BRENNAN & BRENNAN

[2010] FamCA 826

FAMILY COURT OF AUSTRALIA

BRENNAN & BRENNAN [2010] FamCA 826

FAMILY LAW – MAINTENANCE – interim spousal maintenance – interim legal costs

Family Law Act 1975 (Cth)

APPLICANT: Ms Brennan

RESPONDENT: Mr Brennan

FILE NUMBER: SYC 2879 of 2010

DATE DELIVERED: 17 September 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Ainslie-Wallace

HEARING DATES: 23 and 30 August 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr S Wheelhouse SC

SOLICITOR FOR THE APPLICANT: Argyle Lawyers Pty Ltd

COUNSEL FOR THE RESPONDENT: Mr M Kearney

SOLICITOR FOR THE RESPONDENT: Barkus Doolan Kelly

Orders

1. That pending further order, the husband pay to the wife the sum of $6,500.00 per week as interim spouse maintenance commencing 7 days from today.

2. That within 21 days of this order, the husband pay to the wife, or as she directs, the sum of $80,000.00.

3. That I reserve the characterisation of this amount as an issue to be determined in the trial.

IT IS NOTED that publication of this judgment under the pseudonym Brennan & Brennan is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC2879 of 2010

MS BRENNAN

Applicant

And

MR BRENNAN

Respondent

REASONS FOR JUDGMENT

INTERIM SPOUSE MAINTENANCE, INTERIM COSTS

Background

1. Ms Brennan (the wife) seeks interim orders against Mr Brennan (the husband).

2. The wife seeks the following orders (in broad terms):

   1.that the husband pay to her $18,000 per fortnight by way of interim spousal maintenance;

   2.that the husband pay to her solicitors $150,000 by way of interim legal costs and that the determination as to the proper characterisation of that payment abide the final determination of the matter;

   3.that the husband account to the wife for all items of property, wine and art removed by him from the former matrimonial home;

   4.that the husband pay an amount of $32,700 representing the cost of three overseas trips to enable the wife to pursue tuition;

   5.that the husband be restrained from approaching or entering the former matrimonial home;

   6.that the husband consult with the wife in relation to all decisions and strategies relating to the administration of the Brennan Superannuation Fund;

   7.that the husband take all steps necessary to reinstate the wife as trustee of the Brennan Family Trust and that he be restrained from interfering with the distribution of income from the Brennan Family trust.

3. In the course of argument, the issues were refined and the hearing concerned the wife’s application for interim costs and spouse maintenance.  Other issues were able to be resolved and consent orders were made on 30^th August 2010. 

4. The parties married in 1972.  The wife was born in October 1949 and the husband in January 1949.  The parties separated on 4^th March 2010.  There are two adult children of the parties.

5. At the date of marriage the wife was working as a secretary and the husband was a professional graduate.  The wife did not work outside the home after marriage.  The husband practices a profession. 

Superannuation Fund

1. In 1987 the parties established a superannuation fund – the Brennan Practice Superannuation Fund.  They are both beneficiaries of that Fund.  The Fund comprises a number of different investments.  At 30^th June 2009, the opening Member Balance for the husband in the fund was $6,222,604 and $2,163,161 for the wife.  The anticipated average rate of return on the Fund is in the order of 8.39per cent.  The estimated income earned on the husband’s balance for 2010 was $522,077 ($480,446 after tax) and $181, 489 ($154,266 after tax) for the wife.

2. Both parties, being over 60, are entitled to take a tax free pension from the fund.  In 2010, the husband took $124,000.  It seems that this is the minimum withdrawal allowed under the scheme.

3. It was estimated that the minimum withdrawal for the wife is in the order of $832 with a maximum of $4,159 per week.

4. The notes to the draft accounts of the Brennan Group for the financial year ended 30^th June 2010 at point 20 observed in relation to the Superannuation Fund:

   “[Husband] – His balance is in pension phase (Transition to Retirement Income Stream).  His pension will be tax-free.  Minimum $124,460 Max $622.260 – took minimum amount, unlikely to withdraw maximum as better to keep amounts in s/f tax free environment.  Also his proportion of S/F is tax-free.  Only deducted contributions he received during the year is taxable. [Wife] – her balance is in accumulation phase, her portion of s/f income is taxable”.

5. At the time of writing the note to the accounts, the wife had not completed the forms necessary to enter the pension phase of the scheme.  She asserts that she has in fact completed the necessary documentation.

6. In the wife’s application for final orders, she seeks a “splitting order” in relation to the superannuation fund which would have the effect of dividing the member benefits as between her and the husband in equal shares.

7. The wife seeks an order that she be consulted about the investment decisions and strategies concerning the fund.

8. After discussion, the parties agreed that the wife’s accountant and that of the husband will meet once per month to discuss the management strategy for the fund.

Brennan Family Trust

1. The Brennan Family Trust (BFT) receives income in a variety of ways from the husband’s practice.  The beneficiaries of the Trust were (until recently) the wife and Q Company, a company of which the husband and wife are directors and shareholders.  In June 2010, without reference to the wife, the husband removed her as a trustee of the BFT and appointed a company Brennan Holdings Pty Ltd as trustee.   Up until this time the wife was entitled to have access to a bank account into which money from the Trust was deposited. Since her removal as trustee, no money has been deposited into the BFT bank account.  Since June 2010 Q Company has received a distribution from the fund of about $250,000.  The husband has withdrawn funds from the Q Company account.  The wife has no access to that account.

2. During the marriage the wife was accustomed to drawing funds from the BFT bank account for payment of family and her personal expenses. The withdrawals were characterised either as distributions to her from the trust in which case they were taxable in her hands or as loans to her from the trust. 

3. According to the wife’s tax returns and the returns of the BFT in the financial year ended 30^th June 2009 $250,000 was distributed to her from the BFT and in the year ending 30^th June 2008 an amount of $177,280 was distributed to her.

Income available to the wife before separation

1. In addition to distributions of funds from the BFT bank account, the wife had access to two credit cards the charges on which were paid by the husband and had access to the husband’s bank accounts.  Apparently the parties kept a sum of money in cash in a safe in the matrimonial home.  Those funds were also used for daily expenses.  The husband paid separately the expenses referrable to the home in which they lived.

2. At around the time of the separation the husband stopped the wife’s access to his bank accounts and has not paid the expenses incurred on the credit cards held by the wife.  It is not clear whether the husband intends to continue to maintain the payments in relation to the matrimonial home.

3. The Husband’s accountant estimated his taxable income for the financial year ended 30^th June 2010 to be in the order of $1,104,000.

4. In early 2010 the wife withdrew $114,000 from the BFT bank account.  She said that this was on account of a potential tax liability (subsequently paid on her behalf by the husband) and against the husband not providing her with income necessary for her living expenses.  She has kept that sum intact, it presently stands at about $147,000. The wife does not wish this to be considered a distribution from the BFT because it will render her liable to pay tax on it.

5. In June 2010, because of the wife’s anxiety that she was left without funds for her support, the parties’ son lent her $100,000.  She repaid that very soon afterwards.

6. The wife has no other sources of income or savings from which she can draw to support herself.

7. It seems from the material filed on the application that the husband has a significant income and money standing to his personal credit in bank accounts.  Exhibit 1 is a summary of the accounts in the husband’s name or to which he has access at the date of hearing of this application.  His cheque account balance was in the order of $62,000, there was a positive balance on his Visa card of $11,900 and he had access to two cash management accounts, the total balance of those accounts was in the order of $350,000. 

8. The husband argued that if she wished, the wife could draw the maximum pension from the Superannuation fund and use that to support herself.  To do that would deprive her of the benefit encouraged by the husband’s accountant in Note 20 to the accounts, which is to leave the amounts in the fund where they are tax free.  It was not suggested that the husband proposes to withdraw the maximum pension available to him, perhaps heeding the advice of his accountant.  A document produced by agreement between the parties concerned the wife’s superannuation fund to the effect that the minimum and maximum amounts able to be withdrawn from the fund is calculated by reference to the capital balance in the fund at the opening of the year.  One imagines that undrawn pension forms part of the capital balance on which interest is then earned.  In all of the circumstances, I am of the view that it is not appropriate to require the wife to have access to the maximum pension benefit in circumstances in which it robs her of a benefit to be drawn from leaving the money in the fund. 

9. The husband further argued that the wife could draw on the funds standing in the E-Saver account to support herself.

10. Where, as here, there is a great discrepancy in the financial strength between the parties, it would not be appropriate for the wife to be required to exhaust a capital resource for her own maintenance before making an order for spousal maintenance.

Discussion

1. The wife’s application seeks orders that reinstate her as trustee of the BFT and which restrain the husband from interfering with the funds in the trust in such a way as to deprive her of the distribution of funds from the Trust.  It was acknowledged in argument that it would be difficult for her, even if the orders be made to ensure that the income continued to flow into the Trust as it has in the past.  It was further indicated that the application for spouse maintenance was brought in the alternative to the orders and injunctions intended to reverse the effect of her removal as trustee.  In all of the circumstances, I indicated that, on an interim basis, I would not be inclined to make the suite of orders and injunctions referable to the wife’s removal as trustee.

2. Consideration of the issue of spouse maintenance must start with the proposition that a party to a marriage can only be called on to pay maintenance to the other party if and only if the party seeking the maintenance is unable to support herself.

3. It was not argued that the wife was capable of supporting herself.  She has not worked in paid employment since very shortly after the parties married. 

4. Although not conceded, having regard to the husband’s Financial Statement and the other evidence, it seems that he has the capacity to contribute to her reasonable needs.

5. The wife’s claim is to a sum in the order of $9,000 per week.  Her Financial Statement sets out her weekly expenses and lays the basis for that claim.  It was argued that her expenses were unreasonable.  It was further argued that when one looked at the weekly income available to her from the distributions from the BFT in the past, it amounted to about $4,200 per week.  On that basis, it was argued that the wife could not sustain a maintenance claim to more than twice that amount.  This argument would perhaps have force were it not for the wife’s evidence that in addition to the distributions from the BFT account, she was accustomed to withdrawing money from the husband’s bank accounts, paying for joint and personal expenses by credit card and had the use of cash kept in the home.  It seems that she had access to more funds than the money from the BFT bank account.

6. Turning then to her claimed expenses, it was submitted that some were demonstrably unreasonable.  In part that argument pitted the wife’s expenses against those of the husband.  In my view, in an interim hearing where the Court does not have the advantage of having issues explored through cross examination, a bald comparison between the husband’s weekly expenses and those of the wife do not assist the resolution of what are her reasonable needs.  For example Senior Counsel for the wife noted that while the husband’s motor vehicle expenses appeared to be very small compared with those of the wife, he had the advantage of claiming a significant proportion of his expenses as business expenses.  The amount claimed in his Financial Statement reflected the part of those overall expenses that were referable to his private use of the vehicle.

7. It is important to bear in mind the authorities which are clearly to the effect that in determining whether provision is “adequate” the Court should take account of the standard of living to which the party was accustomed nor is it determined by reference to a subsistence standard of living.

8. It is somewhat arbitrary and impressionistic to excise expenses in a quest for a figure that is “reasonable” in all the circumstances.  However, doing the best I can on the evidence, I am of the view that some of the wife’s claimed expenses are somewhat overestimated.  On its face $700 per week for food and a further $200 for household expenses appears rather too much for a person living on her own as does the $1000 for shoes and clothes and the parking expenses of $200 per week.  I am satisfied that the wife’s reasonable needs would be met by a weekly payment of $6,500.

9. I accept that based on the evidence of the husband’s income and financial resources that he has the capacity to meet that order.

10. I will make an order that the husband pay the sum of $6,500 per week to her for her maintenance pending further order.

Interim costs

1. The wife seeks an order that the husband pay to her $150,000 immediately and that the characterisation of that amount be a matter to be determined by the trial judge.  An affidavit of the wife’s solicitor deposes to the costs incurred by the wife to date and includes an estimated cost of the litigation to hearing.  Those costs are estimated at about $160,000.

2. The Husband argued that the wife should use the fund held in her E-saver account to defray past and future legal fees.  There seemed to be no dispute that the way in which the funds would be taken into account should abide the final hearing.

3. The issue is whether the wife ought to be required to use the whole of that capital amount against her legal fees rather than the husband making that payment to her.

4. In this case, the husband has a capacity to meet some of those expenses and there are ample assets against which the payment can be accounted in the final hearing.

5. In all of the circumstances of this matter, I propose to require the wife to draw on some of that fund to support her own legal expenses but will order that the husband pay a sum of $80,000 to her so that she is not left without savings.

Additional expenses

1. The wife has in the past travelled overseas to study with internationally recognised experts in her field.  She had proposed to travel three times in 2010, in May and July and November.  Each trip was estimated to cost about $10,000.  The claim of $32,700 represents the cost of those three trips.  She did not travel in either May or July.  I do not propose to make an order that the husband pay that sum to her or so much as represents the cost of the November trip should she plan to travel.  Her estimated weekly expenses includes an amount of $1500 for holidays and a further $1200 for educational expenses.  It is reasonable in all of the circumstances for the wife to fund any proposed study trip herself.

____________________________________________________________________

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on 17 September 2010.

Associate: 

Date:  17 September 2010