ALLMAN & ALLMAN

[2015] FamCA 806

FAMILY COURT OF AUSTRALIA

ALLMAN & ALLMAN [2015] FamCA 806

FAMILY LAW – Interim proceedings – Where the wife seeks an interim property order to fund legal fees – Where the parties have been separated for about 10 years – Where the parties reside on the same property but in different dwellings – Where the husband asserts and it is accepted that the husband has no capacity to fund the order sought by the wife – Where there is contention surrounding the wife’s employment circumstances – Where it would not be appropriate to make an interim property order in the wife’s favour.

FAMILY LAW – Interim proceedings – Spouse maintenance – Where the wife seeks an order that the husband pay her $500 per week –Where no finding can be made in interim proceedings as to the wife’s employment and earning capacity – Where the husband has health conditions - Where the husband has been responsible for payments associated with the parties’ property – Where the wife has not established the husband has a capacity to make spousal maintenance payments - Where there is not sufficient evidence as to the wife’s level of need – Where it is found that no interim order for periodic spousal maintenance should be made.

Family Law Act 1975 (Cth)

Bevan and Bevan (1995) FLC 92-600
Harris (1993) FLC 92-469
Oates and Crest (2008) FLC 93-365
Redman and Redman (1987) FLC 91-805
Strahan (2011) FLC 93-466

Williamson and Williamson (1978) FLC 90-505

APPLICANT: Ms Allman

RESPONDENT: Mr Allman

FILE NUMBER: SYC 8552 of 2007

DATE DELIVERED: 30 September 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 21 September 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hodgson

SOLICITOR FOR THE APPLICANT: Manning Lawyers

COUNSEL FOR THE RESPONDENT: Mr Levy

SOLICITOR FOR THE RESPONDENT: Newnhams Solicitors

Orders

1. The wife’s application for interim property order and for an interim sale of the Suburb B property is dismissed.

2. I note that the husband deposes to the fact that he makes regular repayments in respect of the current mortgage and insurance on the Suburb B property.

3. The wife’s application for interim spousal maintenance is dismissed.

4. The costs of both parties are reserved.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 8552 of 2007

Ms Allman

Applicant

And

Mr Allman

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. By way of Amended Application in a Case filed 9 July 2015 Ms Allman (“the wife”) seeks interim orders for spousal maintenance and partial property settlement. Specifically, the wife seeks that the husband pay her interim periodic spousal maintenance in the amount of $500 per week. In addition, she seeks that the husband pay to her the amount of $50,000. The wife asserts that this amount could be provided to her by the parties drawing down $50,000 from the joint mortgage secured against the jointly owned property at C Street, Suburb B (“the Suburb B property”).

2. The parties separated in December 2004 or December 2005 and their divorce became final on 1 March 2008. The parties were married for a period of 28 years. There are two children of the marriage, both of whom are now adults.

3. There are two dwellings on the Suburb B property. The husband and his partner reside in the cottage on the property, and the wife resides in the former matrimonial home which was built on the property in about 1999/2000. The husband has continued to meet all the outgoings for both dwellings on the Suburb B property.

4. On 19 December 2014 the husband filed an Initiating Application seeking that the wife transfer to the husband all her interest in the Suburb B Property in exchange for the payment to her of the sum of $350,000. In her Response, the wife seeks the Suburb B property be sold and she receive 60 percent of the proceeds of sale. On 22 May 2014 Stevenson J made orders by consent granting the husband leave to commence the property proceedings out of time and for the wife to commence spousal maintenance proceedings out of time.

INTERIM PROPERTY APPLICATION

1. The Full Court in Strahan (2011) FLC 93-466 revisited the principles applicable to applications for interim property orders. An interim property decision involves two steps.

2. First, it must be established that s 80(1)(h) Family Law Act 1975 (Cth) (“the Act”) was enlivened to allow an interim property settlement under s 79 of the Act. The test for this was not confined to ‘compelling circumstances’. The Court in Strahan revisited the earlier well known statement made in Harris (1993) FLC 92-469 where the Full Court had said:

   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.

3. In Strahan, the Full Court said:

   [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.

   [139] We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.

4. As explained by the Full Court, s 80(1)(h) of the Act is a wide enabling provision for interim property decisions, and there is no reason to limit it, by requiring a finding of ‘compelling circumstances’. All that is required before the power to make an interim property order is exercised, is an assessment of whether it would be “appropriate” to make an interim order, with the “over arching consideration” being the interests of justice. There may need to be evidence of the likely cost of litigation, but only if that is the reason or part of the reason that is propounded as to why it is appropriate that the order be made.

5. As was discussed in Harris and confirmed in Strahan, the second step in making an interim property order is to have regard to the usual matters in a s 79 order (ss 79(2) and 79(4) of the Act). A detailed inquiry is not required, but there must be some assessment of s 79 factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.

6. Being a preliminary property order, the recipient may choose to spend that money however they wish.

7. In Harris, the Full Court said:

   As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.

8. In Strahan, the Full Court said in exercising the wide and unfettered discretion conferred by s 79 and s 80(1)(h) of the Act:

   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.

9. A corollary of these statements made by the Full Court in Harris and Strahan is the proposition that as a generality, the interests of the parties and the court are better served by there being as few interim property applications under s 79 as is possible.

10. The principal asset of the parties is the Suburb B property. On the wife’s case the property is worth about $1.8 million and on the husband’s assertion it is worth $1.6 million. There is approximately $400,000 owing on the mortgage over that property.

11. It is the wife’s assertion that she made significantly greater initial financial contributions than that of the husband at the time of cohabitation. At the time of cohabitation, the wife received a 50 percent share of the land on which the Suburb B property is situated, from her father. The parties then purchased the remaining 50 percent share of the land in 1982. At the time of cohabitation the wife had savings, a motor vehicle and superannuation. The husband also had some savings and a motor vehicle.

12. The wife made ongoing contributions to the welfare of the family as a parent and homemaker and was primarily responsible for performing household tasks and domestic duties.

13. The husband asserts that he has made significant contributions to the Suburb B property both during the marriage and following separation. He says those contributions amount to over $1 million. At [5] of his affidavit the husband sets out the expenses he has met in respect of the Suburb B property between 2006 and 2015. Those expenses total over $1 million.

14. Since separation the husband has continued to meet the mortgage repayments and all other expenses associated with the former matrimonial home. It is the wife’s assertion that the mortgage and overdraft secured over the Suburb B property are in arrears of approximately $20,000. The husband disagrees with this assertion.

15. The wife pays utilities on the former matrimonial home and cottage which she says amount to $900 per quarter. The wife also says she pays $50 per month towards council rates which are in arrears of approximately $6,000.

16. Details surrounding the wife’s employment are contested. The wife asserts she is employed part time in hospitality earning approximately $18,000 per annum. The husband does not accept that is all the wife earns. He asserts that the wife works full time and $18,000 per annum is less than the minimum award wage. He asserts the wife carries out work for private functions. The husband points to the wife’s St George Bank statements which show deposits into the wife’s account from “D Club” and “E Resort”. Counsel for the husband tendered a newsletter from D Club which would indicate that the wife and her daughter prepared a lunch for an event at the club, describing the wife as “D Club’s own [wife name] and daughter [daughter’s name]. Without further exploration, it is impossible to know what weight to place upon that statement. On its face, it seems to indicate that the club is saying that the wife works for them and her daughter assisted at this particular event. It could mean however that the club considers both the wife and the daughter as “their own”. Counsel for the wife makes the point that it is clear from the husband’s financial statement that he is a member of the yacht club at which he asserts the wife is employed, yet gives no evidence of seeing her working there.

17. The parties’ daughter has filed an affidavit in these proceedings asserting that the monies paid into the wife’s account from those two entities are payment of work done by the daughter. The daughter says that she has had to be paid her remuneration into the wife’s account because she does not have an ABN. She says the wife would give her cash when she saw her, or transfer the payments into her bank account. The husband contends that there is no evidence of payments from the wife to the daughter by way of transfer.

18. Counsel for the husband also tendered credit card statements of the wife. He made submissions that the wife had paid $16,000 to her credit cards in 12 month period (almost the entirety of her net income). Counsel for the husband also tendered the wife’s a statement from the wife’s superannuation fund which would indicate that if the wife’s employer is making contributions at the rate of 9 percent, the wife’s income is larger than the wife contends.

19. Counsel for the wife said from the bar table, and it did not seem to be disputed, that subpoenas have been issued to both D Club and E Resort and had not returned any information relating to the wife’s employment at either of those places,

20. The wife has not produced any tax income returns, notwithstanding a notice to produce being served on her by the husband.

21. The husband operates a building company of which he is the sole director and shareholder. The husband says his income consists of salary of $692 per week and declared dividends of $923 per week. That company has been required to enter into a payment play with the Australian Taxation Office to meet taxation liabilities. The husband says he has had to borrow funds from his partner to meet those liabilities.

22. It is also asserted that the husband’s partner has also loaned the husband about $25,000 to meet legal fees.

23. Following separation the husband received inheritance from his mother of about $320,000. The husband also withdrew $105,000 from his pension account. The husband used these funds to renovate the cottage on the Suburb B property.

24. The husband’s partner earns $700 per week and does not make any contribution to household expenses. In fact, the husband deposes in his financial statement to the fact that he contributes $175 per week for the benefit of his partner.

25. The wife seeks funds in the sum of $50,000 in order to meet her ongoing legal expenses. The wife contends that she does not have the funds to meet her legal fees and does not have any financial resources. An expert valuation is required in respect of the former matrimonial home. The wife says she has no funds meet her share of this expense.

26. It is the husband’s case that the wife does not identify a source of funds for the payment of the $50,000. The husband asserts such a source does not currently exist. He says that there is no evidence that any credit provider will lend the funds sought by the wife, no evidence as to who will meet the payments on the debt thereby created and no evidence that either of the parties are able to meet the payments created by the debt.

27. At first sight, there is a disconnect between the husband’s position on an interim basis and on a final basis.

28. Counsel for the husband conceded during final submissions that if final orders were made as sought by the husband, he would pay the wife at least $300,000 by way of final property settlement.

29. The husband also asserted that an order providing the wife $50,000 at this interim stage would not be reversible. I was not able to understand that submission.

30. The husband has not yet provided evidence that would satisfy the court on a final basis that he had the capacity to raise funds to pay the wife the requisite amount to be able to retain the Suburb B property. Upon his current evidence, it seems improbable that he would be able to rely upon his own resources. Any arrangement for finance on a final basis would probably involve a financial institute taking into account the income of the husband’s partner and she in some way being involved in the acquisition or alternatively the husband receiving assistance from his mother or some other third party.

31. It is conceivable that an institution would lend, and a third party would back, the loan by the institution on the basis that the wife was no longer to have any interest on the property on a final basis, but not be prepared to enter into those arrangements whilst the uncertainty of this litigation remained.

32. Whilst not usually particularly relevant in respect of an application for interim property, counsel for the husband does make the point that there is no evidence from the wife that she would be unable to obtain legal representation either with her current lawyer or some other lawyer on the basis that they would defer payment of their fees pending either a lump sum payment to the wife or the ultimate sale of the Suburb B property.

33. In all the circumstances it is not just and equitable to make a lump sum order against the husband.

34. I note that to date the husband has obtained the assistance of third parties to pay legal fees. The wife made no application for a dollar for dollar order in this case.

35. Whilst the parties might move forward in the litigation without there being a level playing field, it is not possible in the context of the applications before me to do anything about that and it is not appropriate to make an interim property order in the wife’s favour in this case.

36. In respect of the wife’s alternate proposal that the Suburb B property be sold, the husband contends that that order would defeat his application in the primary proceedings (that is, that the Suburb B property be transferred to him) and I accept this is so.

INTERIM SPOUSAL MAINTENANCE

1. On the face of the wife’s financial statement, there is a shortfall between her average weekly income and her total personal expenditure of about $500 per week and she applies for the husband to pay that amount to her on an interim basis by way of periodic spousal maintenance.

2. Section 72 of the Act requires a party to a marriage to maintain the other party, to the extent that they are reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately because of certain reasons and having regard to factors set out in s 75(2) of the Act. If the applicant establishes a need and it is shown that the respondent has a capacity to pay, then the court may make such order as it considers proper for the provision of maintenance (s 74 of the Act).

3. In interim proceedings, the Full Court in Redman and Redman (1987) FLC 91-805 endorsed a statement made by Fogarty J in Williamson and Williamson (1978) FLC 90-505 as follows:

   Another consequence is that on an application for interim maintenance, the court conducts ‘not as final or exhaustive a hearing as would be the case if one were hearing the matter finally’ ... the evidence need not be so extensive and the findings not so precise.

4. So, upon an application for interim maintenance, an approach can be taken with a broader brush.

5. Any proposed interim property order must be taken into account when interim spousal maintenance is considered (see Bevan and Bevan (1995) FLC 92-600 and Oates and Crest (2008) FLC 93-365; 216 FLR 469).

6. The wife seeks interim spousal maintenance of $500 per week. It is submitted by counsel for the wife that the wife’s expenses are frugal and not unreasonable.

7. The husband is presently aged 61 years old. He has re partnered and resides with his partner on the Suburb B property.

8. The wife is aged 62 years old.

9. The parties were married for approximately 28 years.

10. The husband currently has a significantly greater earning capacity than the wife. His partner is also in paid employment and earns about $700 per week. However, the husband asserts he is struggling to continue to work, submitting he is still “on the tools” at 61 years of age. He also is unable to accept larger projects in the role of project manager. The husband has hemochromatosis and early stages of diabetes. He says he requires surgery on both his Achilles tendons, as well as a double knee reconstruction.

1. The wife’s income and earning capacity is contested. The husband asserts that the wife has not disclosed her true income and concealed her capacity for gainful employment.

2. It is submitted by the husband that the wife has failed to provide any evidence as to her inability to support herself. The parties have been separated for over 10 years. The wife has not made any previous application for spousal maintenance and has adequately supported herself since separation (with the husband paying expenses associated with the Suburb B property). It is the husband’s case that the wife has made an application for spousal maintenance in answer to the husband’s application for orders under s 79 of the Act. The husband asserts the application by the wife should be treated as a tactical move and lacks any bona fides at all.

3. Counsel for the wife submits that the court should rely upon the sworn evidence of the wife and the parties’ daughter to the effect that the wife is not working at D Club or E Resort. As the earlier discussion indicates, in the context of an interim proceeding, I am unable to resolve the issue the husband raises about that sworn evidence based upon other objective documentation. It might ultimately be that the court absolutely accepts what the wife and the parties’ daughter say on their oath, relevant to the wife’s earning capacity, but I am unable to resolve those issues in the context of these proceedings.

4. It is an important point that apart from paying outgoings, the husband has not been making any direct periodic payment to the wife for her support since the parties separated in 2004 or 2005. The wife has supported herself in that period without the accumulation of significant debt (her current financial statement indicates that she owes $11,600 in credit card debt and that there are council rate arrears of $6,000).

5. At Part N of her financial statement, the wife deposes to a total of $635 per week in average expenses. $585 of that figure is for expenses for the wife, and $50 is paid towards electricity of the cottage in which the husband and his partner reside. Counsel for the husband submitted that the wife is an inaccurate historian and that her evidence of expenditure cannot be taken with any confidence. Counsel for the husband points to items in Part N of the wife’s financial statement that he submits cannot be accurate. For example, gardening and lawn mowing where there is no lawn on the property.  He also refers to item 27 of the wife’s financial statement where she deposes to paying $92 per week towards motor vehicle registration. That weekly expense is inherently unlikely and probably an unintended error.

6. Counsel for the wife submits that a spousal maintenance order should be made because the husband is in a far superior income position than the wife and also has greater assets and financial resources. The husband submits he has no capacity to make the payments sought by the wife. His financial statement indicates a total average weekly income of $1,713 and total person weekly expenditure of $1,911. Counsel for the wife did not address the issue as to where the husband would find the amount sought by way of periodic spousal maintenance.

7. Because of issues raised in relation to the wife’s earning capacity, her level of need and the husband’s ability to pay, no interim order for periodic spousal maintenance should be made.

8. I note that based on the husband’s sworn evidence, he is currently paying the regular payments in respect of the mortgage on the matrimonial home (that mortgage being in the sum of $372,852 and the regular payments apparently being $536 per week and home building insurance at $56 per week).

9. I reserve both parties costs.

I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 30 September 2015

Associate: 

Date:  30.9.2015