Dodt and Elei - [2018] FamCAFC 166

FAMILY COURT OF AUSTRALIA

DODT & ELEI

[2018] FamCAFC 166

FAMILY LAW – APPEAL – INTERIM SPOUSAL MAINTENANCE – Rehearing after appeal allowed – Where the respondent enjoys a significantly greater standard of living to the applicant – Where the applicant has had a long period out of the workforce – Adequate reasons as to why the applicant cannot support herself – Respondent’s insufficient disclosure of financial affairs and resources – Where the evidence demonstrates the respondent’s capacity to pay – Where respondent chose to spend large sum on legal fees resisting application for interim spousal maintenance – Application for interim spousal maintenance granted.

Family Law Act 1975 (Cth) ss 90SE, 90SF

Elei & Dodt [2018] FamCAFC 92

APPLICANT:

Ms Dodt

RESPONDENT:

Mr Elei

FILE NUMBER:

SYC

6260

2016

APPEAL NUMBER:

2018

DATE DELIVERED:

28 August 2018

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Ryan J

HEARING DATE:

6 June 2018

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

22 December 2017

LOWER COURT MNC:

[2017] FCCA 3348

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Avery-Williams

SOLICITOR FOR THE APPLICANT:

Stacks Collins Thompson

COUNSEL FOR THE RESPONDENT:

Mr Livingstone

SOLICITOR FOR THE RESPONDENT:

David H. Cohen & Co

Orders

The parties’ applications in an appeal to adduce further evidence, filed by the applicant on 5 June 2018 and the respondent on 30 May 2018, be allowed.
Pending further order, the respondent shall pay interim spousal maintenance for the applicant as follows:
(a)For the period 22 December 2017 to the date of these orders at the rate of $800 per week, less monies paid pursuant to Order 2 of 22 December 2017 (and as varied by the orders made on 9 March 2018): and
(b)From the date of these orders in the amount of $1,350 per week, with the first payment to be made seven days thereafter and each following week.
Pending further order and by way of interim spousal maintenance the respondent shall reimburse the applicant for private health insurance coverage at the same level of coverage that was held during the relationship, within seven days of the applicant providing evidence of that coverage and payment, on a continuing basis.

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

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

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

IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 16 of 2018
File Number: SYC 6260 of 2016

Ms Dodt

Applicant

And

Mr Elei

Respondent

REASONS FOR JUDGMENT

Introduction

On 17 May 2018 I allowed an appeal by Mr Elei (“the respondent”) in relation to interim spousal maintenance orders made on 22 December 2017 (“the December orders”). Orders 2 and 3 of the orders made on that day were set aside. Pursuant to s 90SE(1) of the Family Law Act 1975 (Cth) (“the Act”) the respondent had been ordered to pay interim spousal maintenance in the amount of $1,450 per week (Order 2) and private health insurance (Order 3). Orders 2 and 3 were made as sought in the application for interim spousal maintenance brought by Ms Dodt (“the applicant”) who is the respondent’s former de facto spouse. Rather than remit those matters to the Federal Circuit Court of Australia for rehearing, I acceded to the applicant’s request to conduct this rehearing.
These reasons should be read in conjunction with my reasons for judgment published on 17 May 2018 ([2018] FamCAFC 92).
It is common ground that the issues which require consideration are as follows:
·Can the applicant support herself adequately?
·If not, what are the applicant’s reasonable needs?
·What capacity does the respondent have to meet those needs?
·What order is reasonable having regard to s 90SF(3) of the Act?

Can the applicant support herself?

At [13] of my earlier reasons I set out the findings made by Judge Boyle in relation to the applicant’s circumstances as at December 2017. Those findings were not disturbed on appeal and generally remain apt. However, the applicant does not now receive Centrelink benefits and her savings have increased to $11,734.
On 9 March 2018, Judge Boyle varied Order 2 of the December orders pending this appeal so as to require the respondent to pay interim spousal maintenance in the lesser amount of $1000 per week. He paid $17,050 of arrears the following week and various amounts thereafter. As at the date of the rehearing he was approximately $1000 in arrears (of the order that was later set aside). The applicant had not obtained employment in the interregnum and continued to reside with her parents. Her savings thus represent savings made from the periodic payments by the respondent pursuant to the interim spousal maintenance order.
However, the respondent had not paid the lump sums he was ordered to pay pursuant to the December orders ($22,000) and the applicant had not yet undergone the surgery for her hand. It is apparent that that will not now happen until later this year or possibly 2020. Counsel for the applicant acknowledged that the delay in the surgery is not an impediment to the applicant’s ability to return to the workforce. Although the applicant will need to wait 12 months from when she has medical insurance to be covered in relation to this surgery, her savings are more than sufficient to meet the anticipated costs and it is not necessary for the applicant to wait any longer. It follows that the savings do not mean she is able to support herself.
It was uncontroverted that at the time of trial the applicant had not had paid work for about five years. The additional evidence admitted with leave in the rehearing established that between the trial and rehearing she had not taken any steps to obtain employment in a service industry or at all. In early May 2018, the applicant’s father underwent hip surgery and upon his discharge from hospital the applicant assisted with his care.
The applicant’s evidence as to her current circumstances is set out at paragraph 16 of her affidavit filed on 5 June 2018 as follows:
Before leaving paid employment, I worked as a [manager in a service industry]. My work duties required me to attend to various [meetings] across multiple suburbs. In order to do this, I would drive to [meeting] sites. As a result, I cannot work in my chosen field without a car. I have no qualifications in any other areas. However, I have training and experience working in hospitality, a field which I left before the commencement of this relationship when I was younger. Given my age, qualification and subsequent work experience in [the service industry], I do not wish to return to the hospitality industry. In early May 2018, my father underwent double hip replacement surgery. Since his return home, I have provided care to him. For these reasons, I have not commenced looking for employment.
Based on the final sentence of this paragraph, counsel for the respondent argued that the reason the applicant had not sought employment is because she had been caring for her father. In those circumstances, it was argued that the applicant could not establish an entitlement to maintenance. The submission proceeded on the misapprehension that the final sentence solely related to the preceding sentence. On a proper reading of paragraph 16, the final sentence encompasses all of the reasons outlined in that paragraph and the submission is rejected.
In the respondent’s affidavit filed on 30 May 2018 he gave evidence about other employment that the applicant undertook during their relationship. For example, for 12 months she worked for an auction house from home and at some stage doing bookkeeping and in sales. He also provided evidence of job advertisements for work in the service industry. The gravamen of his evidence was that the applicant has skills in addition to those as a manager and that even in her chosen field there are opportunities for employment. It followed, that not having pursued this and other employment, the applicant could not establish an entitlement to spousal maintenance.
I agree with the respondent that the applicant has not established that she is unable to support herself adequately by reference to s 90SF(1)(b)(i) or (ii). Therefore the question to be answered is whether she can establish that need by reference to “any other adequate reason” (s 90SF(1)(c)). What is adequate will vary from case to case. In this case it is accepted that as an applicant for interim (not final) maintenance she should have the opportunity to pursue employment in her chosen field, which reflects her qualifications and experiences and in the long term maximises her earning capacity and financial security. In other words, before she is pushed back into employment she in effect outgrew, she should have the opportunity to seek employment at the more senior level she achieved during the currency of the parties’ relationship.
The job advertisements corroborate the applicant’s evidence that in order to be competitive, she requires certification, a business wardrobe and a reliable car. The applicant has had ample time to attend to recertification and the absence of certification does not now support her claim that she is unable to support herself. However, she does not have a motor vehicle and has only recently been in a position to acquire a business wardrobe. I remain of the view that at this stage the applicant is not required to pursue employment in the service industry which, based on her own industry experience, she well understands she would not presently secure. That is, without access to a reliable car and able to present in the manner demanded in her industry, however this does not mean that she should be pushed into accepting work in hospitality or other fields which she has outgrown.
In short, the totality of the applicant’s circumstances (including her period out of the industry and paid workforce) establish that there are adequate reasons why the applicant is unable to support herself.

The applicant’s reasonable needs

Thus, consideration must be given to the applicant’s reasonable needs. In her financial statement dated 4 June 2018 the applicant claimed total personal expenditure of $900 per week. It is not entirely clear how this figure is calculated but it would seem to be by reference to her average weekly expenses contained in Part N of that document, albeit the figures are not identical. However, they are sufficiently close that the difference is immaterial. This calculation does not include rent which the evidence establishes the applicant would need in the vicinity of $550 per week for a modest rental apartment (Exhibit B).
Counsel for the respondent challenged both the personal expenditure and rental amount. In relation to average weekly expenses, the respondent conceded that the applicant’s “reasonable needs are…. in the order of about $800 a week.” This concession was clarified to be $800 and no rent. I agree that $800 per week is the appropriate figure. In my view the amount claimed for food, gardening, clothing and shoes should be moderated, the effect of which is to set the average weekly expenses at the sum conceded by the respondent. The argument that the applicant should continue to live with her parents is rejected. It is accepted that it is reasonable that the applicant, who has after all lived independently of her parents for many years is once again able to establish her own home.

The respondent’s capacity to meet those needs

The capacity of the respondent to meet those needs was more obvious in this hearing than it was previously. This is because it became apparent that the respondent had not given complete disclosure of his financial circumstances and more was known about his interest in his late mother’s estate.
By way of example, although the respondent disclosed that he had incurred $180,000 in legal fees (an extraordinary sum in a case primarily concerned with interim spousal maintenance) his evidence on the point was misleading. In this regard, the respondent said he “incurred” these expenses but did not in his affidavit disclose that he had paid this amount. However, there is no reference to outstanding legal fees in his financial statement and by reading the two documents together it is possible to discern that the amount is not outstanding. This invited questions as to the source of funds used to pay the $180,000. Counsel for the respondent advised that $70,000 was borrowed from Company B (a company with whom the respondent is engaged in property development and recently invested some $385,206), a loan of $20,000 from the respondent’s late mother’s estate and $90,000 from income and savings. The estate borrowings are not disclosed in the respondent’s financial statement and the loan from Company B is incorrectly identified as a business loan.
But more importantly, there is nothing in the respondent’s financial statement of 30 May 2018 which discloses the capacity to pay the remaining $90,000 from income and savings. Indeed, the respondent deposes to total personal expenditure of $5,795 per week against total average weekly income of $3,226.21. The total personal expenditure does not make provision for the payment of legal fees and prima facie it is impossible for him to have paid anything from income. As to savings, in his financial statement filed on 13 December 2017 the respondent disclosed savings of $20,561 which by May 2018 had fallen to $3,424. The source of the remaining $73,000 was not explained and it is this amount that the respondent seems to have drawn from income.
The effect of the above is I am not satisfied the respondent has made proper disclosure of his financial circumstances. I am satisfied that notwithstanding his evidence as to his total personal expenses compared to income and no meaningful savings, he has had and continues to have the capacity to contribute from income to the applicant’s annual support (not including estate income) something equivalent to the amount he appears to have paid on legal fees from income.
Nor is it accepted that his decision to spend the better part of $180,000 resisting a claim for interim spousal maintenance should be ignored in determining his capacity to pay. He was of course entitled to do so, but his decision to incur this level of discretionary expenditure in relation to an interim application reveals a willingness to spend large amounts of money unnecessarily. It provides further evidence that his financial circumstances are not as constrained as he would have the court believe.
Furthermore, the respondent gave his address as the former family home. Yet, it was only during the hearing that it became apparent he, his partner and her two children no longer live there and that they were living rent free in a property provided by Company B. The respondent deposed that the former family home has an estimated value of $2.8 million. In addition, he proposed renovations to that property, the cost of which is slightly in excess of $1 million.
In an attempt to resist the submission by counsel for the applicant that this now vacant property might be tenanted and thereby produce income, or that the applicant herself might be able to live there, counsel for the respondent argued it was uninhabitable. This argument was based on the (not yet retained) builder’s statement that at the completion of renovations an occupation certificate would be provided. On a proper reading of the builder’s document, it is apparent that the occupation certificate would be issued in relation to the renovations. It says nothing about the current state of the property. Moreover, this is the home in which the parties resided until separation, which means as recently as 2016 it was habitable. I am satisfied that this valuable property could be rented albeit the rental return would reflect its current state of repair.
The submission by the applicant that the respondent has a valuable financial resource in his late mother’s estate should also be accepted. The combined effect of the respondent’s mother’s will and a deed of family arrangement (Exhibit A) entered into by the respondent and the other beneficiaries is that the respondent will receive a property at P Road, Suburb A (“P Road”) worth in the vicinity of $1.8 million unencumbered. P Road is registered in the respondent’s name as executor of his late mother’s estate. As probate has been granted, the effect of paragraph 4.1 of the deed of family arrangement is that the respondent is entitled to that property now. It is appropriate to proceed on the basis that it is available to him and he could borrow against it.
P Road in tenanted for an annual rent of $95,000 or $1,979 per week. Presently, that rent is paid into the estate accounts. There is no reason associated with the respondent’s obligations as executor or pursuant to the deed of family arrangement which requires him to do so. According to the respondent, those funds are retained in the estate’s accounts so that he can give effect to the agreement with his sisters to notionally adjust their respective entitlements so that each receives an equivalent inheritance. However, the deed of family arrangement provides the formula for “equalisation” which does not include the P Road rental income. At clause 1.1 to the deed of family arrangement, bank accounts “means all the bank accounts of [the respondent’s mother] at the date of her death, including but not limited to the bank accounts listed in Schedule 3”, and there is nothing in the arrangement that obliges the respondent to deposit the rental income in the estate account. Merely because the respondent elects to do so does not mean these funds should be disregarded in determining his capacity to pay spousal maintenance. Although a case may have been made out that these funds should be treated as property of the respondent, I am content to accept the applicant’s submission that this is a financial resource upon which the respondent can draw.
No doubt there are expenses associated with P Road and, of course tax will be payable in relation to the income. It was for the respondent to disclose those details, which did not happen. It is inferred that those expenses do not exceed the rental income and that the differential is materially advantageous to the respondent. Indeed the respondent’s decision to divert resources and income in this manner undermines his evidence that he has been unable to pay income tax as and when it fell due, or in any event, by now. It strongly indicates that the respondent has very considerable capacity to arrange his financial affairs to give effect to what he perceives to be in his interests, including not contributing to his former partner’s support. I am bolstered in this view by his decision to spend such a large sum defending this action.
By reference to my earlier judgment, it is apparent that the evidence adduced in the rehearing paints a very different picture of the respondent’s financial circumstances than was previously understood to be the case. A comparison of the respondent’s two financial statements reveal he has been able to continue to meet mortgage payments on the former family home, carry significant insurance and superannuation payments and spend something like $926 per week on cars for him and his partner (excluding car insurance which puts the total weekly cost on cars in excess of $1,000). Considered in this light, his decision to reduce his daily rate charged by his business post August 2016 and to work fewer hours for a period of time does not carry a significant weight. Particularly as it coincides with his decision and ability to pay $180,000 in legal fees.

It is accepted that the respondent’s financial support of his partner, who has stopped work and will shortly have a child with him is reasonable, as is his contribution to the financial support of her elder son. It is not necessary to explain why the respondent’s partner has not pursued child support from that child’s father and sufficient to note that the applicant’s concession that this child’s needs should be taken into account was well made. However, no attempt has been made by the respondent’s partner to secure child support from the father of her younger child. Before the respondent’s financial commitment to that child was given greater weight than the applicant’s need for his financial support, it would be necessary to see some serious attempt having been made to have a parent responsible for the child’s financial support, do so.
The respondent, who is self-employed and has valuable assets under his control, has demonstrated an obvious capacity to arrange his financial affairs to meet expenses which, on the face of it, could not be met. And, to leave assets and income in place rather than pay debt, for example to the ATO. Even with the respondent’s support of his partner and her elder son taken into account, I remain of the view that the respondent has the capacity to contribute to support of the applicant in the amount sought (including medical insurance) from a combination of income and property. His approach to disclosure does not lend itself to precise finding as to his actual income and total worth, and thus, calculation of his net income and net worth (given there is outstanding tax including unquantified capital gains tax).

Section 90SF(3)

The matters relevant to s 90SF(3)(b), (d), (e) and (f) have been addressed.
As to the remaining s 90SF(3) factors which are relevant, the parties commenced cohabitation in 2008 and separated in 2016. The applicant is in her mid-forties and the respondent is in his early fifties.
During cohabitation the respondent worked in the building industry via a company owned and operated by him. The applicant was employed in the positions discussed earlier and ceased employment some four year prior to separation. Although the duration of the relationship did not affect the applicant’s capacity for employment, her absence from the paid work force in the years preceding separation has, as have her parlous and difficult circumstances following upon separation. Furthermore, post-separation the respondent retained possession and control of the assets of value which existed during the relationship. His standard of living has greatly exceeded hers, evidenced by his occupation and access to a home valued at $2.8 million and the nature and expenditure on cars available to him.
On the other hand, the applicant has relied on welfare benefits and the generosity of her family in providing her with a roof over her head. She sold her car to meet living expenses. Comparative to the standard of living enjoyed during the relationship and, by the respondent since separation, the applicant’s standard of living has not been reasonable and it is appropriate that the maintenance powers are used to address that deficiency (s 90SF(3)(g).

Conclusion

The applicant has established that she should have periodic maintenance in the amount of $1,350 per week and health insurance. As to the date from which that amount is payable, different considerations arise. As this amount includes a rental component and the applicant has not been paying rent, the total amount of the order will become payable from the date of the order. The submission by counsel for the applicant that spousal maintenance should be payable at least from the date of the original order should be accepted.
I have already made findings that the applicant’s reasonable needs (excluding rent) are $800 per week and that is the amount which will be payable for the period from 22 December 2017 until the date of these orders. The respondent made payments pursuant to the order which was set aside and the amount paid is to be offset against the amount payable pursuant to this order. The respondent’s argument that it should be offset against a lump sum order which he has failed to abide is rejected. So too is his argument that the rental component should be deferred for a period of about six weeks from the date of the order. The figure of $800 per week does not take into account the applicant’s need to raise a rental bond or the expenses associated with moving into her own rented apartment. Those costs will be offset by having the total amount payable by the respondent payable from now.
The respondent will thus have a lump sum payable to the applicant immediately, which will make it easier for her to acquire a motor vehicle sooner than might be the case. He has known of that he might need to pay a lump sum for some time and has had ample opportunity to arrange his affairs to address that potentiality. It would be manifestly unfair to the applicant to cause her to wait any longer for support to which she is entitled.
It was contended by the respondent that this order should be for a limited period. The attraction of this argument is that it would cause the applicant to produce evidence of steps she had taken to return to the paid workforce in order to justify ongoing support. The disadvantage is that it is likely to provoke further litigation, which given the costs paid and incurred to date, should be avoided if at all possible. The parties’ proceedings are listed for call-over in December 2018 and it is reasonable to infer that the case will be called on for final hearing sometime next year, which of itself provides an end date for the interim order Given that timeframe, the order will continue pending further order.
For these reasons orders are made as at the commencement of this judgment.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 28 August 2018.

Associate:

Date: 28 August 2018