BENNETT & BENNETT

[2016] FamCA 481

FAMILY COURT OF AUSTRALIA

BENNETT & BENNETT [2016] FamCA 481

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife seeks interim child support departure and spouse maintenance orders – Whether the husband has the financial capacity to meet the orders sought by the wife – Where the Court finds the wife has failed to establish that the husband has the financial capacity – Where the husband seeks orders that the parties refinance the former matrimonial home in order to have access to funds by way of a partial property settlement – Where the Court finds merit in the submissions of the husband –  Orders made for the parties to refinance the former matrimonial home – All other applications for interim orders dismissed.

Family Law Act 1975 (Cth)

APPLICANT: Ms Bennett

RESPONDENT: Mr Bennett

FILE NUMBER: SYC 1880 of 2016

DATE DELIVERED: 15 June 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 17 May 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Miller

SOLICITOR FOR THE APPLICANT: Dettmann Longworth Lawyers

COUNSEL FOR THE RESPONDENT: Mr Givney

SOLICITOR FOR THE RESPONDENT: Newnhams Solicitors

Orders pending further order

1. Both parties will forthwith do all things and execute all documents required to effect an increase in the mortgage secured on the title to the property situate at and known as B Street, Suburb C by an amount of $300,000.

2. Both parties will do all things and execute all documents required to cause the disbursement of such sum of $300,000 as follows:

   (a)in payment of $100,000 to the wife by way of partial property settlement

   (b)in payment of $100,000 to the husband by way of partial property settlement

   (c)in payment of $100,000 into a controlled monies account, which money will be applied to meet mortgage repayments and outgoings in respect of the Suburb C property, as agreed in writing by the parties.

3. The wife will do all things and execute all documents required to:

   (a)make an application for a refund of money paid to D School over and above tuition fees for the 2016 academic year.

   (b)lodge any such refunded sums into the controlled monies account established pursuant to Order 2.

4. All other applications for interim orders are dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1880 of 2016

Ms Bennett

Applicant

And

Mr Bennett

Respondent

REASONS FOR JUDGMENT

The proceedings

1. By an Initiating Application filed on 31 March 2016 the wife, Ms Bennett, sought interim orders for spouse maintenance, child support departure and payment of a lump sum of $125,000 on account of her costs.  At the interim hearing on 17 May 2016 the wife submitted a Minute of Orders which she sought in the following terms:

   1.        The following definitions for the purpose of these Orders:

   (a)       “Husband” means [Mr Bennett].

   (b)       “Wife” means [Ms Bennett].

   (c)“the parties net assets and liabilities” shall mean the total value of all the parties assets and liabilities including but not limited to real estate, companies, shares, business’s, investments, motor vehicles, furniture, home contents and superannuation less the level of any debt secured against any of those items.  It does not mean any debts (including credit cards) incurred or accrued after the date of separation.

   (d)“the home” means the property at [B Street, Suburb C] which is also known as folio identifier ...

   (e)“the home mortgage” means the mortgage to Commonwealth Bank secured against the title of the home.

   (f)“the Husband’s business” means the business known as [E Pty Ltd] and F Pty Ltd (ABN …).

   Interim Costs

   2.That within 28 days of the making of these Orders the Husband pay direct to the Wife the sum of $125,000 by way of preliminary and interim costs (“the preliminary costs”).

   3.That the preliminary costs be paid into an interest bearing account in the name of the lawyers for the Wife as trustee for the parties in a bank chosen by the lawyer for the Wife.

   4.That the preliminary costs be disbursed as follows:

   a)In payment of the proper fees, expenses, costs and charges of any experts retained by the Wife to carry out any appropriate investigation, examination and report on the financial affairs of the Husband, the Husbands company associated with his real estate business and other related companies and any superannuation scheme in respect of which the Wife or the Husband is a beneficiary and any other entity in respect of which the Husband has any interest.

   b)The fees of real estate valuers and similar experts, and proper fees and disbursements of any other experts retained by the Wife.

   c)All other proper disbursements incurred by the Wife in the preparation of this case.

   AND that these amounts be paid upon the completion of the work carried out by the experts or any investigation, examination or report and upon the submission by experts of their accounts to the lawyers for the Wife.

   5.That the following further costs and disbursements (if any) also be paid out of the preliminary costs:

   a)The fees, costs and expenses in respect of any examination or investigation of the legal implications of the Wife and the Husband’s financial affairs by the legal advisers of the Wife, including Counsel.

   b)The Wife’s legal costs, fees and disbursements including Counsel’s fees and disbursements in respect of any Interlocutory Advice, and the preparation of the case and the final hearing of the case.

   c)The costs, fees and disbursements of the Wife of and incidental to the Final Hearing of these proceedings.

   6.That any of the preliminary costs and interest earned on them remaining after all or any of the proceedings between the parties have been heard and completed and the costs and fees paid pursuant to these orders, are to be dealt with according to the orders made by a judge on the final hearing of these proceedings.

   Spouse maintenance

   7.That the husband pay direct to the wife by way of maintenance for herself the sum of $1,217 per week to such bank account as may be nominated by the wife in writing, the first payment to be made within 3 days of the date of these Orders and each subsequent payment to be made weekly thereafter.

   8.That the husband pay the costs of and associated with the wife’s motor vehicle being a [4WD] (Rego:  …) (“[4WD]”) including all insurances at the current level over the [4WD] as and when such payments fall due, all maintenance costs, all E-Toll costs and registration costs.

   9.That the husband pay the interest and principal repayments owed on the home mortgage when they are due, by making payments directly to home loan account number … and the home loan account number ....

   10.That within 3 days the husband pay the outstanding:

   a)amounts as detailed at paragraph 54 of the affidavit of [Ms Bennett] sworn 30 March 2016 and Tab 7 of the Exhibit to the affidavit of [Ms Bennett] sworn 30 March 2016.

   b)mortgage payments in relation to the home mortgage as detailed at paragraph 44 and Tab 18 of the affidavit of [Ms Bennett] sworn 13 May 2016.

   c)amounts as detailed at paragraphs 45 and Tab 19 of the affidavit of [Ms Bennett] sworn 13 May 2016.

   Child Support

   11.That pursuant to s.117 Child Support (Assessment) Act 1989:

   (a)the periodic rate of child support payable by the husband, for:

   ii)[G] born … 2000 be varied by setting the annual rate of child support at $14,924 per annum ($287 per week).

   iii)[H] born … 2001 be varied by setting the annual rate of child support at $14,924 per annum ($287 per week).

   (iv)[J] born … 2003 be varied by setting the annual rate of child support at $14,924 per annum ($287 per week).

   v)K born … 2005 be varied by setting the annual rate of child support at $14,924 per annum ($287 per week).

   vi)L born … 2008 be varied by setting the annual rate of child support at $14,924 per annum ($287 per week).

   12.That pursuant to s.123 Child Support (Assessment) Act 1989, the Husband be responsible for and pay the following expenses of the children:

   (a)premiums for their membership of a private health fund at the level of membership no less than the highest rate;

   (b)medical ‘gap’ expenses in excess of any refund or rebate from medicate or a private health fund;

   (c)education fees including tuition expenses, tutoring and costs as invoiced by any school the children attend;

   (d)any extra-curricular activities including but not limited to sporting activities, music, drama and dance.

   13.That the husband pay the wife’s costs of and incidental to these proceedings.

2. At the interim hearing counsel for the wife conceded that she was unable to point to any fund from which the husband could pay a sum of $125,000 on account of her costs.  I construed that concession as an acknowledgement that she could not press for that order.

3. By a Response filed on 10 May 2016 the husband, Mr Bennett sought the following interim orders:

   1.        That the wife’s Application filed 31 March 2016 be dismissed.

   2.That the Husband and Wife forthwith do all acts and things and execute all documents, instruments and writings necessary to increase the mortgage currently secured over the property situate at and known as [B Street, Suburb C] (“the Suburb C property”) by $300,000 and disburse the $300,000 in the following manner and priority:

   (a)In payment of the sum of $100,000 by way of partial property settlement to the Husband;

   (b)In payment of the sum of $100,000 by way of partial property settlement to the Wife;

   (c)The remaining $100,000 to be deposited into a controlled monies account with such funds to be utilised to meet payment of the mortgage repayments and outgoings of the [Suburb C] property, as agreed between the parties in writing.

   3.In the alternative to Order 2 above, the Husband and Wife do all acts and things and execute all documents, instruments and writings necessary to effect the sale of the [Suburb C] property for a price of not less than $3,450,000 or such other price as the parties may in writing agree, or failing agreement, a price determined by the President or his nominee of the NSW Division of the Australian Property Institute and upon completion of the sale, the proceeds be disbursed in the following manner and priority:

   (a)In payment of agent’s commission and legal expenses of the sale;

   (b)In repayment of the amount required to be paid to repay the Commonwealth Bank mortgage, secured over the title of the Suburb C property;

   (c)In payment of $100,000 by way of partial property settlement to the Husband;

   (d)In payment of $100,000 by way of partial property settlement to the Wife;

   (e)In payment of the balance then remaining into a controlled monies account.

   4.That the Wife do all acts and things and execute all documents, instruments and writings necessary to seek repayment of the funds paid to [D School] [Suburb C] over and above this year’s tuition fees for [H], [J] and [K], with such funds to be paid into the controlled monies account as referred to in Orders 2(c) or 3(e) above, whichever is applicable.

   5.That within 14 days of the date of these Orders, the Wife provide to the Husband’s solicitors all bank records and documents, including correspondence, relating to the loans asserted to have been made by [Mr M] to the Wife and/or the Husband and all repayments or alleged repayments in respect of the asserted loans.

   6.That the Wife be and is hereby restrained from consuming, selling or disposing of all wine, currently in her possession and from disposing of and/or selling any items of contents and furniture in her possession, custody or control including but not limited to artwork, wine and motor vehicles.

   7.That the Wife pay the Husband’s costs of and incidental to this Interim Application.

4. The applicant wife relied upon four affidavits which, including annexures, ran to hundreds of pages.  Her last affidavit, being sworn on 13 May 2016, was replete with conclusions, submissions and argument.  The husband’s two affidavits were also bulky but not the same extent as those of the wife.

Background

1. The husband and the wife, who are aged 52 and 48 respectively, began to live together in April 1999 and married in 1999.  They separated on 29 January 2016, following an incident which led to assault charges against the husband and an interim apprehended violence order for the protection of the wife and children.  The husband pleaded not guilty to these charges.

2. The parties have five children:

   ·G born in 2000 (16);

   ·H born in 2001 (14);

   ·J born in 2003 (12);

   ·K born in 2005 (10); and

   ·L born in 2008 (8).

   The children live with the wife in the former matrimonial home at B Street, Suburb C.

3. The husband lives with his mother in her one-bedroom apartment in a retirement village at Suburb N.  The husband’s uncontradicted evidence was that his mother leaves her apartment each night and sleeps in the home of a neighbour, so that he can use the only bedroom.

4. The husband and the wife both work in a professional capacity, although she has not worked outside the home since 2008.  The husband is the sole director of business known as F Pty Ltd (“the business”).  The wife was the proprietor of a franchise at Suburb O until 2008, when she sold her business.

5. The wife was also the owner of commercial premises occupied by her business.  She sold this property in November 2015 and paid a sum of $313,305 to D School on account of present and future school fees.  She also paid a sum of $574,000 to her brother Mr M, allegedly in discharge of a loan which he had advanced to the parties.

6. The parties bought and sold real estate during their marriage.  The husband alleged that capital from these sales assisted in the financing of their lifestyle.

7. In November 2014 the parties purchased the property B Street, Suburb C for $1,685,000 in the sole name of the wife.  They demolished the existing house and built a new home.  While the new house was under construction, the family lived in rented premises at Suburb P.

8. On 22 February 2016 NCAT ordered that the husband pay arrears of rental in a sum of $9,859 in relation to the Suburb P premises.  The husband is required to pay these arrears at the rate of $1,000 per month.

9. In October 2015 the wife was diagnosed with breast cancer.  She underwent surgery and is in the process of completing a course of chemotherapy treatment.

10. On 8 March 2016 the Child Support Agency issued a Notice of Assessment which requires that the husband pay a total of $34.50 per month for the five children.  This assessment was based on a taxable income for the husband of $24,546 per annum.  The wife has not sought a review of this assessment.

11. On 20 April 2016 the proceedings came before me in a Duty List. It was apparent that an interim hearing would exceed the two-hour limit, thus time was allocated on 17 May 2016. On 20 April 2016 I ordered, pursuant to section 77 of the Family Law Act, that the husband pay urgent spouse maintenance to the wife in the sum of $750 per week.

12. In his affidavit of 10 May 2016 the husband gave the following uncontradicted evidence as to the source of the funds which he has used to comply with this order.  He deposed as follows:

    26.In accordance with the orders dated 20 April 2016, I have made payment to the wife of $750 per week.  As I did not / do not have the funds available to make these payments to the wife, I have had to borrow the funds.  The first two payments (21 & 28 April) were loaned to me and paid by my mother [Ms Q].  Annexed hereto and marked with the letter “U” is a copy of the loan agreement and payments receipts.  My friend, [Mr P] loaned to me and made the payment of $750 on 4 May 2015.  Annexed hereto and marked with the letter “V” is a copy of this payment receipt.  The next payment due the week commencing 9 May 2016 will be paid from the sale of my Lendlease shares, of which I will be receiving approximately $1,250 by way of the sale proceeds.  Annexed hereto and marked with the letter “W” is a copy of the statement of sale.  The remaining $500 I receive from my shares will be used to partially repay [Mr P].

Consideration

1. The wife’s application for interim child support departure orders must be dealt with prior to the issue of interim spouse maintenance.  Counsel for the husband did not appear to take issue with the appropriateness of the Court dealing with the interim departure order application at the same time as the other financial issues.  Counsel for the husband indicated clearly that his capacity to pay the amount sought by the wife was the issue in relation to each of the interim applications.

2. It seems to me to be of some utility that I analyse with as much precision as possible precisely what amounts the wife requires the husband to pay by way of interim child support departure and spouse maintenance.  I will now proceed to carry out that exercise as best I am able, on the available evidence.

Interim Child Support departure

1. The wife requires the husband to pay a periodic sum of $287 per week for each of the five children, together with private health insurance, gap medical expenses, education fees and costs of extra-curricular activities.  These amounts total some $1,799 per week on the evidence of the wife, excluding any allowance for education costs.  It was difficult to identify what amount the husband may be required to pay on account of education costs, as the wife provided only a figure of $1,678 per week which included private school fees.

2. Accordingly, the wife requires the husband to pay a minimum of $93,548 per annum on account of child support.  The costs of extra-curricular activities for the five children might reasonably be expected to increase that figure by a substantial margin.

Interim spouse maintenance

1. By way of interim spouse maintenance, the wife requires the husband to pay at least the following weekly amounts:

($)
1.        Periodic payment	1,217
2.        Motor vehicle expenses (petrol $114, maintenance $163, insurance $54, registration $24)	355
3.        Mortgage repayments	1,086
Total	$2,658

This sum equates to $138,216 per annum.

1. By way of interim spouse maintenance the wife further requires the husband to pay the following amounts within three days:

($)
1.        Landscaping	20,000
2.        Insurance	273
3.        Wife’s credit card minimum payments	866
4.        G’s school fees	6,312
5.        Water rates	538
6.        Mobile telephone costs	369
7.        AGL	172
8.        Rugby fees	303
Total	$28,833

(Wife’s affidavit 30 March 2016 paragraph 54)

1. The wife further requires payment by the husband of the following amounts within three days:

($)
9.        Land rates	572
10.      BUPA	615
11.      Sydney Water	539
12.      School expenses	2,248
13.      L’s school expenses	5,328
14.      Cost of swimming lessons	2,426
Total	$11,728

(Wife’s affidavit 13 May 2016 paragraph 45)

1. These sums amount to a total of $40,561.  No fund was identified in the submissions on behalf of the wife from which the husband could pay these debts.

2. The husband conceded that the wife has a need for spouse maintenance.  As with the application for interim child support departure orders, the issue was the husband’s financial capacity.

The husband’s capacity

1. As noted, the husband maintained that the parties for years lived beyond their means and that they resorted to capital sums to fund their lifestyle.  In my view some support for the proposition that the parties experienced cash flow problems emerged from the annexures to the husband’s affidavit of 18 April 2016.

2. Annexure G to that affidavit (pp 67-70) consisted of emails exchanged between the husband, the wife and her brother Mr M in September 2015, concerning repayment of an alleged debt of $350,000.  On 14 September 2015 the husband emailed the wife:  “what is happening this is a bullshit story we paid [Mr M] out of the sale of the house what are you saying here?”  On the same day the wife replied to the husband:

   that was for the deposit and stamp duty that they helped us with from exchange to settlement.  This is a loan I accumulated with [Mr M] back in 2007/2008 when the business/market got tough and it paid for us to live !!!!! as well as company bills /debt.  I told him I would repay it when I sold the [business premises].  I need support not aggression or downgrading comments like this.  I will sort it myself AGAIN.

3. On 18 December 2015 the wife emailed to the husband the following:

   [Mr Bennett]

   I have contacted [Mr M] again and asked for his help

   We need 250,000 to finish the house and pay outstanding bills

   [Mr M] has worked overtime to access funds

   He has advised me this morning the funds are available if you agree with the set up that being...

   No interest first year CPI thereafter...

   Without this we cannot make final payment on the house pool etc

   [Bennetts] has outstanding accounts also this is urgent and [Mr M] has pulled a big favour here

   School fees have had funds paid from the sale of my commercial property to relieve the pressure of our cash flow enabling us to survive very comfortably

   [Ms Bennett]

   (Annexure O pp 114-116)

4. In her affidavit of 13 May 2016 the wife deposed to the following matters:

   ·An amount in excess of $1.4 million was withdrawn from the parties’ mortgage account between 30 March 2015 and 29 January 2016 and applied to the cost of construction of the former matrimonial home (paragraph 12).

   ·The total cost of the construction work, including landscaping, swimming pool and rental, was “more than 1.2 million”.

   ·The parties borrowed $350,000 from the wife’s brother in 2008.

   ·In December 2015 the parties borrowed $250,000 from the wife’s brother (annexures page 19) which arrangement was recorded in a loan agreement dated 1 January 2016 (annexures page 21).

   ·The wife’s brother “continues to assist both myself and [Mr Bennett] at this time of need”.

5. These matters suggest to me that the parties’ lifestyle was funded, at least in part, from sources in addition to the husband’s income.  It seems that they have resorted to capital which came from the sale of assets and loans advanced by the wife’s brother from time to time.

6. The orders sought by the wife would require the husband to pay a minimum of $231,764 per annum on account of child support and spouse maintenance.  As noted, she also requires immediate payment of approximately $40,561 from some unspecified source.

7. The husband deposed in his Financial Statement to a gross weekly income of $481 from his business, which was said to consist of directors fees of $25,000 per annum.  Counsel for the wife submitted that “there should be a finding that the husband’s income is about $500,000 as was the case in the last two financial years”.  It seems to me that such a finding would be a brave step on the basis of untested evidence in the context of an interim hearing.

8. The profit and loss statements for the business for 2014 and 2015 (Exhibit 2) showed a gross income of $563,119 and $525,639 for each of those years respectively.  The gross profit for each of those years was shown as $165,369 and $167,397.  The wife took issue with the expenses recorded in these statements and, effectively, suggested that the husband has dealt dishonestly with the tax office.  I cannot make any findings as to the reliability of the husband’s financial records in the context of these proceedings.

9. The wife annexed to her affidavit of 13 May 2016 a BAS for the period 1 July 2015 to 30 September 2015, which recorded “total sales” at $174,216 including GST.  The wife also annexed to this affidavit a “management revenue report” for the period July 2014 to June 2015, which showed a monthly income on account of management fees which varied from $3.40 to $9,894.

10. The husband annexed to his affidavit of 10 May 2016 a management revenue report for the period July 2015 to April 2016.  This document showed total management fees for that period of $61,655 and letting fees of $6,116.  The husband calculated that the annualised income from these sources for the current financial year would amount to some $81,384.

11. The husband deposed that, currently, he has no properties listed for sale and that he last received a commission payment on 1 February 2016.  He deposed that this money came from a sale which was finalised in October/November 2015.  The husband contended that he has not sold a property in 2016, which he attributed to “increased competition in the area” as well as a lack of stock for sale.

12. The husband’s case was that the only realistic option available to the parties is to have recourse to their equity in the former matrimonial home at Suburb C.  He proposed that they initially attempt to refinance so as to obtain funds of $300,000.  If those attempts were unsuccessful, the husband proposed that they sell the property.  In either case, they would each receive $100,000 and a further sum of $100,000 would be deposited into a controlled monies account and applied to mortgage repayments.

13. The husband also proposed that the wife attempt to obtain a refund of money paid to D School on account of school fees beyond the 2016 year.  It is correct, as submitted on his behalf, that there was no evidence from any official at the school that this course is not available to the wife.

Conclusion

1. It seems to me that there is considerable force in the submissions on behalf of the husband, to the effect that the parties have no realistic option other than resort to their equity in the Suburb C property.  I appreciate that the wife seeks to retain this property on a final basis but that proposal was contingent upon an order that the husband meet the mortgage instalments for a period of four years.  The wife offered no evidence or suggestion as to how she might make any lump sum payment to the husband, in the event that she was successful with such an application.

2. It is my view that the wife failed to establish that the husband has the financial capacity to satisfy her proposed orders for child support departure and spouse maintenance.  Accordingly, I will accede to the application of the husband insofar as relief is sought by way of access to liquid funds is to be gained by a refinancing of the Suburb C property and an application for a refund of part of the money paid to D School.  I would note that the wife is at liberty to apply to the Child Support Agency for a review of the correct assessment, if and when there is a clearer picture of or change in the parties’ financial circumstances.

3. I would note that, on the evidence of the wife, the equity in the Suburb C property is approximately $1,400,000.  In her Financial Statement of 30 March 2016 the wife deposed that the property has a value of $2,600,000 and is subject to a mortgage of $1,198,000.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 15 June 2016.

Associate:  M. Rankin

Date:  15 June 2016