ANDERSON & ANDERSON

[2014] FamCA 766

FAMILY COURT OF AUSTRALIA

ANDERSON & ANDERSON [2014] FamCA 766

FAMILY LAW – CHILD SUPPORT – Interim orders – wife’s application for non-periodic child support  – where the wife seeks that the husband pay the children’s educational expenses including tuition fees and arrears – where the husband previously consented to paying the children’s educational expenses – where the wife had applied for an assessment at the time the orders were made but the assessment had not yet issued – where the husband says his financial circumstances have changed – where the husband seeks to direct how any payments be applied – order made for husband to pay children’s tuition fees and extra-curricular expenses in addition to the assessment – question of payment of arrears of tuition fees reserved.

FAMILY LAW – SPOUSAL MAINTENANCE – Interim orders – wife’s application that the husband make the mortgage repayments on the former matrimonial home by way of spousal maintenance – consideration of the meaning of “adequate support” – where the wife concedes her parents will meet the mortgage repayments if the husband does not pay them – where the parties could not otherwise retain the former matrimonial home – order made for husband to pay sum by way of spousal maintenance.

FAMILY LAW – PRACTICE AND PROCEDURE – Interlocutory injunctions – husband’s application to restrain the wife from further encumbering the former matrimonial home – application dismissed.

Child Support (Assessment Act) 1989 (Cth) ss 117, 124, 125, 139, 152 

Family Law Act 1975 (Cth)

Brown and Brown (2007) FLC 93-316
In the marriage of Bevan and Bevan (1995) FLC 92-600
In the marriage of Gyselman and Gyselman (1992) FLC 92-279
In the marriage of Nutting and Nutting (1978) FLC 90-410

APPLICANT: Ms Anderson

RESPONDENT: Mr Anderson

FILE NUMBER: MLC 11091 of 2013

DATE DELIVERED: 16 September 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 8 August 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Strum

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT: Ms Williams

SOLICITOR FOR THE RESPONDENT: Coote Family Lawyers

ORDERS

IT IS ORDERED THAT

1. As and from 16 September 2014 and until further order of this Honourable Court there be a departure from the administrative assessment of child support to provide that in addition to the administrative assessment of child support and pursuant to

   
   

   s 124(1) of the Child Support (Assessment) Act 1989 (Cth) the husband pay by way of child support in a form other than periodic amounts all educational expenses at L School for the children S born … 2002, R born … 2007 and Y born … 2009 inclusive of all tuition fees (excluding arrears), levies, uniforms, books, stationery, computer requirements, excursions and extra-curricular activities.

2. Until further order of this Honourable Court, the annual rate of child support payable by the husband under any relevant administrative assessment not be reduced by the child support ordered in paragraph 1 hereof.

3. Until the final hearing or further order of this Honourable Court, the husband pay to the wife for her maintenance the sum of $350 per week, with the first payment to be made by 4.00 pm on 23 September 2014 and weekly thereafter.

4. The question of any retrospective departure from the assessment for the period

   
   

   17 February 2014 to 16 September 2014 be reserved.

5. The question of the responsibility for the payment of the tuition fee arrears be reserved.

6. All extant interim applications with respect to financial matters, save and except for any applications for costs, be otherwise dismissed.

IT IS CERTIFIED THAT

Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Anderson & Anderson 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 MELBOURNE

FILE NUMBER: MLC 11091 of 2013

Ms Anderson

Applicant

And

Mr Anderson

Respondent

REASONS FOR JUDGMENT

1. This matter was listed for hearing in the Judicial Duty List on 1 and 2 July 2014. Cronin J dealt with objections to subpoenas and otherwise adjourned the interim applications for hearing on a date to be fixed before me. Those applications were listed for interim hearing on 8 August 2014.

2. The husband and wife were married in April 2000 and separated in February 2013. There are three children of their marriage, S who is 12 years of age, R who is six years of age, and Y who is five years of age. The children live with the wife and spend time with the husband from after school on Thursday until the commencement of school on Friday in one week and from after school on Thursday until the commencement of school on Monday in the other week. The children also have dinner with the husband on Tuesday evening of the second week.

3. The husband is living in a de facto relationship and he and his de facto wife have a child together who is almost one year of age. The husband’s new partner’s seven year old child of a previous relationship also lives with her and the husband.

4. The husband is employed in a law firm. The wife works part-time in the education field. The husband deposes that his new partner is a university student and otherwise cares for their child and the child of her previous relationship. She is not engaged in paid employment, does not receive any child support for the child of her previous relationship, and she and both children are financially dependent upon the husband.  

5. The husband deposes that he and the wife decided to send the eldest child S to L School as they both liked the school and because the wife was employed at the school they would receive a staff discount. He says that shortly after S started kindergarten at the school, the wife’s parents offered to pay half of the costs of S’s education including extra-curricular activities undertaken at the school and that after the wife’s parents made the same commitment with respect to the other two children, R and Y, they were also enrolled and commenced their education at the school.

6. The wife disputes the husband’s evidence and it is her evidence that the contribution made by her parents to the children’s school fees was irrelevant to the decision she and the husband made to educate all three children at L School.

7. The husband and the wife do however agree that during the marriage the wife’s parents paid half of the children’s school fees and expenses.

8. The hearing before me was an interim hearing and proceeded on the basis of the various affidavits filed by the parties, their respective financial statements, and counsel’s submissions. The evidence was not tested and insofar as that evidence is in dispute I am not in a position to make any findings of fact. Following the conclusion of the hearing each of the parties filed further written submissions with respect to the order made on 4 February 2014 as to the payment of the children’s school fees.

9. The matter initially proceeded on the basis of the husband’s further amended response filed 31 July 2014 which contained, inter alia, his application for the following interim orders:

   11.    That until further Order the wife be restrained from … encumbering, leasing or in any way dealing with [the former matrimonial home at 1-3 B Street, Suburb A].

   12.    The property known as and situate at [3 B Street, Suburb A] in the State of Victoria more particularly described in Certificate of Title Volume … Folio … (“the [3 B] Street Property”) be placed upon the market for sale as soon as practicable. The terms and conditions of the sale be agreed between the parties and failing agreement as ordered by this Honourable Court.

   13.    At settlement of the sale of the [3 B] Street Property, the proceeds be disbursed as follows (subject to the approval of the Westpac Bank):

   a.In payment of all costs, commissions and expenses of the sale;

   b.In payment to [L School] of all arrears of school fees then due and payable;

   c.To the husband and the wife, the sum of $50,000 each; and

   d.The balance to the Westpac Bank in reduction of the mortgage owing.

   14.    That there be liberty to apply in respect of the terms and conditions of the sale of the [3 B] Street Property.

   16.    (sic) That the husband, until the final determination of this matter or an order of this Court, pay to the wife the sum of $5,000 per calendar month and the payments made by the husband pursuant to this Order shall:

   a.First be directed by the husband to [L School] in payment of the arrears of the children’s school fees, until such arrears are discharged; and

   b.[T]hereafter be directed by the wife to [L School] in payment of the husband’s half share of the school fees, with any excess to be retained by the wife; and

   c.Be credited as to [100 per cent] against the liabilities of the husband under the Assessment dated 17 February 2014 and any other relevant Administrative Assessment of child support payable by the husband; and

   d.In complete satisfaction of the husband’s child support obligations assessed and due up to the date of these Orders.

   17.    That until further Order the husband pay [50 per cent] of the tuition fees for the 2014 academic school year at [L School] for [S, R and Y] and the wife pay the balance.

   19.    (sic) That until further Order the husband pay [50 per cent] of levies, uniforms, books, [stationery], computer requirement (sic) and excursions for the said children at the said [School] for the 2014 academic year and the wife pay the balance.    

10. The wife – premised upon her having the benefit of the orders made by consent on 4 February 2014 – opposed the husband’s application. Those orders provided, inter alia, as follows:

    1.   Until further order, the husband pay the private school fees and school expenses of the children [S, R and Y] (inclusive of arrears) at [L School] and the husband be at liberty to negotiate the terms of payment with [L School].

    2.   Until further order, the husband pay all mortgage repayments of the former matrimonial home at [1-3 B] Street, [Suburb A] as and when same shall fall due and the husband and wife do all acts and things, at the expense of the husband, to convert that part of the mortgage to interest repayments only that can be negotiated to interest only repayments.  

    …

    AND THE COURT NOTES:

    A.  The husband reserves the right to vary or set aside order 1 hereof on the basis he cannot reasonably fund the continuation of order 1 hereof in 2015.

    B.  The parties intend to arrange a mediation with Mr Dan Sweeney on 11 March 2014 if possible.

    C.  The parties forthwith organise a private mediation with Mr Dan Sweeney of Counsel, or such other mediator as the parties may agree, with each party paying one half of the mediator’s fees and such mediation be held within 45 days of this day.

11. The orders that were made on 4 February 2014 do not identify the source of the power pursuant to which it was purported they were made. The wife’s position was that having regard to the orders made on 4 February 2014, the husband would need to demonstrate that the orders for the payment of the mortgage (being orders for her maintenance) and the orders for the payment of the children’s school fees and expenses should be varied.

12. However, it became clear during the hearing that this may not be the case, at least with respect to the question of the child support payable by the husband, as a result of which I made orders providing for the parties to file written submissions with respect to the order made 4 February 2014 for the payment by the husband of the children’s school fees and expenses.

13. It was submitted by counsel for the husband that insofar as it is now clear that the child support assessment was not issued until 17 February 2014, the only basis upon which the Court could have made the orders it did on 4 February 2014 would have been pursuant to s 139 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”).

14. Counsel for the wife submitted that as the husband knew that the wife had applied for a child support assessment at the time the orders were made and anticipated, as indicated by the notation to the orders, that the orders might continue until 2015, the husband must have intended or must be deemed to have intended that paragraph 1 of the orders would continue in effect as an order pursuant to s 124 even after the assessment had issued. It was counsel for the wife’s submission that on that basis, the order that was made on 4 February 2014 is what he described as a “hybrid order” having effect as an order pursuant to s 139 until an assessment issued and thereafter as an order pursuant to s 124.

15. Section 139 of the Assessment Act provides as follows:

    Urgent maintenance orders

    (1)  Where, at any time after an application has been made to the Registrar for administrative assessment of child support for a child (whether or not the Registrar has accepted or refused to accept the application), a court having jurisdiction under this Act is of the opinion that the child is in urgent need of financial assistance, the court may order the payment of such periodic or other amount as the court considers appropriate.

    (2)  Subject to subsection (2A) and section 152, an order under subsection (1) has effect for the period specified in the order.

16. Pursuant to s 152(1)(a) of the Assessment Act, an order made pursuant to s 139 of the Assessment Act ceases to have effect ‘at any time an amount of child support for a child becomes payable by a liable parent to another person under an administrative assessment’.

17. In those circumstances, whatever the husband’s intention may or may not have been at the time the orders were made, the order made 4 February 2014, which I am satisfied could only have been made pursuant to s 139, ceased to have effect on 17 February 2014 when the assessment issued. I do not accept counsel for the wife’s submission that this is simply a case of non-compliance with

    
    

    s 125 of the Assessment Act and can be remedied under the slip rule.

18. It is, however, open to the wife to now seek an order for non-periodic child support in accordance with her initiating application filed 18 December 2013 rather than, as had been assumed by both parties, the husband seeking to vary an already existing order for departure.

19. In his further amended response filed 31 July 2014 the husband sought the sale of 3 B Street, Suburb A (“3 B Street”) (which forms part of the former matrimonial home situate at 1-3 B Street, Suburb A), however he did not press that aspect of his application on the basis of the wife’s concession through her counsel that she would retain the former matrimonial home whatever the outcome of the case.

20. Although counsel for both the husband and the wife made submissions as to whether it was just and equitable for me to exercise my discretion to alter the parties’ legal and/or equitable interest in property, it was not necessary on the basis of the way in which they each ultimately put their cases for me to determine that issue.

21. The husband’s obligation to pay child support is a matter I must consider in determining what, if any, obligation he has to pay spousal maintenance. On that basis, both parties agreed that the appropriate course would be for me to determine the question of the child support payable by the husband and then determine the question of what, if any, spousal maintenance the husband ought to pay for the wife’s support.

22. On this basis, the issues I must determine are as follows:

    ·whether there should be a departure from the child support assessment and, if so, how much should the husband pay for the children of the marriage and in what form; and

    ·what, if any, spousal maintenance the husband should pay and in what form.

CHILD SUPPORT

1. The determination of an application for a departure from an assessment is, as identified by the Full Court in In the marriage of Gyselman and Gyselman (1992) FLC 92-279 (“Gyselman”), a three-step process.  

2. The first of the three steps is that the applicant must establish one or more of the grounds for a departure set out in s 117(2) of the Assessment Act. Those facts must amount to what the Full Court described as “special circumstances”. The Full Court said in Gyselman at [79065] with respect to special circumstances as follows:

   … Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasize (sic) that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. In [Savery and Savery (1990) FLC 92-131] (p. 77,897), [Kay] J ... said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases” …

3. The other steps that the Court must consider, having established that there is a ground for a departure from the assessment pursuant to s 117(2), is that it would be “just and equitable” (s 117(4)) and “otherwise proper” (s 117(5)) to make an order departing from the assessment and what order should be made.

4. Although neither party made submissions with respect to a specific ground for departure, two grounds stand out as relevant in this case. The first ground is the affect upon the costs of maintaining the children in this case, having regard to the manner in which they are expected by the husband and the wife to be educated (s 117(2)(b)(ii)). The second ground is that the administrative assessment would result in an inequitable and unjust determination of the level of the child support payable necessary for these children, having regard to the respective income, earning capacity, property and financial resources of the parties (s 117(2)(c)).

5. The husband’s case is that he should pay the wife $5,000 per month or effectively $1,154 per week for the support of all three children. He also seeks orders directing how that payment or payments should be applied. Insofar as the current assessment requires the husband to pay $2,295 per month or almost $530 per week, this appears to be a concession on his part that a departure from the assessment is appropriate.

6. The wife’s case is that the husband should pay the periodic payments he is required to make pursuant to the assessment and, in addition, pay non-periodic child support by way of the children’s educational expenses at L School, inclusive of all tuition fees including arrears, levies, uniforms, books, stationery, computer requirements, excursions and extra-curricular activities.

7. The cost of tuition for the three children, less the staff discount to which the wife is entitled, is $46,000 per annum. The wife estimates that the other expenses which she seeks that the husband pay are approximately $4,500 per child per year or approximately $13,500 per annum, making total education expenses inclusive of fees and extras of $59,500 per annum.

8. In his affidavit filed 4 February 2014 the husband deposes to having received rebates totalling $6,039, which he said were paid into his Westpac account and applied to general living expenses and payment of debt.  He further deposes that the 2014 rebate with respect to Y’s fees would be applied to the payment of school fees.   

9. Although the husband disputed the amount of the additional education expenses sought by the wife, his estimate of $3,000 to $4,000 per annum for all three children given that they included both excursions and extra-curricular activities was, in my view, on the low side. Although I do not have an exact figure for the additional expenses, it is in my view appropriate to take into account the wife’s higher figure in order to do justice to the parties. If it turns out to be an over-estimate then the husband will not be disadvantaged as the orders sought require him to meet that expenditure rather than specifying a  weekly or monthly sum to cover the costs of these additional educational expenses.

1. Subject to that qualification, the wife seeks on the basis of the current assessment of $527.80 per week, non-periodic payments of the educational expenses (inclusive of fees and extras) which she estimates to be $1,144 per week which, inclusive of the assessment, makes a total of approximately $1,672 per week or $7,245 per month.  The husband’s proposal is $5,000 per month or approximately $1,154 per week.    

2. Insofar as the wife seeks orders for non-periodic payments, those payments significantly exceed the current assessment. It was submitted by Mr Strum on behalf of the wife that the power to make an order for non-periodic payments in addition to the periodic payments as assessed is an independent head of power rather than the substitution of non-periodic payments for periodic payments as assessed which would, of necessity, require a departure from the assessment followed by the substitution of some part of that amount with non-periodic payments.

3. There have been different views expressed by differently constituted Full Courts in relation to this issue.  However, in this case, the husband seeks what effectively amounts to a departure from the assessment by way of his proposed increase of periodic payments from $2,295 to $5,000 per month, albeit that the orders he seeks prescribe the manner in which that sum of $5,000 should be paid.

4. Whilst the wife has not formally sought a departure from the assessment, she is also seeking that the husband’s obligations for the children’s support be increased, albeit that the increase is by way of non-periodic payments in addition to the assessment.

5. Accordingly, the issue in this case as between the husband and the wife is ultimately not whether the husband should be obliged to pay more than the assessment but rather how much more he should pay and in what form. I am of the view that it is necessary to first consider whether the assessment should be departed from and increased and thereafter, if I were to accede to the wife’s application, consider whether that amount should be substituted in part by an order for the payment of school fees as the wife proposes, and I will deal with the matter on that basis.

6. I am satisfied that, although neither the husband nor the wife have sought an administrative review of the assessment, as there is an application pending with respect to the wife’s maintenance and given the connection between the issue of the child support that should be paid by the husband and any obligation he may have to pay spousal maintenance, that in the special circumstances of this case it is in the interests of the parties for the Court to determine both issues at the same time.

7. Although the wife complains that the husband has not been frank about his income, I am satisfied on the basis of the evidence I now have before me, including the emails and internal memorandums and accompanying documents from Law Firm K annexed to the husband’s affidavit filed 17 July 2014, and albeit that the evidence is untested, that the husband’s profit share for the year ending 30 June 2014 was $711,000 gross.

8. It was submitted on behalf of the husband that I should take into account the fact that some $132,000, and a further sum of $29,160 payable to Anderson Pty Ltd as trustee of the Anderson Trust, is payable in arrears.  

9. Whilst I accept, based upon the evidence before me, that some part of the husband’s profit share is payable in arrears, it is equally the case that insofar as he receives some part of his share of the profits in arrears each year he also received approximately $130,000, and a further sum of approximately $15,000 payable to Anderson Pty Ltd, as part of his profit share for the financial year ending 30 June 2013 during the 2014 financial year. The end result being that the husband received approximately $692,000 during the financial year ending 30 June 2014. I have also taken into account the fact that the husband’s share of the profit for the financial year ending 30 June 2015 is anticipated to be approximately $760,000.

10. In his most recent financial statement filed 31 July 2014 the husband discloses an estimated income of $13,037 per week which amounts to $677,924 per year.  It is not clear to me how this is calculated based upon the evidence upon which the husband relies, and in all of the circumstances I therefore propose to proceed on the basis of the husband’s profit share for the financial year ending 30 June 2014 of $711,000 or $13,673 per week, bearing in mind that his profit share for the current financial year is likely to be more than it was for the financial year ending 30 June 2014.

11. In his financial statement filed 31 July 2014 the husband makes an allowance for income tax of an estimated $5,240 per week, thereby leaving him with net income of approximately $8,433 per week. He otherwise discloses expenses of $7,903 per week, excluding the income tax. The husband’s financial statement records a “NIL” actual payment of assessed “maintenance payments/child support” however his Part N total of all other expenditure figure of an estimated $5,602 includes the figure of $1,153 per week for education expenses. The husband’s financial statement includes a note that the education expenses are currently being paid at $5,000 per month, which accords with his application.

12. The husband has a legal obligation to support his new partner and their child however that legal obligation does not extend to his new partner’s child from a previous relationship. The husband attributes $427 of his weekly expenses in Part N of his financial statement to his new partner. It is not clear from his financial statement whether the $2,872 per week that he attributes to expenses “for children” includes he and his new partner’s child or his new partner’s child from a previous relationship, although it is plain that at least some of his expenditure – for example, rental payments, motor vehicle expenses (including for the vehicle driven by his new partner) and health insurance would be referable, at least in part, to his new partner, their child, and the child of his new partner from a previous relationship.

13. There was some criticism levelled by counsel for the wife at the husband’s expenditure, and in particular what was said to be his decision to “prioritise” his new partner, their child and her child over his obligation to support the children of the marriage.

14. One example was the husband’s payment of school fees for his new partner’s child at C School. The husband deposes that he is no longer paying those school fees and although counsel for the wife referred me to an amount of $100 paid to the school contained in the husband’s credit card statement for the period ending 15 June 2014, there is otherwise no evidence before me that would suggest that the husband is now paying the school fees for his new partner’s child at C School.

15. Another example of criticism levelled at the husband was his purchase of a second-hand BMW for his new partner. Counsel for the wife initially submitted that the husband already had a motor vehicle and did not need a second motor vehicle however he ultimately submitted that even if it was reasonable for the husband to purchase a vehicle for his new partner, particularly in circumstances where she would be driving their child around, that it did not need to be a BMW.  I am satisfied that even if the husband had purchased a less expensive vehicle he would, in any event, have probably had to borrow to do so.

16. The husband’s Part N weekly expenses also include an amount of $1,615 for legal expenses excluding disbursements. I agree with counsel for the wife that this is not an expense necessary for his support. None of the other expenditure in the husband’s most recent financial statement upon which I am basing my decision stands out as being out of the ordinary or unnecessary or, for that matter, unnecessarily excessive.

17. According to the wife’s financial statement filed 18 December 2013 the wife works in the education field and earns income of $971 per week. The wife’s income was not disputed by the husband. The wife pays $153 per week income tax, leaving her with net income of $818. She discloses weekly expenses, excluding income tax, of $5,626. That figure includes an amount of $1,446, being half of what she describes as the Westpac loan repayments totalling $2,892 per week. It is my understanding those payments are currently not being paid by either party. In part H of her financial statement the wife attributes $2,995 of her weekly expenses to the living expenses of the children of the marriage. Included in that figure as set out in Part N of her financial statement are education expenses including school fees of $817 per week, albeit that the wife deposes that she is not currently paying those expenses. If that figure is therefore deducted, the wife’s weekly expenditure for the children is $2,178.

18. The evidence is yet to be tested. However, even if the expenses that the wife attributes to the children were the subject of successful challenge, I am satisfied that the wife’s income is not sufficient to meet the reasonable needs of the children and that she requires the ongoing periodic child support payments from the husband to support the children. It is then a question of whether the husband can afford and should be required to also pay for the children’s education expenses and whether those education expenses or any part thereof should be substituted for periodic child support payments.  

19. Neither party is suggesting that the children should not attend L School. The husband’s case is predicated upon the wife paying half of the school fees. Given the wife’s income, she clearly could not afford to do so and that could only be on the basis of the wife’s parents paying her share. The wife’s parents do not have a legal obligation to do so. 

20. The difference between the husband’s proposal and the wife’s proposal in dollar terms is $2,245 per month or $518 per week. Based upon the husband’s share of the profit for the financial year ending 30 June 2014 of $711,000 per annum or $13,673 per week – and which the evidence suggests will be greater again for the financial year ending 30 June 2015 – allowing for all of the husband’s expenses, including the amount he says he spends on legal fees and disregarding the sum of $1,153 he says he is paying for educational expenses, the husband would have an excess of income over expenditure of approximately $1,683 per week. If I were to deduct the husband’s legal expenses of $1,615 per week that excess of income over expenses would be approximately $3,300 per week.

21. I am satisfied that in all of the circumstances of this case it is both just and equitable that the husband be required to continue to make the periodic payments pursuant to the assessment together with an amount sufficient to meet the cost of the children’s educational expenses. I have in reaching that decision had regard to the matters set out in ss 117(4) and 117(5) of the Assessment Act, including but not limited to:

    ·the primary obligation of the husband and the wife to support the children;

    ·the respective financial circumstances of the husband and the wife and, in particular, the husband’s income which is by community standards substantial;

    ·the commitments of the husband and the wife to support themselves and, in the case of the husband, his new partner, their child and his partner’s child; and

    ·the needs of the children and, in particular, the manner in which the parties have chosen to educate the children.

22. I am also satisfied, having regard to s 124 of the Assessment Act, that it is in all of the circumstances of this case both just and equitable and otherwise proper to make the order for the non-periodic payments sought by the wife in her initiating application.

23. Neither counsel for the husband nor counsel for the wife made submissions with respect to the duration of any departure order. I am not critical of them for that as there was some uncertainty as to the legal basis of the orders to be made. I am satisfied that the order I make should remain in force until the final hearing or until further order of the Court. That will provide the parties with at least some certainty pending the final hearing.

TUITION FEE ARREARS

1. The wife in her initiating application filed 18 December 2013 included in the orders she sought that the husband also pay any arrears of the children’s tuition fees, and the order made by consent on 4 February 2014 for the husband’s payment of the children’s school expenses included the arrears and provided that the husband be at liberty to negotiate the terms of payment with the school.

2. In the wife’s affidavit filed 18 December 2013 she deposes that there was $20,635 owing to L School for the 2013 school year, and at paragraph 25 of the same affidavit she deposes that the husband had not paid any school fees since separation in February 2013. The wife further deposes in her affidavit filed 31 January 2014 that the husband had received rebates of $6,039.43 in total in relation to R and Y’s school fees for 2013.

3. The wife also alleges that the husband has failed to pay the school fees, including arrears, in accordance with the interim orders made by consent on 4 February 2014.

4. In his affidavit filed 4 February 2014, the husband deposes that he paid half of the children’s fees at L School for the 2013 academic year and that since separation he has been pursued by the school for the balance, which was previously paid for by the wife’s parents. The husband further deposes that although invoices were previously sent to the former matrimonial home addressed to both the husband and the wife, sometime during 2013 that changed and the husband started receiving invoices addressed to him only at his current address.

5. In his affidavit filed 9 May 2014, the husband deposes that to date he has paid $8,000 for school fees but that there was then $43,000 of school fees outstanding.  Although it does not appear to be consistent, he also then deposes that he was ‘currently paying all of the children’s school fees, including arrears from last year of $20,000, totalling approximately $82,000 for this calendar year.’

6. Finally, in his affidavit filed 31 July 2014, the husband deposes that on 9 July 2014 he received a letter from L School advising that the school fees arrears now outstanding up to the end of Term 2 were $34,520 and up to the end of Term 3 were $46,020.25.

7. On 8 August 2014 the parties received a letter from L School, addressed to both the husband and the wife, confirming the school’s position that they are both liable for the payment of the school fees and asking them to individually complete the forms they had attached and meet, separately or together, with a member of the Fee Assistance Committee to discuss an arrangement for payment which will be acceptable to the school. 

8. Neither party made any submissions as to the payment of the arrears beyond what is contained in their respective applications. On the face of their respective financial statements, neither party has the capacity to pay the arrears other than by arrangement with the school.

9. Although it is clear that there have been proposals made by the school for the payment of the arrears, I do not know exactly what has been proposed. Irrespective of any issues in relation to the order made 4 February 2014, it is not possible on the basis of the evidence for me to ascertain how the arrears are constituted or to what period they relate vis-à-vis the orders that were made on 4 February 2014 or what the school may require with respect to the payment of those arrears.

10. In those circumstances, it is not possible for me to make orders with respect to the payment of the arrears and I do not propose to do so. I will reserve the question of the payment of the arrears, however I am hopeful that the parties will be able to resolve this issue in consultation with the school.

11. I also propose to reserve the question of whether there should be a retrospective departure from the assessment.  Although I propose to make orders that the husband pay both periodic child support as assessed and school fees and other educational expenses going forward, it is not possible on the evidence before me to determine whether it would in all of the circumstances be just and equitable or otherwise proper to make an order for departure as and from the date of the assessment or what the effect of such order would be with respect to the arrears and how it would take into account the payments the husband has made if I were to do so.  

INTERIM SPOUSAL MAINTENANCE

1. In her initiating application filed 18 December 2013 the wife sought interim orders ‘by way of spousal maintenance’ that the husband pay all principal and interest in respect of the loans secured by mortgage registered over the properties at 1 and/or 3 B Street. On 4 February 2014 the husband consented to an interim order that he pay all mortgage repayments as they fell due, albeit that the order did not refer to the payment as spousal maintenance.

2. In the written submissions filed 18 August 2014 counsel for the husband submitted that as the mortgage payment order was not expressed to be for spousal maintenance it can only mean that it was a hybrid spousal maintenance and child support order and that, on that basis, all the mortgage payments and all the school fees the husband has paid should be credited against any administrative assessment of child support as to 100 per cent of that assessment.

3. In his further amended response to initiating application filed 31 July 2014 the husband sought no orders with respect to the mortgage payments or the order made 4 February 2014, however it is reasonable to infer from his response that the husband’s case was that after the sale of 3 B Street and the reduction of the mortgages, the wife would be otherwise responsible for the payments with respect to the remaining balances. I also note that in that response the husband sought orders that his proposed payment to the wife of $5,000 per month be credited as to 100 per cent of his liability pursuant to the assessment of child support issued 17 February 2014.

4. Counsel for the husband did not suggest at any time during the hearing before me that the order for the payment of the mortgage was not an order for spousal maintenance and in fact submitted that it was a spousal maintenance order which should be varied because the husband’s financial circumstances had changed. It was on that basis that the orders I made for the parties to file written submissions were expressed to be in relation to the order for the payment of school fees and expenses. I do not accept counsel for the husband’s submission that because the order for the payment of the mortgage is not expressed to be for spousal maintenance that it can only mean that it is a hybrid order for spousal maintenance and child support and that it therefore follows that the mortgage should be credited against the husband’s liability to pay child support.   

5. Counsel for the husband also submitted that the husband’s consent to the payment of the mortgage repayments on 4 February 2014 was predicated on the parties having agreed, as noted in the orders, to convene a mediation. Whilst that may be the case, the consent orders were not conditional upon the parties either attending a mediation or the outcome of that mediation.

6. Section 83(2) of the Family Law Act 1975 (Cth) (“the Family Law Act”) provides that the Court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:

   (a)that, since the order was made or last varied:

   (i)the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship); [or]

   (ii)the circumstances of the person liable to make payments under the order have so changed;

   ….

   as to justify its so doing;

   (b)that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;

   (ba)in a case where the order was made by consent – that the amount ordered to be paid is not proper or adequate;

   (c)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.

1. The husband’s case in support of the discharge of the order for the payment of the mortgage is that his financial position has deteriorated since the order was made and, to the extent that he was able to meet the mortgage payments and contribute to school fees, he relied upon borrowings to do so and that he has now exhausted his borrowing capacity. Having converted part of the mortgage to interest only, the repayments are now approximately $11,500 per month.

2. Counsel for the wife submitted – by reference to the three financial statements filed by the husband in these proceedings – that his income has increased and his expenses have decreased.  Whilst it is true that the income disclosed by the husband has increased in each of his financial statements and that the expenses have decreased, it is not, at least in relation to the expenses, a direct comparison.

3. Whatever changes there may have been in relation to the husband’s income and expenditure since he consented to the order made 4 February 2014 requiring him to pay the children’s private school fees and school expenses and to pay the mortgage, he has since been assessed by the Child Support Agency to pay periodic child support in the sum of $2,295 per month. I am also proposing to make orders which provide for a departure from that assessment. Accordingly, I am satisfied that there has already been, and will be as a consequence of the orders I propose to make, a significant change in the husband’s circumstances since the orders were made in February 2014.

4. The husband having established the necessary change in his circumstances, it is then for the wife to establish her need for spousal maintenance.

5. Section 83(7) of the Family Law Act provides that for the purposes of s 83 generally, the Court shall have regard to the provisions of ss 72 and 75 of the Family Law Act.

6. Section 72(1) of the Family Law Act provides that:

   A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   (a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   (b)by reason of age or physical or mental incapacity for appropriate gainful employment; or

   (c)for any other adequate reason;

   having regard to any relevant matter referred to in subsection 75(2).

7. In In the marriage of Bevan and Bevan (1995) FLC 92-600 the Full Court set out what it said was required for the Court to make an order for spousal maintenance at [81982] to [81983] as follows:

   1.    a threshold finding under s 72;

   2.    consideration of s 74 and s 75(2);

   3.    no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit; and

   4.    discretion exercised in accordance with the provisions of s 74, with “reasonableness in the circumstances” as the guiding principle.

8. It was submitted by counsel for the wife that I should not lose sight of the fact that what the wife seeks is an order for her maintenance and the focus should therefore not be on the fact that it is for mortgage repayments. It is the wife’s case that she is unable to support herself adequately and that in order to do so she requires the provision of spousal maintenance, in this case, in the form of mortgage repayments for what was the former matrimonial home. 

9. The meaning of the term “adequate” as it relates to the entitlement of a spouse to be adequately maintained in s 72 was considered by Lindenmayer J in the unreported judgment In the marriage of Nutting and Nutting (1978) FLC 90-410 and who at [77,094] described the term “adequately” as meaning:

   … a standard of living which is reasonable in the circumstances, including the circumstance that the parties are no longer husband and wife and that the assets and resources which were formerly available to them both in common have now been divided between them.

10. In Brown and Brown (2007) FLC 93-316 at [161] the Full Court summarised the principles to be applied as follows:

    ·   The word “adequately” is not to be determined according to any fixed or absolute standard.

    ·   The idea that “adequate” means a subsistence level has been firmly rejected.

    ·   Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.

    ·   In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.

    ·   It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.

    ·   However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.

11. The wife is the registered proprietor of both 1 and 3 B Street. It was submitted on her behalf, based upon the decision in Stanford v Stanford (2012) FLC 93-518, that it is not just and equitable for this Court to make any order adjusting the parties’ interests in property in this case.

12. The wife deposes at paragraph 7 of her affidavit filed 18 July 2014 that she is “prepared to indemnify the husband in relation to the mortgage and my parents will assist me” but that her “parent’s (sic) willingness to advance funds to me for this purpose is not a “resource” and is conditional upon the husband relinquishing all claim to the [B] Street property.”

13. In her affidavit filed 11 August 2014 the wife deposes as paragraph 5 as follows:

    ...

    (g)           I have subsequently offered to discharge the mortgage in accordance with the letter from my lawyers to the husband’s lawyers dated 25 July 2014, which letter forms annexure “AA-08” to the husband’s affidavit and states as follows:-

    In relation to the indemnity offered by our client, may we refer you to [the wife’s] affidavit affirmed 1 July 2014:-

    7. As to the contents of paragraph 16, I say as follows:-

    (a)I deny that the current mortgage will need to be discharged. I oppose any orders in relation to property adjustment. I am however, prepared to indemnify the husband in relation to the mortgage and my parents will assist me.

    (b)My parent’s (sic) willingness to advance funds to me for this purpose is not a “resource” and is conditional upon the husband relinquishing all claim to the [B] Street property.

    The indemnity cannot be provided unless your client relinquishes all claim to the property.

    If he is willing to do so, [the wife] will make arrangements for the mortgage on title to be discharged and your client relieved of all liability, not just provided with an indemnity.

    If this is something that your client is interested in pursuing, kindly advise and we will prepare a Section 90D Financial Agreement and appropriate orders

    (h)           My parents are prepared to assist me in respect of indemnifying the husband under the mortgage upon the husband abandoning all claim to [B] Street.

    (i)      Upon making enquiry with the lending bank, it was discovered that this could not be achieved unless the mortgagor was registered on title to [B] Street. I am informed by my father and verily believe that this is consistent with the prevailing policies of banks not to have parents guarantee their children’s mortgages without such provision.

    (j)      It the husband refuses to pay the mortgage interest payments, and my parents are to assist, it will be necessary for me to transfer part of my interest in the property to each of my parents and we will thereafter hold the title as tenants in common.

    …

14. The wife annexed to her affidavit a copy of a letter from Westpac dated 4 August 2014 confirming her parents’ approval to take over the mortgages over the former matrimonial home subject to them each taking a 20 per cent interest in the properties.

15. It was ultimately conceded by counsel for the wife that she would “keep this house come what may”, and that although it is the wife’s case that the husband should continue to pay the mortgage or some part thereof, that in the event that he is not required to do so the wife will borrow part of the mortgage payments or, if necessary, the whole of the mortgage payments from her parents pursuant to the loan agreement she has with her parents.  

16. Although the loan is repayable “on demand” there has to date been no demand for repayment and there is no evidence to suggest that such a demand will be made in the foreseeable future. In any event the wife’s case is that she has no ability to repay any monies she borrows from her parents.

17. Although the husband and the wife lived in the property at 1-3 B Street during their marriage they did so under very different circumstances. Their respective incomes must now be applied to the maintenance of two households and the husband has re-partnered and has another child. The parties no longer have the benefit of the wife’s parents paying half of the children’s school fees. The wife’s parents are not obliged to either pay the children’s educational expenses, the general living expenses for the wife and the children, or provide the wife and the children with suitable accommodation. That is the husband’s obligation to the extent that the wife reasonably needs his support and to the extent that he has the capacity to provide that support.

18. However, in my view, that does not mean that the husband’s obligation is to support the wife to a standard of living which, as conceded by the wife, can only be and will of necessity be provided by the wife’s parents.  

19. The circumstances in this case are that there is an arrangement between the wife and her parents that they will take responsibility for the mortgage “come what may” and it is only a question of timing. There is, in those circumstances, some artificiality about the wife’s application that the husband pay the mortgage payments or that she is unable to support herself adequately unless the husband makes those payments.

20. It is only because the wife’s parents have indicated their willingness to assist her that the wife proposes to remain in the former matrimonial home. This is a standard of living that the parties are unable to sustain having regard to their current circumstances.  I am not satisfied that in those circumstances, adequate support for the wife requires that she be maintained in the former matrimonial home by the husband.

21. Although I am not satisfied that it is either necessary for her adequate support or, for that matter, affordable for the wife to retain the former matrimonial home save and except as may be made possible by her parents, it does not necessarily follow that the husband does not have an obligation to contribute to  her support.

22. The wife in this case is engaged in gainful employment albeit on a part-time basis. She has the care of the three children of the marriage. According to her financial statement the wife earns $818 net per week. The expenses in Part N of the wife’s financial statement directly referable to her are $993. The other expenses, excluding the mortgage repayments, are approximately $192 which includes rates of $130 per week for the former matrimonial home and house insurance which is currently being paid by the husband.  Although the wife does have a need to accommodate herself and the children, there is no evidence before me upon which I could determine what the cost of such alternative accommodation might be.  In any event, that is not the reality of the situation in this case.

23. Based upon the figures in her financial statement the wife has a shortfall of approximately $367 per week. I am also mindful of the fact that, of necessity, some part of the wife’s expenditure, for example rates and house insurance, is referrable to the support of the children.  I have however also had regard to the fact that the expenditure both the husband and the wife have identified in their financial statements, whether or not it was reflective of their standard of living during the marriage, may no longer be either realistic or sustainable.

24. Insofar as the wife has been critical in her affidavit of the history of what she would describe as the husband’s profligate expenditure, I have based my assessment of his expenses on the evidence contained in his most recent financial statement filed 31 July 2014. Based upon a weekly income of $13,673 and after payment of income tax of an estimated $5,240 per week, and after payment of periodic – and non-periodic child support pursuant to the orders I propose to make – of approximately $1,672 per week, the husband will have approximately $6,761 per week to meet his ongoing weekly expenses.  Those expenses, on the basis of his most recent financial statement, but excluding his legal fees and the amount he includes for the children’s educational expenses, are $5,134 per week.

25. Even allowing for the fact that some of the husband’s expenditure may relate to his partner’s child whom he is not legally obligated to support, and the fact that the husband might have purchased a less expensive motor vehicle for the use of his new partner, the husband’s capacity to contribute to the wife’s support is relatively limited. Even if I am incorrect about the mortgage payments not being a necessary component of what is required for the wife to adequately support herself, I am satisfied that the husband would not, in any event, be in a financial position to make those mortgage payments.

26. This is not and cannot be an exact mathematical exercise. There is in many cases an element of uncertainty about the parties’ expenses, if not their income, as it is often not possible to account for every item of expenditure or variations in that expenditure. It is also the case that parties must frequently adjust their expenditure in light of the income and financial resources available to them to meet that expenditure. That is likely to be the position for both parties in this case.

27. Doing the best I can on the evidence before me and mindful of the fact that the orders I am asked to make are interim orders based upon untested evidence, I am satisfied that even without the obligation to make mortgage repayments or pay rent for alternative accommodation, the wife is unable to adequately support herself.

28. I am also satisfied that the husband, particularly having regard to the fact that it is anticipated that his profit share this financial year will be greater than the financial year ending June 2014, has the capacity to contribute to the wife’s support and that it is proper in all of the circumstances that the husband pay the sum of $350 per week for the wife’s maintenance.

INJUNCTIVE RELIEF

1. Although the husband did not pursue his application for the sale of the property at 3 B Street, it was his case that I should make orders restraining the wife from encumbering the titles to the former matrimonial home being 1-3 B Street.  

2. In his affidavit filed 31 July 2014 the husband deposes that in the wife’s financial statement filed 18 December 2013 the wife deposes to owing her parents $38,625 by way of “personal loan”. He further deposes at paragraph 5 of that same affidavit that under cover of a letter from the wife’s solicitors dated 16 May 2014, and by way of disclosure, the wife provided a one page letter from her father addressed to her which is annexed to the husband’s affidavit. The letter states as follows:

   Dear [the wife’s given name]

   Current loan account

   As discussed, the loan to you from [Mr & Ms Rankin] is currently $123,058.

   This amount is not interest bearing and repayable at call.

   Yours sincerely

   [Mr Rankin]

3. On 19 June 2014 the husband’s solicitors caused a subpoena to be issued directed to the wife’s father to produce documents in relation to any loans made to the wife. Pursuant to that subpoena, the husband deposes at paragraph 7 of his affidavit that the wife’s father produced a Loan Agreement dated 15 May 2013. Paragraph 5.1 of that agreement which is annexed to the husband’s affidavit provides as follows:

   5.1Despite anything else set out in this Agreement, in the event that the Borrower is unable to repay the Advanced Funds on demand by the Lender, the Lender will have recourse to the assets of the Borrower to secure the Advanced Funds, including the right to register a mortgage over real property owned by the Borrower.

4. The husband deposes that following the production of this loan agreement he instructed his solicitors to lodge caveats over the titles to the former matrimonial home and requested an explanation from the wife as to why she had granted security to her parents over what the husband asserts is the only substantial asset of the parties’ marriage.

5. At paragraph 10 of his affidavit the husband deposes that on 18 July 2014 the wife’s solicitors responded to his solicitors by letter as follows:

   …

   1.   The loan has been referred to in correspondence, evidence and our client’s financial statement over the course of almost a year.

   2.   [The wife’s] position is that your client has no entitlement to property settlement.

   3.   The [B] Street property is registered in [the wife’s] name and there is no prohibition upon her dealing with it as she sees fit.

   …

6. Although the wife’s response, in the face of ongoing proceedings in this Court and her obligation to provide full and frank disclosure, is somewhat unsatisfactory, I am not satisfied that it demonstrates an intention on her part to either dispose of or encumber the property so as to defeat any entitlement the husband may have to property settlement.

7. The husband has lodged caveats over the titles. The wife in her application in a case filed 11 August 2014 sought orders that the husband do all acts and things required to withdraw those caveats.  The wife ultimately did not proceed with her application for the withdrawal of the caveats and I propose on that basis to dismiss that application.

8. Although counsel for the wife questioned whether the husband has a caveatable interest I am certain that any attempt by the wife to challenge those caveats is likely to excite a further application to this Court to restrain her from dealing with the properties. In all of the circumstances, I am not satisfied that I should make the injunctive orders sought by the husband restraining the wife from encumbering the former matrimonial home.  

FAMILY REPORT

1. On 8 August 2014 I made orders adjourning all extant parenting issues to the Senior Registrar’s Duty List at 10.00 am on 28 October 2014.  Although the parties agreed that they would engage a single expert to prepare a family report they unfortunately could not agree upon whom that single expert should be.

2. The husband had, in accordance with the Family Law Rules 2004, nominated three possible experts, thereby giving the wife the choice of one of those experts nominated by him. The wife proposed that the report be prepared by Dr D, who was not one of the experts nominated by the husband. Counsel for the husband and the wife conceded that all of the proposed experts were suitably qualified, the difference between them – insofar as there was a difference – only being the cost of their respective reports and availability to see the parties.

3. In the absence of agreement, and in order for the parenting proceedings to progress, I ordered that the wife nominate three experts and that the husband then choose one of those experts to prepare a report. I did this on the basis that the wife would then have the opportunity to include her choice of Dr D but that the husband could still choose one of the other nominated experts. This was, in my view, the fairest option.

I certify that the preceding one hundred and ten (110) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered 16 September 2014.

Associate: 

Date:  15 September 2014