Interim Lump Sum Orders
February 8, 2012 Leave a comment
This paper looks at when it is appropriate to seek an interim ‘lump sum order’ and how to give your client the best chance of being successful in obtaining one.
There are several situations where this might apply; for example your client may have no money at all and need funds urgently to re-establish and set up house. The client may have had any money with which to pay accountants and other experts in a complex case to follow a money trail or provide valuations.
Your client may have rather brashly purchased another home and need funds urgently for the settlement; one might laugh at that prospect but I can assure the reader it does and has happened and I represented the husband who ended up having to pay up.
Generally the three types of orders referred to and discussed below are; lump sum property (interim), lump sum costs or ‘barrow’ orders and the third being the ‘lump sum uncharacterised order’. Often these are intertwined and the application is for one or all or simply for an amount of money to be paid over and to be ‘characterized by the trial judge’.
There are other interim orders that parties might obtain. One that often is confused is interim maintenance or urgent interim maintenance. Whilst the paper contains case law on this given the time and the breadth of the first topic it may not be addressed in discussion.
I have also focused on the issue of summary dismissal in particular in the Federal Magistrates Court and refer to a recent High Court decision in that regard. Again, time may not allow discussion; suffice to say the reader will have the paper to refer to.
Interim Orders for Lump Sums of Money
The Legislative Framework
There are a number of legislative routes to a ‘lump sum order’. One can use section 72 and 74 to obtain a maintenance order, section 79 with the enabling provision of section 80(1)(h) for property, or section 117 for costs. Each of these varied sections enable the court to make such an order and each have different requirements in terms of providing the court with the basis upon which it can make such an order.
Section 79 and Interim Property Orders
Section 79(1) says this:
In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them — altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage — altering the interests of the bankruptcy trustee in the vested bankruptcy property;
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage,
such settlement or transfer of property as the court determines.
Section 79(2) requires:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) requires:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
When one reads the section there is nothing in it about Interim Orders. However, section 80(1)(h) is broader, and encompasses the following:
Section 80 General Power of Court
Family Law Act Partner for Section 80.
80(1) [Orders which court may make]
The court, in exercising its powers under this Part, may do any or all of the following:
(a) order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
(ba) order that a specified transfer or settlement of property be made by way of maintenance for a party to a marriage;
(c) order that payment of any sum ordered to be paid be wholly or partly secured in such manner as the court directs;
(d) order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(e) appoint or remove trustees;
(f) order that payments be made direct to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage;
(h) make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order;
(i) impose terms and conditions;
(j) make an order by consent;
(k) make any other order (whether or not of the same nature as those mentioned in the preceding paras of this section), which it thinks it is necessary to make to do justice; and
(l) subject to this Act and the applicable Rules of Court, make an order under this Part at any time before or after the making of a decree under another Part.
For a discussion on section 80(1)(h) and a discussion generally on interim lump sum orders the best starting point is Zchokke and Zschokke (1996) FLC 92-693.
In that case the wife sought a payment of $40,000 as an ‘advance’ in property proceedings. The parties were married for only two years and lived together prior to marriage for six months. The husband had a home worth $750,000 and the wife brought little in to the marriage. During the marriage it was alleged the wife had ‘trashed’ the home and was a heavy drug user. She was charged with use and supply of heroin and convicted to two years gaol in 1995. (She was released early and was caring for two children from a prior marriage.) The husband was unemployed and caring for the child of the parties.
The wife had sought $40,000 and was refused at first instance. Her appeal and leave to appeal were heard by the Full Court. She was not on legal aid and the husband was unrepresented. He had brought the Former Matrimonial Home into the marriage. The wife had debts of $8,000 to her prior solicitor. She had exhausted all avenues of seeking legal aid.
The Full Court, in rejecting her appeal, looked at the orders that could be made under section 117(2) and section 79 with section 80(1)(h). The reason both sections became relevant was that the original order was made on an appeal from a state Magistrates Court where the wife had sought an order for a lump sum non specified and later in the state Family Court she had sought an order for lump sum interim costs.
Baker Finn and Hannon JJ said this:
This case raises the important issues of the jurisdiction to make, and the circumstances in which it is appropriate to make, an order requiring a party, who has in his or her control significant property or other financial resources, to provide to the other party, who has little or no property, funds to enable the other party to pay his or her legal costs in pending financial and/or child related proceedings between the parties. The law in this area is the subject of uncertainty. Accordingly, and notwithstanding that it will be our ultimate conclusion that the appeal should be dismissed, we consider it appropriate to grant leave to appeal in this matter because of the important and unresolved issues which it involves.(At page 83-201.)
The Full Court considered the decision of the trial judge who relied upon an earlier decision of Poletti (referred to below). At first instance the judge had referred to various ways in which the jurisdiction might be invoked to make such an order.
These included sections 117(2), 74, 79, 80(1)(h) or (k), and 114(1). At first instance the judge relied upon the statement set out below from Poletti’s case:
Her Honour then quoted a statement made by Nygh J in Poletti 15 Fam LR 794 (which we will later also quote) and concluded as follows in relation to the relevant law (at Appeal Book p 28):
Without exhaustively examining the various authorities in this area, I consider that it is now well established that for an order to be made there generally should be:—
1. A complexity in the financial affairs of the respondent.
2. A need for an expert investigation into the financial affairs of the respondent.
3. A position of considerable financial strength held by the respondent.
4. A capacity on the part of the respondent to meet his own ongoing litigation costs.
5. An inability on the part of the applicant to meet her ongoing litigation costs from her own income, assets or financial resources.
At trial, the trial judge held a view that there were no complex financial issues and it appears the argument was conducted on the basis of a section 117 costs ground.
The Full Court, however wanted to clarify the jurisdictional requirement and said at 83,211:
As we agree with Counsel that there is some uncertainty as to the source of jurisdiction to make orders of the type which the wife sought before the trial Judge and now seeks from us, we consider that it would be useful to review existing authority in relation to the issue of the power or powers to make such orders under the Family Law Act. In so doing we recognise that given the somewhat unusual fact situation of this case, and given also and with respect to the husband, that we had the benefit of expert legal argument from one side only, this is not the case in which all the questions that arise in this uncertain area can be answered.
The Full Court then reviewed the existing authorities at the time and concluded it had power under the maintenance sections, the costs sections and certainly section 79 to make an order for the advance payment.
The Full Court referred to the decision in Harris v Harris (1993) FLC 92-378 (again a Full Court decision) not only as authority for the power to make the order under sections 79 and 80(1)(h) but as to the types of matters to consider when one exercises discretion wether or not to make the order under those sections.
The Full Court quoted Harris (see page 83, 216 of Zschokke):
We do not doubt that the Court has power in a proper case in s. 79 proceedings to make what may be conveniently described as an interim order, that is an order dealing with some of the property of the parties prior to the final hearing. We do not consider that it is necessary to draw a distinction in terminology between an ‘interim’ order and a ‘partial’ order.
But in the exercise of that power the following matters need to be considered:
1. The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s. 79 proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children….
2. It is an exercise of the s. 79 power. Consequently it must be performed within those parameters. Since it is not the final hearing the Judge is unlikely to have the final findings, but the exercise must fall within that general framework and the material available at that time.
3. Of necessity it is likely to be a somewhat imprecise exercise. Consequently, it must be exercised conservatively and the Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so.
It is the use of the word ‘compelling’ that has perhaps been a thorn in the side of a potential seeker of interim orders for property ever since Harris.
The above statement was held by the Full Court in Zschokke to be a statement of principle applicable to the facts in Zschokke even though it was not clear that Zschokke was a case that was relying on an interim property settlement under section 79 and section 80(1)(h).
The Full Court in Zschokke said if one sought an order under section 117(2) then the matters in section 117(2A) must be addressed (or at least those relevant) and the five factors quoted above from Poletti.
Thus at least at that time one knew that there were tests as set out above to be applied for an order to be made under section 117 and for an order to be made under section 79 and 80(1)(h).
The Full Court in Zschokke queried the position if property proceedings were complete and only child matters were before the court and, whilst not needing to decide the issue, said:
We take the view that where, as in the present case, proceedings involving financial matters and the future of the child are pending and are likely to be heard and determined concurrently, an order for an advance of funds to the party with little or no access to funds, could be made either under s 80(1)(h) or under s 117(2). But the position is less clear where the property settlement proceedings between the parties have already been determined, or where there can never be such proceedings because there has been no marriage and no cohabitation between the parties so that no right of action exists under s 79 of the Family Law Act or under similar provisions of State or Territory de facto relationship legislation. In such circumstances there would be no scope for an order under s 80(1)(h) (given the need to take the advance of funds into account in the ultimate property settlement). The only possibility would then seem to be an order under s 117(2) but it is unnecessary that we express a concluded view about that matter in the circumstances of this case.
The Full Court in Zschokke found it was not possible from the judgement to ascertain upon which ground the trial Judge had granted herself jurisdiction to make the order (or in fact not allow the order as was the case).
Thus Zschokke is authority for the principle that one must seek the order under one of the above sections and ensure that your judge makes an order accordingly.
As to which section the reader will see recent law has indicated an easier approach. Remember that Poletti talked about the costs section and Harris talked about property sections. (There was no discussion in schokke regarding maintenance but it is clear from earlier authority that an order can be made under that section and a lump sum.)
See for instance Wilson and Wilson (1989) FLC 92-033. At trial the order was made as lump sum maintenance.
The wife had sought an amount that included provision for holiday clothes and credit card debts as well as legal and accountant’s fees.
On appeal the Full Court held that the legal and accountant’s fees were of a cost nature. Strauss J and Kay J both said that the funds for legal and accountant’s fees had to be made under the costs provision section 117 and there had to be some clear evidence of what those costs were. Strauss J in particular said there needed to be clear and detailed evidence of the costs both past and future under that section.
It was after Wilson that we all began filing lengthy affidavits setting out costs and anticipated costs and affidavits from accountant’s setting out their costs. There was also the spectre of what was reasonable in regard to those costs being argued by ones opponent.
Harris and Harris (1993) FLC 92-378
This was the case that determined clearly that one could get an interim property order.
There was some extreme urgency in the orders sought by the wife as creditors were closing in and it appeared if a property was not transferred to her there might not be any property to transfer; ‘compelling’ circumstances indeed. In a joint decision of the Full Court (per Nicholson CJ Moore and Fogarty JJ) their Honours referred to the earlier decision of Nygh J in Burridge and Burridge (1980) FLC 90-902.
The Full Court agreed that section 80 was not an independent source of power to make an interim property order and the power to do so came from section 79.
What was important in this case was the matters the court should take into account before exercising it’s discretion to make such an order.
I have repeated in full what the court said below in Harris at 79, 929 – 79, 930; (referred to above in Zschokke):
We do not doubt that the Court has power in a proper case in s. 79 proceedings to make what may be conveniently described as an interim order, that is an order dealing with some of the property of the parties prior to the final hearing. We do not consider that it is necessary to draw a distinction in terminology between an “interim” order and a “partial” order.
But in the exercise of that power the following matters need to be considered:
1. The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s. 79 proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.
2. As to the position in England under the Matrimonial Causes Act 1973 in relation to an interim property order in opposed proceedings and as to the matters to be taken into consideration in the exercise of that discretion including the “overriding grounds of individual or family welfare” — see the discussion in Barry v Barry  3 All E.R. 405. 3. It is an exercise of the s. 79 power. Consequently it must be performed within those parameters. Since it is not the final hearing the Judge is unlikely to have the final findings, but the exercise must fall within that general framework and the material available at that time.
4. Of necessity it is likely to be a somewhat imprecise exercise. Consequently, it must be exercised conservatively and the Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so. It is for this reason that we doubt whether the distinction which Nygh J drew between interim and partial orders is necessary or desirable.
As we will see, the question of how and why you can now get an interim property order seems to have changed significantly since the Full Court decision in Strahan and Strahan (Interim Property Orders) (2009) Fam CAFC 166.
At least one judge has been quoted as saying this case has rewritten the previous law on interim property orders.
The Full Court of Boland J, O’Ryan and Thackray JJ heard the matter.
The wife appealed a decision of Strickland J to give her $1 million by way of interim property settlement to assist her with her legal proceedings. She had sought $5 million and appealed seeking $5 million.
Proceedings were ongoing since 2005; the issues being the extent of the asset pool, parenting orders in relation to the parties autistic child living with the wife and presumably (when the matter gets to trial) the issue of contribution and section 75(2) factors.
The husband contended the asset pool was $80 million, the wife ‘100’s of millions’ and a single expert preliminary view was $60 million. The marriage lasted 11 years, the parties had lived in Switzerland and Australia and the husband resided in Hong Kong post separation with the wife residing in Adelaide. The husband had been involved in the invention of a gambling by numbers system based upon maths that had been applied world wide.
There had been no less than 40 interim applications since the wife issued in early 2005, this is after the husband had issued in Hong Kong and failed there and appealed and lost (presumably on forum grounds albeit not clear from this judgement).
The husband had sworn a financial statement with weekly income of $282,000, property of $35.5 million, debts of only $852,800 and financial resources of $21.2 million.
The wife had already had a number of interim property orders. She had already expended over $10 million on legal fees and expert’s costs.
The husband did not argue that he could not meet the order for $5 million sought by the wife (see para 45).
Strickland J had not listed the matter for final trial but had set aside some four weeks as potential dates. The matter was awaiting the release of an experts report on the value of the husband’s business and the wife had recently changed solicitors.
The wife had foreshadowed before his Honour in earlier proceedings that she would be seeking further interlocutory orders regarding discovery and joinder of third parties but had not done so.
The husband was prepared to advance the wife a further $1 million but not the $5 million sought.
Strickland J, according to the Full Court ‘introduced’ a test of ‘compelling circumstances’ (but see the Full Court in Harris above is it mere semantics the difference between ‘compelling circumstances’ and ‘circumstances presented at that time are compelling’).
Strickland J observed that the wife had, in his view, ample time and funds to prepare her case albeit her new lawyers did need to ‘get on top of the matter’.
His Honour was, however, clearly of the view that the wife simply did not need the money she sought as she had already had so many interlocutory hearings with respect to discovery and that would be a matter for cross-examination at trial. He said (as quoted by the Full Court at para 58 on):
58. In relation to the pending proceedings the trial Judge said:
42. To repeat, the parties have reached the position in relation to the property settlement matter where all affidavits of evidence-in-chief have been filed, there is no application before the court in relation to any interlocutory matter – be it in relation to subpoenas, discovery, production or disclosure generally – and all but one valuation report has been completed, and the only outstanding issue is that one valuation report, namely the report of [Ms E], the single expert.
59. The trial Judge went on to say:
43. Further, there is nothing necessarily new in the allegations made by the wife or by her solicitors as to nondisclosure by the husband or as to deficiencies in his discovery. They have been raised before and, in my view, dealt with by the husband in one way or another. That may not satisfy the wife, and clearly it does not, and there will probably be ample scope for cross-examination of the husband at trial as to his responses to those allegations, but there is no basis – and particularly just because the wife has new solicitors and they may need to get on top of the matter and are raising issues as to what they see, with their limited involvement to date in this matter, as being the work that needs to be completed – for the wife to be provided with funding to again pursue these matters.
60. The trial Judge at  observed that what he said was borne out by the affidavit of the Wife’s solicitor and how she expressed the need for further work to be undertaken. His Honour then at  gave three examples “of many” in the affidavit and at  said that he accepted the submission of senior counsel for the Husband that the Wife’s solicitor “simply does not know what is needed and, thus, the wife’s case is, in reality, ‘give me $5 million and we can work out what we need’ (emphasis in original). His Honour at  said that in his view there was nothing necessarily new in the allegations of the Wife and thus the comments of the solicitor as to the further work that might be needed and that “[t]hey have been raised before. They have been dealt with. Whether they have been dealt with satisfactorily or not is a matter now for the trial. It is not open to, in effect go back to square one with those issues”. His Honour also at  agreed with the submission of senior counsel for the Husband that an appropriate opportunity for the Wife to raise any issue was once the report of Ms E was provided but “not on the basis of looking to commence a new case not found in the wife’s evidence currently before the court”. His Honour at  said that it remained to be seen whether any such issue needed to be addressed once the report of Ms E was available and briefly described the “process” that Ms E had undertaken. He said it was “premature to assume that there [would] be the need for that arising from or flowing from the report of [Ms E]” until her report was received.
61. Importantly the trial Judge at  concluded, “[t]hus, I am not satisfied that at the present time there is any compelling circumstance(RW highlighting) that requires the wife to be provided with funds to pursue allegations of nondisclosure and allegations of deficiency in discovery on the part of the husband”. His Honour at  said that he made “that finding without even addressing the reasonableness or otherwise of the wife’s claim for $5 million in that regard”. He also said that there were “categories of further work and costs alleged to be required which are completely unjustified” and he gave two examples. First, the amount of $500,000.00 for conferring with and preparing the affidavits of in excess of 50 witnesses, some of whom are overseas and interstate. Second, the amount of $550,000.00 for air fares and expenses to see overseas and interstate witnesses. He said at  that they were “but two examples of what [he] would consider to be unjustifiable expenditure on the part of the wife at this stage of the case and given the funds she has already had”.
At para 65, the Full Court refer to the judgement of Strickland J where his Honour agreed that the wife did need to prepare her parenting case, deal with the report of Ms E once released and ensure adequate representation at the trial. It appears this is why in part he ordered the amount of $1 million.
The husband conceded the amount of $1 million might be appropriate but still ‘the husband’s senior counsel did not concede that the wife’s apparent need for funds to take the matter to trial was a ‘sufficiently compelling circumstance to require the husband to make a payment to the wife by way of interim property settlement’ (emphasis added). (Full court at para 66.)
The Full Court pointed out (at para 63) the inconsistency with the approach of the trial judge in requiring ‘compelling circumstances’ and yet going on to say the wife would need some money to prepare for trial.
The trial judge made an assessment of what he thought reasonable for the wife to expend on getting the matter ready for trial.
At para 76 the Full Court refers to the trial judge, suggesting to the wife that the money she received were an interim property settlement and therefore she could spend them how she liked. He went on ‘to make a “comment” that he expected and trusted that the wife would use the funds to meet her legal costs and on the assumption that she does spend it on legal costs “that she spends it wisely”’.
What did the Full Court Do and Why
The Full Court set aside the decision of Strickland J, re-exercised their discretion and ordered the husband pay the wife the sum of $5 million by way of interim property settlement. There was no restriction on how she spent the money.
The Full Court reviewed the law including the cases referred to above under the heading ‘Provision of Funds for Litigation Expenses’.
Their Honours cited with approval the decision of Brereton J in Paris King Investments Pty Ltd v Rayhill  NSWSC 578 (‘Paris King Investments’). See Strahan at para 81 repeated below:
Brereton J observed at , “[t]he juridical bases for an order for preliminary provision for litigation costs in matrimonial proceedings are diverse”. As Brereton J said, an order may be made as a maintenance order under ss 72 and 74 of the Act or a property settlement order under s 79 and s 80(1)(h) or a costs order under s 117. The spouse maintenance and costs jurisdiction to make such an order was recognised by the High Court in Breen v Breen (1990) 65 ALJR 195(“Breen”) per Brennan, Dawson and Gaudron JJ, when dismissing an application for special leave to appeal against such an order. In Paris King Investments Brereton J at  described such an order as an “order for interim provision for litigation expenses” and this may be a more appropriate description than an “interim costs” order so as to more accurately reflect the various sources of jurisdiction.
At para 84 the Full Court went on:
In Paris King Investments Brereton J, with whom on this point we agree, at  said that Zschokke “establishes that it is important, when contemplating an order for interim provision for litigation expenses, to identify the relevant source of power because it is the source of power that determines the necessary preconditions and relevant considerations for making the order.
The Full Court went on at para 86 to say:
Once the relevant source of jurisdiction for making an order is resolved then it could be assumed that what Brereton J in Paris King Investments described as “the necessary preconditions and relevant considerations” or as the Full Court in Zschokke described as the “matters” to be taken into account should be easy to identify. If the source of jurisdiction is s 117(2) of the Act then the court may make such order as it considers just provided there are justifying circumstances. If the order is sought under s 79 of the Act then the court may make such an order as it considers appropriate provided it is satisfied that it is just and equitable to make the order. If the order is sought under s 74 of the Act then the court may make such order as is proper.
As one can see there is no mention of ‘compelling circumstances’ in this para. The Full Court went on to look at what had been described as the various ‘preconditions and relevant considerations’ or ‘matters to be taken into account under the various sections’.
The Full Court said firstly; at para 87:
If the order is to be made under s.80(1)(h), it would seem that regard should be had to the requirement in s.79 that the orders be just and equitable and this would require the Court to undertake at least some brief consideration of the matters in s.79(4) including those referred to in s.75(2). If on a brief consideration of those matters, it seems likely to the Court that the party who is the applicant for the interim order for an advance of funds from the other party will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made.
Secondly, at para 88:
If the source of jurisdiction is s 117 of the Act, in Zschokke at 83,217 the Full Court said:
If the order is to be made under s.117(2) then, in our view, the matters contained in s.117(2A) must be addressed, and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti. In saying this we acknowledge that a number of the paras in the sub-section (notably paras (d) failure by one party to comply with court orders; (e) total lack of success by one party in the proceedings; and (f) existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question. We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the subsection, as is permitted by para (g).
Further at 83,220 the Full Court said: “[a]s we have said earlier it is necessary (in light of the Full Court’s approach in Poletti) that if any order is to be made under s.117(2), regard must be had to the matters in s.117(2A)”.
Thirdly the Full Court said at para 90;
90. In Zschokke at 83,217 the Full Court said that “whether the matter was determined as an interim property settlement order under s.80(1)(h), or as an interim costs (or security for costs) order under s.117(2), or indeed even a maintenance order”, three matters would all be relevant, namely:
1. a position of relative financial strength on the part of the respondent;
2. a capacity on the part of the respondent to meet his or her own litigation costs;
3. an inability on the part of the applicant to meet his or her litigation costs.
The Full Court at 83,218 said that two criteria identified by the trial judge in that case ‘being complexity in the financial affairs of the respondent and a need for an expert investigation into those affairs’ are not necessary pre-conditions for the making of an order under any of the possible heads of power. However, ‘the complexity of, or need to investigate, the respondent’s financial affairs would be a factor or factors, the existence of which would add considerable weight to the case for an order of the type in question’.
Fourthly the Full Court said at para 91:
In Paris King Investments Brereton J at  said:
Thus, where an interim order for litigation expenses is to be made as an interim costs order under s 117(2), and probably also if it is to be made as a maintenance order under s 74, there are at least three requirements: first, a position of relative financial strength by the respondent; secondly, a capacity on the part of the respondent to meet his or her own litigation expenses; and thirdly, an inability by the applicant to meet her or his litigation expenses from her or his own income assets or financial resources.
Brereton J in this passage did not suggest that the three ‘requirements’ were relevant if an order was made under s 79 of the Act (RW highlighting).
Fifthly, the Full Court said at para 92:
In Zschokke the Full Court at 83,215 identified further matters to be taken into account in relation to an order under s 79 and s 80 (1)(h) of the Act. The Full Court said that “[i]t would seem an essential part of such an order that the advance of funds be a matter which the trial Judge must take into account, or at least have regard to, in the determination of the final property settlement” (emphasis added). At 83,220 the Full Court said: “it must … be an integral part of any order under s 80(1)(h) for an advance of funds from the party in possession of the bulk of the party’s assets [sic] to the other party, that such advance can then be taken into account in the property settlement, that is, it must be capable of satisfying part of the other party’s entitlement” (emphasis added). At 83,221 the Full Court again identified as a matter for consideration “whether [the applicant] will ultimately be entitled to sufficient funds by way of property settlement to meet a requirement … that the amount [under the] order could be taken into account in the eventual property settlement order”.
Sixthly, the Full Court quoted Brereton J again with approval at para 96:
1. In Paris King Investments Brereton J at  and  said that in addition to the three matters described in Zschokke, where the order was made pursuant to either s 74 or s 117 of the Act:
an applicant should have “at least an arguable case for substantive relief which deserves to be heard”: Chester v Chester (1995) FLC 92-612 (“Chester”) at 82,107 per Moss J;
there should be evidence of the applicant’s “likely costs of the litigation”: see Wilson and Chester;
“it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis: Columb and Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes and Coomes  FamCA 103; (1995) FLC 92-558 per Cohen J;
an order may “make a provision for litigation expenses at a rate that appears reasonable in all the circumstances”;
an order can be made “in respect of costs already incurred as well as of future costs”;
“whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order, and its’ quantum”;
“any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended” and this may be done “by requiring 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 at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs”: Breen.
We observe that Brereton J at  also said that ‘many of the foregoing considerations [he described] are less important, though not necessarily irrelevant, where what is relied on as a source of power’ is an interim property order under s 79 and s 80(1)(h).
The Full Court then went on to consider if there were any additional requirements when exercising the power under section 79 and section 80(1)(h).
At para 118 the Full Court said:
1. There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act. This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, “circumstances may arise before there can be a final hearing” where the power is exercised. Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.
The Full Court then heard argument from the husband that the first stage must involve ‘compelling circumstances’. The wife argued that what was required at the first stage was in fact a consideration of the matters in section 79 in particular section 79(4) and not a narrowing of the wide enabling provision of section 80(1)(h); see para122 of the Full Court set out below:
The first matter to observe is that the term “compelling circumstances” does not appear anywhere in the legislation. In exercising the power under s 79 of the Act a court may make an order of the type described in s 80(1)(h). In a passage, which we have earlier referred to, the Full Court in Harris at 79,928 said that “[s]ection 80 is intended to be a wide, enabling provision and there is no justification for imposing limitations upon its normal or ordinary meaning and operation when applied to s.79”. Before us it was submitted by senior counsel for the Wife that s 80 of the Act confers a “free standing and unfettered discretion to entertain an application for an interim property settlement” and the Court should not “circumscribe that unfettered discretion with judge-made rules”. It was submitted that it is “contrary to proper judicial practice to confine the jurisdiction … by artificial formulae”. Senior counsel for the Wife submitted that the only limits on the application of s 80 “are the usual limits on the exercise of a judicial discretion” and that the overreaching criterion is the justice of the case.
The Full Court quoted at length the decision of Reithmueller FM in Wenz v Archer (2009) 40 Fam LR 212. There, the Federal Magistrate reviewed a number of decisions after Harris and concluded:
Whilst the phrase “compelling circumstances” is often referred to, it appears to me that this is simply descriptive of the need for there to be matters that weigh sufficiently against the benefits of having only one exercise of a s.79 power, rather than generating a new test of “compelling circumstances” which is not referred to in s.79 nor within the usual legal framework of the tests appropriate for interim relief. It appears that this was the process contemplated by the Full Court in Bonisoli and Zschokke; similarly, in Carson where the court spoke of the “balance of hardship”. Such an approach adequately accommodates the other decisions which have referred to the test as being “sufficiently compelling circumstances”.
The Full Court held at para 130:
130. On behalf of the Wife it was submitted, and we agree, that the reasons of RiethmulIer FM provide substantial support for the submissions put on behalf of the Wife for the following reasons:
1. The Federal Magistrate concluded from a consideration of the authorities that the occasion for the exercise of the discretion identified in Harris did not turn on “a test requiring ‘compelling circumstances’ per se, rather than simply identifying considerations that would be relevant to the exercise of the discretion” and the Full Court in Harris “contemplated the exercise of the power ‘where it is necessary’ … if injustice is to be avoided”.
2. The Federal Magistrate concluded that the test for an interim order under s 79 of the Act “must be whether, in all the circumstances, it is ‘appropriate’: s 79(1)”.
3. The Federal Magistrate held that the exercise of the power to make an order under s 79 of the Act on an interim basis requires an analysis of s 79 factors, including a consideration of whether the effect of the interim order might be unduly to limit the final order which might be made (i.e., the adjustment or claw-back issue identified in Zschokke).
4. The Federal Magistrate recognised a relevant factor in the exercise of the discretion in that: “It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property while the matter is litigated”.
5. The Federal Magistrate recognised that “generally it was better there be once and for all s.79 order, which apparently was the point of departure for the exercise of the discretion (ie, factors must exist which render it appropriate that the prima facie or usual position be departed from)”.
The Full Court said at para 132:
In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h)of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
The Full Court then looked at the various matters referred to by Brereton J in Paris King Investments (referred to above).
The Full Court said at para 141:
As to the various matters discussed by Brereton J in Paris King Investments which we have discussed above, we do not propose to deal with all of what his Honour said, however we make the following observations about some of the matters. Obviously the applicant should have “at least an arguable case for substantive relief which deserves to be heard”.
Further, in determining at the procedural stage whether to exercise the jurisdiction there may need to be evidence of the applicant’s “likely costs of the litigation” given that the need for funds to defray litigation costs and expenses is the circumstance propounded as to why it is appropriate that an order be made.
We also accept that “it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
The Full Court then applied this to what Strickland J had done at first instance and said at para 155:
Senior counsel for the Wife summarised what the trial Judge did as follows:
These are matrimonial assets the husband has got them; the husband can do what he likes with them; the husband can run his case as he likes and expend whatever he likes out of the matrimonial pool on costs, but I’m going to inhibit in some way the wife in what she can do with the matrimonial assets, notwithstanding that there is scope in the pool to pay her now and [this is an approach which his Honour took] notwithstanding he also said “what the wife does with the money, once she receives it is her business, not the business of the court”.
The Full Court re-exercised its discretion and found for the wife the sum of $5 million.
The Full Court said at para 161:
There are appropriate circumstances to make an interim property order and thus we propose to proceed to the substantive stage. For reasons we have given there is no issue that the Husband is able to pay his legal costs and expenses and is in a position of considerable financial strength. Further there is no issue that the remaining property will be sufficient to meet the claims of the parties when an order is made exhausting the jurisdiction. In the circumstances, we propose to make the order sought by the Wife. The Husband will therefore be required to pay the Wife the sum of $5 million.
Lessons and What Does this Mean for Practitioners
Not all cases will involve this sort of money but the principle is clear: one does not need compelling circumstances to seek an interim property distribution and one can seek an interim property distribution when one party needs some funds to defray both charged and anticipated legal costs.
The court cannot embark upon a determination of the merits of the legal action to be taken for and on behalf of your client in circumstances where the other party with all the assets and funds can pursue any legal work they desire with marital funds whilst having the court constrain your client; purely because your client does not have immediate access to those funds.
It seems to me that this case is of enormous importance to all practitioners who are so often faced with acting for one party without funds. This places enormous pressure on the practitioner, the client and may lead to the refusal of the expert one requires to assist whilst the other side blithely spends away.
There is one important issue not to forget however, and that is that you will need to show there is money or property there from which the preliminary distribution can be made and of course the matters referred to above by the Full Court.
Interim or Urgent Interim Spousal Maintenance on a Lump Sum Basis
There is firstly nothing in the Act itself that prevents a lump sum order for maintenance per se, whether it be interim or urgent interim under section 77 of the Act.
However, there is one basic requirement in both interim and urgent interim matters that must be considered. That is, that one still has to establish a right to maintenance under section 72(1) of the Act.
One might think it impossible to get a lump sum order for maintenance on an urgent basis. There is clear authority that one can: See Kowalski V Kowalski (1993) FLC 92-342.
In that case the wife and the husband had separated and divorced and had recommenced living together. The husband became quite ill and the wife sought leave to institute proceedings out of time under section 44 with respect to the home the parties had lived in for most of their cohabitation both during and after marriage. The wife sought occupancy and the husband wanted to kick her out. The wife had no assets and no income; the husband had the property and invested money providing him with income. He was in hospital with terminal cancer, the wife had cared for him and he had supported her. She also sought urgent maintenance and had been granted an order for $3,000 payable within seven days, plus occupancy and leave under section 44.
The Full Court on appeal said that:
In relation to the occupancy of “Blue Haze”, we need merely state that on the evidence before his Honour, it was open to find that the balance of hardship in finding alternative accommodation favoured the wife and in relation to interim maintenance, again, the evidence supported a finding that the wife was in need of support and the husband admitted in his affidavit that he had approximately $80,000 in a bank. In the circumstances, the sum of $3000 cannot be described as excessive or outside the exercise of his Honour’s discretion. The appeal must, therefore, fail.
Whilst the Full Court referred to the maintenance as interim, it is submitted that given the nature of the application it was instead urgent interim maintenance and by way of a lump sum.
For a more recent decision see Moby v Shulter (unreported, Cronin J, 23 December 2009) that was a decision of Cronin J who made a section 90RD declaration in order to provide a small urgent interim lump sum to the de facto wife. Again, the wife was impecunious and the husband had funds available to pay her. The decision is really on the 90RD matter and his Honour having indicated in clear terms that he would make the requisite declaration providing him with jurisdiction to make an urgent interim maintenance order, counsel very sensibly settled the amount to be paid on that basis.
Things that are necessary to show for Urgent Interim Maintenance (Lump Sum or otherwise)
There must be an immediate or urgent pressing need for assistance: Malcolm and Malcolm (1977) FLC ¶90-220, Williamson and Williamson (1978) FLC ¶90-505, and Hayson and Hayson (1987) FLC ¶91-819.
The order is only ever a ‘stop gap’ until there can be a proper hearing on a proper interim basis. Hence, one would be unlikely to get a huge lump sum and, if that is what is sought, then perhaps an interim property order might be more appropriate or a lump sum interim maintenance order. It is hard to envisage where one might have to seek a large lump sum on an urgent interim basis.
The most recent decision on both lump sum and urgent interim maintenance is the decision of Monahan FM sitting in Sydney called Galazin and Anor and Galazin (2010) FMCAfam1.
The wife sought urgent orders for maintenance including payment of mortgage, car payments and the like plus a small lump sum and weekly payments. His Honour set out the difference in law with respect to interim decisions or urgent interim decisions (this was as it was heard in the duty list at the end of a long day on short oral submissions). His Honour quoted a number of decisions that point out the different enquiry made for an urgent basis and interim basis; see Baber V Baber (1980) FLC 90-901 and see Ashton V Ashton (1982) FLC 91-285. His Honour found there was enough evidence before him and the submissions were long enough that he could make an interim order rather than an urgent order.
Little has changed with respect to these sorts of orders.
‘Summary Dismissal’ or section 17A of the Federal Magistrates Court Act
The Federal Magistrates Court Act has a unique and not often used section. It is often likened to summary dismissal. However the High Court of Australia has made it clear that the section requires a less stringent test than that required for summary dismissal.
This means that solicitors and counsel should be aware of this recent decision, as it might save ones client a lot of time and money in circumstances where one party seeks to re-litigate a child matter where, for instance, final orders have been made and there is absolutely no change of circumstances whatsoever that could possibly warrant a ‘Rice v Asplund’ application.
Section 17A says:
17A(1) [No reasonable prospect of defending]
The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
17A(2) [No reasonable prospect of prosecuting]
The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
17A(4) [Powers not limited]
This section does not limit any powers that the Federal Magistrates Court has apart from this section.
The section is not often used since the High Court decision in Spencer v Commonwealth of Australia  HCA 28 (1 September 2010)(Spencer). Spencer dealt with a section of the Federal Court Act in the exact same terms as section 17A (section 31A(2) of the Federal Court Act).
Mr Spencer was a farmer in NSW. He issued proceedings against the Commonwealth in the Federal Court claiming that the Commonwealth had ‘acquired’ some of his land other than on ‘just terms’ and that the empowering legislation enabling the Commonwealth to do so was in fact legislation made for the purpose of acquiring property other than on ‘just terms’ and therefore in breach of section 51(xxxi) of the constitution.
The NSW government had various native vegetation acts that prevented clearing and the Commonwealth laws on natural heritage and natural resources contained in various Commonwealth acts in order to authorise agreements with NSW with respect to the restrictions amounted to nothing more than an attempt to acquire property on other than just terms.
His application was dismissed at first instance on the basis he had no reasonable prospect of successfully prosecuting the proceedings.
He appealed to the Full Court of the Federal Court and lost with a cost order against him in favour of the Commonwealth.
He then applied for special leave to appeal to the High Court and the Court asked all parties to address it on whether the case had been a suitable one for the application of section 31A.
The High Court heard addresses on this issue and determined the case was not one to which section 31A could apply as it potentially involved important questions of constitutional law. It also involved questions of fact about the existence of an arrangement between the Commonwealth and the State of New South Wales which may justify the invocation of pre-trial processes such as discovery and interrogatories. The possible significance of those questions of fact had become apparent in the light of the judgment in ICM Agriculture Pty Ltd v The Commonwealth, which had not been delivered when the primary judge and the Full Court delivered their judgments.
The High Court distinguished the test in section 31A from that of summary dismissal for no reasonable cause of action disclosed, a frivolous or vexatious application or summary judgement supported by evidence; the test there being (at para 24):
The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.
The High Court said that section 31A may be satisfied on grounds wider than the pre-existing rules at law and at statute about summary dismissal.
The High Court said at para 25:
Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
In the joint judgement of Hayne, Crennan, Keifel and Bell JJ, their Honours pointed out the radical departure from the older summary judgement principles in section 31A. They said at para 51 to 53:
51. First, the central idea about which the provisions pivot is “no reasonable prospect” (emphasis added). The choice of the word “reasonable” is important. If s 31A is to be seen as deriving from r 24.2 of the Civil Procedure Rules 1998 of England and Wales, its provisions underwent an important change in the course of their translation from that jurisdiction to this. The English rule speaks of “no real prospect”; s 31A speaks of “no reasonable prospect”. The two phrases convey very different meanings.
52. Second, effect must be given to the negative admonition in sub-s (3) that a defence, a proceeding, or a part of a proceeding may be found to have no reasonable prospect of successful prosecution even if it cannot be said that it is “hopeless” or “bound to fail”. It will be necessary to examine further the notion of “no reasonable prospect”. But before undertaking that task, it is important to begin by recognising that the combined effect of sub-ss (2) and (3) is that the enquiry required in this case is whether there is a “reasonable” prospect of prosecuting the proceeding, not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.
53. In this respect, s 31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. Those earlier provisions were understood as requiring formation of a certain and concluded determination that a proceeding would necessarily fail. ( highlighting of RW)That this was the basis of earlier decisions may be illustrated by reference to two decisions of this Court often cited in connection with questions of summary judgment: Dey v Victorian Railways Commissioners and General Steel Industries Inc v Commissioner for Railways (NSW).
Their Honours said at para 56:
Because s 31A(3) provides that certainty of failure (“hopeless” or “bound to fail”) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different enquiry from that which had to be made under earlier procedural regimes. It follows, of course, that it is dangerous to seek to elucidate the meaning of the statutory expression “no reasonable prospect of successfully prosecuting the proceeding” by reference to what is said in those earlier cases.
Whilst the High Court did not define the less stringent test it nevertheless made it clear that the test is less stringent.
Thus consider section 17A a powerful tool to use.
Note: Mr Spencer succeeded in his leave application.
Written by Robyn Lee Wheeler
Barrister at Law
Owen Dixon Chambers East
Please see relevant Smokeball publication Family Law Practice Manual written by Peter Szabo and Stephen Winspear.