Carlisle and Carlisle (No.2)

[2018] FCCA 3950

FEDERAL CIRCUIT COURT OF AUSTRALIA

CARLISLE & CARLISLE (No.2) [2018] FCCA 3950

Catchwords:
FAMILY LAW – Property – spousal maintenance – changed circumstances – variation.

Legislation:

Family Law Act 1975 (Cth), ss.82, 83, 111AA

Applicant: MS CARLISLE

Respondent: MR CARLISLE

File Number: SYC 431 of 2017

Judgment of: His Honour Judge  B Smith

Hearing date: 16 November 2018

Date of Last Submission: 16 November 2018

Delivered at: Sydney

Delivered on: 19 November 2018

REPRESENTATION

Counsel for the Applicant:	Mr Tockar
Solicitors for the Applicant:	Hamish Cumming Family Lawyers

Counsel for the Respondent: Mr Livingstone

Solicitors for the Respondent: Lorne Havenstein Lawyer

Counsel for the Independent Children’s Lawyer: Ms Weber

Solicitors for the Independent Children’s Lawyer: Legal Aid NSW Sydney Central Family Law

ORDERS

1. Order 20 of the Orders made in this matter on 3 August 2017 be varied to read as follows:

   “That, pending further Order, and by way of periodic spouse maintenance pursuant to section 74 of the Family Law Act 1975, the Husband shall pay to the wife, by way of cleared funds the sum of $600.00 per week.”

IT IS NOTED that publication of this judgment under the pseudonym Carlisle & Carlisle (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 431 of 2017

MS CARLISLE

Applicant

And

MR CARLISLE

Respondent

REASONS FOR JUDGMENT

1. This is an oral decision on an interim application brought by the husband pursuant to the Family Law Act 1975 (Cth) (“the Act”) for a variation and, in effect, reduction of existing maintenance orders.

2. The starting point to this application are the orders of the Presiding Judge of 3 August 2017. Those orders cover a range of parenting and property matters. The orders at paragraph 20 set out the order which is the subject of the s.83 Family Law Act variation application. That is:

   20. That, pending further Order, and by way of periodic spouse maintenance pursuant to section 74 of the Family Law Act 1975, the Husband shall pay to the wife, by way of cleared funds:

   a. The sum of $350 per week until such time as the Wife is required to pay market rental or until 31 December 2017, whichever is the earlier;

   b. Thereafter, the sum of $900.00 per week.

3. Order 21 deals with the procedural mechanism:

   21. The spouse maintenance payable by the Husband to the Wife pursuant to Order 4 (sic) shall be paid as follows;

   a. Weekly on a Monday commencing on the first Monday after the date of these orders; and

   b. By way of electronic funds transfer into a bank account nominated by the Wife and advised to the Husband’s solicitors in writing or as agreed.

4. There were also orders made for payment of $10,000 lump sum spouse maintenance.

5. The husband brings the matter before the Court by way of an application in a case filed on 1 March 2018 seeking orders that (emphasis in original):

   Pursuant to s83(1)(f) of the Family Law Act 1975 (Cth), the orders made on 3 August 2017 (“the Second Orders”) in relation to spousal maintenance are to be varied so as to decrease the amount to be paid by the Applicant due to the change in living and (sic) circumstances of the parties in the proceedings since the orders were made.  This order shall come into effect as and from the date on which the Respondent re-entered the work force.

6. Orders were also sought in respect to parenting matters, however, no parenting matters were argued and so are not dealt with.

7. The arguments made by the husband are set out in his written submissions.  The essential arguments made are that there has been a reduction in the husband’s capacity to pay, an increase in the wife’s capacity to support herself as she has returned to work, and a change in the circumstances of both parties following the sale of the former matrimonial home and settlement of property upon the wife as a result.  I will go into more detail about these arguments in due course.

8. The wife’s written submissions were also relied upon.  The effective summary, which is at the end of those written submissions, made by the wife on this application was:

   It will be submitted on behalf of the wife, that the husband’s Application is no more than an appeal of Her Honour’s Decision of 3 August 2017 and should be dismissed with costs.

9. I note provisions of s.82 and particularly s.83 of the Act “Modification of spousal maintenance orders”:

   (1) If there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of a party to a marriage:

   (a) made by the court; or

   (b) made by another court…

   … the court may, subject to section 111AA -

   and there is no issue about New Zealand here -

   (c) discharge the order if there is any just cause for so doing;

   (d) suspend its operation wholly or in part and either until further order or until a fixed time or the happening of some further event;

   (e) revive wholly or in part an order suspended under paragraph (d); or

   (f) subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner.

   I do not understand there is any question with jurisdiction here.

10. The requirements for variation set out within s.83(2) are:

    The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:

    (a) that, since the order was made or last varied:

    (i) the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);

    (ii) the circumstances of the person liable to make payments under the order have so changed; or

    (iii) in the case of an order that operates in favour of, or is binding on, a legal personal representative--the circumstances of the estate are such;

    as to justify its so doing;

    There is no personal representative here.  Or:

    …(b) that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;

    (ba) in a case where the order was made by consent--that the amount ordered to be paid is not proper or adequate;

    (c) that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.

    Subsections 83(2)(ba)-(c) are not particularly relevant.

11. As I have said, the essence of the husband’s case is that there have been changes sufficient to justify the Court considering, in the first instance, a variation of her Honour’s order which was made more than a year ago, and, as I have said, her Honour’s order anticipated a number of things on its face.  

12. Neither the parties nor the Courts have access to her Honour’s reasons as they were, quite appropriately given the nature of the work this Court has to do and the sheer volume of work the Court has to do, delivered orally.

13. But that decision did anticipate the sale of the family home at Property A with an anticipated sale price in the range of about one point something million dollars, and the Court obviously anticipated the fact that the wife’s then subsidised accommodation would have to cease and she would have to pay market rent so that whilst $350 was allowed until she had to pay rent, thereafter, the sum of $900 per week was allowed.  So it is clear that it was anticipated that the wife would have to pay market rent.

14. I will deal with the husband’s case first.  He says that he has had a decrease in his capacity to pay.  The husband relies upon his affidavit as well as his financial statement which were both sealed and filed on 8 November 2018.  The husband’s position set out in his financial statement, which could have been more fulsomely detailed, is nevertheless that he has an income of $3,884 per week.  That is, according to my rough calculation, approximately $201,968 per annum.

15. Now, the wife in her case tendered exhibit B which showed the husband’s taxable income in 2017 as being $182,000 approximately and in 2018 being $201,989.  The latter is almost identical to what is set out in the husband’s financial statement, and it is only five months since 2018 finished.  So it seems to me that the husband’s financial position in terms of his earnings has not deteriorated.  He had to move into rental accommodation and says that that affected his costs, but, as it was pointed out, he stopped having to pay the mortgage when the property was sold.

16. In terms of just the husband’s general capacity, I was taken to exhibit E where the husband spent $502.43 at … Hotel at Sydney, which I note is a hotel.  I think this was meant to suggest to me that he was living a lavish lifestyle and has plenty of money to spare, contrary to what is set out in his affidavit.  I am not sure that I can go so far as to draw that factual inference from one expenditure of $500 to have perhaps a weekend or a night at a nice hotel, particularly given the other material set out in the husband’s affidavit; however, having considered the material in the husband’s affidavit, on balance, I am not satisfied that the husband’s financial position has changed so sufficiently that it would alone justify a reconsideration of the question of maintenance.  However, that is, of course, not the end of the issue.

17. The husband points to two other things.  The first thing is that the property was sold.  The parties have both had substantial distributions from the sale of the property.  Both the husband and the wife had substantial distributions and have, it seems, expended those moneys, but the most recent figure, as I understand it, which is set out in the wife’s financial statement filed 15 November 2018, was that there are funds of $455,957 currently being held in trust which is the residue of the sale proceeds after the various disbursements. As I said, substantial disbursements have been made to each of the parties.

18. Now, that is one factor the husband points to, and that does go to the circumstances of the wife.  Whilst the money is in trust, there have been distributions by consent or by order of the Court, and there is now a pool of funds available, if the parties are able to resolve their differences.  There is now a pool of funds available in the sum of over $450,000 to the parties.  And whilst it can be argued that the Court knew this was going to happen, nevertheless, when the Presiding Judge made her decision, she had to make a decision about what should happen at the time taking into account what was known and on the basis that it would always be possible for the question of maintenance to be re-determined if there was a change of circumstance, even an anticipated change of circumstance.

19. The husband further says that there has been an increase in the wife’s capacity to support herself.  The husband points to the wife’s financial statement where she discloses income of $618 per week before tax and a tax liability of $99 per week.  At the date of the hearing before her Honour Judge Henderson the wife had a notional capacity, which she disclosed, she was not actually earning income.  The wife also has the capacity, potentially, that she disclosed, of another day taking it up to three days work a week.

20. She is still seeking to exercise that third day of work capacity which, assuming she works with the same place and she is earning a consistent income, if she is earning $618 for two days, you would expect that she would earn about $927 for three days but the tax liability is going to go up since she had moved through thresholds, but nevertheless, one would anticipate at least another $200 net per week if she was to exercise that additional earning capacity.  But she is not exercising it yet.

21. The argument was made that on the husband’s case, referring to the affidavits of the wife of 5 June 2017 at paragraph 136 to 138, where she says, at paragraph 137:

    …I hope to return to work in 2018, once the children and I are in a more stable situation, and after [X] has settled into school (which is due to commence next year).

    And continuing, at paragraph 138:

    When I return to work, it will only be on a part-time basis, three days per week.  I will be on approximately the same income as at the time of separation, being approximately $40,000 per annum.

22. That evidence is, in effect, as I understand it, repeated in her affidavit sworn on 3 July 2017 to which I was taken and it was before the Presiding Judge.  It is in virtually identical terms in the current affidavit at paragraph 265:

    I hope to return to work in 2018, once the children and I are in a more stable situation, and after [X] has settled into school (which she is due to commence next year).

    Continuing into paragraph 266:

    When I return to work, it will only be on a part-time basis, three days per week.  I will be on approximately the same income as at the time of separation, being approximately $40,000 per annum.

23. The husband’s case is that the Court in August 2017, being presented with that evidence, probably proceeded or made orders based on the fact that at that stage the wife had children, she was in supported accommodation, she had no income, she was hoping to work but she did not actually have work, it was all relatively new in terms of what was happening, and that it is most likely that the orders were made not taking into account her latent earning capacity at that stage, and noting that the Court does have the capacity to later reconsider the matter when a person obtains employment.  And although her Honour might have said, “well, you have capacity” and not made allowance, it is put to me that it is unlikely.

24. For the wife, the argument, as set out in written submissions, which are aide-mémoire 3, summarise it as:

    Since the Hearing the wife has returned to work and earns approximately $550 per week.  This was anticipated at the Hearing and submissions were made to the effect that the wife would return to work once school commenced of Term 1, 2018.  While the wife’s income can be asserted to have increased, her expenses have increased significantly as she has to pay market rental of $1100 per week.  In summary, the wife’s income has increased by $550 but expenditure in the form of rent has increased by $880 per week.  This leaves her $330 worse off. 

    Of course it was anticipated the wife’s income would increase by the amount of Spousal Maintenance.  This cannot be submitted on behalf of the husband as a significant change for the purposes of a Variation, nor, indeed, his payment of Spouse Maintenance.

    And then they go on to say:

    The husband has a clear capacity to pay ...

    which, as I have noted, I accept.

25. Now, it seems to me, dealing with the first question, that contrary to the wife’s submissions it is unlikely that when her Honour made her orders, structured as they were to take into account specifically a change based upon the wife having to get rental accommodation, that her Honour set that maintenance figure by reference not to what the wife’s then present needs and income were, but rather to what the wife’s then present needs were less an amount for the wife’s then unexercised earning capacity.

26. In those circumstances, given that the wife is now earning approximately $500 net per week and, significantly, in my view, given that the parties have now sold the marital property so $450,000 of capital has been released, both of those things between them go to the wife’s capacity, relevantly, to care for herself, and I find that this is not merely an application to re-hear her Honour’s decision but is a bona fide application for modification; and as the circumstances of the wife have changed, both in terms of her actual income and in terms of her potential access to some portion of the net capital of the proceeds of sale, that it is appropriate to now consider the question of a variation.

27. I should note that although I am reconsidering the matter, I think it is appropriate to do so from the starting point of her Honour’s orders since a judge has previously considered the matter in detail and that on that basis, I will merely look to the change in circumstances.  I note that in respect of the fact that the wife has an extra $500 per week income and extra capacity, the husband, urges that the Court would at least reduce the $900 per week to $400 per week.

28. The wife points out that she is now paying $1,100 per week rent.  That is a difficult issue.  The husband took the Court to the wife’s affidavit of 5 June 2017, in particular at paragraphs 149 to 155, although he emphasised particularly 152.  Those paragraphs basically say that the wife and children would be required to move out of their then current accommodation by January 2018 and she would need to find alternate rental accommodation.

29. The wife refers to the interim order made on 7 March 2017 at the husband’s request restraining her from “relocating the children’s residence outside of the Region 1 area without first seeking to relist the matter before the Court”.  She said that she was in the process of applying for further subsidised accommodation; however, that would be “unlikely” to be “on the Region 1”.  She says, highlighted by the husband, in the middle of paragraph 152 (emphasis in original):

    …Based on my research, a suitable three bedroom house in an area close to [Y]’s school costs between $730-$750 per week to rent.  Annexed hereto and marked with the letter “I” is a copy of online advertisements from realestate.com in respect of four properties currently available for rent in Suburb B which I have identified as being suitable for myself and the children.

30. I note that exhibit “I” which appears at pages 75 to 80 of the wife’s affidavit and which include properties in that range of $650 through to $750 per week which the wife thought were suitable properties at the time. 

31. The husband asks why the wife is now paying $1,100 per week when her evidence was, and the evidence seemed to be, that the properties in exhibit “I” do not look to be in any way deteriorated, dilapidated or substandard.  Of course, I have not inspected them; but he asks why the wife is paying $1,100 per week rent when her evidence was that she would pay $750, could pay $750 per week rent and asks whether she is just, in effect, extravagantly using the money he is paying her in maintenance.

32. I was also told, during submissions, that the wife might be able to find suitable accommodation for about $850 to $900 per week. There was not much by way of evidence before me around that topic, but that is something that the wife’s counsel indicated, as I understand it.  But, nevertheless, she is currently paying $1,100 per week.

33. In paragraph 153 of that same affidavit of 5 June 2017, the wife says, starting partway through:

    …My current weekly expenditure (as set out in part N of my Financial Statement) not including rent is $779.

34. Now, the financial statement referred to was obviously before June 2017.  The wife’s financial statement filed 15 November 2018 has personal costs of $854 for herself and $835 for the children.  Part of the submission, as I understand it, was that the children are covered by the child support figure which is independent of these proceedings but, for example, household supplies is all said to be for the wife, electricity is all allocated to the wife, telephone is all allocated to the wife, motor vehicle is all allocated to the wife and etcetera.  It is not possible in this interim application to go through in detail part N of the statement, but there is also a general submission made that the wife is overstating her costs.

35. So, as I have said, rather than seeking to start de novo, which I think would be inappropriate and is not the way I understand the case was run by either party given that we are dealing with a variation, even though on one view it might in fact be a de novo question, it seems to me appropriate to start with the position that her Honour came to which was that there is a prima facie need which is made out.

1. As I have said, I look at the husband’s income, and despite what he says in his affidavit, I am not persuaded to change the position based upon any incapacity or reduced capacity on his behalf, however, the parties do have $450,000 sitting in a bank account.  I think that is relevant.  The wife is now earning another $500 per week.  That is relevant.  She has the capacity to earn another approximately $200 net per week, a capacity she says she is seeking to exercise.  I think that is relevant.  And it looks like she has chosen, which she is entitled to do, but not necessarily at her ex-husband’s cost, to have a larger house or a more expensive house than she originally thought in the sum of $350 per week, and that is also relevant.

2. I think this type of matter defies any kind of mathematical precision.  There is an element of judgment involved.  I have read the material.  It seems to me there is still a degree of need.  I think the husband’s suggestion was that I would reduce the sum by $700 per week, given the wife is earning $500 net and could earn about $200 net more. 

3. I note that whether it is necessary or not, she does have more rental costs than she anticipated, and it is submitted that even if a cheaper alternative could be found it would still at least $850 to $900 per week.

4. In those circumstances, doing the best I can, it seems to me that the order should be varied down from $900 a week to $600 per week. 

5. The submission was made that because there was a failure to properly disclose matters that I should vary that retrospectively.  I am not persuaded that that is a just and equitable nor an appropriate course of action to take.

6. I will make orders in accordance with this decision.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Judge Smith

Date: 31 January 2019