CARDOZO & TAVERNA

[2017] FamCA 819

FAMILY COURT OF AUSTRALIA

CARDOZO & TAVERNA [2017] FamCA 819

FAMILY LAW – PROPERTY – INTERIM – Where the wife seeks that a jointly owned property be sold – Where orders are made for the wife to be restrained from selling the property without first giving notice to the husband.

FAMILY LAW – SPOUSAL MAINTENANCE – Application by the wife, aged 67, for interim spousal maintenance – Where the husband asserts the wife does not meet the test in s 72 of the Family Law Act 1975 (Cth) – Where the wife has significant health problems and is unable to support herself – Where the husband is found to have capacity to pay spousal maintenance – Order made for the husband to pay the wife $1,500 per week by way of spousal maintenance.

Family Law Act 1975 (Cth) s 72

APPLICANT: Ms Cardozo

RESPONDENT: Mr Taverna

FILE NUMBER: SYC 4091 of 2017

DATE DELIVERED: 13 October 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 27 September 2017, 12 October 2017.

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Levy

SOLICITOR FOR THE APPLICANT: Broun Abrahams Burreket

THE RESPONDENT: In Person

Orders

IT IS ORDERED UNTIL FURTHER ORDER

1. That the wife be restrained from entering into any contract to sell the property at B Street, C Town (“the farm”) without first giving to the husband 21 days’ notice of her intention to do so including but not limited to a copy of the proposed Contract for Sale.

2. That the wife inform the husband of any offer to purchase the farm and of any counter-offer made by her, within 24 hours of the making of such offer or counter-offer.

3. That, unless otherwise agreed, upon the sale of the farm, the net proceeds of sale shall be held in a controlled monies account pending the determination of the substantive proceedings.

4. That the husband pay to the wife the sum of $1,500 per week by way of spousal maintenance, the first payment to be made within seven days of the date of this order and payments to be made weekly thereafter.

5. That the interim application of the wife filed 30 August 2017 be otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4091 of 2017

Ms Cardozo

Applicant

And

Mr Taverna

Respondent

REASONS FOR JUDGMENT

1. Ms Cardozo (“the wife”) and Mr Taverna (“the husband”) commenced co-habitation in 1994, married in 2003 and separated in March 2016. There are no children of their relationship.

2. Before the Court is an interim application filed by the wife seeking a suite of orders which are, in summary:

   ·    Payment of medical insurance premiums;

   ·    Payment of outgoings on a rural property at C Town (herein referred to as “the farm”);

   ·    Payment of spousal maintenance in the sum of $1,500 per week, increasing to $3,007 per week when the farm is sold.

3. The husband opposes all of the orders sought by the wife.

4. The matter came before the Court for hearing on 27 September 2017 and judgement was reserved. The parties were notified that judgement would be delivered on 12 October 2017. On that day the husband made an application to re-open his case and tender additional bank statements which had been provided to him by the wife’s solicitors the previous day. The wife opposed the application to re-open but her solicitor was prepared to argue the substantive issue if leave were granted. Since both parties were present and ready to proceed, and it could not be said that the additional bank statements were irrelevant, the husband was permitted to reopen his case.

5. In relation to the orders sought for the payment of outgoings on, or referable to, the farm, the husband submits that he has always paid those outgoings and that there is no reason to contend that he will not continue to do so.

6. In relation to the application for spousal maintenance, the husband submits that the wife has not met the test in s 72 of the Family Law Act 1975 (Cth) (“the Act”). Further and in the alternate, he submits that the wife has not established that her reasonable needs are as she alleges and further he submits that he is not in a position to pay the sum sought.

7. The husband seeks an order that the wife, who is the registered proprietor of the farm, not sell it, pending the determination of the substantive proceedings. In submissions, it appeared that he sought, in the alternate, that she not sell the farm without giving appropriate notice. He also asks that, if the farm is sold, the net proceeds of sale be held by the solicitors for the wife pending determination of the substantive proceedings or agreement between the parties.

BACKGROUND  

1. The husband is a professional with his own business. From 2002 until separation, the wife worked as his business manager for about three days each week.

2. The farm was purchased in 2004.

3. As a result of poor investment advice, the husband was made bankrupt in 2014. He was discharged from bankruptcy in February 2017.

4. After separation the wife lived at the farm.

5. The trustee in bankruptcy agreed to the transfer of the farm to the wife in February 2014. The husband paid the stamp duty of $107,000. After the transfer, the husband was required to personally guarantee the payment of the mortgages secured against the farm and he paid all the outgoings related to the farm.

6. The husband stopped paying spousal support to the wife in November 2016.

7. The wife listed the farm for sale.

8. The wife’s sister purchased a property at D Town for $1,100,000 for the wife to live in. The wife moved into the property at Easter of 2017. The wife has entered into a lease which requires her to pay rent of $700 per week for D Town. The wife paid rent until July 2017. She has spent a considerable amount renovating and furnishing D Town.

9. Although the husband’s present substantive application to the Court seeks an order that the farm be sold, he has made enquiries about raising funds to purchase the interest of the wife so that he can retain it.

OUTGOINGS ON THE FARM

1. The husband has paid the outgoings since the wife vacated the property. They are substantial. The mortgage payments alone are $5,914 per week.

2. There is no evidence that the husband is likely to stop paying the outgoings. He wishes to keep the farm and to borrow money in order to do so. It is in his interests to demonstrate that he has a solid record of repayment.

3. The wife has not demonstrated that it is necessary to make the order she seeks in relation to the outgoings. That portion of her application will be dismissed.    

SALE OF THE FARM

1. On behalf of the wife it was submitted that the Court would order that she give 14 days’ notice to the husband of any intention to enter into a contract to sell the farm and that the parties have liberty to apply on seven days’ notice if his consent is not forthcoming. She also proposed that an order be made that she will inform the husband of any offer or counter-offer within 24 hours.

2. Having regard to the capacity of the Court to deal with such matters on short notice, I propose to require that the husband be given 21 days’ notice.

3. No submissions were directed to the issue of retention of the proceeds. The husband’s application is appropriate.

SPOUSAL MAINTENANCE

1. The wife bears the onus of establishing that she meets the threshold test established by s 72 of the Act which is set out below:

   Right of spouse to maintenance

   (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).

2. If the threshold is met, the Court must determine what the wife’s reasonable needs are and whether the husband has the capacity to meet those needs.

3. These proceedings are interim in nature and conducted without the opportunity for cross-examination.

IS THE WIFE UNABLE TO SUPPORT HERSELF?

1. The wife deposed that she is 67 years of age, not in paid employment and in poor health.

2. She suffers from multiple conditions including asthma, chronic obstructive pulmonary disease, reflux, depression, allergies and glaucoma. She was hospitalised between December 2016 and January 2017 including two admissions to intensive care.

3. She deposed that she does volunteer work in a clerical capacity of about 10 to 12 hours per week but cannot commit to an employer because her health is unpredictable. She deposed that, during the relationship, she was hospitalised on average twice each year.

4. The husband did not dispute the wife’s evidence as to her health but submitted that, despite her health conditions, she had worked throughout the whole of their relationship until they separated in 2016 when it was not appropriate for her to continue. Therefore, he submitted, she is able to work and earn an income.

5. I do not accept that submission. Commercial employers are unlikely to be as tolerant to the wife’s ill health as was the husband. In any event, she is 67 years old and may have difficulties competing in the employment market with younger applicants.

6. I accept that the wife is unable to support herself from employment.

7. The husband submits that the wife has not demonstrated that she is unable to support herself from her income and assets.

8. It is not disputed that since May 2016, the wife has received the following sums:

2.5.2016	Withdrawal from husband’s Westpac account	$4,000
2.6.2016	Withdrawal from husband’s Westpac account	$5,500
3.8.2016	Cattle sales	$18,401
23.8.2016	Withdrawal from husband’s Westpac account	$15,500
March to October 2016 (6 months)	Spousal maintenance from husband of $5,600 per month	$33,600
20.12.2016	Sale of bull	$2,750
27.1.2017	Cattle sales	$33,952
May to June 2017	Cattle sales	$17,372
6.2017	Withdrawal of superannuation	$19,000
November 2016 to March 2017	Trustee in bankruptcy	$27,018
7.2017	Sale of a painting	$16,000
8.2017	Cattle sales	$26,320
2017	Balance of inheritance	$115,000
TOTAL	$334,413

1. I note that the payment for cattle on in August 2017 occurred after the wife swore her affidavit and Financial Statement.

2. The wife deposed that she has spent that money in the following manner:

   ·$94,374 in renovations and furnishings for D Town; and

   ·$16,000 to reduce credit card debt.

3. The balance, she deposed, has been spent on living expenses which she estimates to be about $3,007 per week, or in the period of 72 weeks approximately since May 2016, a total of $216,504.

4. Thus, the wife has accounted for spending of $326,878.

5. I accept that the husband considers her spending to have been extravagant and that he does not accept that she has accounted for all of the money she has received, but I also take into account that he considers his reasonable discretionary expenses (excluding future tax) to be $3,300 per week and that, in addition, he pays rent of $1,200 bringing his expenses, as compared to those of the wife, to $4,500 per week.

6. I accept that the wife has received and spent some $327,000 in the period between May 2016 and September 2017, however, those amounts were received from capital or from the sale of assets and not from income earned by her. I also accept that the wife did not make proper disclosure of the money she held in her bank accounts at the date of the hearing. However, the bank statements tendered by the husband when he re-opened his case demonstrated that the wife had a modest sum, about $25,000 in her bank accounts. There is no evidence that there are any other amounts left to which she has access, with the exception of her superannuation which has a current balance of $83,931.

7. It has long been the law that an applicant for interim spousal maintenance is not required to exhaust her capital to satisfy the test that she is unable to support herself.

8. I am satisfied that the wife has established that she is unable to support herself.

THE WIFE’S REASONABLE NEEDS

1. What then are her reasonable needs?

2. The husband challenged the reasonableness of the wife’s asserted needs. Annexed to his affidavit is an analysis of her claims in relation to her discretionary expenses, compiled from her credit card and bank statements. On the basis of that analysis, the husband sets out at page 51 of the annexures to his affidavit his assertions as to her actual spending.

3. There was no evidence adduced by the wife to substantiate her claims as to her reasonable needs.

4. The husband challenges the asserted lease entered into between the wife and her sister requiring payment of rent in the sum of $700 per week. It is an agreed fact that, although the wife has not paid rent to her sister since July 2017, she has not been asked to vacate the property.

5. The husband requested a copy of the lease. He was provided with three pages of what appears to be a standard form Residential Tenancy Agreement which appear to be the first two pages and the last page. The terms and conditions of the agreement have not been provided. The husband wrote to the wife’s solicitors on 28 August 2017, drawing them to this deficiency. It has not been rectified.

6. However, I am satisfied that it is necessary for the wife to pay rent and her sister has no obligation to provide her with accommodation free of charge.

7. The wife seeks maintenance of $1,500 per week. I am satisfied that she is required to pay rent of $700 and that her discretionary expenses are at least $800 per week.

THE HUSBAND’S ABILITY TO PAY

1. Annexed to the wife’s affidavit is an estimate of the husband’s 2017 taxable income to which no objection was taken. The document appears to have been prepared on behalf of the husband. His estimated taxable income for the year ended 30 June 2017 is $1,296,064. The tax payable on that income is $605,018 leaving the husband with a net income of $691,046 or $13,289 per week.

2. The husband, in his Financial Statement, estimates his gross income to be $22,231 per week or $1,156,012 per annum. Thus his estimate of his actual income is within a small distance of his accountant’s estimate.

3. Counsel for the wife took issue with the husband’s claimed outgoings.

4. The most significant expense which was challenged is the husband’s claim for taxation. He estimated, in Part G of his Financial Statement, that his weekly tax is $9,885. In addition to that sum, in Part N, he estimated that he is required to pay a further amount of $9,152 by way of tax, making his total tax payments $19,037 per week on a gross income of $22,231. I do not accept that evidence.

5. Annexed to the husband’s Financial Statement is an estimate of his total tax payable, including GST, until April 2019. It is not possible to draw any inference from that document. Insofar as there is an estimate of the tax that the husband will pay in the future, that tax will be paid from income earned in the future. Insofar as the estimate includes GST, the GST is not a component of the tax payable on the husband’s taxable income.

6. The safest course of action, for the purpose of this application, is to adopt the amount of tax estimated by the husband’s accountant to be payable which is the equivalent of $11,635 per week. In those circumstances it is also appropriate to adopt the accountant’s estimate of income and to assume that the husband has a net income after tax of $13,289 per week.

7. Superannuation contributions are discretionary and that claim will not be allowed. Thus the husband has fixed expenses, according to Part G of his Financial Statement, of $1,892. In addition, he pays the outgoings on the farm (noting that the wife seeks an order that he continue to do so) which are $5,914 by way of mortgage and a further $301 for lease payments and he pays the wife’s health insurance premium of $40, bringing his total non-discretionary payments to $8,147.

8. I note that the husband will have repaid one of the farm loans in November 2017, saving him $1,100 per month or $253.85 per week so that from December 2017 his non-discretionary outgoings will be $7,893.

9. I have not taken into account the asserted payment of $500 per week on farm maintenance because the husband has not quantified the amount he receives for weekend and holiday letting which I am prepared to assume at least covers that expense.

10. Further, he claims discretionary expenses of $3,300 per week. Substantial challenge was made to the reasonableness of the husband’s expenses. Those challenges, on the face of his Part N statement, have some merit. However, if those expenses are allowed in full he has an excess of income over expenditure of $1,842 per week, increasing in December to $2,096 per week.

11. The husband has the capacity to pay the sum sought by the wife.

THE APPLICATION TO INCREASE THE AMOUNT OF MAINTENANCE

1. I am not satisfied that the wife has demonstrated that she reasonably needs more than $1,500 per week and therefore that application will be dismissed.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 13 October 2017.

Associate:

Date:  13/10/2017