ASKEW & VARGO
[2019] FCCA 2221
•14 August 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ASKEW & VARGO | [2019] FCCA 2221 |
| Catchwords: FAMILY LAW – Interim spousal maintenance – de facto relationship – applicable principles – applicant wife inherits $1.6M – inheritance applied, in part, in series of property purchases – other part of inheritance retained in cash and on term deposit – part inheritance expended during relationship – whether applicant discharges evidentiary burden of satisfying court of threshold requirement that she is unable to support herself adequately – whether proper to make an interim order for spousal maintenance – application dismissed. |
| Legislation: Family Law Act 1975 (Cth), ss.74, 77, 90SB, 90SD, 90SE, 90SF, 90SG, 90SI, 90SS, 90RB |
| Cases cited: Adami & Adami [2019] FamCA 162 |
| Applicant: | MS ASKEW |
| Respondent: | MR VARGO |
| File Number: | MLC 6453 of 2019 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 31 July 2019 |
| Date of Last Submission: | 31 July 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 14 August 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Wilson |
| Solicitors for the Applicant: | Berger Kordos Lawyers |
| Counsel for the Respondent: | Ms Hannan |
| Solicitors for the Respondent: | Lakey Family Law and Mediation |
ORDERS
The application for interim spousal maintenance be dismissed.
By 4.00pm on 21 August 2019, the parties file and serve any submissions (not exceeding 3 pages) in relation to costs.
Any application for costs be decided on the papers.
IT IS NOTED that publication of this judgment under the pseudonym Askew & Vargo is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 6453 of 2019
| MS ASKEW |
Applicant
And
| MR VARGO |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain my conclusions respecting a claim for interim maintenance pursuant to s 90SE of the Family Law Act 1975 (Cth) (Act). In summary, I have concluded that the application should be dismissed. That is because the applicant has not discharged the onus of establishing that a threshold requirement under s 90SF(1) has been satisfied. I am not satisfied that the applicant is presently unable to support herself adequately. Nor am I satisfied that in the circumstances of this case, it would be proper to make an order for interim maintenance.
By her Initiating Application filed on 13 June 2019, the applicant mother seeks final orders in respect of parenting, the parties’ property interests and spousal maintenance.
It is convenient to mention briefly, the nature of the property relief that is sought by the applicant. The subject of the application for adjustment in this proceeding is the property situate at B Street, Suburb C, in the State of Victoria (the Property). Despite some difficulties in doing so, the Property is in the process of being sold.
The applicant seeks that, pending its sale, she retain sole use of the Property and for the respondent to pay the mortgage repayments, utility costs and vehicle expenses when they fall due. Upon sale and after payment of selling costs and liabilities, the applicant seeks that the whole of the net proceeds of sale be applied in her favour. Contrastingly, she also seeks an equalisation of the parties’ superannuation interests.
The applicant seeks equal shared parental responsibility of the children, [Y] born … 2010 and [X] born … 2014 (the Children). Orders are sought that the Children live with the applicant and spend time with the respondent. The applicant also seeks to relocate to Brisbane with the Children.
By her Initiating Application, the applicant sought spousal maintenance as follows: (a) a cash payment in the sum of $500 per week; (b) all fuel costs, registration, insurance and servicing costs for a motor vehicle; (c) all costs of preparing the Property for sale.
By his Response filed on 31 July 2019, the respondent sought equal shared parental responsibility, for the Children live with the applicant and to spend time with him. The respondent also seeks to restrain the applicant from relocating to Brisbane with the Children.
The respondent also seeks an order for the sale of the Property with the net proceeds of sale to be divided as to 60% in favour of the applicant and 40% in favour of the respondent. He too, sought equalisation of the parties’ superannuation interests.
The proceeding was listed in a Duty List on 31 July 2019. Before that date, a Registrar had refused an application for an urgent listing.
At the Duty List hearing, the parties were agreed in certain procedural orders to arrange for a family report and for mediation. They were also agreed in the Children living with the mother and for them to spend time with the father on alternate weekends (Friday to Sunday), midweek (Wednesday nights), on alternate Sundays and for part of school holidays.
The matter is listed for mention on 4 December 2019, by which time the parties expect to be in receipt of a family report prepared by Mr A, family consultant. While the mother seeks orders that she be permitted to relocate, it has been made clear that there is no guarantee of this significant application being heard or determined on that date.
The parties are unable to agree upon a final settlement of their property interests and seek a determination in their dispute. As noted, the parties are to attend mediation no later than 30 November 2019. The matter is listed for a final hearing on 7 October 2020.
The applicant pressed her application for interim spousal maintenance orders in the course of the Duty List hearings. As matters evolved, she confined her application to the claim for payment of $500 per week.
Background
The applicant, who was born on … 1980 is now aged 39 years. She further deposes to having been diagnosed with anxiety and insomnia and as attending upon a psychologist for treatment.
The respondent husband was born on … 1982, is now aged 37 years and is in good health.
The parties commenced a relationship on … 2005 and commenced cohabitation … 2005. The applicant claims that the parties separated under one roof in August 2017 and that the respondent vacated the Property on 11 August 2018.
As noted above, there are two Children of the relationship.
There is some dispute as to whether the applicant has re-partnered (with Mr D) since separation and whether that relationship subsists. Statements from the Bar table contest such a relationship subsists.
The applicant is in dispute as to whether she has a new relationship.
The respondent has now re-partnered and is currently living with his new partner.
The applicant alleges family violence perpetrated by the respondent. In early-mid 2019, each of the parties obtained an Intervention Order (IVO) against the other. Both applications have been withdrawn by consent. The applicant deposes that she is considering making a further application for IVO against the respondent due to verbal abuse. The respondent deposes to an incident where the applicant was abusive toward him in front of the Children. By her affidavit filed on 13 June 2019, the applicant also alleges that the respondent is verbally and financially abusive. The respondent also deposes to the applicant being physically and mentally abusive toward him and hurling racist comments like ‘black bastard’. The failure of their relationship has been rancorous. They would be well advised to undertake a post-separation parenting program. The evidence will disclose whether this has occurred.
The applicant also alleges that the respondent ‘constantly’ changes his spend time with the children ‘to suit him’ and that this causes her stress and anxiety as she does not have support to assist her in last minute changes to the children’s schedule. Contrastingly, the respondent deposes to adhering to the Children’s pick-up and drop off schedule but accepts there have been some occasions where he has had to reschedule. Further, he claims that the applicant has on numerous occasions been delayed (from 30 minutes to three days) when picking up the children.
It is against that background that the current application for interim spousal maintenance was made.
Interim maintenance
As concerns parties to a de facto relationship, Div 2, Pt VIIIAB of the Act governs, amongst other things, spousal maintenance. An application for spousal maintenance differs in some respects from an equivalent application between parties to a marriage. First, the court is proscribed from making an order for maintenance unless it is satisfied of one of the matters in pars 90SB(a)-(d). As to this, most commonly, the court may be satisfied: that the parties’ de facto relationship was of at least two years duration; that there is a child of the relationship[1] or; that a party had made substantial contributions to, or for a child of, the relationship and that substantial injustice would result from a failure to make an order. Secondly, the court needs to be satisfied of the geographical requirements addressed by s 90SD of the Act.
[1] Act, s 90RB as to ‘child’ of de facto relationship.
An interim order for spousal maintenance is authorised[2] by par 90SS(1)(h) which provides that a court exercising power under Pt VIIIAB may make an order pending the disposal of the proceeding or until further order. Thus, the distinct purpose of an interim order for maintenance is to make provision for the interim financial needs of the claimant.[3] The duration of that interim provision may operate until a proceeding has been finally disposed of or perhaps for a more brief period in order that a person may stabilise their affairs following the breakdown of their marriage or in other relevant circumstances. Accordingly, an interim order for maintenance is to be distinguished from both a final order and an order for urgent spousal maintenance.[4] Such applications also arise for consideration in a different context from an application for final orders. In the latter case, it is trite that where an application for an adjustment of property interests is being sought, the court should determine the property application before the maintenance application is sought.[5] Conversely, where an order for interim maintenance is sought, the parties’ property interests have not yet been considered and remain for determination at a final hearing.
[2] Hall & Hall (2016) 257 CLR 490, [6]-[7]; see also, Act, s 74(8)(b).
[3] Auden & Auden [2019] FamCa 17, [75] (Hannam J).
[4] For which the Act makes separate provision: see ss 77, 90SG.
[5] Clauson & Clauson (1995) FLC 92-595, 81,907 (Barblett DCJ, Fogarty and Mushin JJ).
By s 90SE(1), power is conferred on the court to make such orders as it considers proper for the maintenance of a party to a de facto relationship after that relationship has broken down. Section 90SE(1) confers power to make an order for maintenance in wide terms. It is well recognised that Pt VIIIAB affords flexibility in the structured exercise of discretion to tailor a result appropriate to the unique circumstances of each case.[6] Thus, a significant exercise of discretion and value judgment is allowed to the court in the determination of an application for spousal maintenance; particularly is that so on an interim basis.[7]
[6] JS & GP [2006] FamCA 150, 133 (Kay, Warnick and Boland JJ).
[7] Bodilly & Hand [2019] FamCA 210, [43] (Cronin J).
When an order is made under s 90SE, that order crystallises and so defines the scope and extent of the liability of a person to maintain the other party.[8] The making of a maintenance order does not prevent a court from making a subsequent in relation to maintenance: s 90SS(3). However, a court must not thereafter increase or decrease the amount of maintenance unless, amongst other things, the claimants circumstances have changed so as to justify it doing so: s 90SI(3)(a).
[8] Hall v Hall (2016) 257 CLR 490, [4].
Sub-section 90SF(1) requires the court when exercising jurisdiction under s 90SE to apply the principle that a party to a de facto relationship must maintain the other:
(a)only to the extent that the first-mentioned party is reasonably able to do so; and
(b)only if the second-mentioned party is unable to support himself or herself adequately whether:
i.by reason of having the care and control of a child of the de facto relationship who has not attained the age of 18 years; or
ii.by reason of age or physical or mental incapacity for appropriate gainful employment; or
iii.for any other adequate reason.
In applying this principle in the determination of an application for spousal maintenance, the court is required, in imperative terms, to take into account only the matters referred to in subs 90SF(3): s 90SF(2).
Although the text of the provisions are slightly different, s 90SF(1) finds an analogue provision in s 72 of the Act. In Hall v Hall,[9] High Court observed that s 72 of the Act provided the ‘gateway’ to Pt VIII. Section 90SF is likewise a gateway in a de facto relationship and provides that a party 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, having regard to any relevant matter in s 90SF(3) of the Act.
[9](2016) 257 CLR 490, [3] (French CJ, Gageler, Keane and Nettle JJ), [61], (Gordon J dissenting as to result but in not disagreement as to the pluralities statement of principle).
In the consideration of whether an applicant for maintenance is able to support herself or himself adequately, no fixed or absolute standard is applied. While parties will understandably desire that they may continue to enjoy their pre-separation standard of living, the term ‘adequately’ as employed in s 90SF(1) is taken to mean “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” In the marriage of Nutting and Nutting.[10] There is no authority or legal principle that a party to a spousal maintenance application is entitled to enjoy the same standard of living that may have been enjoyed prior to separation.
[10](1978) FLC 90-410, 77,094 (Lindemayer J). see also Brown & Brown (2007) FLC 93-316, 161 (Kay, Warnick and Boland JJ) (albeit a case of lump sum maintenance).
As concerns capacity to pay, it is to be recognised that the Act does not confine this issue to one of income.[11] As was recently observed in Smyllie & Smyllie,[12] “there is no requirement that interim spousal maintenance be paid from property or from income. It can be paid from financial resources, it can be paid from borrowings and particular latitude is available on any interim basis.”
[11] Maroney & Maroney [2009] FamCA 45, [56] (Coleman J).
[12] [2019] FamCA 318, [23] (Loughnan J).
Onus of proof
The power to make an order for interim maintenance cannot be exercised unless the court is satisfied that the requirements of subs 90SF(1) have been met, taking account only of the matters in subs 90SF(3).[13]
[13] Hall v Hall (2016) 257 CLR 490, [8].
The court is authorised to make orders for interim spousal maintenance without a full hearing upon all aspects of the case. While the evidence on an interim application need not be so extensive and the findings not so precise as on an application for final relief, yet the power conferred by s 90SF(1) cannot be exercised unless a finding is made that the threshold requirements of s 90SF(1)(a) and (b) have been met.[14] This relevantly invokes the evidentiary burden that an applicant for spousal maintenance must establish those threshold requirements on the balance of probabilities.[15]
[14] Ibid.
[15]Evidence Act 1995 (Cth), s 140; Hall v Hall (2016) 257 CLR 490, [8]; Adami & Adami [2019] FamCA 162, [58] (Berman J).
Having regard to that burden of proof, an applicant may not be able to establish an inability to support herself or himself adequately and/or may not establish that the capacity of the respondent to the application is such that they may not reasonably be able to provide or afford spousal maintenance. However, the test whether an applicant is able to support herself or himself adequately is not to be equated with a question of whether they are in need – the notion that support is synonymous with subsistence has been firmly rejected.[16] Nor is it necessary that a person must deplete all of their capital before they can demonstrate an inability to support themselves adequately. So much may be accepted.
[16] McCrossen & McCrossen (2006) FLC 93-282, [32] (The Court).
Instead, the focus is upon whether the applicant for spousal maintenance is in a position to finance herself or himself adequately from their own resources. The test is whether “by reason of earning capacity, by reason of capital or other sources of income which have accrued independently to the applicant, the applicant is in a position to look after herself”: Eliades & Eliades.[17] This test was recently endorsed in Moller & Moller[18] and again in Auden & Auden.[19]
[17] (1981) FCL 91-022, 76,232.
[18][2017] FamCA 841, [23]; see also Clauson & Clauson (1995) FLC 92-595.
[19] [2019] FamCA 17, [78] (Hannam J).
The evidentiary burden upon whether the threshold requirements of subs 90SF(1) have been met is separate from and anterior to the quantification of an applicant’s reasonable needs.[20] These matters involve separate inquiries. The overall approach to the determination of an application for spousal maintenance has been helpfully described as involving:
a)a threshold finding under s 90SF(1);
b)consideration of the exercise of the power conferred by s 90SE(1) having regard only to the matters in s 90SF(3);
c)the application of a “no fettering” principle whereby a pre-separation standard of living is the benchmark upon which maintenance is to be measured; and
d)the exercise of the discretion conferred by s 90SE(1) upon a guiding principle of reasonableness in all the circumstances.
See In the marriage of Bevan and Bevan;[21] Anderson & Anderson.[22]
[20] Maroney & Maroney [2009] FamCAFC 45, [56] (Coleman J).
[21] (1995) FLC 92-600, 81,982-983.
[22] [2014] FamCA 766, [78] (MacMillan J).
Once satisfied that a person has either the moneys, or control of assets or resources, from which to pay, it is not for the court to determine how that may occur. To the contrary, it is for the respondent to demonstrate an inability to pay.[23] At the point where the court is satisfied of the threshold requirements and quantified the level of maintenance, an evidentiary onus shifts to the person resisting the application to demonstrate an inability to pay it from such identified resources.
[23]H & H (1985) FCL 91-654, 80,268 (Wood J) citing Hendriske & Hendriske (1976) FCL 90,069, (Hutley, Glass and Mahoney JJA).
Relevant matters
When exercising the jurisdiction conferred under s 90SE(1) the court is constrained by subs 90SF(2) to take into account only the matters that are referred to in subs 90SF(3).[24]
[24]Hall v Hall (2016) 257 CLR 490, [5]. Further, the court is required to disregard any income tested pension, allowance or benefit: Act, subs 75(3).
Twenty matters are prescribed by pars 90SF(3)(a)-(t) as being relevant to the consideration whether the requirements of subs 90SF(1) are met. Of central relevance perhaps to the majority of cases are: the age and state of health of each party; their income, property and financial resources; the physical and mental capacity of each party for gainful employment; whether either party has the care or control of a child under the age of 18 years; the commitments of each party that are necessary to support herself or himself and any child or another person that the party has a duty to maintain; a reasonable standard of living; any child support that a party has provided, and; any other fact or circumstance which the justice of the case requires be taken into account. The foregoing list is, of course, non-exhaustive. Sub-section 90SF(3) identifies a range of other matters that may also be of relevance in a particular case.
The analysis of whether a person is in a position to look after herself or himself and whether the respondent to the application has a capacity to provide maintenance entails consideration of their respective financial circumstances. Where spousal maintenance is sought, it is said[25] to be necessary to distinguish between the expenses of the applicant spouse and those of the children of the marriage: compare par 90SF(3)(d)(ii).
[25] Adami & Adami [2019] FamCA 162, [61] (Berman J).
The determination of an application for spousal maintenance requires: (1) a calculation of the applicant’s necessary commitments and the deduction from that sum of the amount of their income; (2) a calculation of the respondent’s necessary commitments and the deduction from that sum of the amount of their income; (3) an evaluation by reference to the sum of those calculations of whether the applicant is or is not able to look after themself and the respondents capacity to provide maintenance. The process of calculation and evaluation involves an objective determination of the parties’ economic circumstances.[26] While a primary task in the consideration of an application for maintenance is often described as involving a largely mathematical exercise, one of the critical questions is whether a claimant is able to support herself or himself adequately: s 90SF(1). Further considerations of the kind identified in [36] and [40] above are also required.
[26] Bodilly & Hand [2019] FamCA 210, [46] (Cronin J).
The question of the extent to which the expenditure of a party is to be deducted from their income before a maintenance contribution was ascertained was considered in Mee & Fergusson.[27] The appeal related to an application for child maintenance. Asche ACJ, Fogarty and Cook JJ identified three competing approaches to the resolution of that issue and held that the nature of an obligation to maintain a child was in the nature of a pre-eminent obligation to be calculated from income after deduction only of unavoidable commitments together with necessary living expenses.[28] While that decision may be distinguishable as concerning the ‘pre-eminent obligation’ to provide child maintenance, it may be accepted as instructive in the cases of spousal maintenance and in particular, where the applicant has the care of a child of the marriage.
[27] (1986) FLC 91-716.
[28] (1986) FLC 91-716, 75,197-198.
Capital
Much debate centred upon the applicant’s accumulated assets and the relevance of such assets to the determination of an interim application and, in particular, to the threshold requirements of s 90SF(1). Relatedly, as noted at [32] above, it may be accepted that where a claimant has established and quantified her or his claim for maintenance, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or by borrowing against capital.[29]
[29] See also Maroney & Maroney [2009] FamCAFC 45, [56] (Coleman J).
In JS & GP,[30] Kay, Warnick and Boland JJ accepted that different approaches could be found in the authorities upon a consideration of whether a spouse should be required to apply her or his capital so as to meet expenses. Bevan & Bevan[31] is a central authority on the subject. The Full Court there stated that an applicant ought not be required to deplete further an already meagre capital sum before being able to satisfy the threshold requirements of s 90SF(1). Again in Mitchel & Mitchell,[32] the Full Court accepted that it was legitimate for a party to set aside a reasonable capital sum by way of nest egg for future contingencies. However, in that appeal the Full Court also accepted that where the line was to be drawn would depend upon the circumstances of the individual case. In Brown & Brown it was reaffirmed that it is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that she/he is unable to support themself adequately.[33]
[30] [2006] FamCA 150, 133.
[31] (1995) FLC 92-600, 81,980.
[32] (1995) FLC 92-601, 81,995-996.
[33] (2007) FLC 93-316, [161] (Kay, Warnick and Boland JJ).
Contrastingly, in Fewster & Drake,[34] the Full Court remitted an application for spousal maintenance in circumstances where it accepted the husband’s submission[35] that the primary judge’s discretion had miscarried by reason of a holding that the wife should not have recourse to capital in order to support herself. Aldridge and Kent JJ held[36] that neither Bevan nor Mitchell established that the capital of a person seeking spousal maintenance “is always to be entirely disregarded. Rather, the point is that the possible need to retain that capital and not use it for day to day support is a relevant consideration to take into account.”[37] The court recognised that capital bears a dual nature inasmuch as it may be applied for both immediate and future needs. Furthermore, as the plurality recognised in Fewster & Drake,[38] that appeal concerned an application for interim relief whereas Bevan and Mitchell involved appeals from final orders. Aldridge and Kent JJ recognised the distinction as being of significance because:
In the case of an interim claim pending the hearing of final property proceedings, factors to be taken into account could include the time that would elapse between the interim hearing and the final hearing and the possibility that any depletion of capital could, provided sufficient assets were available, be restored or otherwise taken into account in the final property orders. (emphasis added)
I consider this reasoning to be instructive in this case. By extension, the court is authorised, in the final determination of an application for an adjustment of property interests, to make an order for the payment of money. In the making of such final orders, an evaluation could be made on any application for spousal maintenance of the capacity to meet such a claim. So too, consideration would be made of whether a claimant had the means of providing for themselves adequately. While Fewster & Drake has been referred to on several occasions it has not been considered in relation to the question of spousal maintenance.[39]
[34] [2016] FamCAFC 214.
[35] [2016] FamCAFC 214, [88].
[36] Strickland J agreeing.
[37] [2016] FamCAFC 214, 106-107.
[38] [2016] FamCAFC 214, 108.
[39]Fewster is important in relation to the principles concerning binding financial agreements.
By their combined operation, subs 90SF(2) and 90SF(3)(b) of the Act require that one of the matters that must be taken into account is the property of each of the parties. There is no doubt that property includes capital.[40] It must follow that the court is required to take into account the capital of both an applicant and respondent in the consideration whether the threshold requirements of subs 90SF(1) have been met, taking account of the matters in subs 90SF(3).
[40] Act, s 4 definition of ‘property’.
In my view, Bevan and Mitchell do not support a proposition that capital is to be disregarded in the determination of an application for spousal maintenance. Additionally, as Cronin J observed in Bodilly & Hand, s 75(2)(b) mandatorily requires the court to take into account the claimant’s property.[41]In that application, his Honour approached the question of capital by including the wife’s superannuation and potential annuity income in the determination of the application (but disregarding her real property) for the purposes of the application. While the unique and case sensitive nature of the evaluative task is self-evident, the principles stated by Cronin J apply with equal force in relation to 90SF(3)(b).
[41] [2019] FamCA 210, 142.
Consideration
There is no dispute that the parties were in a de facto relationship. Although there were no submissions upon the issues, I am satisfied that the parties’ de facto relationship was of at least two years duration and that there are two children of the relationship. I am also satisfied of the geographical requirements addressed by s 90SD of the Act.
As the matter proceeded by way of interim hearing, the application was conducted on the papers and, as was appropriate, neither party sought to cross-examine the other. The matters addressed below are therefore dealt with on the basis that disputed issues of fact remain for trial. Further, as neither party’s financial statements address the position of their partners (if any), I leave those considerations out of account.
I have considered each of the party’s affidavits and their financial statements. To the extent that statements were made from the Bar Table which were at odds with the evidence, I have considered them as indicating the existence and extent of their dispute on those issues. For example, the applicant appeared to equivocate about (and then deny) the existence of a relationship with a new partner. She also sought to suggest that a sum standing to the credit of her bank account ($114,000) as detailed in her financial statement should be discounted by ~50% because she had bought a car. This means that the applicant has been prepared to spend ~$57,000 to purchase a vehicle in the period between the preparation of her financial statement and the interim hearing. However, I note that the applicant purchased this vehicle after the lease on the vehicle formerly provided by the respondent’s employer had been cancelled and the vehicle sold. The applicant also cavilled at the suggestion that the respondent was paying child support. Yet it was submitted for the purposes of the application, a figure of $505 per week was appropriately included for this payment. This was consistent with the sum detailed in the respondent’s financial statement.
As to the applicant’s needs, her financial statement indicates the following weekly expenses: (a) Item 22 – rates and unit levies – $200 and (b) Item 30 – Credit card payments – $30 (d) Item 32 – all other expenditure – $1,500 (e) Item 33 – total expenditure – $1,730. In Part N of her financial statement, the applicant provided some detail as to the weekly expenditure of $1,500. Accepting the vagaries of such documents, however, I do note the following weekly expenses: (i) electricity $150 (ii) hairdressing toiletries $100 (iii) car hire $400 and child related expenses[42] of $215. As the applicant stated she has now purchased a vehicle that hire cost should be excluded from an assessment. Likewise, the figures for electricity, hairdressing, child related expenses are approximations. The particulars provided in relation to claimed expenditure was not amplified by the applicant’s affidavit.
[42] Children’s activities ($80), child minding ($60) and education expenses ($75).
I find for the purposes of the application that the applicant’s weekly income is at least $700 made up as to salary, interest and child support.[43]
[43] See Financial Statement, Items 9, 10 and 13.
On the basis of the evidence before me I conclude that the applicant has weekly expenditure in the order of $1,000 and income of $700 leaving an indicative shortfall of $300 per week. The shortfall is indicative at least because the figures provided in relation to expenditure are fluid and the applicant concedes to an average weekly income of $100 to $200 per week whereas her financial statement pitched this income at $150. This leaves open that her income may be higher in some weeks than in others. It is also supportive of a conclusion that the claim for weekly spousal maintenance of $500 was excessive.
While the applicant’s Initiating Application states that she seeks an order for 100% of the net proceeds of sale of the Property, by her financial statement she claimed a 50% interest in that Property: see Item 35. Her 50% interest in the Property was stated to be E$750,000. In addition, the applicant has other assets including: (a) cash in savings accounts of $114,500 (b) a term deposit $300,000 (c) share portfolio E$113,000. Those sums amount in aggregate to ~$520,000. I leave out of account that the applicant has other minor assets and superannuation.
Apart from a small credit card debt, the applicant’s only liability is 50% of the mortgage over the property. Although the sale process has been slow to date, the parties are agreed that the mortgage must be discharged when the Property is sold. Until recently, the respondent had been paying the mortgage but says he can no longer afford to do so. While he had been living with family for some time following separation, he has now rented accommodation of his own.
In resisting the application, it may have been tacitly conceded that there was, to some extent, a shortfall between the applicant’s means and needs. While some submissions were made indicating good reason to doubt the extent of the shortfall between the applicant’s means and needs, as stated above, the substantive basis on which the application was resisted was that the applicant had not demonstrated she did not have the ability to maintain herself adequately from her own income, assets and resources. I address this topic in further detail below.
The respondent is employed as a sales representative. For that reason, his annual income is substantially dependent upon the number of sales that are sold in the business. As to the respondent’s financial position, a number of documents were produced in the course of the hearing, including a PAYG statement for the financial year ended 30 June 2018 and an electronic statement of the respondent’s income for the year ended 30 June 2019.[44] This information, viewed collectively, indicates that the respondent’s income has dropped from $211,000 in the year ended 30 June 2018 to $201,000 in the current year. I proceed on the basis that, after deductions, the respondent’s current net annual income is ~$130,000. In the result, his weekly net income is $2,500.
[44]The latter information was furnished to the applicant’s counsel by means of inspection of an email or other communication on a smart phone.
One subject of debate was the respondent’s expenditure and in particular the issue of his liability for rent in circumstances where he has re-partnered and so, as the argument ran, his liability for rent should be halved from $716 per week to $358. Other relatively minor issues were raised as to double counting. I am not prepared on the evidence before me to conclude that the respondent’s liability for rent should be reduced in the manner contended for. Having regard to the table of income and expenditure that was helpfully produced by counsel in the course of submissions, I find that the respondent’s weekly expenditure is $2,360. In reaching that conclusion I disregard a sum for childcare that was already included in a composite amount for ‘Part N’ expenditure.
On the basis of the findings as to the respondent’s net weekly income and expenditure, a surplus of $140 results.
In addition, I note the respondent has very few assets (~$7,000) apart from his 50% share of an interest in the Property. As I did in relation to the applicant, I disregard the respondent’s superannuation ($180,000) as to which the applicant seeks equalisation orders. The respondent also disclosed some modest liabilities ($26,000).
I have concluded the applicant has not demonstrated that she cannot support herself adequately. To adapt the reasoning of Macmillan J in Anderson & Anderson,[45] there is an artificiality in the substantive basis for the application. It is common ground that in 2009 the applicant inherited a sum of $1.6M. Part of that sum has been used in relation to a series of purchases of properties. As it stands, when the first property was sold the net proceeds were used to purchase the next property. In this way, part of the inheritance has blended in a series of transactions. However, there is some opacity as to the proper accounting of the whole of the inheritance and it is not entirely clear how that inheritance has been applied and what remains of it. Viewed objectively, the remaining sum of such inheritance may well be represented in part by the net proceeds of the sale of the Property (which is yet to occur) and the applicant’s various investments and cash at savings accounts. Otherwise, it may be taken that it has been depleted in the course of the relationship.
[45] [2014] FamCA 766, [90]-[92].
The applicant submits, in effect, that as she brought an inheritance to the relationship, the size of that contribution will require a conclusion at trial that it is not just or equitable that there be any adjustment of property interests. On this basis it is then said that for the applicant to be required to apply the remainder of that inheritance in lieu of maintenance is to require her to apply her own capital in satisfaction of her immediate needs when, in truth, the whole of that capital will be hers to retain once the property application has been finally determined. As was observed in the course of argument: the parties’ relationship was of some 12 years’ duration; there are two children of the relationship; the respondent has contributed his income to the relationship and there is ample evidence that he has made non-financial contributions during the relationship and continues to do so inasmuch, he has bore the mortgage liability and clearly has maintained a close bond to the children. Viewing those matters collectively, the applicant’s submission that it is neither just nor equitable that any adjustment of property interests should be made as between the parties seems, at least on the basis of the present evidence (some of which is in dispute), to be somewhat ambitious.
What cannot be said, objectively, is that the applicant’s assets are meagre. Having regard to the parties’ respective assets and liabilities this is not a case in which considerations of preserving a ‘nest egg’ for the benefit of the applicant seem apposite, particularly in circumstances where the respondent has – and on the applicant’s case will have – no ‘nest egg’ of his own. In those circumstances, I decline to leave the applicant’s capital out of account in the evaluation of whether she has discharged the onus of establishing that she presently is unable to support herself adequately.
In my opinion, the adoption of the applicant’s approach simply leaves out of account that the Act requires in imperative terms that the court must have regard to, amongst other things, the capital of the applicant, in assessing whether the threshold requirements of s 90SE(1) are satisfied: see s 90SE(2) and 90SE(2)(b). Despite the careful submissions of her counsel, I do not accept that the applicant’s capital is to be effectively disregarded. While it is one thing to accept (as I do), that an applicant need not exhaust ‘meagre’ capital before the threshold requirements of s 90SE(1) are met, it is quite another to conclude that in the circumstances of this case, the applicant’s capital should be left out of account in deciding whether this threshold requirement is met. The determination of those issues, while frequently described as being a largely mathematical exercise,[46] is also evaluative and that is because the test requires consideration of whether an applicant is able to provide for herself or himself adequately. In the circumstances of this case, I am not satisfied that the applicant is unable to support herself adequately.
[46] Bodilly & Hand [2019] FamCA 210, [42], [46] (Cronin J).
Where the line is to be drawn must depend upon the unique circumstances of this case. While the possible need to retain capital and not use it for day to day support is a relevant consideration, and one that I have taken into account, I do not consider that it would be proper (or reasonable in all of the circumstances) to make an interim order for spousal maintenance. The ‘no fettering’ principle is also of relevance in a modest case of this kind. Neither party can expect in such a case that their pre-separation standard of living is the applicable benchmark against which interim maintenance must be measured.
If I am wrong in those conclusions, I would in any event have concluded that it was not proper to make an order for interim spousal maintenance. Should the applicant determine to press a claim for spousal maintenance at the final hearing, orders can be made against the respondent for him to pay maintenance if the threshold and other considerations then favour the grant of such relief: compare Fewster & Drake.
Conclusion
The application must be dismissed.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 14 August 2019
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