Calder and Poca

[2008] FamCA 481

FAMILY COURT OF AUSTRALIA

CALDER & POCA [2008] FamCA 481

FAMILY LAW – SPOUSAL MAINTENANCE – Lump sum

Family Law Act 1975 (Cth) s 75(2)

In the marriage of Clauson (1994-5) 18 Fam LR 693

APPLICANT: Ms Calder

RESPONDENT: Mr Poca

FILE NUMBER: WOC 167 of 2007

ORDERS MADE: 15 May 2008

REASONS DELIVERED: 27 June 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Cohen

HEARING DATE: 14 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gould

SOLICITOR FOR THE APPLICANT: Shepherds the Family Law Specialists

COUNSEL FOR THE RESPONDENT: Mr Sansom

SOLICITOR FOR THE RESPONDENT: A R Yates and Co.

Orders

1. That the husband pay to the wife lump sum spousal maintenance of $78,000.00 for the period of one year from the date of these orders.

2. For the purpose of paying the said $78,000.00 pursuant to order 1. the husband shall within 14 days do all things and execute all documents necessary to pay and shall cause to be paid to the wife:

   a.$13,000.00 from the proceeds of the sale of horses received on 23 April 2008 and deposited into a bank account in the name of P Pty Limited; and,

   b.$24,000.00 currently held in the trust account of A R Yates &Co., solicitors, on behalf of the husband, or the husband and wife; and,

   c.$7,000.00 currently held by the National Australia Bank Ltd in account no. … in the joint names of the husband and wife.

3. The parties shall do all things necessary to sell and shall sell within four months all their interests in the real property at and known as B Street and from the proceeds of sale shall forthwith on settlement:

   a.Firstly, discharge all mortgages over the said property; and,

   b.Secondly, pay all advertising expenses, agents commissions, solicitors costs and incidental expenses of and associated with the said sale; and,

   c.Thirdly, pay the sum of $34,000.00 to the wife for the purpose of compliance with order 1. herein; and,

   d.Fourthly, pay the sum of $50,000.00 to the wife to be held and only used for payment of legal costs and disbursements as they fall due to her current solicitors; and, 

   e.Fifthly, pay the remainder to the parties’ solicitors to be held by them on trust for the parties and only released in equal sums to each party if a party requests such release.

4. Order 3. shall be discharged forthwith if before contracts for sale are exchanged or the property is sold by auction contracts for sale of the real property known as and situated at P Street in W are exchanged or the said property is sold by auction.

5. Costs are reserved for one month.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: WOC 167  of 2007

MS CALDER

Applicant

And

MR POCA

Respondent

REASONS FOR JUDGMENT

1. There are two essential matters which arise from the wife’s interim application filed 24 April 2008. One is a claim for lump sum spousal maintenance; the other is a claim for what is commonly called interim costs; that is, a lump sum to be used to pay the wife’s solicitors for the conduct of these proceedings.

2. The wife asks for $78,000.00 to be paid to her virtually forthwith for spousal maintenance as well as an order that the husband pay all the running costs of the car she uses.  She seeks $50,000.00 for interim legal costs.

3. In his response the husband asks for the wife’s application to be dismissed. However, in his counsel’s address, he seemed to concede that an order which allowed each party to pay their lawyers equal amounts would not be inappropriate.

4. This case has all the hallmarks typical of a trial by attrition. Currently, the husband has virtual sole control of the parties’ liquid assets and income stream. The parties are not poor, but are not well enough off to be able to afford to indulge in the waste involved in destructive litigation like this has become.

5. They married in 1984 and separated in mid 2006. Both are in their mid 40’s. They have three children. The oldest is aged 22 and is independent. The other two, girls aged 17 and 13, live with the parties on a week about basis. The older girl is in her HSC year at school. The wife has not had formal paid independent employment since 1990 except that she has worked on what is probably an intermittent basis in the family business. It is a sales business which the husband operates through two companies. The wife was a director of this business until separation. The husband then removed her from this role. He is now the sole director and as such has control over his income and access to other benefits from the business. The wife still uses a car which is owned by the business. On separation, the business stopped paying its running costs. The wife has attempted to obtain employment since separation but has been quite unsuccessful. Currently, the only funds immediately available to her amount to about $1000.00 and regular child support which she receives from the husband in the sum of $246.42 per week.

6. The husband has absolute control of both family companies. One employs him and contracts his services to the other. Not long after separation the wage he was paid by his employer was reduced to $900.00 per week. He does not say what it was beforehand. However, the company which employed him was collecting $19,640.00 per month plus GST for his services until November 2006. It was reduced after that but I have not been informed of the level. The husband and wife have interests in a number of rented properties either directly or through a family company. Relatives of the husband also have interests in some of the rental properties. There are four which produce rental income. In all, their share of the rent as well as that company’s share amounts to $252,403.00 pa or $4,854.00 per week gross. All is received by the husband. He says that the expenses exceed the rental receipts by $1173.00 per week. This claim creates a somewhat false impression. One of the properties is owned in ¼ part by the company which employs the husband and in ¾ part by the husband. It is rented to the other family company which runs the family business on it. In addition, a very high degree of the outgoings on the properties is of a capital nature, being purchase loan mortgage repayments. Three of these are in W. The parties’ share is $84,024.00pa or $1616.00 per week for mortgage payments; a significant part of which provides capital accretion.

7. The property owned by the husband and the family company which employs him is in G. Its value is not known at present, but it is highly likely to be very substantial because it is security for about $7.483mil in loans. The parties’ interests in the other three properties, those in W, are worth about $1.9m and $1.014m is owed on them. In addition, the husband has a hobby farm at N which is on the market. In January this year he refused an offer of $700,000.00 for it so it must be worth more than that in his eyes. The mortgage debt on it is currently about $740,000.00, so it may not provide any significant funds if it is sold. There are orders in force which require the wife’s consent for a sale to take place. The outgoings, including mortgage payments of $61,176.00, are $64,000.00 pa or $1230.00 per week and it brings in no income.

8. The only other significant real estate in which the parties hold an interest is the former matrimonial home which is worth $1.1m and is not encumbered. The husband lives in it. It too is on the market. The wife rents a house.

9. Orders were made on 16 May 2007 for sale of the former matrimonial sale. So far, it has not been sold. Once it is the justification for applications such as that before me will be removed because the net proceeds are to be distributed to the parties.

10. The parties’ business and companies have not been valued yet. This complicates the determination of the issues I must deal with. The husband claims the business has suffered a downturn and that it cannot be a source any of the funds the wife seeks. The husband has annexed many documents to his affidavits. They do not enlighten the Court on the real financial situation the parties or their companies are in. Firstly there has been no attempt to provide up-to-date and useable information about the company which operates the sales business Holdings Pty Ltd (“Holdings”). P Pty Ltd, the family company which employs the husband, is wholly owned by him. I could not find one document which might illuminate the Court on its financial situation although there is evidence that it owns ¼ of the shares in Holdings. The husband owns the balance of the Holdings shares. The parties own P Pty Ltd in equal shares.

11. At the end of the 2006/7 financial year, although Holdings had a net loss of $82,000.00, its net assets were $578,206.00. The sum was also its retained profits. It had more than $178,000 in cash, so, in theory, this was available to the parties and could to a large extent be paid as a fully franked dividend. However, the balance sheet is deceptive when read with the parties statements of financial circumstances or any balance sheet for them because included in the calculations of net assets in the balance sheet is $4.485m of current liabilities which also includes $1,071,029.00 secured by mortgage over the G property owned by the husband and P Pty Ltd. A difference in the figures for this debt ($1.071m and $1.041m) is due to the different timing of the accounts; the smaller indebtedness being the more up-to-date. It is based on a document dated 4 April 2008. Because the accounts of Holdings are obviously fluid and because there are no accounts for P Pty Ltd, I have not been put in a position to have a realistic understating of the parties’ true overall situation. There is another $155,000.00 or a little more in a bank account in the names of the parties. $148,000.000 of this cannot be immediately withdrawn because it is security for the mortgage debt on the hobby farm. On sale of the N Farm it will be released to the extent that it is not needed to meet the mortgage debt on it. In view of the offer which was refused, it is likely that at least $100,000.00 of this will become available.

12. The husband says the parties are not in a position which would permit the lump sum payments to be made. The wife’s asserts they are. The husband has the real control over provision of information which could be used to resolve this issue. In fact, the wife has habitually complained that the husband has not supplied sufficient information to complete valuations of the two companies. The husband claims he has provided sufficient information. The material before me does not allow me to know which of the parties is correct or more correct.

13. For these proceedings, it is the husband’s obligation to be candid. He could have, but has not, been candid in his affidavits, and his statements of financial circumstances are gravely deficient in providing what he must have realised was necessary information to assist the Court to deal with the wife’s application on the financial merits. His latest financial statement was made on 1 May 2008. The least he could have provided was up-to-date balance sheets and profit and loss statements for Holdings and P Pty Ltd. He obviously has computer records of his monthly business activities for Holdings, so it is quite highly likely that he could with little difficulty have provided interim financial accounts for each company.

14. I find that the onus is on the husband to establish that the funds the wife seeks are not able to be obtained and that he has not discharged this onus.        

15. I can say that the parties could not be regarded as other than comfortably off. Their net assets are likely, in view of the husband’s lack of candour, to be substantial and quite enough to permit interim payments to the wife of the sums she seeks without compromising the ability of the Court to ultimately make effective and proper orders for division of property. This is particularly so because any payment toward her legal costs is likely to be regarded as an advance on her entitlement to have property settled on her pursuant to s.79 of the Family Law Act.

16. There are some cash funds available to meet the orders the wife seeks. $24,730.00 is held in the husband’s solicitors trust account. He claims it is held in trust for his parents as a result of what he says, and the wife denies, was an agreement between the parties and the husband’s parents. On the husband’s version of events, this money could not be regarded as a trust fund. The husband has simply appropriated it against the wife’s wishes. It is an example of the husband’s power over funds being used to put pressure on the wife who I accept is in straitened situation in respect of provision for her ordinary living costs. It is immediately available to meet any order for a lump sum payment I might make.  The NAB account containing the $155,000.00 could supply a further $7,000.00. In March 2008 the husband sold a number of horses he owned. He received a little more than $13,000.00 net for them. He has placed this money in an account in the name of P Pty Ltd and does not suggest he cannot draw it out. The wife holds some shares worth in total a little more that $15,000.00. There seems to be no reason why she should not sell these to meet her needs.

17. The only assets which, so far as I can tell, can be conveniently sold to yield the funds the wife seeks are the three properties in W. Two of these are owned in common with the husband’s relatives; the parties owning a one third share in each. The 3^rd property, at B Street is wholly owned by the parties and is worth $950,000.00. It is mortgaged for $454,000.00, leaving an equity of $496,000.00. There is only one reason why it should not be sold if it is appropriate to pay a lump sum to the wife of more than is otherwise readily available. It is that the wife intends to ask for this to be part of the property settled on her pursuant to s.79. She says she wishes to live in it because it also has a self contained flat and so can be used as both a home and a source of income. In my opinion, if the wife is entitled to have a lump sum payment which requires the sale of an asset for it to be made, her wish to keep this home is not a good enough reason not to order its sale. If provision can be made which ensures that the fund she is entitled to can be obtained from another source, that provision should be preferred.

18. This is not the first application the wife has made for lump sum spousal maintenance. The husband, after separation, helped himself to $190,000.00 from a joint account which contained $308,000.00 and used it for purposes he determined without the wife’s agreement. The wife then appropriated the balance of $118,000.00 and used a little less than half of it as she chose. She then provided $74,000 of it so it could be used as part of the cash security which now amounts to $155,000.00 to permit the husband to purchase the hobby farm. The husband must have contributed $74,000.00 from his funds, probably from the $190,000.00, because the original security was $148,000.00. The parties held a cash management account with $12,000.00 in it at separation. The husband took this too.

19. As a result of an application made by the wife in May 2007, the parties agreed to an order that the husband pay the wife lump sum spousal maintenance of $48,000.00. This was paid before the end of May. The wife had used it on living expenses before the 2008 New Year. The parties must have contemplated that the wife’s needs were greater than that because, at the same time, they agreed to orders that the former matrimonial home be sold at a reserve price of $1.1m, or as otherwise agreed, and that the net proceeds of sale be distributed on sale to the parties equally without restriction on the use of the funds. It is only because the sale has not yet eventuated, although the orders still bind the parties, that the wife has made the present application. If it is granted to any extent, it would be inappropriate to force the sale of the B Street property after the former matrimonial home is sold.

20. There seems little doubt that in May 2007 the wife needed a lump sum to live even though the standard she could uphold was probably less than she had been used to. The parties, on the evidence, seem to have lived very comfortably and according to their means. Before separation the funds were available for them to continue to do so. There is no suggestion that the husband has had to limit his lifestyle since separation or as a result of the wife receiving the lump sum and other moneys she received.

21. I am not sure what the wife’s other resources were when she received the $48,000.00 in late May 2007. For my purposes it is not relevant to know what they were. What is relevant is to determine what the wife actually spent in the year since she received the lump sum. She must have needed or reasonably used what she spent because the husband does not suggest she has had a lifestyle which is above that which was appropriate or that she has committed waste.

22. It is not difficult to discover from the affidavits of both parties what the wife needed in the 12 months up to now. She had the $48,000.00 and received another $11,800.00 as a tax refund. She also probably incurred credit card debts at the level of indebtedness now standing for them. Currently she owes $3700.00 for all her credit cards except a Westpac visa card. There is about $6,000.00 owing on it, but it was the result of about equal spending by both parties. The wife’s spending by way of its use has therefore been $3,000.00 in the past year. She has a debt of about $650.00 for servicing her car and debts totalling about $4,200.00 for accountancy services and the like which do not arise from the proceedings against the husband. Thus, she says she has spent a little more than $71,000.00 or about $1,400.00 per week for her upkeep and her share of the children’s upkeep above what the husband has paid for in child support.

23. The wife has filed an up-to-date financial statement. In it she says her current weekly outgoings are $1760.00 per week. None of her claims have been challenged. She receives $246 per week from the husband for child support of the $472.00 per week she actually spends. She spends $246.00 per week from her own funds on the children. If the Court were to allow her to obtain, as part of her payment from the husband, the difference between what she receives in child support and what she spends on the children, she would be in fact receiving child support which I have no power to order. For spousal maintenance she is only entitled to receive what she needs for her own upkeep excluding any amounts she spends on the children. Thus, her likely yearly spending for herself is about $78,725.00pa. Her remedy for the underpayment of her actual need to meet the cost of upkeep of the children is to make an application for child support which meets all her outgoings on the children because she receives no disposable income above her needs to maintain herself.

24. The wife has claimed an order that the husband maintain the car she uses. He is, by earlier orders, already responsible for making her lease payments on it. In her financial statement, the wife has included in her outgoings of $1760.00 the costs of running her car. To grant the order that the husband pay the operating expenses of the car would amount to doubling up on so much of these as are also calculated in her claim for lump sum spousal maintenance.

25. Before a claim of spousal maintenance is granted the Court must be satisfied that the claimant has the care and control of a child who is not yet 18 years or because of the claimant’s age, physical or mental incapacity for gainful employment or because of any other sufficient reason, cannot support herself adequately and the prospective payer can do so at a reasonable standard in the circumstances if a proper order is made. The Court must, in deciding what is proper, consider the matters and only those matters specified in section 75(2) of the Family Law Act. I shall proceed to consider each of these matters.

    (a)The parties are in their mid 40’s and there is nothing to suggest both are not in good health.

    (b)The wife has no income other than child support. The full extent of the parties’ property is not really known. It is substantial. The wife has access to little, whereas the husband has practical control over most of their property. There is enough property to permit a lump sum spousal maintenance order without interfering with the right of the husband to obtain a proper share of the property if his claim for 60% of it is upheld. There is also little doubt that the wife could not borrow to see her though until she obtains a property order. She cannot say what the parties property is, but, more importantly, she does not have any income to repay any interest even is she could gain an interest only loan.   

    There is no doubt that the husband has the capacity for gainful employment. He claims he is paid only $900.00 net per week. This is so highly artificial and inappropriate to his position in life, the size of the company he controls and the level of his responsibility it is ridiculous. The husband controls the business which pays him to do work for another business he controls. The Court will not be deceived by such dishonest artifice. The business had sales worth $35m in each of the financial years 2005/6 and 2006/7 and from July 2007 to March 2008 and had a net profit of roughly $47,000.00 which can be extrapolated to $62,240.00pa; enough to warrant a higher wage for the husband. Of course, the figures the husband has provided include none for the service company, P Pty Ltd. He says the business has not been in a position to pay more since just after separation. If that were the truth, the businesses should have been wound up and the premises on which it is conducted sold or leased, leaving him and the wife with good clear incomes and/or the ability to discharge what he says are debts on investment properties. This could be done now. Between 1999 and separation, his company; the one which employed him, charged his other company more than $4,500.00 plus GST per week for his services. He does not say what his company charges for them now. What is clear is that the husband has enormous flexibility and ability to rearrange his affairs to increase his income. He says he needs $4,421.00 for his ordinary expenditure each week including child support and his own expenditure on the children, but not including outgoings on investment property. If what he says about his situation is true, he cannot justify maintaining it and ought to reorganise his finances and his businesses. He is expending $225,000.00 each year on living plus the $125,000.00 pa which he claims is the excess of his outgoings on his investment properties in excess of the income they bring in. I am not satisfied that the husband’s income needs to be as limited as he claims it is and I regard his claims that he cannot afford to pay the spousal maintenance claimed by the wife as quite inconsistent with his own decisions to permit himself to use $250,000.00pa more than his claimed income on living and maintaining investments. The husband has other debts which I recognise but do not regard as warranting discussion because I have no idea of the value of his assets and, in particular, cannot say whether or not and, if so how much, knowledge about P Pty Ltd might affect the Court’s appreciation of  the parties overall financial circumstances. The husband has, I find, the physical and mental capacity to undertake gainful employment which is much more lucrative than his present position. He is in control of his ability to increase his net income.

    The wife has no income from earnings. She was last employed in the family business in the 2006 financial year. She probably has some theoretical earning capacity, but it is not great. Over the years since separation she has applied for many jobs with no success. The jobs she has applied for appear to be appropriate for someone who is and has been in her position in life. I find that she has no actual earning capacity despite having no physical or mental deficits which would hinder her in obtaining gainful employment. She simply has not been able to obtain it and, in my opinion, is not likely to in the foreseeable future. This is probably because she last worked for an independent employer in 1990. She has essentially been a housewife since then. When the wife was paid for work in the family business, she was not required to work regular hours or for a full week yet was being paid $1500.00 per week until she was effectively sacked by the husband at the time of separation. It is highly likely that prospective employers see her as someone who is not used to doing what she is told or as directed or working for a full week and as also having little relevant experience or skill.  

    (c)Each party has equal responsibility for the care and control of their under 18 year old daughters each second week. I cannot imagine that it would be reasonably possible for the wife to obtain employment which is limited to the weeks when the children live with the husband. She feels obliged and is entitled to expect to spend time each week when they live with her, attending to their needs. The child who is undertaking the HSC this year must require particular attention.

    (d)&(e)I have dealt with the husband’s child support obligations and actual expenses as well as those of the wife. Apart from any obligation which arises in the husband from these proceedings, neither party has any other commitment or responsibility to support somebody else. I have also already dealt with the parties’ abilities to support themselves.

    (f)Eligibility for pensions, allowances or benefits: There is none which is relevant. There is substantial property in a pension scheme which the husband administers, but this is only relevant to final s. 79 orders. Neither party is entitled to current benefits from the pension scheme.

    (g)I accept that each party has been used to a high standard of living. The wife was paid wages of $1500.00 per week from the family business until the husband stopped this on separation. She spent it on ordinary living for herself. Many would regard her as living in a manner close to luxury, if it could not be described as luxury. Her claim for maintenance is based on being used to receiving and spending about $78,000.00 pa. She says that since her income has been substantially reduced she has not been able to live as she had been accustomed. This is why she has claimed $78,000.00 for one year of spousal maintenance.   

    It will be recalled that the wife spent about $78,725.000 in the year to date on her own upkeep. Yet she says, and I accept, that she has had to suffer a reduced standard of living since ceasing to receive a wage from the family business. She not only lost her wage, she lost the benefit of having a car supplied at no cost. In the May 2007 consent orders, in addition to the $48,000.00 spousal maintenance, she became entitled to have the husband make the lease payments on the car she drives. This will remain the situation because the orders are still in force. The husband does not claim this outgoing as a personal expense in his up to date financial statement. It is likely to be charged to one of the family businesses. However, the wife has not had the car running costs restored to her. In addition to the $1500.00 per week before separation, she probably received the benefit of these. They are now about $135.00 per week. They probably reduced, if anything, over the period since separation because the wife needed to economise.

    The wife holds shares and/or other small investments worth about $15,000.00. She controls these. Compared with the overall family assets, which are largely in the form of investments, this is a very small sum. One might think on first impression that the wife should use this source of funds to provide part of her need for maintenance over the next year. I do not. To require her to do so with such a small holding would make a mockery of the concept that the parties should be able to live at a standard which is reasonable in all the circumstances. I cannot accept that it is reasonable that the wife live on the borderline of solvency in relation to what is practically available to her in view of the assets and income which the husband controls. I regard it as reasonable, because of their assets, that each party should have available to them enough for their day-to-day needs while continuing to live at the standard they were used to before separation, a standard which I find they can still easily afford; a standard which I also find is reasonable in the circumstances .

    (h)Whether maintenance will allow the wife to take steps to increase her earning capacity: There is no evidence that it will or will not.   

    (ha)The wife, inter alia, seeks funds to pay existing debts, although her indebtedness is not great. Without enough, she will not be able to use the funds to do so. For credit cards, she needs at least $118.00 per week. She has debts amounting to about $4,800.00, not including the Westpac MasterCard which the husband seems to be servicing. The $4800.00 extrapolated to weekly repayments over the year would require about $95.00 per week. The wife will not be able to repay her debts unless she receives enough spousal maintenance.

    The husband’s case mainly consists of reliance on indebtedness to resist paying spousal maintenances. That reliance flounders on my inability to make any sense of his and the wife’s indebtedness or his business debts without knowing the other relevant financial details which he has failed to provide.

    (j)&(k)The parties married in January 1984, so the marriage lasted more than 22 years. The oldest child was born in 1985. The others were born in 1991 and 1995. It is obvious that from the time of marriage to date, the husband has been hard working, imaginative and successful financially. The wife was employed from marriage until the birth of the first child, took only a short time off then continued to have independent employment until 1990. She has always had primary responsibility for the children and home duties in addition to working in and sharing in the family business and providing tax advantages for the parties by doing so. She says their property was acquired as a result of their joint efforts. This claim has not been challenged. She is currently the holder at law of a considerable proportion of it. Each party seeks a 60% proportion of it. It is likely that she will be found to have contributed to it to a degree within that range. She was a director of the sales company and worked in the business from early 2001 until separation. The wife claims she had an opportunity to open her own business but the husband told her he could not do without the work she was doing in the family business so she rejected the offer. It is probable that marriage has substantially undermined her ability to find work now and therefore her earning capacity.

    (l)One of the children is doing the HSC, but there is no specific evidence to suggest she wishes to continue being a full time parent. Before separation she always spent much more time parenting than the husband. He has always worked full time outside the home. The denial of spousal maintenance or the provision of an amount which will significantly reduce her quality of life is likely to cause her to continue to seek work, as she has in the past. She may find a full time job which she would otherwise regard as not worthwhile or beneath her. If she does, in the unlikely event she keeps it, it will probably interfere with her role as a parent despite that role being limited to every second week.

    (m)It is not suggested that either party is cohabiting with another.

    (n)S. 79 property orders and vested bankruptcy property are irrelevant here.

    (na)The husband pays child support to the wife and is likely to continue to do so. It seems that he has paid it since not long after separation. The eldest is now 22, so child support would never have been paid for him. The middle child will be 18 years in January 2009 after she will probably have left school. I do not know whether the child support obligations will continue after that because I do not know what this child will do after the HSC. The child support obligation relating to the youngest child will continue for more than the next year. The husband pays both girls’ school fees, their upkeep when they live with him and for some of their clothing and other necessary expenses in addition to the child support he pays the wife. It is currently $246.00 per week. From August 2006 when child support commenced, to March 2008, the husband has paid the wife $17,154.00, an average of $188.00 per week.  

    (o)I have initially canvassed many matters. I regard them all a necessary considerations for a just result. With one exception, there are no other matters which I should consider. The exception goes to the question of whether there should be periodic payment or payments of a lump sum, how each can be provided for and whether, if that provision is made, other orders are also appropriate.

1. The case often regarded as the leading case on the issue of lump sum spousal maintenance is In the marriage of Clauson (1994-5) 18 Fam LR 693, a decision of the Full Court of the Family Court of Australia. It is there said that because lump sum maintenance is the capitalisation of a periodic sum, it is necessary to determine what, if any, periodic maintenance ought to be payable. This statement brings into focus the clear distinction between an order for lump sum spousal maintenance and a settlement of property pursuant to s. 79. The case is usually relied on as authority that the Court should be cautious in exercising the power to award lump spousal maintenance rather than periodic maintenance, particularly because a lump sum is the present day value of the entitlement to future period i.e. payments which is dependent on future events about which there is considerable uncertainty. It is said that an order for a lump sum is rarely justified if there is no concern that future payments will be unreliable. I am bound by this authority.

2. The matter which I must decide is quite different to the factual situation in Clauson. What was held in that case was conditioned by its distinctive imperative. In Clauson, the Court was speaking of a maintenance order made with final property orders. The Court was required, for the spousal maintenance order, to provide for the very distant future. The more distant the less foreseeable. The wife was aged only 34 years when the Full Court heard the matter, although the husband was by then 50 years old. To anticipate the future was quite a different task to that involved here. I must only to anticipate how only the next year will unfold in the lives of the parties who are before me. The latter is relatively easy because there is not likely to be much change from the present. Another distinction is that, in Clauson, the spousal maintenance had to be considered at the same time as the division of property. In the case before me this is not so. Property division is yet to be decided and is likely to be decided in about a year from today. As a result, any alteration in circumstances which might then be seen to have required a different spousal maintenance order can be taken into account in the property division if lump sum maintenance has been ordered. If money remains from any lump sum maintenance which is ordered to be paid to the wife, it will have become part of the assets available for distribution. If the lump sum paid is insufficient, it will either result in increased contribution by the wife due to her hardship which will have led to capital savings created by the underpayment or to debt which will need to be accounted for in the division of property or both.

3. In any event, some matters cause me considerable concern that, especially in the short term, the husband will attempt to claim he cannot pay any periodic amount ordered. The first is his efforts to thwart his proper spousal maintenance obligation by artificially manipulating his wages. Secondly, he has failed to rationalise, if it is true there has been a downturn in his business with resultant difficulty in paying his debts, including by reducing necessary capital and interest payments on investments. Thirdly, he has failed in his duty to frankly disclose his financial circumstances by failing to provide sufficient information about the sales business and failing to provide information about P Pty Ltd. The little which has been provided must be regarded as a nugatory.        

4. Another matter which I regard as of considerable importance in deciding whether to provide the wife with a lump sum, rather then periodic maintenance, is her ownership of property which the husband benefits from, particularly her 50% share of P Pty Ltd over which the husband exercises complete control. The deprival of such control is exceptionally common in cases seen in this Court. It is most commonly, but certainly not always, a manifestation of the outmoded attitude leading to the assumption that businessmen have the right to control the family assets to the exclusion of their wives who have contributed greatly to them until the Court actually decides how the property should be divided between them. Such an assumption leads to a completely unfair balance of power and a litigation process where one party has to plead for information and is at a disadvantage in gaining legal representation and preparing his or her case because of financial constraints and increased stress. This case appears to be typical. Yet it, as is so often the case, will eventually result in a much more even distribution which will give ownership and control of a significant proportion of the property to the wife. Until she receives it, she is not only deprived of what is hers, she is forced to cede control over it to the husband. This anomaly should be ended in this instance. It is therefore just, despite the caution which I still accept must be exercised in ordinary lump sum spousal maintenance and which I do exercise, to make a lump sum payment to the wife in this case. I, nevertheless, recognise that the reason for caution; the uncertainty about the future which the lump sum must provide for, does not arise here.

5. The wife asks for a lump sum based on her need for spousal maintenance of $1500.00 per week. In my opinion, she would be entitled to more. The payment of at least her proper entitlement in a lump sum involves very little reduction for its advanced receipt. That reduction would be less than the amount over $1500.00 per week which I regard as otherwise a proper periodic sum after considering all the matters I have referred to above. Accordingly, it is my view that $78,000.00 is a proper lump to from the parties’ assets for the wife’s maintenance for the next year. It is really not being paid by the husband or, at least, wholly by the husband. Part will be paid by the paid by the husband from the wife’ s share of the property and is really a payment by the wife to herself.

6. The sources of such a sum seem obvious. $13,000.00 can come from the money held by P Pty Ltd from the sale of horses, $24,000.00 from the trust fund held by A R Yates & Co., solicitors, and $7,000.00 from the $155,000.00 deposited in the National Australia Bank in the parties’ joint names as security. The bank only requires $148,000.00 as that security. The balance of $14,000.00 can be raised from the sale of B Street, W. I appreciate that the wife wishes to retain this property, but I am of the view that it is more important for her to receive this money with reasonable promptness and certainty as well as with as little difficulty and undue expense as possible. To attempt to sell properties in which 3^rd persons related to the husband hold an interest involves the prospect that the sale will be delayed because of objections by the 3^rd persons and might involve cost in dealing with any dispute which arises over a sale. This situation should and can be avoided by sale of the B Street property.

7. Because the order for the sale of the former matrimonial home is still in force, it is possible that it might be sold before the B Street property. It is unlikely to be sold beforehand and is very unlikely to be sold before the wife could obtain the moneys from the three sources of the $44,000.00 cash which can be accessed virtually immediately. I regard it as important to do justice that she obtain a substantial part of the lump sum spousal maintenance she is entitled to as soon as possible and that receipt not be delayed or put in a position of uncertainty by no more then a possible sale of the former matrimonial home. Nevertheless, if there is to be a sale of the former matrimonial home which will be completed before sale of B Street, it would be appropriate to avoid sale of B Street so its fate can be determined at the final hearing as the wife asks that it be. It is proper to order the discharge of any order for sale of B Street in the event that settlement has taken place of a sale of the former matrimonial home. The sale of the former matrimonial house and the orders which give her half the net proceeds will result in her recovering capital which she can use to maintain herself until the final hearing. I made orders for spousal maintenance which reflect the above. These are my reasons for making them.

8. The wife also seeks interim costs. I have been informed that the husband’s legal costs and disbursements so far have been about $106,000.00. Of this, he borrowed $65,000.00 from his brother and owes his solicitors about $8,600.00. He must have paid about $32,400.00 from funds or resources which would otherwise be available for division between the parties and has paid his lawyers about $97,400.00 already.

9. The wife has paid $15,700.00 to her former lawyers from the $44,200.00 she eventually used for herself after she withdrew the $118,000.00 in July 2006. She now owes those lawyers $41,949.00. This debt is not payable until she obtains the funds in final settlement of her s. 79 claim. She has changed lawyers and owes her new representatives $8,717.00, so her legal costs to date have been about $66,366.00, considerably less than those of the husband. She has paid her lawyers much less. She has been advised that the costs of litigation to the completion of a final hearing, including the $8717.00 now due, will be not less than an additional $50,000.00 for her solicitors and counsel and that there will be the additional costs for experts fees and for GST. This is why she seeks a lump sum payment of $50,000.00 for costs. I regard this estimate as unduly optimistic.

10. Nevertheless, she asks for $50,000.00 in the situation that with what she has paid and had been advised she needs, her total costs will be only about $107,649.00 plus unpaid GST and experts fees. This is barely more than the husband has already expended and in my estimation is a modest sum for costs of litigation in the nature of these proceedings.

11. Although the wife’s application, as is common in similar applications, has been called an interim costs application, it is not an application for costs pursuant to s 117 of the Act. It is really an interim property application in which, if granted, the orders are made pursuant to the Court’s power to make orders under s.80(1)(h) of the Act to provide the wife with sufficient property to permit her to properly instruct her lawyers pending final distribution under s.79. As is most usual, the actual moneys spent on her lawyers will ultimately not be likely to be permitted to be directly or indirectly met in part or wholly by the husband without an order pursuant to s.117. As the costs are largely to be spent in future, the time has not come when s.117 could usefully be considered and no application for the type of costs order contemplated by it has been sought. The money spent by the wife on her lawyers is likely to be regarded notionally as part of the assets available for distribution under s.79 and as having been advanced to the wife as part of her entitlement to property. Unless the husband warrants a costs order being made against him pursuant to s.117, he will not have to bear any part of the sum the wife spends on her legal costs.

12. As with lump sum spousal maintenance, the wife will not need the costs order she seeks if the former matrimonial home is soon sold. However, if it is not soon sold, the money she seeks will be able to be raised from the proceeds of sale of B Street. For the reason I have already relied on to make a lump sum spousal maintenance order, the funds are available to meet the order the wife seeks for interim costs and the parties can afford to comply with such an order.

13. The only remaining question is whether it is just to make the order. In my assessment it would be quite unjust and grossly unfair to refuse the wife’s application in the circumstances. After all, the husband has already helped himself to $32,400.00 without needing to ask the Court for access to the money and expended it plus $65,000.00 which he borrowed from his brother for his costs and will already have to pay, just for legal fees to date, about the same as the wife asks to permit her to complete the proceedings. The wife says her solicitors require their monthly accounts to be paid in 14 days. This is not unusual. Nor is it unusual for solicitors who know they will be paid from the assets received by their client on s.79 settlement at the conclusion of the proceedings to wait until then. They can, and often do, come to such arrangements and may charge at a higher rate to compensate for the long wait for payment. I have no reason to believe the wife’s solicitors would not continue to act for her if her claim for interim costs is wholly refused. I think it is much more likely that they would. There is no evidence that they would refuse to continue to act. If it were the case that they are not prepared to await payment, I would expect to have seen specific evidence to that effect from the solicitors. But that is not the point. Why should the wife, who must contest these proceedings, has a right to do so, should be properly represented and is fighting over a considerable sum in circumstances where, even in these proceedings, the husband has been far from forthright in his disclosure of assets and has contested the wife’s right to lump sum spousal maintenance and failed, be inhibited in making decisions because of embarrassment about delayed payment or uncertainty about the time of having the funds to pay her lawyers? Why should she be stressed and be put to the disadvantage of not having those funds readily available? There seems to be no similar limitation on the husband’s access to funds to pay his lawyers.

14. It is a matter of some concern that these proceedings are going to be so expensive. I am not, in saying this, suggesting that the lawyers are overcharging or overservicing. It would be of greater concern that the wife, because of unavailability of funds which she will eventually receive, will not be completely free to make the decisions she feels are in her best interest in this litigation. To deny her the funds will have the tendency to limit her freedom a in a manner which, because the husband seems to have sufficient access to funds whether from the parties’ pool or from other resources, does not seem to limit the husband’s freedom to conduct his case as he sees fit. In my opinion, it is just and proper that she have the necessary funds. Fairness demands that the wife now have access to part of her ultimate entitlement to properly meet her needs to pay her legal fees and expenses as they fall due. I shall make the order she seeks and provide that the fund is to come from the proceeds of sale of B Street, unless, before its sale, the former matrimonial home is sold and it is no loner required to sell B Street to raise the money needed for interim costs.

15. I am of the view that neither party should be unduly restricted in having the funds to meet their continuing legal and living expenses. If the former matrimonial home is sold first they will have significant funds to do so. If it is not and B Street is sold, it is likely that a significant amount will be left after both the lump sum spousal maintenance and the interim costs orders are met. It seems to me to be just to permit the parties to draw on this balance if they agree to do so to meet their needs including day to day living and legal costs. It is just to make orders which provide that if the parties agree they can draw equally on this fund. I have made the orders which reflect this view.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen.

Associate: 

Date:  27 June 2008