Cryall and Peterman

[2008] FamCA 295

FAMILY COURT OF AUSTRALIA

CRYALL & PETERMAN [2008] FamCA 295

FAMILY LAW – MAINTENANCE - interim spousal maintenance
FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

APPLICANT: Ms Cryall

RESPONDENT: Mr Peterman

FILE NUMBER: SYC 5885 of 2007

DATE DELIVERED: 19 March 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Judicial Registrar Loughnan

HEARING DATE: 19 March 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT:

SOLICITOR FOR THE APPLICANT: Meyer Pigdon Lawyers

COUNSEL FOR THE RESPONDENT:

SOLICITOR FOR THE RESPONDENT: Barkus Edwards Doolan

INDEPENDENT CHILDREN’S LAWYER: Legal Aid Commission of NSW

Orders

1. Orders are made in terms of paragraph 1 of the document titled “Husband’s Minutes of Orders” dated 18 March 2008 and marked Exhibit A hereto, substituting the figure $1,200 for the figure $500 in paragraph 1.1.

1. By way of interim costs the husband is to cause a payment to the wife’s solicitors within 21 days from today’s date or within such further time as the parties may agree in the sum of $100,000 AND it is noted that the characterisation of that payment will be a matter for the Trial Judge in the property proceedings between the parties.

1. Otherwise the Application in a Case filed 12 February 2008 and the husband’s Response filed 14 March 2008 are dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5885 of 2007

MS CRYALL

Applicant

And

MR PETERMAN

Respondent

REASONS FOR JUDGMENT

1. These are proceedings listed in the duty list yesterday.  In the fashion of the Sydney duty list, the matter involves a considerable amount of written evidence in the form of the parties' affidavits and other documents, and a considerable amount of tendered material.  I heard submissions from the parties yesterday afternoon and indicated, subject to one matter, that I proposed to give judgment today.  I indicated to the parties that they were excused, with their lawyers, on delivery of judgment in order to save costs.

2. These are interim financial proceedings involving claims by the wife for interim spousal maintenance and interim costs.  The wife and husband, I understand, are 48 and 43 years of age respectively.  They lived together from 1990, were married in 1993 and separated first under one roof in April 2007 and then physical separation occurred in June with the husband moving out of the former matrimonial home, which is a property at L into another property bought by him in that same suburb.

3. The proceedings came before me in September last year in relation to parenting issues. The parties have three children, D, M and T, who, I think, are 12, 8 and 6 years of age respectively.  In September I made orders leaving in place an arrangement whereby the children were split between the households.  A lawyer was appointed for the children, and a report commissioned by a Dr W.  That report became available to the parties, and I heard the matter again on 6 November 2007. I ordered that the children live with the husband and spend time with the wife on a supervised basis every second Friday from 3 pm to 7.30 pm, 9 am to 7.30 pm on Saturdays and Thursdays from 3 pm to 7.30 pm.

4. There were further issues in dispute between the parties and on 28 November 2007 I made a number of other orders, including an order that the wife have exclusive occupation of the home at L.

5. I should also say that I understand that the proceedings have progressed to the first day of the less adversarial trial before Stevenson J, and the matter has been flagged for a hearing of five days before her Honour at Parramatta at the end of August of this year.  There was some dispute between the parties as to whether that hearing would include the property proceedings, and I gather at the end of some discussion about that, perhaps because the wife had not agreed to the less adversarial process, Div 12A of Part VII applying to the property proceedings, it was unlikely that the hearing in August would deal with the property aspects of the parties' conflict.

6. Coming back to the matters before me, it took a while to achieve joinder of issue in these proceedings, but the situation is that, by her application in a case filed on 12 February 2008, the wife sought in summary a payment of interim spousal maintenance of $3260 per week and direct payment by the husband of the following expenses: the wife's health insurance contributions, home and contents insurance for the former matrimonial home, council rates and mortgage instalments for that home, lease payments, registration, comprehensive and green slip insurance and all costs of servicing and maintaining and repairing the wife's Honda motor vehicle.  Finally, she seeks an order that the husband pay her $100,000 for the purposes of her legal costs in these proceedings, the characterisation of which would be left to the trial Judge.

7. In accordance with a minute handed up at the commencement of the hearing, in summary the husband seeks that he be required to pay $500 per week into a bank account nominated by the wife and then direct payment of the following expenses: health insurance for the wife with the Hospital Contribution Fund, home and contents insurance for the former matrimonial home, council rates for that home, mortgage instalments for the home, lease payments, registration, comprehensive and green slip insurance for the wife's motor vehicle and reasonable repairs and maintenance, as agreed in advance by him for that vehicle, the costs of the wife's etag for that vehicle, all reasonable gap medical expenses not covered by Hospital Contribution Fund, Foxtel, gas, electricity and water rates in relation to the former matrimonial home, reasonable Telstra expenses for that home, the wife's reasonable mobile telephone expenses.  He wants to pay accounts rendered by Bigpond for the home at approximately the current rate.  He wants to pay for all annual pest inspections for the home, the costs associated with the maintenance of the pool at the home, the costs of the back‑to‑base alarm for the home, the costs of the wife’s therapy at $200 a week, the costs of the wife's personal training capped at $160 a week and reasonable veterinary expenses incurred in respect of the pets currently at the home.  He would like the order reviewed after the outcome of the proceedings before the trial Judge on 31 March 2008.

8. I do not know all of the details about this, but I think the situation was that an order was made by me that the wife's time with the children be supervised.  In response to that, the husband retained the services of a full‑time nanny, whose job would both be to manage the children's time in his household and also supervise their time with the wife.  I am told, for reasons that are referred to in an affidavit filed sworn by the nanny, she is no longer able to provide that supervision.  I understand that the proceedings before the trial Judge on 31 March may well be in aid of, among other things, addressing that issue.

9. I asked learned counsel at the end of submissions last night to express the orders for the wife in terms of the format of the husband's orders sought, and I was told that, in the event that the husband made the payments that he proposed to make ‑ I must say, the wife opposes all of those payments being made direct by him ‑ then the wife's claim was $1974 per week.  Thus, the dispute in relation to quantum between the parties relates to a difference of $1474 per week.

10. The husband's formal response to the wife's application was that the application be dismissed.  On that basis, as I understand it, the application for interim costs is opposed.  In submissions, it was acknowledged on behalf of the husband, or it was stated on behalf of the husband, that if he was ordered to pay any lump sum it would have to be borrowed.  I was also told in submissions that, in the event that an order was made for the wife, then similar provision should be made for the husband.

11. Firstly, turning to interim spousal maintenance, it is a remedy available between parties who have been married. It is a remedy based on one party to a marriage establishing that that party has a need for financial support because of obligations in relation to the care for children under 18, because of age or physical or mental incapacity for appropriate gainful employment, or for any other adequate reason. In this case, the wife would need to establish that she is not able to adequately support herself from her own resources for an adequate reason. Then the inquiry turns to whether ‑ and the wife has to establish this ‑ there is a capacity in the husband to provide the required support and, of course, the Court has to determine the extent of that capacity. The examination of the extent of the need and the extent of the capacity is undertaken by reference to the matters that are set out in s 75 of the Family Law Act.

12. The Court has power to make these orders on an interim basis, and that is what I am asked to do today.  An interim determination necessarily involves a truncated inquiry.  Findings of fact are often not possible and certainly should not be made about disputed issues of fact unless there is independent evidence that excludes one version of events or wholly support the other.

13. There is a preliminary issue between the parties as to the way in which maintenance will be paid.  The wife seeks that only some of her expenses be met directly by the husband and seeks that the cash component of her maintenance be increased so that she is able to pay more of her expenses herself.  The first point about this, and perhaps the last point about this, is that it is not necessary to change the current arrangement whereby the husband pays directly the expenses that he has identified.  The wife makes some complaint in her affidavit about the arduous course of correspondence between solicitors needed to pursue her claim for provision from the husband for her legal fees.  However, I think I am right in saying that there is no significant complaint from the wife about the husband's payment of utilities for the property and the other types of expenses that she has sought.

14. One does find an argument from time to time along the lines of a preference for a payer paying maintenance in kind, such as providing clothes, food and household items. It is said that that is to avoid a recipient of support, wasting maintenance.  It is possible that an attitude like that can simply reflect a manipulative, controlling or demeaning attitude from the payer.  In my view, that is not the situation here.  The wife herself seeks that certain payments be made directly by the husband.  The husband himself seeks that there be a cash component of his support.  As to the line drawn between the components of cash support and direct payment, there are issues arising in this case from Dr W’s report in relation to the wife's psychological health that have given rise to the husband having some concerns about, inter alia, the possible application of financial support by the wife to the consumption, for example, of alcohol and cannabis.  I do not say that there is evidence about there being a significant application of those funds in that way, but it is a matter raised by the husband in his case.  A subtext of the proceedings ‑ and it must be remembered that these are only proceedings at a very early stage ‑ is that the wife has, in the past, had a problem with the use of alcohol and other substances and it is possible that she does not have significant insight into those problems.  Indeed, the concerns in relation to the wife arising from Dr W’s report came as something of a surprise to both of the parties.

15. I am not able to address these issues in these proceedings, so I come back to the point that, in my view, it is not necessary to change the current format of payments and I will continue it.

16. Coming then to the cash component, if I can call it that, the wife seeks $1974 a week, and the husband would like to pay $500 a week. The parties are apart by $1474 a week. In relation to the wife's needs, s 75 identifies a raft of things, the age and health of the parties, the income, financial resources of each of them, their physical or mental capacity for appropriate employment, whether either has the care and control of a child under 18, commitments necessary for their own support and the support of others, responsibility of either party to support another person, a third party, eligibility for superannuation and pensions, a standard of living that in all the circumstances is reasonable, the extent to which a party knows maintenance is under consideration has contributed to the income‑earning capacity, property and financial resources of the other party, the duration of the marriage and the extent to which it has affected earning capacity, the need to protect a party who wishes to continue a role as parent, and they are the relevant matters. Also any child support that has to be provided. Then there is a catchall provision.

17. The wife's expenses are referred to variously in her financial statement and in an affidavit sworn by her on the same day.  That is where the claim for $3260 comes from.  That is where the detail by which I can assess this dispute over $1450 a week can be found.  The documents do not quite match up, the financial statement and the affidavit.  I think I was told the difference related to two categories of expenses that will be paid directly by the husband under this arrangement ‑ the cost of a personal trainer as $160 a week and of a Mr R, who I think is a psychologist, who provides counselling services to the wife at $200 a week.

18. There are some irritating differences between the affidavit and the financial statement.  Just to go through some of the claims and complaints - as to house repairs at $150 a week, the wife says that she incurs repairs, including electrical, plumbing and computer repairs and the like.  The husband says that the property underwent an extensive renovation a few years ago, that repairs are rarely needed and will often be performed under warranty.  The parties seem to be like ships in the night on this issue.  I suppose the electrical and plumbing repairs may well relate to the renovation; they may not.  Computer repairs presumably would not.  It is not possible to make a finding about this issue. 

19. The wife says she spends an average of $130 a week on Etag, parking and train fares.  She travels by train to see her lawyers and to attend for personal training.  The submission for the husband, made without complaint from the wife, is that from a week before swearing her affidavit setting out these claims ‑ that is from 24 January 2008 until 24 April 2008, the wife's drivers licence is cancelled.  It is a bit irritating that that fact was not mentioned in the wife’s affidavit.  In those circumstances, the particular claim seems excessive, but the orders need to address the medium term and potentially through until the property settlement is achieved.  In relation to Etag, of course, that is a payment that is going to be made directly by the husband.

20. The wife's clothing and shoes at $238 a week - in her Financial Statement she says $240 a week made up of $200 for herself and $48 for the children.  In her affidavit she says she spends an average of $200 per week on clothes and $38 per week on shoes.  It is the husband's case that the wife's claim is excessive.  He points to the fact that an earlier claim for this item was significantly less.  Indeed, the entirety of the wife’s claim made for her own support and that of the household, bar the mortgage payments, on 21 June 2007 by a letter from her lawyers, was a total of $2070 per week.  Similarly, there was a more modest claim made in September 2007.  There is a problem that I will come back to in relation to the children's expenses, but it is not possible to get to the bottom of that.

21. By reference to the husband's expenses, I think he wants to spend $23 a week for his own clothing.  There might be an argument that this claim seems a little light, given that he is in professional employment. No doubt the wife could spend less than $200 per week for her clothes and shoes. As to a claim for holidays at  $450 a week.  The wife points to an average expenditure of about $23,000 by the parties on holidays over 12 years of marriage.  She proposes to take the children away for at least two holidays a year.  As I say, there is an issue about the children in any event, and I will come back to that.  The husband contends that he and the children went to the USA with his mother last Christmas holidays at a total cost of $20,000.  He says that that was the first time he and the children had been overseas on a holiday for four years.  He puts the usual cost of holidays for the family, (while they were together, I assume) at $5000 per year.  He says that there was only one year where the parties spent about $23,000, and that was the event four years ago in 2003.

22. The wife seeks $100 a week for a gardener/lawn mower and $120 a week for a housekeeper.  She says that they were expenses she had during the marriage.  She says that since separation she has paid those persons directly.  The husband's contention is that the wife is not employed, that she enjoys gardening and does not need to incur an expense for a gardener.  He pays for the pool cleaner, and he says that the wife lives alone and is not employed and could clean the house herself. As to gifts at $5000 per annum, the wife says she would like to spend $5000 on her children, friends and family at Christmas time.  Again, the ships in the night problem arises, and the husband contends that he pays for all of the children's gifts to them and from them for birthday parties and the like. I think the parties are addressing different categories of gifts.  I think the wife says she wants to buy $5000 worth of gifts for the children, her friends and family.  That would not obviously be accommodated by the gifts the husband pays for.

23. I was provided with an aide memoir that was represented as showing an application of $755 to alcohol by the wife in a period of 12 days, earlier this year.  The answer to that from the wife is that, as to $400, although apparently from licensed premises, the expenditure really was a withdrawal from an ATM machine.  In relation to another expense, I think of the order of $90 or $70, that was a meal consumed by the wife.  Otherwise, those two items absent reduced the expense at a time around the holiday season to something much more modest.  That is not conclusive, but I just thought I would mention the concern of the husband.

24. As to children's expenses, there is a raft of them in the claims the wife makes, for example, I have mentioned $450 per week for holidays.  The wife's claim is apparently based on that claim of an average of $23,000 a year, which the husband says is massively inflated, but, in any event, it must involve the costs of the children.  Indeed, when she disaggregates that claim in her financial statement, the wife says that it is $150 for her own holidays and $300 for the children.  So, it is substantially relating to the children.  As to shoes and clothes, it is complicated.  The wife says that now she spends $40 per week on the children for clothes, but she says that before September 2007 she spent a total of $150 per week on the children for shoes and clothes.  She identifies a claim for $50 a week in relation to the children's activities, swimming, diving and gym are mentioned.  She says that her claim for food at $500 a week includes food for the children each Thursday, alternate Friday and Saturday and Sunday.  There is no mention of a break‑up in her affidavit, but in her financial statement, that is disaggregated to $300 for herself and $200 for the children.

1. The husband submits that he should not be required to meet a claim in relation to expenses for the children as that is a matter for child support and not spousal maintenance.  In any event, it is his claim that he meets at least some of the relevant expenses.  I think the submission for the wife is that, notwithstanding a decision of the Full Court in In the Marriage of Stein, reported at 2000 FLR 727, the Court is not excluded from taking account in relation to the costs of the wife's household, her support of the children.  In In the Marriage of Stein, the Full Court was dealing with an appeal against a single Judge of this Registry who, himself, was dealing with a claim for interim spousal maintenance. The Full Court was satisfied that his Honour wrapped up costs associated with children with the claim for spousal maintenance.  The Full Court says:

   It must be borne in mind that the proceedings before the trial Judge were proceedings for spousal maintenance.  There were no proceedings before the trial Judge for departure from administrative assessment of child support.  Although it may be reasonable to speculate that if such proceedings had been brought, an order might properly have been made which would have visited the entire costs of supporting the children upon the husband.

   Just stopping there for a moment, that is really the case here, for reasons that I will come back to. For the time being, the entirety of the financial support of the family vests on the husband's income and the parties' assets, resources and borrowings. The Full Court dealt with the fact that there is a reference, as I have said, in s 75 to child support and to the commitments of each of the parties necessary to enable the party to support themselves and a child. The Full Court said this:

   S 75(2) serves many masters.  It contains matters to be considered in both s 74, spousal maintenance, and s 79, alteration of property proceedings.  It contains matters relevant to the capacity of a payer to make maintenance payments and to the needs of the payee to receive them.  It contains matters which are relevant to comparing the situation of the parties when deciding what appropriate adjustment of property interests should be.  But its provisions must be read as ancillary to the power being exercised in each case.  The maintenance power is found within the confines of s 72 and s 74 and the property power within s 79(1) and (2).  It seems to us that in the context of an application for spousal maintenance, the consideration in s 75(2)(d) of the commitments of each of the parties that are necessary to enable the party to support a child that the party has a duty to maintain has greater significance in determining the capacity of the pair to provide support rather than in determining the extent to which the other party requires support.

   The Full Court went on later:

   While the legislation permits the Court in exercising its s 74 power to take into account only the matters set out in s 75(2), the legislation gives little guide as to manner in which they are to be so taken into account.

   It goes on later:

   There is, however, an overlap between the various sections. In order to avoid double dipping in s 117 of the Child Support Assessment Act, that section enables the Court to take into account in proceedings for a departure order any payments made or to be made whether under this act the Family Law Act 1975 or otherwise by the liable parent to the carer entitled to child support for the benefit of the child. As already indicated, s 75(2)(na) enables the Court in determining an application for spousal maintenance to take into account any child support that is being provided or might be provided or might be liable to be provided in the future.

2. In concluding the matter, the Full Court said:

   Even if it was appropriate for the trial Judge to have taken into account the commitments of the wife necessary to enable the wife to support her children, it could not be said that the expenditure of moneys on the children by the wife over and above the moneys she would be able to obtain by way of an appropriate assessment of child support could be seen as necessary expenditure by the wife.  It certainly could not be seen as an element of her self‑support.  In our view, we must conclude that his Honour erred when taking into account what his Honour described as the obligation to maintain the children pursuant to s 75(2)(d).  In one sense, the wife had no obligation to support the children, because that obligation could be clearly met by an application for departure from administrative assessment of child support.  In another sense, even if she had an obligation to maintain those children, the fact that she was meeting that obligation could not be said to be a necessary element of the amount of support she needed for herself.

   Stein’s case is binding authority, as far as I can tell, and it applies here.

3. I have not mentioned the wife's need for financial support.  It is conceded in this case that there is some need, as I said, although his initial response was to ask that the wife's application be dismissed, I think, to be fair to the husband, that was on the basis that he was already making payments.  It is not contended for the purposes of interim proceedings that the wife has any significant capacity for her own support.  Counsel for the husband went to some lengths yesterday to explain to me that the husband would not want to be held to that position in relation to final property proceedings at some future date.  I accept that.  But, it is an agreed fact that the wife has no current capacity for self‑support.  Her need will be the entirety of her need for her own living expenses.

4. There is a necessary imprecision in interim maintenance proceedings.  The wife's claim is for rolled up amounts, $300 for food, $150 for household supplies, $150 for house repairs, $200 for clothing and shoes.  They are just estimates, obviously.  The average weekly figure over a year would never have been and could never be exactly those sums.  The authorities consistently support a decision in an interim proceedings not being based on an item‑by‑item analysis of the propriety of expenses.  Cases such as Wilson's case identify that families have very different needs, and what is a proper level of support, what is a reasonable expense in one household will be gross exaggeration and indulgence in another.  To some extent, one tries to take a line, as one is required to do, by reference to the standard of living of the parties in the past, and one tries to take a line through the comparative expenditure of the parties now.  That still does not help on any given day as to whether it is a reasonable expense for the wife to spend $300 a week on her own food, $150 on household supplies, $150 a week on house repairs.

5. The claims in respect of the children, accepting that they are wrapped up in the wife's claim for a weekly payment of $1974, amount to $200 of the holiday expense.  No doubt, although they are not disaggregated, there are components of virtually every expense, at least some small aspect of the recurrent costs of the wife's household, shared with the children to the extent that the children are there.  I accept that it is possible that the wife could consume at the rate of $1974 a week.  I am not in a position to find whether that is the rate at which her pro rata expenses were incurred at some time in the past or, in the event that that is not so, whether, with the loss of efficiencies of the family all occupying one premises, it is critical or necessary or reasonable that she consume at that rate now.  However, on the other hand, with the best will in the world, I cannot reduce the wife's expenses to the husband's proposed figure of $500 per week.  True it is that the cost of some things, such as holidays, will be divided up over time, but, for example, in relation to that item, the husband found it possible and appropriate to take the children and his mother at his cost to the United States over the last Christmas holidays.  I think he spent something of the order of $20,000 on that exercise.  Now, his claim in relation to holiday expenses is $240 a week, $60 a week for himself and $180 a week for the children.  I do not know how it is possible to divide $20,000 to get to those figures ‑ presumably he has done a calculation based on that expense being spread over far more than one year. It gives an indication that it is not the family standard that holidays would stop during this period.  It pleased the parties to make arrangements for the children to have some time with the wife on holidays, I think in Western Australia, over those same holidays.  True it is that a claim for holidays would always give way to necessity. However, we do not seem to have got to that point just yet. Some proper allowance should be  made for holidays for the wife.

6. The same, I think, will apply to many of the expenses.  Stepping back broadly, the parties had overseas travel.  They have lived in a house that the husband describes as a very attractive property.  I think it is agreed to be worth something like $3 million.  When he needed a place to stay in anticipation or concern that there may be a separation, the husband found a property at $1 million.  The children attend private schools. The parties had somebody cleaning the pool and somebody gardening and so on.  It has not been a breadline household. 

7. Just finishing up in relation to the wife's needs, I am satisfied that she has a need and it could be a need of the order of her claim.  I think the case falls to be determined based on an assessment of what is proper and what is reasonable given the constraints on any capacity to pay.

8. As to the capacity to pay, there are issues that I cannot get to the bottom of about this.  The husband says that his income is $31,169 a week.  That disclosure is made up of drawings, a sign-on fee, and a salary from a service company.  In relation to the sign on fee, although his Financial Statement says something else, it is conceded by the husband through his counsel that the sign-on fee continues to be paid.  It was to be paid in three instalments of $200,000, and it is agreed that there was a payment in January of this year, and the last payment will be made in January next.

9. The argument on behalf of the wife is that the husband's disclosure involves a shortfall on a weekly basis of $2700. He says he earns $31,169 a week and spends $33,838, a shortfall of $2700.  I am asked to question that because the husband maintains a healthy balance in the main accounts that he operates. There has been a credit balance of not less than $100,000 in that account since December 2007. I will come back to that. There is reference to a distribution from a thing called the M Trust, which amounted to $150,000 in the hands of the wife during the marriage.  I am asked to accept that was an income splitting arrangement and now the husband's income could include that amount directly.  The evidence about the trust is said to unsatisfactory on the basis that the wife's solicitors were told, even though the income was distributed inter alia to the wife from that trust, no financial statements or returns have been made for the same financial year for the trust.  The hypothetical question is - how on earth could income be identified if the financial statements of the trust have not been resolved?

10. On that basis, it is asserted that his income is more like $36,000 a week.  Coming to his expenses, the husband claims a weekly expense of $962 for superannuation.  There is some evidence that that is paid if a lump sum, not in a weekly amount.  I am asked to treat it as either something that does not have to be paid or a payment that will not now come around well beyond the scope of the duration of the interim maintenance orders that I am hearing.  The husband seems in the heat of the period since separation to have applied $100,000 to the purchase of shares in an entity called something like A….  That, I am asked to accept, suggests he is confident that he will have a surplus of funds.  In any event, it is submitted, if needed the shares could be sold.  The husband's weekly expenses include a claim for $2088 paid in legal fees.  That is a claim that would give way to the need for the wife's support.  In relation to the loan facilities being serviced by the husband, he makes payments, notwithstanding that the amounts are expressed in weekly amounts, in capital sums on an annual basis, and there is some issue about the reduction of principal and whether that is strictly necessary or not.  But it is said that the result of ignoring the legal fees, prepaid capital amounts by way of mortgage principal and the superannuation contributions is that something like $8000 a week can be taken off the debts.  What is argued is that the dividend from that is an income increased and debts reduced releasing another $13,000 a week.

11. In response to that, although not all the items were addressed (no reference, I think, was made to superannuation) the husband’s case is as follows.  In relation to the mortgage payments, it is said that whether they are paid annually or weekly, they have to be paid.  The obligation cannot be ignored and will continue to be incurred.  It is asserted that, with the separation, the husband's opportunity for income splitting has gone and that his asserted income of $31,169 reflects the entirety of his income. 

12. The assertion by the husband is that he is running at a significant deficit.  The background facts suggest that might be right.  The husband has, since the parties were together in May last year, needed alternate accommodation. He addressed that need by buying a property for $1 million, fully encumbered.  That involved a significant cost.  He has retained the services of a nanny at $65,000 a year plus GST.  He is meeting all of the costs of both households. He foreshadows, by reason of the requirement for him to be, in effect, the primary caregiver of the children, reduction in his hours of work requiring him to reduce his income.

13. A couple of things fall from all of that.  I am not satisfied that there is a significant surplus or any surplus in the husband's weekly budget.  In fact, what he says is that he has been meeting the costs of the combined households from sources other than income.  He is running at this deficit of $2,700 a week.  If I ignored the superannuation payments and treated the mortgage payments as if they involved little or no reduction of principal I could get him closer to a balanced budget. That would not release the additional $1,474 claimed by the wife.

14. The next thing to be said is that there is no requirement for maintenance to be paid out of income. As I said, s 75(2) refers to the income, property and financial resources of each of the parties and their physical and mental capacity for appropriate gainful employment. Thus there is no requirement that the payment be made out of income or out of property. It can be made out of borrowings or financial resources. Indeed, I think that is the husband's claim. In that context, he has been happy or able to do it. I made reference to the travel overseas at Christmas time. It is not as though the household has been completely locked down in terms of discretionary expenditure because of the circumstances of the pressure on his weekly budget.

15. The next thing to be said is that there is no joy for the wife in that outcome.  The parties seem to agree that there may be net assets of the order of $3 million.  By reference to legal fees and by reference to their recurrent expenditure, they are chewing away at the pool of assets that is to be the subject of, among other things, the wife's claim for a property settlement.  It does her no favours if the ultimate outcome is that she pays for her support today from funds that she will be relying on to provide appropriate housing for herself and for her own support into the future. There is a need to be conservative and cautious in the context of this case.

16. As I said, I cannot balance the wife's budget on any normative or arbitrary process against the amount the husband thinks she should be spending. In my view there is a need for additional funds.  I do not think it is responsible to make the order at $1974 per week.  Although it has the effect that I have indicated in terms of reducing the pool of assets, the fact is that if there is an imprecision about the calculation today of the expenses of the wife in all the circumstances, that can be remedied in the final proceedings.  It is often said in fact there will be no adjustment but that does not mean I cannot take that capacity into account. Any excess or shortfall in support can be remedied in terms of a direct payment.  The trial Judge can make a finding in relation to the character of payments that have been made in the past.  Even if they are left as they are, the husband gets credit for contributions in the exercise of discretion under s 79(4) for the payments that he has made to support the wife's household, more so if, in the ultimate, they are found to be some in some way excessive.

17. In the circumstances it seems to me that there should be a payment at $1200 a week.

18. As to interim costs, that is remedy that has no specific expression in the Family Law Act. Over time there has been a consideration of the basis for such relief. Possibilities include s 114 by way of a mandatory injunction for payment, s 72, s 74 and s 75 for spousal maintenance, s 117 in relation to the payment of costs. What is not in doubt is that the Court has the power to make an order, and, over time, in cases such as Poletti, Zshokke, Hogan and Barro and others, the Court has been concerned to identify cases where there is some financial complexity, where a party may be left without adequate financial capacity to provide for legal fees and, therefore, be left without legal representation. The concern is that thereby the exercise of discretion in the substantive proceedings may be jeopardised because the proceedings are not properly litigated.  It has also been noted in cases such as Poletti that where one party controls the patrimony of the family ‑ that is, the access to resources and the flexibility to use them and the knowledge associated with the financial affairs of the parties ‑ the costs for the other party can be significant, and there is an essential unfairness about those costs not being met. 

19. Here the wife owes $41,447 in legal costs.  She is committed to a payment of $24,500 for work in progress.  There are moneys owing by way of disbursements in the form of counsel's fees in the sum of about $15,290.  The arithmetic does not quite make sense, but I am told that she owes in excess of $81,000 for those fees.  She seeks a payment, as I have said, of $100,000.

20. The proceedings have advanced to the point, whereby the first day of the less adversarial trial has occurred, at least in relation to the parenting proceedings, and five days are likely to be set aside at the end of August.  In relation to the source of funds to meet this claim, learned senior counsel for the wife points to the husband's account with the National Australia Bank.  That is an account numbered …60, which, as I said earlier, had a credit balance of over $100,000 maintained since December 2007.  That account as at 13 March 2008 stood at $132,681.  In any event, it is said in the wife's case that she would not oppose a further drawing on the facility secured on the former matrimonial home for this purpose ‑ in other words, further borrowings.

21. In response, the submission on behalf of the husband dealt with a concern at the legal costs already incurred by the parties, which are said to be in excess of $200,000 and a desire to bring home to the wife the fact that joint funds are being applied and eroded by those costs.  In relation to the source of funds, the submission is that the husband has very significant outgoings and borrowings to service.  By way of example, he has a taxation liability of $249,497 due on 1 May this year, and a quarterly Pay As You Go instalment of $140,000.  The husband's formal application, I think, is that the wife's interim application for costs be dismissed.  In the event that there is to be a payment, it is submitted for him that the payment would need to be borrowed by the husband.  Finally, in the event that there is to be a payment, it is submitted on behalf of the husband that there should be a similar facility offered to him.  In reply to that, the wife's submission is that the husband sought no order for interim costs and, in the circumstances, there is no basis for making an order just to be fair between the parties.

1. The wife has incurred legal costs, and she will incur more over the next six months at least.  She needs legal representation.  The husband has at least adopted as part of his case, a concern for the wife and her parenting capacity arising from issues of substance abuse and personality disorder identified by Dr W in the parenting proceedings.  Here, although perhaps not as complex as the affairs of the parties in the cases of Poletti and Zchokke, to the extent that there is complexity in the parties' financial affairs, it is husband here who has the knowledge and who has had the carriage of those affairs for the wife.  The wife has committed herself to an arrangement whereby payment is required in an orderly manner to her lawyers. In any event, the situation should not be left on the basis that her lawyers be required to carry the impost of disbursements as well as waiting for profit costs.  The fact is that the lawyers on both sides will ultimately be paid and, largely, from the same source.  The wife has no other identified option for meeting her costs.  The character of the payment will be a matter for the trial Judge in the property proceedings.  In the normal course, the outcome is likely to be at the end of the day that the wife is simply seeking a preliminary distribution of her own funds to pay her own debt.  I will make the order sought by the wife, and I note that the wife does not oppose the funds being raised by further borrowing.

2. As to the husband's belated claim for an order in relation to his own costs, there is no merit in that claim.  He neither sought such an order in his Response nor in the minute of orders handed up to me at the start of the hearing yesterday.  That accounts for the fact that there is no evidence in support of a claim for those costs, and there is no suggestion that his representation is threatened for want of an order.  "Me too" is not a proper basis for an exercise of discretion.  It follows from what I have said that the wife's costs are likely to be greater than those of the husband as she is required to have her lawyers seek out evidence of facts already within the knowledge of the husband.  Finally, the husband is himself a senior professional and is hardly in the same position as the wife, who has been out of the paid workforce for 13 years. Further, if Dr W is right, she has some qualification to her health.

I certify that the preceding forty seven (47) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan.

Associate: 

Date:  1 May 2008