Atkins and Hunt

[2017] FamCA 179

FAMILY COURT OF AUSTRALIA

ATKINS & HUNT [2017] FamCA 179

FAMILY LAW – SPOUSAL MAINTENANCE – INTERIM PROCEEDINGS – Application by the wife for spousal maintenance – Application opposed by the husband – Consideration of the elements of s 72(1) of the Family Law Act1975 (Cth) – Where the wife is not able to support herself – Where the husband has substantial income from directors’ fees and a superannuation fund – Where the husband is found to have a capacity to pay spousal maintenance –Application for lump sum payment dismissed – Orders made for the husband to pay the wife periodic spousal maintenance.

Family Law Act 1975 (Cth) s 72(1)

APPLICANT: Ms Atkins

RESPONDENT: Mr Hunt

FILE NUMBER: SYC 425 of 2012

DATE DELIVERED: 24 March 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 23 March 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Weightman

SOLICITOR FOR THE APPLICANT: Milevski Family Lawyers

COUNSEL FOR THE RESPONDENT: Ms Christie

SOLICITOR FOR THE RESPONDENT: Sexton Family Law

Orders

IT IS ORDERED

1. That the husband pay to the wife by way of interim spousal maintenance the sum of $1,130, the first payment to be made on 30 March 2017 and weekly thereafter.

2. That the wife’s application for interim spousal maintenance is otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 425 of 2012

Ms Atkins

Applicant

And

Mr Hunt

Respondent

REASONS FOR JUDGMENT

1. Ms Atkins (“the wife”) is the applicant in these proceedings seeking an interim order for spousal maintenance against Mr Hunt (“the husband”).

2. The proceedings have a long and complicated history. For present purposes it is sufficient to say that, although orders in favour of the wife for spousal maintenance have been made in the past, there is currently no such order. The orders made by Aldridge J on 4 December 2014, following a defended hearing lasting ten days, provided for the existing order for spousal maintenance to be discharged upon the sale of a property at Town M. The sale of that property was settled on 17 July 2015. The wife has appealed against the orders of Aldridge J but those orders have not been stayed.

3. The wife seeks, on an interim basis, the following payments:

   ·    Spousal maintenance of $2,421 per week;

   ·    A lump sum of $159,786 which is calculated to be the amount which the husband would have paid to her if the previous order for spousal maintenance had not been discharged pursuant to the orders made by Aldridge J on 4 December 2014;

   ·    Payment of a rental bond up to $3,000;

   ·    Payment of any rent required to be paid in advance pursuant to the terms of the yet to be negotiated lease;

   ·    Payment of rent up to $700 per week.

4. The payment of rent, rent in advance and bond is in addition to the payment of $2,241 per week.

5. The husband opposes the application and asks the Court to dismiss the wife’s application.

6. The process is a three step process and the elements are set out in s 72(1) of the Family Law Act 1975 (Cth), as follows:

FAMILY LAW ACT 1975 - SECT 72

Right of spouse to maintenance

(1)  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).

1. Firstly, the wife must demonstrate that she is unable to support herself. Nextly she must establish what her reasonable needs are. Thirdly, the Court must determine the extent to which the husband is reasonably able to contribute to her maintenance.

2. Because these are interim proceedings, no cross-examination is allowed and the matter proceeds on untested evidence. Where matters are disputed, particularly where those matters are complex financial issues, it may not be possible to make a finding of fact.

3. The wife bears the onus of proving each of the three elements of her application.

IS THE WIFE UNABLE TO SUPPORT HERSELF?

1. The wife is 61 years old. She commenced to live with the husband in 2001.

2. The husband did not accept that the wife was unable to support herself.

3. The wife deposed that she is in receipt of a disability pension. That is not correct. As her bank statements indicate, she is in receipt of a Newstart allowance (“Newstart”). Receipt of Newstart signifies that Centelink expects her to look for work.

4. The wife deposed that her last employment was with commercial ventures associated with the husband and that employment terminated in 2011.

5. The wife held 49 per cent of the issued shares in a company, Business Z Pty Limited (“Business Z”) that conducted a business in the Sydney CBD. The remaining shares were held by Mr WW. The wife guaranteed the lease of the business premises.

6. The wife deposed that the business is in administration and its liabilities exceed its assets.

7. Tendered in the husband’s case was a loan application submitted on behalf of the wife in May 2014 together with a draft tax return of the wife for the year ended 30 June 2013. The loan application asserted that the wife had been employed for the past nine years by Business Z and that she was employed on a full time basis. The draft tax return disclosed a gross income from Business Z as managing director of $55,200. The tax return disclosed the rent received by the wife for her Town C property and contained a schedule of the expenses claimed as tax deductions. The tax return included the wife’s tax file number and the number of her medical insurance policy.

8. The wife deposed that she did not complete the loan application or the tax return. In relation to the tax return, it is difficult to accept that the information about the wife’s expenses did not come from her. She deposed that she signed the documents, intended to be used to raise money by way of loan, without reading them.

9. The wife deposed that of the $15,000 which was borrowed, she received $7,000 and Mr WW received $8,000. Mr WW deposed that he received the full amount.

10. The wife deposed that she has never received an income from Business Z. It is her evidence that she attends at the business about four times each week and answers the phones and sweeps up because that gives her a sense of routine and normality.

11. The husband challenges that evidence and submits that there is no reason the wife would not be paid for assistance in the business. That is not an issue that can be determined on the available evidence.

12. The wife’s treating psychiatrist, Dr CC, has provided a report dated 3 December 2016 in which he states that the wife in unable to work because of a range of symptoms that impair her decision making. Dr CC has diagnosed the wife with an adjustment disorder with mixed anxiety and depressed mood. He opined that treatment by medication and psychotherapy is not likely to have significant effect while the ongoing stressors of the litigation continue.

13. Dr CC’s evidence cannot be tested in these proceedings.

14. The wife owns a property at Town C which has a rental value of $400 per week. It is currently rented to long term tenants, who are pensioners, for $250 per week. The wife has every right to be charitable, but not at the expense of the husband.

15. The tenants hold a week-to-week tenancy. The wife chooses not to charge commercial rent. The wife does not wish to take possession of Town C and live there because she does not want to disturb the tenants. The wife deposed that taking possession of Town C would not assist her as the property, which she estimates to be worth $450,000, has a mortgage of some $340,000. She has negotiated a moratorium on the loan until April 2017 (having extended the moratorium from December 2016 and again from February 2017). It is her case that she is not able to meet the mortgage payments when the moratorium expires but she has already been able to negotiate an extension and it cannot be assumed that there will not be further extensions.

16. For the purpose of these proceedings, the wife could live at Town C and take advantage of the moratorium on mortgage payments, thus accommodating herself at no cost.

17. She has been served with a Writ for Levy of Property in relation to unpaid council rates and costs in the sum of $4,089. On behalf of the husband it was submitted that those rates were owing when the matter was determined by Aldridge J.

18. The wife is currently not paying rent but she receives a rent allowance from Centrelink. She deposed that she stays intermittently with friends, including Mr WW and his wife, and her brother, and has, on three occasions, slept in her car.

19. While I accept that the wife may not have been frank in her dealings or in her evidence, she cannot support herself.

WHAT ARE THE WIFE’S REASONABLE EXPENSES?

1. The husband challenges the wife’s claimed expenses.

2. It is the wife’s case that she needs to rent rural property because she has a pigeon, a parakeet and a peacock which need space. These are interim proceedings. The peacock is currently being boarded. I do not consider the needs of the birds should be taken into account in this application and I do not accept that the wife needs to rent property on acreage.

3. In relation to her claim that she needs to pay rent of $700 per week, she could live at Town C.

4. The husband challenges the reasonableness of including, for the purpose of this application, her periodic loan repayments. The relevant loans are liabilities for which the wife is liable as a consequence of the judgment of Aldridge J which has not been stayed. Those repayments amount to $1,092 per week. The wife has a total income from Centrelink and the rent from Town C of $609 per week. She is clearly not making those loan repayments. If the liability is increasing, as a result of her not making repayments, it is a liability which has been assigned to her by the orders of 4 December 2014. I do not propose to take those repayments into account when assessing her reasonable expenses for present purposes.

5. I exclude from the wife’s expenses the mortgage payments on Town C because they are not currently required to be paid.

6. I also exclude the claim that she repays, or is required to repay, the rates outstanding on Town C at the rate of $140 per week or $7,280 per year. She has a judgment debt for rates but there is no evidence that the creditor is unwilling to accept repayments in a lesser weekly amount. However, I accept that rates on the Town C property are a recurrent liability. The current yearly rates are $1,910 or $37 per week and I will allow that amount.

7. The wife has Part G expenses of $72.

8. The wife’s Part N expenses are also challenged. Counsel for the husband submitted that there should be some parity between the expenses claimed by the wife and those claimed by the husband. The wife claims $1,055 per week. The husband claims $1,330 per week. The nature of their expenses is different and the comparison is not useful.

9. The wife’s reasonable expenses, for the purposes of this application, are $1,055 plus her Part G expenses or $1,127 per week which I will round up to $1,130.

WHAT IS THE ABILITY OF THE HUSBAND TO CONTRIBUTE TO THE WIFE’S MAINTENANCE?

1. The husband is 81 years old. He is retired. He lives with his present partner in Asia.

2. In a Financial Statement sworn on 20 December 2016, he deposed that he has an income of $1,000 per week paid by a company, N Pty Limited (“NPL”) by way of salary. The husband is one of four directors of NPL. The husband deposed that he does not control NPL. That matter is disputed by the wife but cannot be determined here. There is no issue that the husband does not hold a majority of shares in NPL.

3. In addition to his salary from NPL, the husband receives director’s fees.

4. The husband deposed that in the financial year ended 30 June 2016, NPL resolved to pay a director’s fee of $60,000. The husband deposed that there was no certainty that NPL would continue to pay a director’s fee but the Minutes of the Annual General Meeting held on 22 November 2016 record a resolution to pay  directors’ fees in the 2017 financial year of $200,000, or $50,000 for each director.

5. I propose to add a further amount of $1,000 per week to the husband’s income for director’s fees.

6. The husband also deposed that he has an income of $3,000 per week from his superannuation fund. That income is derived from rent on property owned by the superannuation fund. The husband deposed that the value of his superannuation was not known. Tendered in the wife’s case was a copy of the financial report of the husband’s superannuation fund for the year ended 30 June 2015. That report was prepared in October 2015 and must have been available to the husband when he swore his Financial Statement. The report shows the value of real estate owned by the fund as $1,500,000 and the net rental income as $160,923. The net income of the fund for the 2015 tax year was $161,941. There is no evidence that the income is less than that amount in the current year. The husband is 81 years old and has control of the fund.

7. A further $3,000 per week should be added to the husband’s weekly income. His income for the purpose of this application is $5,000 per week.

8. The husband estimated his expenses at Part N of his Financial Statement at $1,330. Those expenses were not challenged. Thus his total weekly estimated expenses are deposed to be $1,735 plus “tax and loan repayments”.

9. The husband is not paying tax and loan repayments from income.

10. The husband has other sources of funds.

11. His loan account with NPL had an opening balance at 1 July 2016 of $381,894 owed by him to NPL. The closing balance, at 8 November 2016 was debt of $772,352. By February 2017, the husband owed NPL $868,241.

12. Thus he had been permitted to draw $486,347 in the period from July 2016 to February 2017. The ledger shows payments to lawyers, to PAYG tax and directly to the husband.

13. In addition, the husband drew $50,000 from T Pty limited (“TPL”).

14. I accept that the loans will have to be repaid but they are available to pay the husband’s expenses.

15. The husband deposed that he will be obliged to sell the property owned by the superannuation fund in order to reduce his debt to NPL which is examined below, and, presumably, to pay tax. If the property is valued at $1,500,000, the proceeds will not be sufficient.

16. As a result of the judgment of Aldridge J of 4 December 2014, the husband became liable, in substitution for the wife, to repay the debt owed by the wife to NPL. Aldridge J found that the wife’s debt to NPL was $805,190 and the husband’s debt to NPL was $588,178, a total of $1,393,368.  

17. The husband deposed that the current balance of his loan account debts to NPL and to its subsidiary H Pty Limited, is $1,664,955. That evidence was not challenged.

18. The husband deposed that, in the financial year ended 2016, NPL paid a dividend of one million dollars to a company controlled by the husband and the whole of that sum was applied to reduction of the wife’s assigned debt to NPL. The dividend caused a tax liability to come into existence which will be crystallised in the husband’s 2016 tax return. The husband estimates, on the advice of his accountant, whose report is annexed to the husband’s affidavit, that liability will be in the region of $540,000.

19. In addition, the accountant estimates that the husband will have a liability to make Division 7A payments to the Australian Taxation Office (“ATO”) of $377,433.

20. In addition to those debts, the husband deposed that he has a debt for legal fees of $88,000 incurred as a result of criminal charges laid by the police in 2015, in relation to the wife’s complaint about incidents before the parties separated in 2011.

21. There was no challenge to the husband’s asserted liabilities which total $2,670,380.

22. Thus it is the husband assertion that his outgoings exceed his income and his liabilities exceed his assets. He is not, however, paying his liabilities out of his income.

23. It may be the case that, at some time in the future, the liabilities will be called in and the husband’s financial position will change but I am required to deal with his position as I find it now.

24. He has a capacity to contribute to the wife’s maintenance from his disposable income of $3,265. The husband will pay interim spousal maintenance of $1,130 per week.

LUMP SUM MAINTENANCE

1. The purpose of spousal maintenance is to meet reasonable living expenses as they fall due.

2. When the husband had an obligation to pay spousal maintenance, he complied with that obligation.

3. Lump sum maintenance would usually be ordered when the Court is satisfied that a periodic sum, properly calculated, would not be paid periodically and it is necessary to capitalise that sum.

4. That is not the case here.

5. The husband had no obligation to pay spousal maintenance after the orders abated on the sale of the former matrimonial home.

6. No reasons have been advanced to support the application for a lump sum.

7. The application will be dismissed.

I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 24 March 2017.

Associate:

Date:  24/3/2017