations under s 65DAC. Having said that, the fact that the wife objected to the "observation" order seems to have little foundation and reflects on her role as a parent.
3. The husband's substantive parenting position is quite inconsistent with the family consultant's recommendations to the Federal Magistrates Court and the interim orders including those I have now been asked to make. He sought a residence order but with a significant time being spent by the wife with the children. The basis of his request for a change to the existing orders is apparent in his recent affidavit. I do not propose to detail his concerns save that they relate to hygiene and similar matters of discipline. That is not the basis upon which interim orders should be changed and there are far more significant issues for a court to consider on a final parenting trial. That is an important observation bearing in mind that the parties had apparently filed all of their trial material.

1. The priority hearing issue was based upon the fact that the parties had been prejudiced because of their transfer to this Court yet when I questioned many of the things that I would be asking on the first day hearing before a judge, it seemed that the case may not have been ready for a final hearing anyway. I do not intend to repeat those matters but no doubt the parties will consider the discussion. They now have some months to get their houses in order. Suffice to say that the husband conceded that the existing legal and equitable interests in the assets of the parties would not be a just and equitable outcome for the wife and that therefore, the Court would be justified in finding that it was accordingly just and equitable to alter them. The dispute otherwise seems to centre on:
   • the valuation of their various interests;
   • the claim by the second respondent who now seems to have lost interest in the proceedings; and
   • what (if any) adjustment might be considered because of s 79(4)(e) of the Act.
2. Even factoring in very significant arguments about discovery including the husband's counsel's concession that the husband had not been as fast as he could have been in respect of the production of documents, this case is neither complicated nor lengthy.
3. Having considered the matters in rule 12.10A, it is appropriate to expedite the first day before a judge.
4. This is a short marriage of some five years with the wife being presently responsible for three young children in circumstances where English is not her first language. She is currently reliant upon Centrelink. The husband articulated a position whereby he thought she could go to work. No doubt his evidence about that will be very significant at trial.

1. The wife sought the following orders:
   • the husband pay $500 per week spousal maintenance and $2,000 for "any new accommodation the wife may secure"
   • discovery including the opportunity to serve specific questions;
   • $150,000 for litigation funding to be utilised on account of legal and accounting costs;
   • The right to issue subpoenae;
   • The second respondent's application for orders be struck out;
   • The appointment of experts of the parties' choice for valuation purposes; and
   • Costs.

1. Nothing I heard or read at this stage would justify a departure from the rules of the Court relating to single experts. The parties have both spent a lot of money already and apparently propose to continue to do so. They will need to put proper material before the Court to justify why the rules should not be applied even though they had relied upon their own accountants in the Federal Magistrates Court.

1. There has been no appearance of the second respondent nor compliance with orders. The husband's position was ambivalent about the second respondent because he wanted to call her as a witness any way. As the issue concerns the second respondent's claim for a large sum of money, I observed that her reticence to be a participant should entitle the Court to draw the inference that either no claim is now sought relying on s 79(10) or that she is intending to institute proceedings in some other jurisdiction.
2. Rule 11.02(2) provides that a court may dismiss a proceeding where a party does not comply with a procedural order. The second respondent had legal representatives at the hearing when the hearing was fixed before me. A notice by her solicitors advised the February return date for return of subpoenae. Nothing further has been done and it is appropriate that the proceedings not be held up or delayed. That has already apparently happened in August 2012 by the late attention to detail by the second respondent. On the basis that there has been a request to dismiss the second respondent's claim, I propose to strike her out from the proceedings.

1. Discovery is a contentious issue in this case. I propose to order that each party exchange lists indicating what they seek. If there is non-compliance by either party with my orders, the compliant party may rely upon rule 11.02 hereafter.
2. In relation to subpoenae, I see no reason why the rules should not be applied.

1. The two contentious issues left were:
   • spousal maintenance; and
   • litigation funding.

1. Counsel for the wife relied upon her client's material and when pressed as to what power I was being asked to exercise, she indicated reliance upon s 80(1)(h) of the Act. There was also an approach of relying upon ss 79 and 117 but it was conceded that the evidence was lacking. Late in the proceedings, counsel for the husband conceded that the wife would have an entitlement under s 79 and offered $45,000 to $50,000 on the basis of a partial settlement. I do not intend to be a party to negotiations in proceedings and I have little doubt that this arose out of my comment that negotiations between the parties would have enabled such matters to be agreed. No agreement was forthcoming from the wife so I propose to determine the matter on the basis that there is not sufficient evidence for me to make a s 79 order even with the husband's concession which I have taken to go to both jurisdiction and power. However, in my view, there is ample evidence from the wife to show that she justifies a litigation funding order generally. I find:
   • the wife has no capacity because of her income, property and language skills to engage professionals to investigate anything in circumstances where it is clear there are entities that need examination;
   • the case, as articulated by the husband, is that there is at least two companies and a trust where significant changes in gross income have occurred in the first 6 months of this financial year. I am also conscious that the parties initially thought in August that the case would take 5 days;
   • the husband has spent over $200,000 on legal and associated professional expenses which would indicate complexity of issues; and
   • the wife has lawyers acting for her who have anticipated significant costs particularly with their expressed concerns about lack of discovery.
2. $90,000 has already been provided to the wife but there is presently $20,000 legal fees outstanding. On any view, there is not the "level playing field" referred to in Iphostrou & Iphostrou and Ors [2011] FamCA 20.
3. In Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166, the Full Court examined the approach to making litigation funding orders. The plurality observed that in relation to an application under s 80(1)(h) of the Act, there were two steps to be taken:

The first consideration is the adjectival or procedural step and the second consideration is the substantive step. The first step requires consideration as to whether the jurisdiction will be entertained.

1. For the reasons set out in paragraph 22 above, it is appropriate and indeed, proper, the exercise the jurisdiction. Absent an order, the wife's ability to conduct this litigation will be stifled. In addition, the husband concedes that the wife will benefit ultimately from a division or alteration of the interests of the husband and argument can be had at that time as to what, if any, adjustment should be made for the fact that a payment is now being ordered.
2. It is no longer appropriate to consider that there must be "compelling" circumstances to make an order for interim property settlement or a litigation funding order once the entitlement is established and the court considers it appropriate to exercise its discretion. The Full Court said that what is important is to ensure that justice is done.
3. In Gabel v Yardley [2008] FamCAFC 162; (2008) 40 Fam LR 66 Bryant CJ and Coleman J observed that the interim order just mentioned must be capable of variation or reversal without resort to s 79A of the Act or appeal. Finn J said that the interim order must be "capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power".
4. Having regard to the evidence here, there are assets in the husband's control. One of those assets is his interest in a company. I do not profess to understand just what the structure is but the husband proffered evidence that the balance sheet showed cash assets of $456,000 as at 31 December 2012. It would be simplistic to say that that money is not encumbered by liabilities but the husband's accountant's evidence did little to explain the true overall position.
5. It is important to note that the husband has access to resources that the wife does not have. In my view, this being an interim order, the problems of rectifying any disadvantage to the husband including any taxation consequences can be determined at trial. I find that even on the husband's evidence, any order I now make could be adjusted at trial.
6. The wife relied upon the evidence of her solicitor to justify the claim for $150,000. In my view, that evidence was predicated on a huge exercise still to be undertaken including a significant trial in circumstances where the evidence should already have been filed for the Federal Magistrates Court. That however ignores the fact that there is still much discovery to be undertaken where the husband concedes he has not been entirely diligent. I also take into account that the husband argued that accounting costs may have been obviated by the wife's accountant talking to the husband's representative. That too is too simplistic because these proceedings have been going on for months and little seems to have been forthcoming until now.
7. In my view, the exercise of discretion should be made in favour of the wife but at this stage, I do not agree that $150,000 is appropriate. In my view, $80,000 is the appropriate amount taking into account the $20,000 currently outstanding, the fees of counsel for this hearing and the foreshadowed first day hearing, the accounting exercise which should now be much simpler with the husband's co-operation and the trial should be shorter and preparation much less.
8. To avoid injustice and ensure that the funds ordered are used for their intended purpose, I propose to order that the funds be administered solely by the applicant's solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court (see Breen v Breen (1990) 65 ALJR 195).

1. I turn then to spousal maintenance.
2. The first and critical issue for the Court's determination is whether the applicant has crossed the so-called threshold (see Bevan (1995) FLC 92-600 and Mitchell (1995) FLC 92-601)
3. The relevant legal principles on spousal maintenance are well known. The statutory provisions are s 72, s 74 and s 75(2).
4. The liability to pay maintenance depends on the need for the applicant for it and the ability of the respondent to pay. There can be no liability to pay maintenance unless the applicant is unable to support herself adequately. If that inability cannot be established, then an order for maintenance cannot be made.
5. The examination is not just income related. The obligation, if it arises, concerns the assets, income and expenditure of both parties. An assessment must be made as to whether the reasonable needs and expenditure exceed what is available for each party's support. The reference to "adequately" requires a consideration of the standard of living of each party which is reasonable in the circumstances.
6. The husband did not concede that the wife met the threshold nor did he concede he had any capacity to pay.
7. The wife said she was dependent upon Centrelink benefits for her support. In her affidavit, the wife said she relied upon matters set out in her previous affidavit. It is not appropriate that she be permitted to do so. First, the rules of court require that affidavits only be used for the application to which they relate. Secondly, that material was not relied upon in submissions. Be that as it may, the wife said she wanted to remain the primary carer of the children. The husband's response was that the wife was offered work when she obtained an aged care qualification but she chose not to take the job. He too referred to some previous affidavit that I do not intend to include for the reasons just outlined.
8. The wife's reason for wanting to stay out of the workforce was that she had the care of the three children. Two of them are aged five years and the other is aged six. The twins have just started school. The wife satisfies the requirement of s 72(1)(a) of the Act bearing in mind that it seems on the evidence that during the latter part of the parties' relationship, the wife fulfilled the homemaker role even if the extent of that role is disputed in the parenting proceedings.
9. In her financial statement, the wife showed that with rental expenses and her own estimated living expenses, absent Centrelink payments, she could not adequately support herself. It is not appropriate nor legislatively permitted that I take into account that the taxpayers of Australia are providing that support. The obligation on the husband is clear if he has the capacity to make the payment.
10. The husband's position was that he did not have the capacity to pay. He has converted his superannuation to a pension and now receives $5,000 per calendar month. In his financial statement filed for the final hearing in the Federal Magistrates Court, he said that his income was $1,767 per week from his own company. I do not know what, if any, benefits he received over and above that salary but he said there were none. The accountant's affidavit attached the recent profit and loss statement. That statement shows significant expenses were claimed as deductions but I was not told who received the benefit of those sums. I am not in a position to assess on this evidence just what the husband's true financial position is. As I understand his position, he has decided, on his accountant's advice, that the business is not viable and should be closed or sold. That would seem logical having regard to the turn over substantially dropping in the first six months of this financial year. The reasons for that are not clear but will no doubt be traversed at trial. From his income previously received, he was paying substantial tax which will now no longer apply. Similarly, he was paying superannuation and that will cease. He was also paying $1,823 per week off an American Express card so that too will cease if he has retired from the workforce. He otherwise claimed $382 per week for living expenses but some of those presumably will no longer apply such as travel to work. For her part, the wife had an equivalent expenditure of $232.00.
11. Bearing in mind that the company balance sheet has significant cash and that spousal maintenance is payable from resources other than just income, it is clear on the evidence that the husband can afford $500 per week. It is not appropriate that I speculate about potential residential bonds and so forth as the wife sought.

I certify that the preceding Forty Three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 25 March 2013.