Barajas & Frye
[2023] FedCFamC1F 1024
•7 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Barajas & Frye [2023] FedCFamC1F 1024
File number: SYC 5751 of 2022 Judgment of: MCGUIRE J Date of judgment: 7 December 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Review of a decision – husband seeks a review of interim spousal maintenance orders made by a Senior Judicial Registrar – application dismissed Legislation: Family Law Act 1975 (Cth) ss 72(1), 74, 75(2) and (3) Cases cited: Hall & Hall (2016) FLC 93-703, [2016] HCA 23
In the Marriage of Brady (1978) 4 Fam LN 54
In the Marriage of Ferguson v Ferguson (1978) FLC 90-500
In the Marriage of Patterson (1970) FLC 90-705
In the Marriage of Wilson & Wilson (1989) FLC 92-033
Jenson & Jenson (No 2) [2022] FedCFamC2F 1672
Plongeon & Plongeon [2007] FMCAfam 456
Division: Division 1 First Instance Number of paragraphs: 60 Date of hearing: 23 November 2023 Place: Sydney, delivered in Melbourne Counsel for the Applicant: Mr Fermanis Solicitor for the Applicant: Manning Lawyers Counsel for the First Respondent: Ms McConaghy Solicitor for the First Respondent: Watson Law Pty Ltd Counsel for the Second Respondent: Mr Fermanis Solicitor for the Second Respondent: Manning Lawyers ORDERS
SYC 6751 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR BARAJAS
Applicant
AND: MS FRYE
First Respondent
B PTY LTD
Second Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
7 DECEMBER 2023
THE COURT ORDERS THAT:
1.UNTIL FURTHER ORDER the husband, Mr Barajas (“the husband”), pay to the wife, Ms Frye (“the wife”), the sum of $1,270 per week spousal maintenance with the first payment to be due and owing as of seven (7) days from the date of these Orders with payments to be made directly by the husband into a bank account nominated by the wife through her solicitors to the husband’s solicitors.
2.The husband’s obligation for spousal maintenance pursuant to these Orders dates from 3 February 2023 and that the husband pay and satisfy any arrears due and owing from that date within four (4) calendar months of the date of these Orders.
3.These Orders bind and obligate the husband and the second respondent jointly and severally.
4.The oral application made by the wife on 23 November 2023, pursuant to s114(a) and (b) of the Family Law Act 1975 (Cth) to restrain the husband from selling, encumbering and disposing of the assets of B Pty Ltd or drawing funds from the accounts of B Pty Ltd other than in the ordinary course of business be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym of Barajas & Frye has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCGUIRE J:
APPLICATIONS
This is an Application for Review filed by Mr Barajas (“the husband”) in respect of orders of a Senior Judicial Registrar made 28 July 2023 providing inter alia that the husband pay to the wife spousal maintenance in the sum of $1,270 a week until further order with the first payment to be made no later than 4.00pm on Friday, 28 July 2023.
Where the Rules of this Court provided that a hearing on Review from a senior judicial registrar will proceed as a hearing de novo, Ms Frye (“the wife”) pursues the order for spousal maintenance but also seeks orders as follows:[1]
1.That the company known as [B Pty Ltd] ACN […] trading as [C Company] be joined to these proceedings as the Second Respondent.
2.That pending further orders the wife shall have the sole use of the motor vehicle described as [Motor Vehicle 1] bearing the registration […] ([Motor Vehicle 1]) to the exclusion of the husband and [B Pty Ltd] effective from the date of this order.
3.That [B Pty Ltd] is restrained from interfering in any way with the wife’s use of the Motor Vehicle 1 to the exclusion of the husband and [B Pty Ltd] ACN […].
4.That [B Pty Ltd] ACN […] continue to pay any and all repayments on any finance secured over the [Motor Vehicle 1] as and when such repayments fall due including any balloon payment due and payable on expiry of any said finance.
[1] Wife’s amended application in a proceeding filed 8 November 2023.
The orders sought by the wife were initially opposed.
The matter first came before me on 1 November 2023 where I determined the interim spousal maintenance issue to require some limited testing of the evidence where prima facie the husband’s sworn financial statement showed expenditure exceeding income. As such, the matter proceeded to hearing in Sydney on 23 November 2023. The parties attended and there was limited cross-examination of each party.
BACKGROUND
The parties commenced cohabitation in mid-2013 and were married in 2014.
There is one child of the parties namely X born 2016. X lives primarily with the wife.
The wife has three children from previous relationships. Two of those children namely Mr D (21 years) and E (aged 14 years) live in the wife’s family unit.
The husband concedes that he contributes $60 per week child support for X.
During the relationship the parties operated a business, C Company. The wife worked full‑time in the business from 2016 until the husband terminated her employment in late 2022.
The business was incorporated as B Pty Ltd in mid-2020.
It appears that there was a delegation of tasks between the parties in respect of the business with the wife being primarily responsible for administration and the husband working in the field, although each concedes some confusion of those tasks.
The wife, X and the wife’s older children continue to reside in the former matrimonial home at Suburb F. The mortgage instalments of some $860 per week were initially met from funds available in a mortgage offset account. That facility expired in about mid-2023. The wife has since been responsible for the mortgage payments albeit conceding that she meets one half only with the other half being met with loans from her parents.
The wife is not in remunerative employment. She receives a Centrelink benefit.
Whilst the wife is an equal shareholder in the business. The husband as sole director terminated her employment in 2022. The husband continues to operate the business.
The wife’s son Mr D was also employed in the business until late 2022 when his employment was terminated by the husband. Mr D operates his own business and contributes from his income approximately $350 per week to the wife’s household.
Proceedings in this Court were commenced by the husband in August 2022. In late 2022, and despite proceedings on foot in this Court for property settlement, the husband in his capacity as a sole director of B Pty Ltd caused B Pty Ltd to commence proceedings in the Supreme Court of New South Wales against the wife and Mr D for return of items of property asserted to be owned by the company but in the possession of the wife and/or Mr D. The evidence is that the items related to the operation of the business.
Whilst orders were made by consent in the Supreme Court in late 2022, issues of costs remain live between the parties and where the husband, as sole director of B Pty Ltd, authorised the use of company funds variously estimated between $74,000 - $123,000 to pursue the litigation. The husband himself estimates the value of the objects of the litigation to be approximately $70,000 - $80,000 but where the company financial statements depreciation schedules suggest the values to be much less.
There is evidence that the husband has repartnered and that the husband’s partner contributes financially to the business. There is no evidence that the wife has repartnered in any sense of dependency or support.
ISSUES
Sensibly, and to their credit, the parties were able to agree during the hearing that the wife should have exclusive use of Motor Vehicle 1 in the interim and that the parties would cooperate in signing all documents necessary to extend the lease with B Pty Ltd being responsible for the payments. To this end, the parties also consented to an order that B Pty Ltd be joined as a second respondent to these proceedings where the entity’s sole business is the operation of C Company.
The husband, in opposing the spousal maintenance order, raises an issue as to the quantum of the wife’s asserted need for spousal maintenance in the quantum of $1,270 per week.
The husband also takes issue with the wife’s asserted inability to attend to her own needs where he argues that the wife has not made adequate effort to obtain employment so as to attend to those needs.
Finally, the husband argues that he has no capacity to meet spousal maintenance in the quantum sought by the wife, or at all.
THE EVIDENCE
Both parties provided affidavits and updated sworn financial statements. Each of the parties was cross-examined briefly. I found the wife to be a candid and responsive witness in cross‑examination where those responses were considered and informed. The husband gave his evidence in a more blasé fashion but, to his credit, made concessions and admissions against interest where appropriate.
THE RELEVANT LAW
The Family Law Act 1975 (Cth) (“the Act”) provides for spousal maintenance at Part VIII where s 72 states:
(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).
Section 74 provides in proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.
Section 75(2) sets out a number of matters for the Court to take into account in exercising its jurisdiction and discretion under s 74.
Consequently, the authorities identify that an applicant for spousal maintenance carries an onus to cross a “threshold” at s 72(1)(a) – (b) by proving on the balance of probabilities that there are needs to be met and, secondly, that the applicant is not able to attend to those needs. It is then, and only then, that the Court turns to consider the ability of the respondent to contribute to the needs of the applicant.[2]
[2] Hall & Hall (2016) FLC 93-703, [2016] HCA 23, Plongeon & Plongeon [2007] FMCAfam 456 at [79].
Importantly, the wife’s receipt of a Centrelink benefit does not constitute “income” in the consideration of her ability to support herself.[3]
[3] Section 75(3) of the Family Law Act 1975 (Cth).
A consideration of the wife’s ability to support herself “adequately” has been interpreted as importing a standard of living which is reasonable in the circumstances.[4]
[4] In the Marriage ofFerguson v Ferguson (1978) FLC 90-500.
In the circumstances of an interim application, often heard on the face of the papers or, as is the case here, with limited testing by cross-examination, it is permissible for the Court to take a “broad brush” approach and particularly in determining the needs of an applicant.[5]
[5] In the Marriage ofWilson & Wilson (1989) FLC 92-033.
THE WIFE’S NEEDS
The wife provides a financial statement sworn the 17 November 2023. At Part G she deposes to her personal expenditure totalling $1,911 per week.
Notably, that expenditure includes mortgage payments at just $430 per week. The mortgage instalments are, in fact, $860 per week. As such, the wife’s evidence understands that she is receiving financial assistance by way of a “loan” from her parents each week in a sum of $430. She says that she is accruing a loan which will become a liability of the marriage subject, of course, to argument at the final trial. I prefer, however, that the wife’s obligation to meet the mortgage sits at $860 per week for the purpose of considering her “needs”. There is, of course, no obligation on her parents to contribute to the mortgage and I am not able to obligate them by order to do so. Such an adjustment, therefore, of a further $430 per week would bring the wife’s claimed weekly needs to $1,830 dollars per week.
At Part N of the financial statement the applicant differentiates her weekly expenditure between herself, and the children and she was not vigorously or successfully attacked in cross‑examination as to her weekly expenditure with emphasis placed only on her home utility expenses.
In all of the circumstances, I am satisfied that the applicant has shown financial needs on a weekly basis in excess of the $1,270 that she seeks by way of spousal maintenance.
WIFE’S ABILITY TO SUPPORT HERSELF ADEQUATELY
The wife is in receipt of a Centrelink benefit. She is the primary parent of the parties’ primary school aged daughter. It is generally accepted that the responsibility for the care of the child, particularly a young child, is a reasonable limitation on gaining employment.[6] The wife’s work history since 2016 was in the family business where that employment was unilaterally terminated by the husband in late 2022. The evidence suggests that the wife was keen and willing to continue her role in the company/business where she is, of course, an equal shareholder but where the husband did not give his consent and where the husband has either employed a person to attend to the wife’s previous duties or assumed those duties himself.
[6] In the Marriage of Patterson (1970) FLC 90-705, In the Marriage of Brady (1978) 4 Fam LN 54, Jenson & Jenson (No 2) [2022] FedCFamC2F 1672 at [52].
The wife’s affidavit material discloses some attempts by her to obtain employment sympathetic to her care of X. She was cross-examined as to a lengthy gap during 2023 in those attempts which have been unsuccessful. Her response was a need to care for her son E who suffered an injury requiring post-surgery rehabilitation.
Whilst not pursued in cross-examination, the wife’s financial statement discloses a bank account balance of $7,500. Circumstantially, I do not consider this to be substantial savings. Notably, the wife has a primary care and financial responsibility for the parties’ child. She has another dependent child in her care. The authorities question the use of crystallising of assets for interim financial support pending a final property settlement. In any event, as I said, the husband’s counsel did not pursue this bank balances as a form of possible support of the wife.
Where the wife is the primary carer for the seven year old X and where her most recent work history has been limited to that of the family business, I am satisfied generally, and consistent with the authorities, that the wife is unable to support herself adequately.
HUSBAND’S ABILITY TO ATTEND TO CONTRIBUTE TO THE WIFE’S SUPPORT
The husband provided a financial statement sworn 14 November 2023. He discloses an income from all sources of $1,384 per week with expenditure of $1,258.
Cross-examination exposed the husband’s financial statement to be incorrect or misleading by omission in a number of aspects including benefits received by him from the company/business where he, of course, is the sole director and where he has the ability to direct the disbursement of income from the business. There is no evidence that the wife now receives any dividend by reason of her 50 per cent shareholding in the business.
Prima facie, the husband’s claimed weekly expenditure is unremarkable. His financial circumstances, however, should be seen in a more holistic sense given his personal and direct control of the business.
The husband’s material suggests a significant downturn in the profitability of the business where financial statements disclose a profit of $149,075 in 2022 financial year, but just $38,000 in the previous year of 2021. The 2023 company financial statements indicate a loss for the year of $10,487. The following factors are notable in respect of the financial status of the company:
(1)that the wife was paid a wage of $1,100 per week during her employment in the business until late 2022;
(2)the husband says that he himself has assumed a great deal of the wife’s former administrative role thereby prima facie saving some company expense;
(3)the husband concedes that he has directed expenditure during the last financial year of between $74,000 - $123,000 for litigation in the Supreme Court of Victoria in respect of the return of plant and equipment of the business from the wife and Mr D where the husband himself concedes that the value of such property might be considerably less than the expenditure on litigation for its return and where the reasonableness of the husband, as director, in commencing such litigation and authorising such payments is questionable on a costs benefit basis and particularly so when property proceedings were alive in this Court noting again that the parties now consent to the joinder of B Pty Ltd as a second respondent;
(4)the husband in his evidence in court concedes that the business continues to employ the same number of employees in 2023 as it did in 2022 and where the inference follows that clientele remains relative;
(5)the husband in his evidence in court concedes that whilst the business might have lost some clients, it has picked up “new clients”;
(6)there is no indication in the husband’s evidence that he is hesitant or reluctant in his continued operation of the business which, of course, provided the financial support for the family unit during the course of the marriage and until late 2022; and
(7)The husband is the sole director of the second respondent company and he conceded in evidence that he alone has authority to direct disbursements of company funds.
Taking all these matters into account, I am of the view that the husband himself, and through his relationship as director and shareholder of B Pty Ltd, is able to contribute to the financial support of the wife in the interim and I am satisfied that the quantum of spousal maintenance sought by the wife at $1,270 per week is reasonable and necessary, and where I am satisfied that the wife is not adequately able to attend to her own financial support.
Consequently, there will be an order that the husband pay ongoing spousal maintenance in the sum of $1,270 per week for the wife by himself or in his capacity as a director of B Pty Ltd with the first payment to be made in arrears due and owing from seven (7) days from the date of these orders.
The wife seeks that the order for spousal maintenance be backdated. Initially, the application sought payments from the date of separation. Consistent with the authorities, however, the wife’s counsel amended her position for maintenance from the date of the wife’s application for spousal maintenance initially filed 3 February 2023.
Although the rationale for a spousal maintenance order is not for a party to accrue a “nest egg'”, the financial circumstances of the wife since the date of filing her application are relevant. The matters set out above have continued consistently since the filing of the wife’s application. Prima facie those circumstances have been static since the husband unilaterally terminated her employment in September 2022. Further, notably, the wife was the beneficiary of an order for spousal maintenance in the quantum of $1,270 per week from a senior judicial registrar on 28 July 2023. It was the husband who filed the Application for the Review thereby causing the delay in the wife receiving the benefit of her successful application. The wife should not be disadvantaged accordingly. In the circumstances of the husband’s ownership and sole control of the company B Pty Ltd, the orders should bind the company jointly and severally with the husband.
In all of the circumstances, I will order that payment for spousal maintenance date from the filing of the wife’s application on the 3 February 2023. It is clear that the arrears will be substantial and, in the realm, on my calculations, of $55,000. The husband gave evidence of some cash reserves in the business and I am satisfied as to a consistent regular income for the business. In those circumstances I will allow the husband four (4) calander months from the date of these orders to satisfy the arrears.
INJUNCTIVE ORDERS
The oral submissions of neither counsel address the order sought by the wife as to injunctive orders in the husband’s management of the business. I acceded to counsel’s request for time to provide short written submissions.
The wife seeks an order that the husband be restrained from selling, encumbering and disposing of the assets of B Pty Ltd (“the Company”) or drawing funds from the accounts of the Company other than in the ordinary course of business.
The application is opposed. Significantly, the only “business” operated by the corporate entity is a particular type of business. It employs some six or seven persons. It supported the family unit prior to separation and for a period after separation. I can take inferences from the evidence of the parties, both in court and their affidavits, that the assets of the company would be those normally seen in such a business.
The wife correctly points out that the husband as sole director of the Company made a decision to expend somewhere between $74,000 – $123,000 on the Supreme Court action where an application to this Court arguably may have been more prudent. Nevertheless, it appears that the litigation achieved its end.
The husband otherwise continues to operate the business. I am not influenced by variations in the annual “profits” of the business and prefer, as set out above, the business model remains static in terms of its employees and available work.
The wife remains in occupation and possession of a major asset of the parties being the former matrimonial home in which the parties hold significant equity.
Should the Court make orders in the terms sought by the wife then there is likely to be the need for considerable and prima facie unnecessary communication between the parties where, of course, the husband remains the sole director and operator of the business.
Whilst the Court has a wide discretion to impose an injunctive further order pursuant to s 114(1) and (2) of the Act, and where, of course, as a matter of principle, the wealth of the parties should be preserved until a determination can be made pursuant to s 79 of the Act, circumstantial considerations must apply such as:
(i)it is generally considered that such an injunction should not be imposed lightly where to do so necessarily restricts a party’s use and enjoyment of an asset or the remunerative benefit of that asset; and
(ii)the continuation of a business or enterprise can be curtailed in a practical sense by the imposition of an injunctive order.
The wife here argues by implication a strategic downturn in the business and the disposing of assets by the husband. The evidence given in court and a close scrutiny of the affidavit material does not support these contentions. As mentioned above, the husband continues to run the business and apparently on the same scale as prior to separation and until the wife’s exclusion from the business in late 2022.
The husband’s unilateral act in excluding the wife from work in the business is not of itself a sufficient reason to grant the injunctive orders sought by the wife.
Should the wife rely on the husband’s expenditure for litigation against her and her son then this would not appear to be an ongoing expenditure and, where the husband may well argue justification, this is a matter more properly considered at the trial.
In all of the circumstances, therefore, I am not persuaded that the husband’s continued operation of the business should be conditional or limited by the imposition of injunctive orders and where, in my view, the wife has not made out a case for what may be seen as a drastic remedy needed to preserve the subject matter of the substantive litigation.
The application in this respect will be dismissed.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 7 December 2023
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