BRICKLEY & MODINE
[2021] FCCA 520
•19 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BRICKLEY & MODINE | [2021] FCCA 520 |
| Catchwords: FAMILY LAW – Spousal maintenance – application by the wife for spousal maintenance – where wife has a demonstrated need – where husband receives sizeable personal income protection insurance payments – where husband has capacity to pay interim spousal maintenance to the wife. |
| Legislation: Family Law Act 1975 (Cth), ss.72, 74, 75 |
| Cases cited: Brown & Brown [2007] FamCA 151 Garston & Yeo (No.2)[2019] FamCAFC 139 Hall v Hall [2016] HCA 23 Hanas & Jolaha [2019] FamCA 483 Maroney & Maroney [2009] FamCAFC 45 MS & PS [2006] FamCA 588 Stein & Stein [2000] FamCA 102 Williamson & Williamson [1978] FamCA 57 |
| Applicant: | MR BRICKLEY |
| Respondent: | MS MODINE |
| File Number: | PAC 1345 of 2020 |
| Judgment of: | Judge Obradovic |
| Hearing date: | 26 November 2020 |
| Date of Last Submission: | 26 November 2020 |
| Heard at: | Parramatta |
| Delivered at: | Dubbo |
| Delivered on: | 19 March 2021 |
REPRESENTATION
| Appearing for the Applicant: | Mr Seton |
| Solicitors for the Applicant: | Ryan & Seton Lawyers |
| Appearing for the Respondent: | Mr Hall |
| Solicitors for the Respondent: | Hall Partners |
ORDERS
Pending further order, the husband shall pay to the wife an amount of $565 per week in spousal maintenance.
The matter is listed for directions at 2:15pm on 24 May 2021.
The parties are to file a jointly drafted agreed statement of issues 7 days prior to the directions hearing, together with an agreed minute of order for the further progress of the matter.
IT IS NOTED that publication of this judgment under the pseudonym Brickley & Modine is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 1345 of 2020
| MR BRICKLEY |
Applicant
And
| MS MODINE |
Respondent
REASONS FOR JUDGMENT
Introduction
These are the reasons for judgment in respect of an application for interim spousal maintenance.
The applicant in this application is the respondent in the substantive proceedings (“wife”), and the respondent to the application is the applicant in the substantive proceedings (“husband”).
The wife and husband commenced a relationship in 1999, they were married in 2009 and they separated on a final basis in 2018.
The parties have two children together; Mr F born in 2003 and Y born in 2006.
The wife moves the Court for orders that the husband pay her interim spousal maintenance in the amount of $5000 per month.
Neither the wife nor the husband were cross-examined.
Spousal Maintenance – Relevant Principles
In determining whether to make an order for spousal maintenance, it is appropriate for the Court to determine the issue in the following manner[1]:
a)Can the applicant support themselves adequately in terms of s.72 of the Family Law Act 1975 (Cth) (“the Act”)?
b)If not, what are the applicant’s reasonable needs?
c)What capacity does the respondent have to meet those needs?
d)What order is reasonable, having regard to s.75(2) of the Act?
[1] Hanas & Jolaha [2019] FamCA 483 (at [79] citing MS & PS [2006] FamCA 588; (2006) FLC 93-268 per Coleman J
It is useful to set out s.72 of the Act in order to understand what the onus on the applicant in a spousal maintenance application entails.
Section 72(1) of the Act relevantly provides that:
(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).
The question as to whether or not a person is able to support themselves “adequately” is:
… not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances. [Citations omitted].[2]
[2] Hanas at [79] citing M v M (2006) 36 Fam LR 97 at 106
It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.[3]
[3]Brown & Brown [2007] FamCA 151; (2007) FLC 93-316 at 81,455-56 cited in Hanas at [80]
Furthermore, a claim for maintenance is not limited by reference to current expenses because an applicant applying for maintenance may not have the ability to pay for commitments necessary to support themselves and thus avoid incurring what otherwise would be a reasonable expense. Therefore, the focus is on what is necessary for support. [4][5]
[4] Aldridge J (sitting as the Full Court) in Garston & Yeo (No.2)[2019] FamCAFC 139 (“Garston”) at [24] citing Hall v Hall [2016] HCA 23 at [8].
A claim for interim maintenance “would normally involve some hearing on the merits, although not perhaps as final or exhaustive a hearing as would be the case if one were hearing the matter finally”.[6]
[6] Garston at [32] citing Williamson & Williamson [1978] FamCA 57; (1978) FLC 90-505 per Fogarty J at 77,650
“Capacity” to meet an order for interim spousal maintenance is not confined to income[7].
[7] Maroney & Maroney [2009] FamCAFC 45 at [56]
The Court can only make such an order “as it considers proper”[8] taking into account the factors set out in s.75(2) of the Act.
[8] Section 74(1) of the Act.
It is useful to set out what the Full Court said in Stein & Stein[9]:
[39] ...on an application for interim maintenance… The evidence need not be so extensive and the findings not so precise. Having regard to those factors… the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period…
…
[48] Section 75(2) serves many masters. It contains matters to be considered in both s 74 (spousal maintenance) and s 79 (alteration of property) proceedings. It contains matters relevant to the capacity of the payer to make maintenance payments, and to the needs of the payee to receive them. It contains matters which are relevant to comparing the situation of the parties when deciding what an appropriate adjustment of property interests should be. But its provisions must be read as ancillary to the power being exercised in each case. The maintenance power is to be found within the confines of ss 72 and 74, the property power within the confines of s 79 sub-ss (1) and (2).
[49]…In a maintenance case if … a husband is called upon to pay maintenance for his wife, the Court must determine his capacity to pay that maintenance having regard to his obligation to support his children. The level of support that the wife needs for herself is not dependent upon the level of support she must give to others.
[9][2000] FamCA 102 (“Stein”)
Relevant Factual Findings
It is useful to set out some background facts to better understand the Court’s reasons.
The parties lived together from early 2000 to late 2018 and are not yet divorced. They were married in 2009. During their relationship, the parties combined all of their income and shared all expenses.[10]
[10] See wife’s affidavit filed 8 May 2020 at [63] and husband’s affidavit filed 2 July 2020 at [17] filed in the substantive proceedings, but not relied upon at the interim spousal maintenance application.
During the parties’ relationship, the wife worked in paid employment except during periods of time she was caring for the parties’ children. The husband likewise, prior to 2004, was in paid employment, although it does not appear that he took any significant time away from paid employment post the children’s births or during their early years.
From 2004, the husband was involved in a business known as B Company, later known as C Company, with a business partner. The business was started in about 2004 and was a successful business over the years, expanding operations to Sydney, Melbourne, Country D and Country E. According to the husband, “the business was generating income of approximately $180,000 to $300,000 per annum for our family, which was split as dividends to Ms Modine and me for tax purposes.”
In early 2015, the husband’s business partner according to the parties, appropriated the business in circumstances which left the husband completely disillusioned. The husband was thereafter no longer involved in the business nor did he (or the wife) receive any income from it.
In early 2015, the husband’s mental health took a serious down turn. He was admitted into hospital and diagnosed with severe post-traumatic stress disorder.
From August/September 2015, the husband started receiving personal income protection insurance payments, which he continues to receive to date, and subject to complying with the conditions for such payments will continue to receive them until age 65.
The husband presently receives $26,450 per month before tax, being the income protection insurance payments.
After separation, the husband continued to share his income with the wife. It was agreed between the parties at the time that the husband would continue to meet the mortgage repayments and outgoings associated with the former matrimonial home, and renovations to the home, which were to be undertaken by the wife who remained living there.
It appears that between June 2019 and December 2019 the husband paid to the wife an amount of $6000 per month, which was inclusive of the costs associated with Y. From this monthly amount, the wife also paid for some of the repair and renovation work on the former matrimonial home.
From December 2019, the payments the husband made to the wife were decreased to $2000 per month, which is the amount the husband continues to pay on account of the costs associated with Y. The husband has not made any payments properly understood as spousal maintenance since December 2019.
After separation, the wife remained living in the former matrimonial home, which was ultimately sold in late 2020. The net proceeds of sale[11] were applied by the husband in payment of a substantial debt to the Australian Taxation Office (“ATO”) (which arose as a result of him not lodging any tax returns and or business activity statements for a number of years and not paying income tax in respect of his income protection insurance payments), two credit card debts[12] and a loan to the parties’ son Mr F[13]. At the time of the interim hearing, there was some $19,800 remaining from the net proceeds of sale.
[11] Being an amount of $459,787
[12] Totalling $8,155
[13] In the amount of $10,000
It appears that the debt to the ATO was some $640,424 as at November 2020, and that the husband paid $418,000 to the ATO on or about 11 November 2020 in reduction of that debt. There is a remaining debt of $117,163 and the husband has entered into an arrangement to pay off that debt by periodic payments of $3,000 per month (at present).
The husband does not otherwise earn any income, nor does he appear to be capable of earning an income. The parties’ son is an income earner in the husband’s household and the husband has a new partner (whom he appears to be in a de-facto relationship with). The husband’s partners’ two children are also income earners in the husband’s household.
Can the wife adequately support herself?
The wife is 46 years of age. She appears to be in good health.
The wife is employed on a full time basis. She commenced her most recent employment as a Manager in 2020. She earns $1635[14] each week before tax. The wife’s contract of employment was due for renewal in December 2020, and at the time of the hearing of the interim application for spousal maintenance she was confident that she would be offered a further 6 month contract. In any event, the wife has a demonstrated capacity to earn an income of $85,000.[15]
[14] Rounded up to the nearest dollar
[15] Rounded down to the nearest $100
The parties’ youngest child, Y aged 14, resides with the wife. The husband pays to the wife an agreed but unassessed amount of child support in the sum of $462[16] per week. The costs associated with Y, which the wife pays are $610 per week.[17] Child support aims to ensure that children receive an appropriate level of financial support from parents, and the payments which the applicant receives are geared towards meeting the costs of the children (to be differentiated from the costs of the spouse or former spouse). This cannot be an element of self-support in the wife’s case.[18]
[16] Calculated from $2000 per month, being $24,000 per year, which is $461.54 per week rounded up to the nearest dollar
[17] Part N of wife’s financial statement filed 28 October 2020
[18] Stein at [56]
The wife’s weekly expenses are as follows[19]:
[19] See wife’s financial statement filed 28 October 2020
Income tax
$402
Super Fund G
$155
Rent (1/2 share)
$475
Car Insurance
$43
Health Insurance
$30
Motor vehicle registration
$21
Credit Card
$17
Food
$250
Household supplies
$75
Gas
$10
Electricity
$30
Telephone
$35
Petrol
$140
Car maintenance
$42
Clothing/shoes
$50
Medical, dental and optical
$60
Entertainment/hobbies
$70
Chemist/pharmaceutical
$25
Cleaning
$20
Hairdressing/toiletries
$40
Total:
$1990
On the wife’s evidence, there is a shortfall of $355 per week in respect of her current expenses.
The wife’s reasonable needs
The wife sets out in her financial statement and affidavit what her usual expenditure is. Her financial statement, as noted at [34] above, has her current expenditure at $1990 per week.
The wife’s current lifestyle is criticised by the husband. It is submitted on his behalf that the wife’s current accommodation is more luxurious than the former matrimonial home, and therefore an extravagant expenditure which is not necessary.
The wife presently lives with her partner in rental accommodation, which is a 5 bedroom home situated at Town H. She moved into that property in early July 2020. Also living in that home is Y, the parties’ 14 year old child, and the wife’s partner’s two children (who do not live there on a full-time basis). The wife pays half of the cost of the rent, namely her share is $475 per week.
Prior to separation, the parties lived in the former matrimonial home located at Town J. The homes are not too dissimilar it appears, although the one where the wife presently lives does have water views and is slightly larger. It is located in an area which is many hundreds of kilometres further up north than the former matrimonial home. The mortgage which was associated with the former matrimonial home was $783 per week.[20] As such, the cost to the wife of living in her present home is less than the cost of the mortgage of the former matrimonial home. It is not an unreasonable or excessive expenditure.
[20] See husband’s financial statement filed 18 March 2020
It is also said on the husband’s behalf that the wife’s recent purchase of a boat is likewise evidence of the wife presently leading a more luxurious lifestyle than the parties had during their relationship. It is said “… yet [she]… still comes before the Court with her hand open wide asking for financial support from the Husband”. The obligation by spouses for maintenance is a legal obligation. It is entirely inappropriate for this sort of criticism to be levelled against the wife for making an application in exercise of those legal rights. It is an entirely misconceived submission given that the wife does not make a claim in respect of any cost of such boat as part of her maintenance application.
The solicitor for the husband further submitted that the wife’s expenditure of $155 per week for superannuation was unexplained, and that the wife offers no evidence as to why additional contributions to her superannuation from her taxable income are required to be made, and that this was an unnecessary discretionary expenditure.
The Court notes that the wife’s contract of employment, which is part of the evidence in the wife’s case, sets out that her remuneration is $40.87 per hour plus superannuation. However, this does not mean that an additional amount which the wife pays into her superannuation fund is an unnecessary discretionary expenditure or that it is unreasonable in all of the circumstances. As noted earlier, in the conduct of an application for interim spousal maintenance, the hearing is not as final or as exhaustive as would be for an application for spousal maintenance as a final order. Furthermore, the evidence need not be so extensive nor the findings be so precise as they would have been if the Court was conducting a final hearing.
Next the submission is made that the wife’s expenses of $17 per week associated with her credit card should not be included as a reasonable expense, given that they were incurred post-separation and when the wife was living in the former matrimonial home rent free, and receiving $6,000 per month from the husband. The wife presently has a credit card debt of $2400, and she is required to make the payments associated with that debt.
Lastly, the wife’s expenditure of $140 per week on petrol is contested as not being reasonable, and it is submitted by the husband that given there is no evidence as to why she would need to spend $140 per week on petrol, that a reasonable amount for her would be $70 per week to spend on petrol. There is no evidence which could suggest that $140 per week on petrol is unreasonable.
The wife lives with her new partner. His income is $19,585 per month before tax. His expenses including spousal maintenance, child support and school fees, and his usual expenses (not including self-expenses) are about $17,240 per month. It would not be unreasonable for the wife’s new partner to spend $1500-$1800 per month on himself for necessities. Indeed, this is only 1.5 times the amount the husband says he spends each week on his self-support.
As noted earlier, the wife was not cross-examined.[21] Her evidence, notwithstanding the submissions made in the husband’s case was not challenged in any meaningful way.
[21] Indeed no application was made to cross-examine her
The Court is satisfied that the expenses which are set out in the wife’s evidence, and as outlined in paragraph 34 above, are reasonable in all of the circumstances.
Furthermore, noting the parties’ lifestyle prior to separation and the husband’s continued significant income post separation, the standard of living the parties enjoyed and in particular the standard the wife enjoyed (including post separation) were higher than that enjoyed by the wife at present. The parties’ joint income prior to separation included the wife’s remuneration and the husband’s insurance payments.
It is not unreasonable for the wife to continue to enjoy a similar standard of living today. After separation, she was receiving $6000 per month from the husband, which is extrapolated to have been $2000 per month for Y (in accordance with the current payments made by the husband) and $4000 per month for the wife’s own needs.
Therefore, the Court assesses the wife’s reasonable needs as $2200[22] per week. Taking her income into consideration, this is a shortfall of $565 per week.
[22] If the wife was receiving $4000 per month from the husband, this is an amount of $48,000 per annum. Combined with her then income of $65,000 per year, this is a total of $113,000 per annum. A weekly amount of $2200 is equal to $114,400 per week.
The husband’s capacity to pay
As noted earlier, the husband receives $26,450 per month before tax, or $6,103 per week. The other income earners in the husband’s household are the parties’ son Mr F, who earns $1,345 per week, the husband’s partner who earns $680 per week and the husband’s partner’s two children who have a combined income of $1,510 per week.
The husband’s financial statement[23] sets out his expenses as follows:
[23] Filed 18 March 2020
Income tax
$2,342
Payment plan instalment
$692
Rent
$350
Life insurance
$164
Health insurance
$81
Car insurance
$21
Home and contents insurance
$55
Motor vehicle registration
$15
Motor Vehicle Finance
$305
Child support for Y
$461
All other expenditure (Part N)
$1,040
Total:
$5,471
Despite the complaints that he makes about the wife’s expenditure the husband’s expenditure is overall more than the wife’s. His spending on discretionary items such as entertainment/hobbies, holidays, books and gifts is greater than hers, which also then lends support to the finding that the parties enjoyed a higher level of lifestyle previously than the wife does today (on the basis of the husband’s current spending when compared to the wife’s current spending). Indeed, the husband’s usual weekly expenses are almost $200 per week greater than that of the wife.
Noting the husband’s income of $6,183 and his expenditure of $5,471 per week, he has the capacity to pay $700 per week.
What order is reasonable?
In the circumstances, noting the husband’s capacity to pay $700 per week and the wife’s need of $565 per week, it is just and equitable, for there to be an order that the husband pay to the wife a weekly amount of $565 in spousal maintenance.
For all of those reasons, orders as set out at the forefront of these Reasons for Judgment will be made.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Associate:
Date: 19 March 2021
[5] Garston at [29]
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