Abano and Emerton

[2018] FCCA 1957

FEDERAL CIRCUIT COURT OF AUSTRALIA

ABANO & EMERTON [2018] FCCA 1957

Catchwords:
FAMILY LAW – Interim financial – husband seeking interim orders made on 23 February 2018 be revoked based on errors in his sworn material – whether or not there has been a change in the husband’s financial circumstances.

Legislation:

Family Law Act 1975, ss.72, 75, 83(1)(c), 83(7)

Child Support (Assessment) Act1989 s.139

Federal Circuit Court Rules 2001 r.11.02

Cases cited:

Parmesh & Parmesh [1997] FamCA 15

Lutzke & Lutzke (1979) FLC 90-714

Applicant: MS ABANO

Respondent: MR EMERTON

File Number: MLC 11620 of 2017

Judgment of: Judge Harland

Hearing date: 2 July 2018

Date of Last Submission: 2 July 2018

Delivered at: Melbourne

Delivered on: 20 July 2018

REPRESENTATION

Counsel for the Applicant: Mr Serra

Solicitors for the Applicant: Costanzo Lawyers

Counsel for the Respondent: Mr Tatti

Solicitors for the Respondent: WMB Lawyers

ORDERS

1. Order 11 of the orders made on 23 February 2018, insofar as it requires husband pay child support of $200 a week, is set aside with the balance of the order remaining in full force and effect.

2. The husband’s application in a case filed on 8 May 2018 is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Abano & Emerton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 11620 of 2017

MS ABANO

Applicant

And

MR EMERTON

Respondent

REASONS FOR JUDGMENT

1. This is the second time this matter has come before me for a contested interim hearing.  Both parties filed an application in a case in May 2018. In part those applications arise out of interim financial orders I made on 23 February 2018.  Stated broadly the issues the parties seek to agitate relate to interim child support, interim maintenance and the proposed joinder of a third party.  I will address each of these in turn.  Before turning to those competing applications it is necessary to refer to the history of the proceedings.

2. The wife commenced these proceedings on 8 November 2017 seeking urgent interim financial orders, including orders for maintenance.

3. The matter first came before me on 28 November 2017.  On that occasion, the parties agreed to interim orders restraining the husband from dealing with various assets and ordering him to provide disclosure of various documents.  The husband was represented by counsel. The wife’s interim application was adjourned for hearing on 23 February 2018.

4. The husband filed his response, supporting affidavit and financial statement on 18 December 2017.

5. The first interim contested hearing took place before me on 23 February 2018.  There were several deficiencies in the husband’s material.  Although his response was signed by his lawyer, it appeared to have been drafted by the husband and it did not contain properly formulated orders. I commented that the orders read as though drafted by the husband himself, as did parts of his affidavit, particularly with respect to parenting issues.

6. The husband had ample opportunity to prepare his material prior to the first interim contested hearing. The wife’s application for maintenance had been adjourned from 28 November 2017. When the appalling state of his documents was raised with his counsel, she said there had been issues with funding. That is not an excuse for such poor drafting. The husband’s then solicitor had indicated on both documents that she had prepared the documents, not the husband.

7. I pointed out to the husband’s counsel that the husband’s financial statement was completely unreliable given the state it was in, but that I was not inclined to adjourn the wife’s application again. The husband’s counsel advised that she had various bank statements which had been disclosed previously that supported her client’s case that he did not have the capacity to pay any maintenance. She said she was instructed that the husband was on the verge of declaring bankruptcy. There was no explanation as to why the husband had not filed an amended financial statement prior to 23 February 2018.

8. The wife’s counsel submitted that the bank statements provided by the husband were incomplete.

9. Despite being on notice of the wife’s maintenance application, the husband did not complete part N of the financial statement.  There were other problems with the husband’s financial statement, for example:

   a)Part G question 19 total income: instead of containing a figure it merely says “XX”; 

   b)Part G question 20 superannuation: refers to a figure of $1,563.88 as a weekly liability;

   c)The husband includes mortgage and outgoings liabilities when in fact he was not paying them, which he makes clear in his affidavit that he filed at the same time; and

   d)Part G question 32: he provided a figure for total other expenditure as $1,825 a week without the requisite part and particulars being provided.

10. The figures in the husband’s financial statement simply do not add up.  It is significant that no attempt was made by the husband to correct these errors prior to the interim hearing on 23 February 2018.

11. At the interim contested hearing on 23 February 2018, the husband’s counsel indicated that the husband’s circumstances had changed and he had reduced his working hours due to ill health.  None of this was put into evidence before the Court, despite the husband having ample opportunity to do so.

12. On that day after hearing argument, I made orders addressing the following issues:

    a)I ordered the parties to attend a conciliation conference on 26 April 2018 and listed the matter in the duty list before me at 9:45am on 9 May 2018;

    b)I ordered the wife be responsible for the mortgage payments and outgoings with respect to the former matrimonial home at Suburb A;

    c)I ordered the husband pay the arrears on the mortgage and the rates owing on the former matrimonial home as at that date;

    d)I further ordered that the husband pay $200 a week by way of maintenance to the wife with a further $200 a week in urgent child support pending an assessment being made; and

    e)I made interim parenting orders providing for the husband to have supervised time with the parties’ two year old child, supervised at his expense.

13. The husband was represented by the same counsel on 28 November 2017, 23 February 2018 and at the conciliation conference on 24 April 2018. The husband’s current solicitor indicated that he was instructed in April 2018.

14. The wife filed an application in case on 4 May 2018 which in summary sought orders for:

    a)the husband to comply with the previous financial orders made for interim payments;

    b)the joinder of Company Pty Ltd;

    c)injunctions against the husband and Company; and

    d)disclosure by the husband and Company.

15. The wife deposes in her supporting affidavit that the husband has not complied with the interim maintenance and child support orders.  She also says that she has had to issue several subpoenas because the husband did not comply with the orders for financial disclosure.

16. The wife issued subpoenas to various financial institutions in April and May 2018. She says the subpoenaed documents raise more questions and concerns about the husband’s financial circumstances. Her case is that he is carrying out his threat to dissipate assets. The husband denies this. This will be an issue for trial.

17. One of the subpoenas that the wife issued was to Company. The husband’s sister is the director and shareholder of that company.  The wife alleges that the husband is diverting his wages, with the assistance of his sister, in order to avoid his financial obligations to her and the children.

18. The husband filed an application in a case on 8 May 2018 seeking that the interim maintenance and child support orders be set aside or varied.  His application and supporting affidavit were prepared by his new solicitors that he had engaged subsequently to the first interim contested hearing.

19. In his supporting affidavit the husband makes various complaints about his former solicitor.  He claims that he provided his solicitor with all the financial information to prepare his financial statement and affidavit.  He claims that his solicitor brought the documents out to his truck for him to sign and he was not administered the oath nor affirmation.

20. He provides no explanation as to why it took him over two months to file this application.  I also note that the husband did not appeal the interim orders.

21. The matter came before me in a duty list on 9 May 2018 for mention after a failed conciliation conference.  Given the nature of the issues before the Court currently, it is of no surprise that the matter was unable to be resolved.

22. The husband’s counsel stated that the valuation of the home in accordance with previous orders had not yet taken place but that his client had borrowed funds to do so and anticipated having the valuation that day.  It is unfortunate that the practitioners did not seek to have the conciliation conference vacated given that the state of the matter was such that it was clear that no meaningful settlement discussions could have taken place.

23. On 9 May 2018 the wife’s counsel sought a listing for an interim contested hearing with respect to the applications and leave to cross examine the husband, and possibly his previous solicitor, with respect to the issues the husband raised with respect to his previous financial statement and the February orders.  In addition to this he indicated he would seek to agitate the joinder issue and the non-compliance with the subpoena issued to the proposed second respondent.

24. During exchanges with both counsel, I raised concerns about the fact that the wife was seeking a one day interim hearing with cross-examination in a case where counsel stated that the pool was “minuscule” and the question is how “minuscule” it is.  The wife’s counsel submitted that it would be the only way for the wife to assess the case she has to meet where she says the husband is in the process of dissipating assets.  The application in a case had a return date of 2 July 2018.  I declined to list the matter for an interim hearing with cross-examination without seeing the wife’s responding material. I raised further concerns about finding time for that to occur in my sizeable docket and questioned whether or not that would be necessary to do so.

Child Support

1. During the hearing on 23 February 2018, the husband’s counsel initially indicated the husband was happy to start paying child support once it had been assessed.  His counsel later said he was not opposed to paying child support straight away in accordance with his financial circumstances. With respect to child-support, I made an urgent child support order that the husband pay $200 per week pending an assessment being issued by the child support agency. 

2. When the matter was argued before me on 2 July 2018 the wife’s counsel indicated that the wife had still not made an application for a child support assessment. The wife instructed her counsel that she had spoken to the child support agency who had excused her from making an application based on her allegations of significant family violence. This raises a jurisdictional difficulty. The wife’s counsel said that the husband could apply for a child support assessment, but that is not an answer to the problem. In this respect I refer to s.139 of the Child Support (Assessment) Act1989 which enables the court to make an order for child support if it is satisfied that the children are in need of urgent financial assistance and an application has been made for an administrative assessment.  Given the fact that it is now clear that neither party has applied for a child support assessment, part of order 11 of the orders made on 23 February 2018 were made without jurisdiction and must be set aside.

Maintenance

1. In the husband’s written submissions he seeks that the spousal maintenance order be discharged, referring to a s.72 and s.75 of the Family Law Act 1975 and the consideration that the Court must give to whether it is right and proper that the order be discharged.  He relied on a combination of factors being:

   a)the material before the court at the time, particular in his financial statement did not reflect his true financial position;

   b)his current personal circumstances; and

   c)the nature and size of the pool.

2. The husband’s lawyer had the disadvantage while preparing the written submissions of not having been at court on 23 February 2018.  Insofar as at [10] of his written submissions, he suggests that “the court was moved (in part) to make the orders on the basis of the husband’s income and superannuation amounts” contained in his financial statement. That is not correct.  I made it very clear that it was impossible to rely on the husband’s financial statement given the state of it. The husband’s lawyer draws attention to the annexures to his affidavit filed contemporaneously with his financial statement, being invoices for the work the husband did between July and October 2017. Contrary to the husband’s submissions, these do not prove that this was his total income.  All they do is indicate income that he was earning during that period.

3. The husband seeks to blame his former lawyer for the state of his financial documents before the Court.  The allegations he makes against his former solicitor in his affidavit are serious.  His former lawyer is not in a position of being able to respond due to legal professional privilege.  The wife’s lawyers had subpoenaed her to produce documents and give evidence but resolved that issue prior to the interim hearing.  It is not an issue that I can or should determine and the husband can pursue such issues in another forum.

4. The husband’s submissions then go on to analyse the affidavit and annexures the husband filed in December 2017 and argues that his financial statement was inaccurate.  In this regard I note my comments above. 

5. The husband also relies on Full Court decision of the Family Court Parmesh and Parmesh [1997] FamCA 15 in support of his submission that there is just cause pursuant to 83(1)(c) of the Family Law Act which gives the Court discretion to discharge a maintenance order “if there is any just cause for so doing”.  The Full Court considered the meaning of just cause.  There are two parts to the husband’s argument which I will address separately.  The first is that there is just cause to discharge the order because the evidence before the Court at the time it made the order was wrong.  The second is that the husband’s financial circumstances have changed since the orders were made justifying the Court giving further consideration to the maintenance order.

6. The Full Court decision provides useful discussion about the meaning of just cause in this context and reviews previous decisions discussing this term.  They refer to with approval the dicta of Lindenmayer J in Lutzke & Lutzke (1979) FLC 90-714 at 78,832 where he says

   “… The Act is silent as to what may constitute ‘just cause’ for the discharge of an order.  In my opinion, however, the words ‘just cause’ are not used in any broad sense, nor to import any abstract notions of justice, ‘palm tree’ or otherwise, into the determination of applications for discharge.  In my opinion those words must be interpreted in the context of the Act as a whole, and in particular with regard to the other specific provisions of the act which relate to maintenance.  Thus a ‘cause’ for the discharge of an existing maintenance order will be a ‘just cause’ only if, having regard to the other provisions of the Act , particularly those relating to maintenance, it can be said that it is ‘right’ or ‘proper’ that the order should be discharged.”

7. As pointed out by the Full Court s.83(7), inserted after Lutzke & Lutzke, requires the Court to have regard to ss.72 and 75. I accept that this is what I must do. It is significant to note however that the circumstances of Parmesh & Parmesh are quite different to the case before me.  In that case it was the wife, who sought and benefited from the making of maintenance order, who withheld evidence from the Court that she owned a property and that the payslips of the husband which she tendered to the Court were fortnightly and not weekly payslips.

8. As it is clear from submissions made before the Court on 23 February 2018, the wife was not in a position to know with any accuracy the husband’s true financial circumstances based on the material the husband had filed.  It would not be a just cause that is right or proper to discharge the order in his favour based on his own failure to put the evidence before the court when it was in his control to do so.  Indeed that would encourage nondisclosure and non-compliance with orders and undermine the administration of justice. It would be a different consideration if it was the wife who withheld evidence from the Court in order to obtain the benefit of a maintenance order as was the case in Parmesh.

9. It must be remembered that these proceedings are at an interim stage where it is not possible to engage in an exhaustive hearing. That can be done at a final hearing. 

10. He refers to the wife’s affidavit and states that apart from making various assertions and submissions, she cannot point to any evidence that the husband is in fact working and is able to work and has the capacity to meet such an order. 

11. In contrast to the husband, the wife disclosed in her affidavit filed 21 February 2018 and in her amended financial statement filed the same day that she had recently started full-time employment earning approximately $800 a week after tax.  Her previous financial statement showed that she was fully reliant on Centrelink payments.  This was taken into account the interim hearing where I made orders for the wife to take over the payment of the mortgage as she and the children are living in the property.

12. In her affidavit filed 4 May 2018 at [14] she refers to two payments the husband received from the Australian Taxation Office on 21 March 2018 of $2,765 and $4,064.  She annexes his bank statement which shows that he withdrew $6,800 the next day.

13. The manner in which the husband has chosen to prioritise payments of alleged debts over compliance with the interim maintenance order is of concern.  On 21 March 2018 the husband received two sums totalling $6,800 from the Australian Taxation Office.  He claims that he transferred $4,500 to his friend Mr M in repayment of an alleged loan, $1,500 in repayment of loan to another friend Mr A, and that the Bank applied the remainder to his credit card debt. Mr M filed an affidavit about that alleged debt which claims he was repaid on 26 March 2017.  The bank statements annexed do not show to which year it refers.

14. It is significant that the husband, accepting for the moment his evidence on face value, chose to prioritise these repayments to unsecured creditors over compliance with the court orders that he is now seeking to be discharged.  It does not assist his position.

15. The husband refers to having produced medical evidence as to his capacity to work.  The husband annexes various medical documents to his affidavit filed 26 June 2018. One is a letter from a social worker which states the husband should not (employment omitted). I can place no weight on it, putting aside the fact that the social worker has not sworn an affidavit, as a social worker is not qualified to give expert opinion about the husband’s capacity to work. There are other annexures to the husband’s affidavit filed on 26 June 2018 which show that the husband has presented to emergency departments from mid-2017, well before these proceedings commenced.

16. The nature and extent of husband’s debts and whether those debts are debts of the relationship are in fierce dispute.  For example, at [20] of the husband’s affidavit filed 18 December 2017 he claims to have borrowed $22,500 from a friend in 2014 and annexes a statutory declaration from a friend.  This statutory declaration is dated 12 April 2017, a few weeks after the parties separated.  The wife disputes the existence of this loan. The husband has still failed to complete Part N of his financial statement.

1. The wife’s counsel tendered a contract extracted from the subpoenaed material between Business (the husband’s company) and Company dated 7 December 2017 for a chattel mortgage for a Motor Vehicle. The significance of this is the statement of assets and liabilities on the third page of the contract. It was signed by the husband on 4 December 2017. He discloses assets totalling $787,000 and liabilities of $348,000 (being the mortgage of $325,000 and $23,000 in credit card debt.  It begs the question on which documents signed by the husband can the Court put weight, especially at an interim stage where the credibility of the parties cannot be tested, in circumstances where husband’s own material contains significant inconsistencies.

2. The husband’s application to vary the maintenance order on the basis of change of circumstances cannot succeed when the husband’s own evidence is full of such contradictions.  The focus of the argument was on the husband’s capacity to pay, not the wife’s needs.  The maintenance order is modest.

Joinder application

1. In order to assist with the efficient disposition of the applications and to the nature of issues raised, I directed that the parties file written submissions in advance of the hearing on 2 July 2018.  The difficulty with the manner in which this case has progressed is becoming all too common in this Court and it places more pressure on overstretched court resources. 

2. The wife’s counsel sought to proceed with the wife’s joinder application despite the proposed third party not being served with the application.  He submitted that as the director of the proposed second respondent is the husband’s sister and she has been served with a subpoena, she is aware of the proceedings. That falls well short of being on notice of orders being sought against her.

3. In support of this submission he cited rule 11.02 of the Federal Circuit Court Rules 2001.  It is apparent that he only read rule 11.02(1)(a) and not (b).  I set out the rule in full:

   11.02  Party may include another person as a party

   (1)  A party to a proceeding may include any person as a party by:

   (a)  naming the person as a party in the application, response or reply; and

   (b)  serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.

   (2)  A party may not include a person as a party after the first court date without the leave of the Court.

   (3)  The Court may at any time order a party who has included a person as a party to file and serve on each other party in the proceeding an affidavit setting out the basis on which the person has been included.

4. The wife’s submissions do not address the joinder issue.

5. As a result of the failure to address this was necessary to adjourn the joinder application at further cost to the parties and court time.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Harland

Date: 20 July 2018