Charonne and Charonne (No. 4)

[2009] FamCA 676

FAMILY COURT OF AUSTRALIA

CHARONNE & CHARONNE (NO. 4) [2009] FamCA 676

FAMILY LAW – SPOUSAL MAINTENANCE – review of Senior Registrar’s orders – application to suspend – available income not disclosed – variation – costs

Family Law Act 1975 (Cth)

HUSBAND: Mr Charonne

WIFE: Ms Charonne

FILE NUMBER: MLC 4853 of 2007

DATE DELIVERED: 30 June, 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: 30 June 2009

REPRESENTATION

THE HUSBAND: In person

COUNSEL FOR THE WIFE: Ms. Carter

SOLICITOR FOR THE WIFE: Marshalls & Dent

Orders

1. That the orders made herein on 21 May, 2009 be discharged and in lieu thereof, the following orders made :

   (a)that from 19 May, 2009 until further order the husband pay by way of spousal maintenance for the wife the sum of $380 per week, such payments to be made on each Tuesday or pursuant to such other arrangement as the parties agree in writing;

   (b)that within 28 days hereof, the husband comply with the order made herein on 30 September, 2008 which required him to pay to the wife, costs of $1,650;

   (c)that all costs of this day be reserved. 

2. That the application filed by the husband on 12 June, 2009 be otherwise dismissed. 

3. That the reasons for judgment this day be transcribed and copies made available to the parties. 

4. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4853 of 2007

MR CHARONNE

Husband

And

MS CHARONNE

Wife

REASONS FOR JUDGMENT

1. The husband seeks to review a decision of Senior Registrar FitzGibbon of 21 May, 2009.  I start with a little history as that review application needs to be put in context.  By that I do not mean the history of the parties’ relationship or all events since separation, which have been rehearsed in a number of earlier judgments.  I mean the history of recent applications. 

2. On 27 April, 2009 the husband filed an application in which he sought to suspend paragraph (8) of an order made by me on 12 August, 2008.  That order provided that, until further order, the husband pay $650 per week by way of maintenance to the wife.  The husband sought that the order be suspended from 1 April, 2009 until further order.  He also sought that a sum of $28,741.70 be paid to the Australian Taxation Office in satisfaction of a tax liability of his.  In support of that application the husband filed an affidavit sworn by him on 24 April.  The application was given a return date of 25 May. 

3. As noted by counsel for the wife, the husband had sought leave to appeal against the orders of 12 August, 2008, including the spousal maintenance order.  On 27 November, 2008 the appeals registrar gave directions for the filing of appeal books.  They were filed.  The hearing date of 4 May was confirmed by the registrar on 13 March.  The husband was to file the usual summary of argument and list of authorities by 3 April.  That did not occur.  The registrar wrote the usual letter in relation to default on 15 April.  According to the judgment of the Senior Registrar, on the same day the wife gave notice of an intention to apply to advance fresh evidence in the trial.  On 21 April the husband discontinued that appeal.  Thus, the application for leave to appeal was discontinued some six days prior to the filing of the application in which the husband sought to suspend the maintenance order. 

4. On 11 May the wife filed an application seeking enforcement of paragraph (8) of the orders of 12 August, 2009 and that, in default, sums due to her pursuant to those orders be withdrawn from a St. George loan account ending in 229 in the husband’s name.  She also sought enforcement of a number of other orders made on 30 September, 2008, costs and penalty interest, together with orders restraining the husband from otherwise drawing down on the mortgage account.  She filed an affidavit in support of that application on 11 May. 

5. The wife’s legal representatives made an application to abridge times to allow the enforcement application to be heard swiftly.  The abridgement application was successful.  Her application filed 11 May was listed before the Senior Registrar on 19 May, 2009.  A search of the court’s computer records would have shown that there would thus be proceedings before the Senior Registrar on 19 May and proceedings before a judge in the judicial duty list on 25 May.  While it is important that enforcement applications are heard swiftly, it is difficult to see any real justification for the two hearing dates. 

6. Before me, the husband submitted that the wife obtained the date of 19 May by deception.  As noted, his application was listed in the judicial duty list on 25 May, some six days later, and involved the very order which the wife sought to enforce.  I cannot say whether the staff member who granted the application to abridge time knew of the listing of 25 May.  One would expect that the computer record would have been checked but that may be a counsel of perfection.  Through counsel for the wife it was put that “of course” the staff member was told of the date of 25 May when the application for expedition was made.  At para. 45 of her affidavit filed on 11 May, 2009 the wife deposed that :

   . . . On 27 April 2009 I understand the husband filed a further Application in a case in principle seeking that the spousal maintenance order be “. . . suspended from 1 April 2009 until further Order”.

7. Nowhere in the affidavit is the return date of that application mentioned.  The wife did depose she had not yet “formally responded” to it. 

8. The husband also submitted that the wife should have brought to the attention of the staff member his letter of 10 April in which he proposed that spousal maintenance payment cease until his application was heard and a sum of $10,000 be set aside from funds in trust, to be drawn by the wife for her support.  This letter was annexed to the affidavit he filed on 27 April and the wife’s solicitor’s response to it was annexed to the affidavit the wife filed on 11 May.  To be fair to the wife, the husband’s summary of it could be said to be over-generous to him.  His letter contained a bare suggestion to vary the existing order by paying the wife a lump sum of $10,000 from the money invested with his solicitors;  the summary in his affidavit added that this was “to abide the outcome of these proceedings”.  He did seek further mediation.

9. The court cannot say if the staff member who granted the abridgement read the whole of the wife’s affidavit and the various attachments. 

10. I must find it surprising that the wife’s application was not listed to 25 May, particularly as she sought to enforce the very order which the husband sought to suspend by an application filed a fortnight before the enforcement application.  Nevertheless, the court cannot conduct an enquiry into those circumstances or make any findings about what the staff member was told by the wife’s solicitor when abridgement of time was sought.  The bottom line is that the staff member obviously determined it was appropriate for the wife’s application to be listed before the Senior Registrar, he being the judicial officer who routinely hears enforcement cases.  He does not have power to hear a contested application for an injunction to preserve assets pending a hearing, which was another order sought by the wife.  The decision to list the matter before the Senior Registrar necessarily resulted in the parties having to attend an additional hearing and, as the Senior Registrar’s decisions are subject to review, the potential for a third hearing. 

11. On 15 May the wife filed a response to the husband’s application of 27 April, being his application to suspend the spousal maintenance order until further order, and for the payment of tax debt.  She sought that his application be consolidated with the applications for final orders and otherwise dismissed.  She also sought a number of additional orders herself.  These included the provision of tax and company returns;  that the husband’s brother vacate a property in H;  various orders relating to the rental and valuation of the H property;  that the H property be put on the market;  that the husband provide authorities to banks and financial institutions as earlier ordered (she alleging that some provided were defective and some had not been provided);  orders for the payment of Workcover premiums for the business S Business and orders for the translation of documents relating to Japanese real properties.  In support of that response, she filed an affidavit sworn 15 May.

12. None of those orders had been sought in the application she filed four days previously, on 11 May.

13. On the same day the husband filed an amended application.  He sought, in addition to the initial orders, that the case be transferred to the Federal Magistrates’ Court and that the wife execute a discharge of mortgage.  On 18 May he filed another affidavit sworn by him in support of that amended application.

14. The following day, 19 May, the parties appeared before the Senior Registrar.  He heard submissions as to the applications he should hear.  That is, should he only hear matters raised in the wife’s application of 11 May, which had been abridged to that date, or should he hear those parts of the husband’s application of 27 April, as amended, and the wife’s response of 15 May, as fell within his jurisdiction.  He determined he should take the latter course.

15. The Senior Registrar reserved his decision.  Judgment was delivered on 21 May and I have read his reasons.  On that day, 21 May, the Senior Registrar, by consent, ordered that arrears of $4,600 of spousal maintenance be paid to the wife from moneys held in trust and form part of the husband’s property entitlements.  Those arrears were said to relate to the period between 31 March, 2009 and 19 May, 2009.  In his judgment the Senior Registrar referred to the circumstances which led to the making of that order by consent. 

16. Not by consent, the Senior Registrar ordered that the husband continue to pay spousal maintenance of $650 per week, an order that did not need to be made, absent an order suspending, varying or discharging the existing spousal maintenance order.  He also ordered the husband to pay $1,650 within 28 days, this being a sum he had been ordered to pay on 30 September, 2008.  He acceded to an application for indemnity costs by the wife, ordering the husband to pay costs of and incidental to the application of 11 May in the sum of $7,854.40.  Inherent in those orders, but specifically stated towards the end, was that the husband’s application to suspend the maintenance order was dismissed. 

17. On 26 May the wife filed an amended response to the husband’s amended application filed 15 May and an affidavit sworn on 22 May.  Although the document carries the date 26 May, it was deemed by an order made by me to have been filed on 25 May, as leave to file it was given that day.  When the case was before me on 25 May the husband said nothing of a proposed review of the orders of the Senior Registrar.  He acted for himself as he has today.  All outstanding applications and responses were ventilated and I made a number of orders on 25 May. 

18. On 12 June the husband filed an application in which he sought to review orders (3) to (5) of the Senior Registrar.  Those orders provided for the payment of the costs of $1,650, the indemnity costs of $7,854.40 and the dismissal of his application to suspend the spousal maintenance order.  He did not seek to review the Senior Registrar’s order, made by consent, that $4,600 of arrears be paid from funds held in trust.  He conceded that the wife was not served with the review application until 22 June, which is not satisfactory.  The husband advanced a reason for that, which was not compelling.  It is not hard to serve an application when a party is represented. 

19. For completeness, I add that when the case was before me on 25 May the wife was given leave to file a contravention application.  As the husband had no notice of that, it was adjourned to a judicial duty list on 12 June.  On that day the case was adjourned, part-heard, by Dessau J to 19 June.  On 19 June Dessau J found one charge proven and adjourned the case to 26 June for sanction.  On 26 June, last Friday, the husband entered a 12 month bond with a condition he comply with all financial and parenting orders made in the proceedings.  He was ordered to pay the wife’s costs of the contravention proceedings, fixed at $7,000.  I note that her Honour also made an order that the sums taken from the husband’s bank account (the substance of the found contravention) be deemed to be part property settlement in the husband’s hands. 

20. This morning I heard submissions from the husband.  Counsel for the wife then made submissions.  Late in those submissions she sought an adjournment to put evidence of two matters before the court.  Both related to her client’s current income, which could be said to be at the heart of the application before me. 

21. First, it was put from the bar table that the wife is now in receipt of $170 per week, being rental from a casual sub-tenancy of a space above the shop from which she conducts the business, S Business.  Reference had been made to this sub-tenancy when the application was before me in August 2008, the husband alleging then that this sum was available to the wife from this source.  The spousal maintenance order made at that time was made on the basis the tenant had vacated the premises and the wife was not in receipt of any sum by way of rental.  As the wife did not depose to this in her recent affidavits, counsel sought an adjournment to allow her to do so.  I am content to proceed on the basis she is in receipt of that sum.  It is not contested by the husband and an adjournment would serve no purpose.

22. Second, it was put by counsel for the wife that the husband deposed to a conversation with the wife’s accountant, and she sought to lead evidence from that accountant of that conversation.  The husband’s evidence was of the accountant reporting that the wife told him that she took $100 a week from the business.  Through her counsel, the wife said that she made it clear to her accountant that the $100 per week of which she spoke (she did not deny a conversation about taking $100 a week from the business) was in the nature of petty cash and expended on flowers and other minor expenses.  She could not explain why the sum did not appear in the financial documents prepared by her accountant even if not labelled as petty cash;  for example, there is provision in the accounts for items such as flowers and general expenses.

23. I am content, at this time, to proceed on the basis that her account of this conversation is accurate and the $100 is not cash in her hand.  There would be no point in adjourning proceedings to allow that relatively anodyne evidence to be called.  The only person who could be prejudiced by this course of action is the husband and he has not supported an adjournment. 

24. In the course of his submission the husband abandoned his application for a suspension of the spousal maintenance order and sought, in lieu, that the maintenance order be varied to $300 per week.

25. The essence of the husband’s submission is the income said to be available to the wife.  It is clear he will allege in the trial that the evidence on which she obtained the original spousal maintenance order was false and he has given notice that he will seek to have sums paid to her by way of spousal maintenance brought back into the pool and notionally attributed to her.  In these proceedings he acts on financial documents provided by the wife pursuant to court order, which should have been, but were not, before the Senior Registrar.  While maintaining the right to contest their accuracy at trial, it is the husband’s case that the wife’s financial position is much better than she asserts;  for today’s hearing, his submissions are based on documents prepared by her accountant and provided by her to him, pursuant to court order. 

26. Although there may be reference in the husband’s affidavit to his own financial position, in cogent submissions made this morning he has said not one word about that aspect of the application.  In those circumstances, I proceed on the basis that his capacity to pay is not what is in issue before me. 

27. Earlier orders required the wife to provide, on a quarterly basis, financial statements for the business, S Business.  This has been a bone of contention and in an earlier interim hearing the husband complained of her non-compliance.  When the matter was before me on 25 May I made it very clear that provision of BAS statements did not amount to compliance and that proper financial documents were to be provided, on a quarterly basis.  I need not determine today whether the accounts for the years to 30 June, 2007 and 30 June, 2008, which are annexed as EVC-2 to the husband’s affidavit filed 27 April, 2009, were provided in a timely manner or not.  There is no doubt the husband had them at the time he filed the application to suspend.  It is not denied that the documents tendered this morning as exhibit H-1 were only provided to the husband earlier this month and after the hearing before the Senior Registrar.  Those documents are a balance sheet and profit and loss statements for the business for each of the periods ending 31 December, 2008 and 31 March, 2009.  This evidence, which was not before the Senior Registrar, should have been provided to the husband soon after the end of each of the stated quarters.

28. The accounts to 30 June, 2007 show a trading profit of some $5,942.  The husband submitted that as the sum for GST noted in the accounts has not, insofar as any evidence discloses, been paid, those funds have also been available to the wife.  That is a potentially complex issue and I do not have enough evidence before me to proceed with confidence on that basis.  However, there is no doubt that a trading profit of $5,942 was declared, together with assets of between $21,000 and $22,000 in cash and bank accounts.

29. In my judgment of August 2008, I recorded that the husband had put some $30,000 into this business when it was created.  That sum was intended to pay set-up costs.  Some part of it might represent part of the cash assets now to hand. 

30. The accounts to 30 June, 2008, the following year, show a profit of $6,076.  I do not add the GST, for the reasons set out earlier.  The assets - cash and in financial institutions - have increased. 

31. The trading and profit and loss accounts as at 31 December, 2008 show a net operating profit of $5,734 to date.  The balance sheet shows current assets (cash on hand, cash in bank, a Visa business account and an unnamed source) totalling $42,037.  That is a substantial increase on the figure at 30 June, 2008.

32. As at 31 March, 2009, the most recent figures, the net operating profit is $9,693 and cash assets total $46,739.  Even were the court to ignore the “Visa business account”, which it should not, the wife has some $14,000 in cash on hand and at the bank. 

33. The husband submitted that the wife acknowledged receipt of $170 a week which she was not receiving when the order for spousal maintenance was made.  He said that whether the $100 of which the accountant spoke is income in her hand, as he submits, or is going back into the business, the business is making a profit which, on any basis, represents more than $100 per week.  The business bank balances have gone up.  For these reasons, the spousal maintenance should come down.

34. In relation to the order that the husband pay the sum of $1,650, his submission is that the sum has been paid by a set-off.  He asserted an agreement between the parties that fees of a mediation conducted by Clive Rosen be paid initially by him, with the wife to reimburse him one half.  The fees were $3,300 and one half is, coincidentally, $1,650.  In his submission it is legitimate to set-off those two obligations.  He produced no letter or order confirming the mediation arrangement or responsibility for payment of its costs. 

1. The wife’s counsel said she thought an order made in February 2008 was relevant to the question of payment for the mediation.  A search of the file has not revealed any such order but, as she said, many orders have been made.  In any event it is clear that the mediation costs were incurred prior to the order of 30 September, 2008.  If there were a valid set-off argument, it should have been raised then.  If it had been accepted, no order would have been made on 30 September, 2008.

2. The third order the husband sought to discharge was the order for indemnity costs.  It is his case that vital evidence referable to the spousal maintenance application was not before the Senior Registrar and that the unfairness of such a costs order is exacerbated when one considers that the wife was obliged by court order to provide the very evidence which would have undermined her case.  By the wife’s default in compliance with her obligation to provide financial statements for S Business for December 2008 and March 2009, she ensured the Senior Registrar was not privy to vital information about her financial position.  Further, the husband submitted that in the letter dated 10 April he made an offer which would have enabled the wife to access $10,000 from the funds in trust and that the order made by consent, which is not the subject of review, provided for arrears of $4,600 to be taken from those very funds in trust, not from the St. George Bank account, as initially sought by the wife. 

3. It should be said that the evidence supports a finding that only on the day prior to the hearing before the Senior Registrar could the wife have known that funds had been removed from the St. George Bank account in breach (as Dessau J. subsequently found) of a court order.  By the time the wife’s application came before the Senior Registrar, the funds in trust were the only funds available to meet such an order.  The Senior Registrar ordered the sum of $4,600 be deemed a part property settlement in the husband’s hands. 

4. The submissions of counsel for the wife were interrupted a number of times for her to obtain instructions from her instructing solicitor and her client.  The judgment of the Senior Registrar makes it clear that the wife had pressed for him to determine those parts of the applications then listed for 25 May which were within his jurisdiction, a course opposed by the husband.  On that basis one can assume that she believed all evidence necessary to support those aspects of her response was before the court.

5. The wife’s submission is that nothing has changed since the court made the spousal maintenance orders on 12 August, 2008.  That submission cannot be maintained given her concession (a concession not put before the Senior Registrar) of receiving $170 rent each week from a tenant.  As noted in paragraph 35 of the judgment of 12 August, 2008, the court did not proceed on that basis, it accepting her evidence that the tenant had vacated.  When fixing the spousal maintenance the court proceeded on the basis the wife was in receipt of no income from the business and no rental income;  her only income was child support received from the husband. 

6. Throughout the proceedings the husband has asserted the wife was not telling the truth about the income generated by S Business.  The court could not find the position now to be the same as that asserted in August 2008.  Financial documents prepared by her accountant show a modest operating profit.  I make it clear that it is a modest figure but it is, nevertheless, a profit.  They also disclose an increase in cash and bank assets. 

7. It was put by her counsel that the wife “cannot explain” the financial statements.  She does not know what bank accounts are referred to.  When the business was set up the husband was to run its financial aspects and the wife was to undertake the creative and operational parts of it.  Since separation she has run the business alone.  I place no weight at all on the submission, thrown in on the run, that the wife could not access the profits of the business because the business is owned by G Pty. Ltd., a company controlled by the husband. 

8. The wife has had the conduct of the business since separation.  In a hard fought case the husband has never submitted she should not deal with an asset which is, notionally, that of a company controlled by him.  Indeed, he has relied on evidence which, he has submitted, would demonstrate the business is making a profit and has proceeded on the basis that any profit is available to support the wife. 

9. I add that the husband could not object to the wife paying herself a modest salary.  On the financial documents it would be a very modest salary, so modest it would not attract a tax liability.  But it does her little credit to suddenly assert that the business belongs to the husband and thus she cannot access its operating profits.  I add that the submission sits uncomfortably with her evidence of the business’s lack of profitability.

10. In an earlier hearing, I noted that if the wife’s evidence were accurate – at that time her evidence was, as it was before the Senior Registrar, of taking nothing out of the business – one would have to ask whether she should be conducting the business at all and whether it was a reasonable utilisation of her time and energy, let alone fair to potential creditors.  That issue may need to be determined at another time.  To the extent that a court can make it clear, I make it clear that, absent any submission to the contrary today from the husband, who is present as I speak, the wife, who works fulltime in the business, can, consistent with usual practice, be paid a wage by the business.  On the figures before the court the wage would not be a market wage and whether it were $100 a week, $200 a week or more would depend on the profitability of the business from time to time.  Whatever other animosity exists between the parties, it cannot be said that the husband has obstructed the day to day business of S Business.

11. This is a re-hearing.  The husband does not need to demonstrate any error of law.  Importantly, vital evidence before this court was not available to the Senior Registrar and it was not available because the wife had failed to comply with an order for its production.  The Senior Registrar determined the applications within his jurisdiction on the evidence then available to him.  As is not uncommon, additional evidence is before the court which undertakes the review.

12. I am satisfied the evidence establishes that the wife has access to additional income to that to which she deposed.  There is the rental of $170 per week and there is profit from the business.  The profit from the business may well be reflected in the increased sums in bank accounts;  it should not be double counted.  But on the March 2009 figures, the operating profit amounts to some $248 per week.  In addition, while the figures for depreciation are appropriate, they do not represent case expended and those sums have been available, too.

13. In my judgment, the evidence justifies a reduction in the wife’s maintenance of $270 a week.  The existing order is for $650.  A reduction of $270 brings that to $380.

14. In the usual course I would back-date that order to the date on which the husband filed his application which was 27 April, 2009 or the next Tuesday which is the day on which maintenance is paid.  However, I am mindful of the order made by consent which was not the subject of review and provides for arrears (calculated at $650 per week) from 31 March to 19 May, 2009.  In those circumstances the variation will take effect from 19 May, 2009, until further order.

15. In relation to the order for payment of $1,650 I note that the Senior Registrar found, correctly, that the mediation costs were incurred prior to 30 September, 2008, and the court did not then set-off the two sums.  I find the amount to be due (indeed, overdue) and it is to be paid within 28 days hereof. 

16. Indemnity costs were ordered by the Senior Registrar, he giving sound reasons on the evidence then before him for that order.  He noted that the wife’s application of 15 May was the second enforcement application brought by her.  Times are only abridged if an application seeks such an abridgment.  If not abridged, all outstanding applications would have been before me on 25 May and orders made by me on that day would not have been subject to review, but rather to an application for leave to appeal, potentially a less palatable alternative for a litigant.  In my judgment, having regard to the findings I have made and the outcome of the review, the order for costs to be paid on an indemnity basis should be discharged. 

17. The only costs orders sought by counsel for the wife today is an order reserving her costs of today.  No other application has been made.  I will reserve all costs of this day. 

18. The husband practices a profession and it can be assumed he understands the importance of the bond he signed on 26 June, 2009.  Any failure to comply with an order of this court, including orders made today, would constitute a breach of that bond. 

I certify that the preceding 52  paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the           day of            2009.

…………………………………………
Associate.