Case notes

Procedure – litigation funding sought by husband from wife and her mother

Edson & Whitney and Anor [2020] FamCA 184 (25 March 2020)

9 July 2020

In Edson & Whitney and Anor [2020] FamCA 184 (25 March 2020) Rees J dismissed an application by a husband in a property case for litigation funding from the second respondent (the wife’s mother); the wife (by lump sum paid by her obtaining a mortgage over her real property, her mother to waive her security over that property); and the wife as a “dollar for dollar order”.

The wife’s case was that she owed her mother $3,616,000 and $350,000, which exceeded the value of the marital assets and were secured over the wife’s property and owed her brother $111,000 for legal fees.

After citing ([27]) Knight v FP Special Assets Ltd [1992] HCA 28 as to the court’s power to order interim costs against a non-party, Rees J referred to the Full Court’s statement in McAlpin [1993] FamCA 71:

“We do not think that we should conclude our discussion of the matter, however, without saying that we think that the approach taken by his Honour in this case, is one that should be taken with great caution. It is one thing for a family or organisation to stand behind a party in proceedings under the Family Law Act, either by paying their costs or supporting them in the course of the litigation, but it is quite another matter, in most cases, to make orders against an impecunious party in the expectation that such other person or persons will discharge the orders on their behalf.”

The court concluded (from [37]):

“[T]here is no possibility that, if the second respondent were required to waive her security to allow the wife to borrow $180,000, thus diminishing the security for her asserted loan, and if the husband’s challenge is not successful, the second respondent can ever be compensated by the husband for her loss. (…)

[39] It would not be just and equitable to interfere with the security where the beneficiary of the security could not be compensated for any loss occasioned.”

Robert Glade-Wright is the founder and senior editor of The Family Law Book, a one-volume loose-leaf and online family law service (thefamilylawbook.com.au). He is assisted by Queensland lawyer Craig Nicol, who is a QLS Accredited Specialist (family law).