Drysdale & Drysdale

[2011] FamCAFC 85

FAMILY COURT OF AUSTRALIA

DRYSDALE & DRYSDALE [2011] FamCAFC 85

FAMILY LAW - APPEAL – Application for leave to appeal against an interim order for the payment of spousal maintenance made by a Federal Magistrate – Whether the Federal Magistrate erred in finding that the wife satisfied the “threshold requirement” of s 72 – Whether the Federal Magistrate erred in finding that the wife had demonstrated that she was unable to support herself by reason of her failure to identify which of the household expenses claimed by her were referrable to the wife’s own needs – Whether the Federal Magistrate erred in finding that the husband had the capacity to satisfy the interim order – Whether the Federal Magistrate’s failure to offset against the order made in the wife’s favour the correct amount the husband had agreed to pay by way of child support constitutes appealable error – Application for leave to appeal dismissed.

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 Branson & Branson (Unreported, Full Court of the Family Court of Australia, Ellis, Baker and Anderson JJ, 12 October 1995)
Chapman and Chapman (1979) 34 FLR 530n; (1979) FLC 90-671
Mee & Ferguson (1986) FLC 91-716; (1986) 84 FLR 179; (1986) 10 Fam LR 971
Paradine & Paradine (1981) FLC 91-056; (1981) 7 Fam LR 125
Redman & Redman (1987) FLC 91-805; (1987) 11 Fam LR 411
Rutherford and Rutherford (1991) FLC 92-255
Stein & Stein (2000) FLC 93-004

Family Law Act 1975 (Cth) s 72

APPELLANT: Mr Drysdale

RESPONDENT: Mrs Drysdale

FILE NUMBER: BRC 7238 of 2010

APPEAL NUMBER: NOA 120 of 2010

DATE DELIVERED: 8 April 2011

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Coleman J

HEARING DATE: 1 April 2011

LOWER COURT JURISDICTION: Federal Magistrates Court

LOWER COURT JUDGMENT DATE: 15 October 2010

LOWER COURT MNC: [2010] FMCAfam 1379

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Bourke

SOLICITOR FOR THE APPELLANT: Family Law Solutions

COUNSEL FOR THE RESPONDENT: Mr Fermanis

SOLICITOR FOR THE RESPONDENT: Conroy Stewart Spagnolo

Orders

1. That, save for costs, the husband’s application for leave to appeal be dismissed.

2. That costs in the application be reserved.

3. That within 28 days the husband file and serve any submissions in opposition to the wife’s application for costs of and incidental to the husband’s application for leave to appeal.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PARRAMATTA

Appeal Number: NOA 120 of 2010

File Number: BRC 7238 of 2010

Mr Drysdale

Appellant

And

Mrs Drysdale

Respondent

REASONS FOR JUDGMENT

Introduction  

1. By application filed 21 December 2010, Mr Drysdale (“the husband”) sought leave to appeal against orders made in the Federal Magistrates Court on 4 November 2010 and, if leave to appeal be granted, that the order for interim spousal maintenance then made in proceedings between the husband and Mrs Drysdale (“the wife”) be set aside.

2. The wife opposed the husband’s application for leave to appeal and/or to appeal the orders of the Federal Magistrate and sought to maintain those orders.

3. On 15 October 2010, after a hearing on 11 October 2010, Federal Magistrate Jarrett, sitting on circuit at Coffs Harbour, ordered that, pending further order, the husband pay to the wife by way of spousal maintenance the sum of $500 per week. The husband seeks to have that order discharged.

Background

1. The parties married in 2002, having cohabited for a period of almost two years prior to that time.

2. There are two children of the marriage who are now aged 7 and 6 years.

3. In 2005 the parties commenced a business which was conducted through E Pty Ltd.

4. At about that time the parties moved from Town S to Town M.

5. From the time of the birth of the parties’ second child, the wife devoted herself to homemaking and parenting on a full time basis. The husband at all material times has been primarily responsible for the conduct of E Pty Ltd’s business activities.

6. The parties separated in mid-2010. Since that time the two children of the marriage have primarily lived with the wife.

7. On 21 September 2010 the wife filed an application seeking parenting and financial orders. Amongst the interlocutory relief sought by the wife was interim spousal maintenance in the sum of $800 per week. That figure was later reduced to $500 per week during the hearing before the Federal Magistrate on 11 October 2010.

8. It was common ground, and with respect sensibly so having regard to the authorities, that, in the circumstances of this case, if the husband demonstrated appealable error in the decision of the learned Federal Magistrate of 15 October 2010, he should be granted leave to appeal, and his appeal allowed (see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 and Rutherford and Rutherford (1991) FLC 92-255).

9. The focus of the Court’s interest has thus been whether any of the challenges to the learned Federal Magistrate’s exercise of discretion would enliven appellate intervention.

Grounds of Appeal

1. Although not necessarily literally so expressed, there were essentially four general areas in which it was submitted that the learned Federal Magistrate had erred in making the interim spousal maintenance order he did on 15 October 2010. It was asserted:

   (1)That the learned Federal Magistrate erred in finding that the wife satisfied the “threshold” requirement of s 72 of the Family Law Act 1975 (Cth) (“the Act”) in reliance upon her having the care of children of the marriage who had not attained 18 years of age;

   (2)That the learned Federal Magistrate erred in finding that the wife had demonstrated that she was unable to support herself in so far as her expenses exceeded her means by reason of her failure to identify which of the household expenses claimed by her were referrable to the wife’s own needs;

   (3)That the learned Federal Magistrate erred in finding that the husband had the capacity to satisfy the interim order;

   (4)That, if none of the above challenges succeeded, his Honour erred by not offsetting against the order made in the wife’s favour the sum of $133 per week, being the difference between the amount which the husband had agreed to pay for the children of the marriage by way of child support ($150 per week) and an amount which the learned Federal Magistrate perceived that the husband was obliged to pay ($70 per month).

The “threshold” challenge

1. It was submitted by Counsel for the husband that the mere fact of the wife having children under 18 years of age in her primary care could not satisfy the requirements of s 72 of the Act. By reference to the decision in Eliades & Eliades (1980) 6 Fam LR 916; (1981) FLC 91-022, it was submitted that, notwithstanding that she undoubtedly had children under 18 years of age in her primary care, the wife had to additionally demonstrate “inability”, by virtue of an incapacity, by whatever means, to support herself. The Court does not perceive anything said by Nygh J in Eliades assists the husband’s contention.

2. Despite his undoubtedly thorough research, Counsel for the husband was unable to refer the Court to authority supporting his construction of s 72 of the Act. With respect to the ingenuity of Counsel for the husband’s endeavours to do so, the Court does not perceive that s 72 of the Act should be construed in the manner asserted by him.

3. The basis of that conclusion is the wording of s 72 itself. Section 72 provides that an entitlement to spousal maintenance is predicated on the inability of the claimant “to support herself or himself adequately”, by reason of factors identified in the section. The first of those factors (s 72(1)(a)) relates to “having the care and control of a child of the marriage who has not attained the age of 18 years”. The second identified basis of potential inability to support oneself (s 72(1)(b)) relates to “age or physical or mental incapacity for appropriate gainful employment”. The section also includes “any other adequate reason” as a basis of inability to support oneself.

4. The Court is comfortably satisfied that the matters identified in ss 72(1)(a) & (b) are not conjunctive, although it is conceivable that there may a factual overlap between the two. The provisions are not expressed to be conjunctive. To construe them as such, and in the manner asserted by Counsel for the husband, would effectively mean that only claimants who had the care and control of children falling within s 72(1)(a) who were also precluded by age or physical or mental incapacity from gaining appropriate employment could succeed with a spousal maintenance claim. On Counsel for the husband’s construction of s 72, persons precluded from appropriate gainful employment by physical or mental incapacity would only be able to secure an order for spousal maintenance if they also had the care and control of a child of the marriage under 18 years. The Court is satisfied that the legislative intention which clearly emerges from the wording of s 72(1) is that claimants falling into either of those categories, or within s 72(1)(c), satisfy the threshold to that extent. To the extent that this complaint involves finding that the absence of evidence from the wife of inability to support herself obliged the learned Federal Magistrate to find that she did not demonstrate inability as required by s 72, the Court does not accept that assertion.

5. The Court is thus unpersuaded by the submissions on behalf of the husband in relation to the first of the broad challenges raised on his behalf.

The wife’s failure to particularise her personal expenses

1. The second challenge raised on behalf of the husband asserts that, having failed to particularise her own asserted expenses in support of her spousal maintenance claim, the wife could not establish that she was “unable to support herself adequately” even if, contrary to the submissions of Counsel for the husband, this Court rejected the construction of s 72 for which he contended and which has, for reasons indicated earlier, been rejected.

2. It is not in doubt that the wife did not differentiate between expenses which were personal to her and those which she asserted to be expenses referrable to the parties’ children in the statement of financial circumstances upon which she relied before the learned Federal Magistrate (see Appeal Book page 49). Nor was there any attempt to apportion expenses such as electricity, household supplies or the like, which were not readily able to be differentiated as between herself and the children. It is clear from Part N, para 60 of the form in which the wife’s financial circumstances were presented (Appeal Book page 49) that it is expected that total expenses will be presented, as they were in this case, and that expenses “For You” (the wife, in this case) “For Children (If Applicable)” (of whom there were two in this case) and “Other Adults (If Applicable)” (of whom there were none in this case), are to be disclosed. Why that is so is not difficult to understand, particularly when, unlike in earlier times, the distinction between child and spousal maintenance is real and significant given the provisions of the child support legislation.

3. The learned Federal Magistrate directed his attention to the reasonable weekly needs of the wife and the children of the marriage. His Honour (para 7 and following of his judgment) indicated the expenses which he rejected as not being reasonable in the context of an interim application. Having done so, his Honour concluded that the wife’s “reasonable weekly needs are something in the order of $880 per week” and that “[e]ven if her claims for food and house repairs are exaggerated, and her claims for clothing and shoes are exaggerated, she still does not have an income which is anywhere near the expenses that she has on a weekly basis” (para 8).

4. The only sources of “income” the wife had at the time of the hearing before the learned Federal Magistrate were a Centrelink benefit of $200 per week and a payment of child support. His Honour “ignored” the former, pursuant to s 75(3) of the Act. Nothing to which this Court has been referred suggests that so doing involved appealable error.

5. His Honour was under the mistaken belief that the husband was paying child support in the sum of $70 per month. The evidence suggests that the husband had agreed to pay $150 per week. That sum assumed significance in the last, “fallback” challenge agitated on behalf of the husband in this Court.

6. As his earlier Reasons for Judgment make clear, the learned Federal Magistrate’s conclusion that the wife’s “reasonable weekly needs are something in the order of $880 per week” did not involve any allowance for rent, as the wife was living rent free, or motor vehicle expenses, as the wife did not have a driver’s licence at that time.

7. Counsel for the husband submitted that the wife’s failure to identify her personal weekly expenses was fatal to her application for interim spousal maintenance. No specific authority was relied upon in support of that proposition, although it was submitted that the cases referred to in Counsel for the husband’s written submissions provided inferential support for it. Counsel for the wife submitted that, in an interim spousal maintenance application, the failure to particularise the wife’s personal expenses was not fatal to her claim.

8. Having regard to the provisions of the child support legislation, and particularly in the context of a final order, the distinction between expenses claimed by a party claiming spousal maintenance pursuant to s 72 of the Act and those of the household, for purposes such as s 75(2) of the Act in proceedings for settlement of property, is potentially of more than academic importance.

9. It is useful to consider some authorities on this point.

10. Although concerning an application for child maintenance under the now repealed s 76, the case of Paradine & Paradine (1981) FLC 91-056; (1981) 7 Fam LR 125 could be said to provide some degree of authority for both sides of the argument with which the Court is confronted. The presumption against spousal maintenance arising from the terms of s 72 of the Act, and presumption in favour of child maintenance arising from the terms of the repealed s 76 of the Act might be thought to have contributed to the tension between spousal and child maintenance claims. The facts were substantially similar to those in the present case, in that the wife had reported only the total of the expenses of the household (which included her and two other children, only one of which was the subject of her application for child maintenance from the husband the subject of the proceedings) and had not provided to the Court any breakdown of those sums which attributed specific proportions of them to the needs of the child. Simpson SJ, with whom Yuill J agreed, found that this failure on behalf of the wife was fatal to her application, as she “failed to establish the overall financial needs of the child” (at Fam LR 126). Simpson SJ was of the view that (at Fam LR 126):

    In the absence of evidence of even the most general nature giving some estimate of the needs of the subject child, apart from educational expenses, I do not consider it was open to her Honour to extrapolate the expenses of the child from the wife's statement of financial circumstances which sets out the joint expenses of the wife and the two children of the marriage for the year ended 30 June 1979.

    As Gun J quite properly says, an appropriate question or two would have overcome the lack of evidence in relation to the expenses of supporting the child. I do not suggest that in order to establish the quantum of a child's needs it is necessary to descend to detail of each item of expenditure. However in my view there was an onus on the wife to at least give evidence to the effect that the current household expenses equalled or exceeded the expenditure set out in her statement of financial circumstances and that it was reasonable to attribute one-third, or some other proportion thereof, to the relevant child.

    Accordingly it seems to me that although the wife satisfactorily established education expenses for the child in the amount of some $1400 per annum she failed to put forward sufficient evidence to enable the trial judge properly to draw an inference in relation to the balance of the expenses associated with the child.

11. His Honour concluded that the appeal should be allowed and a rehearing undertaken. Gun J, dissenting, said (at Fam LR 130):

    While I agree that there is some merit in Mr Broun's submission that there should be some specific evidence as to the amount required to maintain a child, I do not consider that the absence of such evidence is necessarily fatal. There may be sufficient evidence of the financial circumstances of the party seeking maintenance for a child to enable the court to decide the matter without specific evidence of the amount required to support the child. Although her Honour did not say specifically how she arrived at the figure of $45 per week, it is clear that she took into account (inter alia) the wife's financial position, including her commitments. I do not think that it is obligatory in every case for the court to calculate with mathematical precision the amount required to support a child, nor the amount which a party should contribute towards the maintenance of a child. Provided that the amount ordered to be paid can be demonstrated to be reasonably approximate to an appropriate contribution towards the needs of the child having regard to all relevant matters, I do not consider that the court need go any further. In my view, it would be taking an unrealistic and impractical view of the material before her Honour to say that there was no evidence as to the needs of the child.

    An examination of the wife's financial circumstances shows that the wife had various items of expenditure which were related, at least in part, to the maintenance and support of the child.

12. His Honour went on to examine the evidence provided by the wife in relation to her financial expenses and concluded (at Fam LR 131):

    In spite of Mr Broun's submission to the contrary, it would not, in my opinion, be unreasonable for her Honour to attribute a proportion of those expenses as being required for the support of the child. I do not think that it would be unreasonable to attribute one-third of these expenses to the child. …

13. The difficulty presented in Paradine was subsequently noted by the Full Court in Mee & Ferguson (1986) FLC 91-716; (1986) 84 FLR 179; (1986) 10 Fam LR 971, although it did not prove decisive in that case. The Full Court (Asche ACJ, Fogarty and Cook JJ) noted (at FLR 976):

    … the essential first step is to ascertain in financial terms the needs of the child in question. This will obviously vary with the circumstances of the individual case, taking into account amongst other circumstances the age and sex of the child, the relevant standard of living and any special factors applicable in that particular case. Very often in maintenance cases this aspect is neglected and very imprecise evidence is given, a problem referred to by the Full Court in Paradine [1981] FLC 91-056; (1981) 7 Fam LR 125. Often it seems to be assumed that by inference or intuition courts are able to form a view without actual evidence.

14. However, whilst the Full Court noted that the trial Judge was critical of a list of expenditure provided to the Court by the wife which set out expenditures (including golf club fees) more accurately referable to the household, rather than to the needs of the children, there proved to be sufficient evidence that specified the expenses referrable to the needs of the children the subject of the claim for child maintenance. Their Honours said (at FLR 976):

    We need not examine this aspect further in this case because here precise evidence was given of these matters, both general and specific, and the amount of their “financial needs” was a matter virtually of concession on the hearing of the appeal before us.

    Nevertheless it must be emphasised that evidence must be called on this issue.

1. In Redman & Redman (1987) FLC 91-805; (1987) 11 Fam LR 411 an issue on appeal against an order for the payment of interim maintenance from the husband to the wife was whether, in an application for both spousal and child maintenance, the applicant for spousal maintenance needed to separate out the expenses exclusively referable to the spouse from those referable to the children, rather than provide evidence of the expenses referable to the household as a whole, in order for the trial Judge to be able to make a spousal maintenance order. Similarly, the question was whether an applicant for child maintenance must separate out expenses referrable exclusively to the needs of the child in order for the Court to be able to make an order for child maintenance). Also considered was whether the trial Judge needed to make separate orders for spousal maintenance and child maintenance, rather than making a global order encompassing both types of maintenance. The Full Court (Evatt CJ, Lindenmayer and Nygh JJ) said (at Fam LR 414):

   In this case, however, the wife was seeking maintenance in respect of herself and the children. She presented evidence relating to the expenses of the joint household and her Honour's findings as to this expenditure were not challenged on appeal. It cannot therefore be said that the costs of the household were assessed in any arbitrary or unrealistic manner. Nor was it necessary at that stage to split off definitively the costs of the children.

   In the second place, this was an interim order. Whilst we agree with the view expressed in Ashton that in principle such an order is one under sec. 74, to which the principles of sec. 72 or sec. 73 may be applicable, as the case may be, the very fact that the order is limited in time imports certain different considerations. One of these is that such an order is intended to be reconsidered, quite apart from a variation under sec. 83. As Nygh J. said in Ashton, the most common purpose of an interim order is to make provision for the spouse and children pending the determination of the property settlement. If a so-called permanent order is made on that occasion, that is not a variation under sec. 83 and does not have to be justified as such, but it is a fresh order made upon the termination of the interim order. Another consequence is that on an application for interim maintenance the court conducts ''not as final or exhaustive a hearing as would be the case if one were hearing the matter finally'': Williamson and Williamson (1978) FLC ¶90-505; (1978) 4 Fam. L.R. 355 at FLC p. 77,650; Fam. L.R. p. 359 per Fogarty J. The evidence need not be so extensive and the findings not so precise. Having regard to those factors, and the general injunction of sec. 97(3), the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period and can only be varied under sec. 83.

   In the third place, a strict line between costs referable to the custodial parent and those referable to the children cannot always be drawn with clarity. Some expenditure relating to the household as a whole, such as the provision of housing, electricity, fuel, transport, and possibly food and groceries, cannot be strictly divided. Where an application is made which covers both the custodial parent and the children those expenses can with some justification be allocated under either heading. They are relevant to spousal maintenance in pursuance of sec. 75(2) para. (c) (d) and (e). In such a case it will be difficult to stipulate with any precision how the maintenance should be allocated or to challenge any such allocation if it is made. It may be different if a custodian who is able to support himself/herself adequately, seeks an order for child maintenance which includes part of the cost of housing and the like. Here again, if the matter is likely to be reviewed in the near future there may be no need for a full and detailed examination of the issues.

2. Their Honours comments have particular application to the present case. Finding that “there was some material from which an inference could be drawn as to the needs of the children”, the Full Court in Redman then concluded that the trial Judge “could and should have made some allocation in respect of the maintenance of the wife and of the children” (at Fam LR 415). Their Honours allowed the appeal and made orders for the continued payment of precisely the same amount of maintenance by the husband to the wife as under the original orders of the trial Judge, but apportioning that amount as between spousal maintenance for the wife and child maintenance for the children. It appears that it was the failure of the trial Judge to apportion the maintenance order as between the spousal maintenance component and the child maintenance component that resulted in the appeal being upheld, rather than by reason of the wife’s failure to adequately separate out the expenses personal to her from those attributable to the needs of the children.

3. Albeit a decision relating to s 77 of the Act (which governs applications for urgent maintenance) the decision of the Full Court in Chapman and Chapman (1979) 34 FLR 530n; (1979) FLC 90-671 provides some support for concluding that the failure to differentiate between an applicant’s personal commitments and those of herself and children of the marriage in her care was not fatal to such an application.

4. The Full Court’s decision in Stein & Stein (2000) FLC 93-004 is also instructive for present purposes. Having reviewed a number of authorities, including those referred to in these reasons, the Full Court (Kay, Holden & Dessau JJ) concluded that, in the circumstances of that case, the trial Judge had erred in determining a claim for interim spousal maintenance by reference to the expenses referrable to the claimant and the children of the marriage in her care. Their Honours concluded that the trial Judge had erred in taking into account the costs of support for the children of the parties pursuant to s 75(2)(d) of the Act. Their Honours suggested that, in the context of a spousal maintenance application, the consideration of s 75(2)(d) had greater significance in determining the capacity of a payer to provide support for the children than in determining the extent to which the other party required support. As their Honours made clear, in circumstances where the husband’s wealth (in the order of $20 million) meant that he would be called on to bear the entire cost of meeting the reasonable needs of the children, taking into account in the context of the wife’s spousal maintenance claim the expenses of those children was erroneous. As is immediately apparent, the factual scenario in Stein differed quite significantly from that of the present case.

5. The earlier decision of the Full Court in Branson & Branson (Unreported, Full Court of the Family Court of Australia, Ellis, Baker and Anderson JJ, 12 October 1995) confirms that the issue raised by this challenge is not beyond doubt, although, at least inferentially, Stein may be regarded as having overturned earlier decisions which expressly or impliedly accepted that, at least in an interim application, spousal maintenance could be sought in reliance upon the undifferentiated expenses of the claimant and children of the marriage in his or her care and control. In Branson, the Full Court rejected a challenge in virtually the same terms as that which the Full Court accepted in Stein. The fact that it was an application for interim spousal maintenance was clearly influential in the Full Court’s conclusion that the trial Judge had not erred. The facts were somewhat different to those in the present case in that the claimant made an “across the board” apportionment of the total undifferentiated expenses claimed by her as between her and the children of the marriage of 55% and 45% respectively.

6. Despite the uncertainty which attends this issue, and with respect to the decision in Stein, which is clearly distinguishable from the present case on its facts, the Court perceives no impediment, in an interim spousal maintenance application such as the present, to having regard to “commitments” of the wife “that are necessary to enable” her to support herself and a child who she has “a duty to maintain”. Were this an application for a final spousal maintenance order, in part for the reasons referred to in Stein, and in part by virtue of the provisions of the child support legislation, and its philosophical underpinning, the Court would be likely to reach a different conclusion. The facts of this case, as revealed by the evidence before the learned Federal Magistrate, are influential in the Court concluding as it does. 

7. The Court is not persuaded that, in the context of an interim spousal maintenance application, the failure to differentiate between the expenses of the claimant and those of the children of the marriage is necessarily fatal to a successful spousal maintenance claim.

8. It is the nature of an interim spousal maintenance order that, as here, it is made after a circumscribed hearing, in reliance upon evidence which is incomplete and/or unable to be fully tested. Whilst different to urgent spousal maintenance pursuant to s 77 of the Act, orders for interim maintenance are as their title implies. The Court hearing and determining financial proceedings between the parties on a final basis, as clearly will occur in this case in the absence of any intervening settlement, has abundant power to accommodate within its final orders, whether by way of settlement of property or spousal maintenance, any anomalies which full agitation of disputed issues of fact may reveal to have resulted from an earlier interim spousal maintenance order. There is no reason to think, in the circumstances of this case, that any unfairness or hardship visited upon either party by reason of the interim spousal maintenance order could not, or will not, be addressed in the final orders of the Court.

9. The Court is thus, in the absence of clear authority to the contrary, not persuaded that his Honour erred in finding that the wife was unable to support herself in reliance upon claimed expenses which were not differentiated as between herself and the children of the marriage.

10. Having found, as the Court is satisfied it was open to his Honour to, that the reasonable weekly expenses of the wife’s household were in the order of $880 per week, even if, contrary to his Honour’s conclusion in that regard, both the wife’s Centrelink benefits ($200 per week) and the child support ($150 per week) which the husband agreed to pay were taken into account, the wife still had a shortfall equal to or greater than the weekly sum claimed by her by way of interim spousal maintenance. However categorised, the $150 per week which the husband proposed to provide for the support of the children would have to be taken into consideration in circumstances where, as occurred in this case, the Court had regard to expenses which were in part referable to the children for whom that support would be paid.

11. The Court is not persuaded that this proposed challenge has merit.

The husband’s capacity to meet an interim spousal maintenance order

1. The third challenge sought to be agitated on behalf of the husband related to his capacity to meet an interim spousal maintenance order of $500 per week. With respect to Counsel for the husband, many of the submissions earnestly agitated by him proceed on the basis of questionable logic. As was suggested to Counsel for the husband during the course of debate, in order for this complaint to succeed it would be necessary to demonstrate that the learned Federal Magistrate’s conclusion was either not reasonably open to him on the facts as found by him, or that it was made in reliance upon material errors of fact. The submissions of Counsel for the husband refer to other findings which may have been open, as undoubtedly they were. The prospect of other, even “equally probable”, findings being open does not demonstrate that the findings which were made were not reasonably open.

2. The thrust of the submissions on behalf of the husband was that, subsequent to the Commonwealth government’s ill considered, and ultimately disastrous, home insulation scheme, the husband’s income through E Pty Ltd had declined significantly in the third quarter of 2010, and done so to the extent that the husband could not reasonably afford to pay $500 per week interim spousal maintenance.

3. With respect to Counsel for the husband, as a reading of his various written submissions in support of this complaint confirm, no part of the challenge involves any reference to the transcript of the proceedings, or evidence before the learned Federal Magistrate which could advance the contention that his Honour’s findings as to the husband’s capacity were not reasonably open to him. Having read the transcript of the proceedings before the Federal Magistrate, with particular attention to the cross examination of the husband, the absence of such references is unsurprising. In cross examination, the husband revealed an ability to spend money which was consistent with the learned Federal Magistrate’s rejection of the assertion on his behalf that the husband could not afford to pay $500 per week by way of interim spousal maintenance.

4. The learned Federal Magistrate’s reasons for judgment in relation to the husband’s capacity are revealing, and provide an insurmountable hurdle to the success of this complaint. His Honour referred to what the husband had been receiving from E Pty Ltd (para 16). His Honour referred to the husband’s evidence that the level of remuneration ($1,448 per week for a 10 week period between 17 July 2010 and 26 September 2010) was referrable to the “insulation debacle”, during which E Pty Ltd’s turnover increased by some 300 per cent (paras 16 & 17). The learned Federal Magistrate referred, uncontroversially then, and now, to the scheme having “come to an end” and that “the ending of the scheme has had an effect [sic] on the company’s turnover”. His Honour recorded that “[t]here is no deposition, it seems to me, that, although the company’s turnover has been affected by the cessation of the scheme, that the company’s profit has suffered as well” (para 17). Counsel for the husband conceded that there was no evidence before the learned Federal Magistrate which precluded a finding in those terms.

5. As becomes apparent from the learned Federal Magistrate’s further discussions of the husband’s capacity, his Honour did not find, or assume, that the profitability of the company had continued at the same level as it had been prior to the “insulation debacle” coming to an end. Clearly alive to the basis of the husband’s asserted incapacity to pay interim spousal maintenance of $500 per week, the learned Federal Magistrate recorded:

   18.It is possible, of course, for turnover to fluctuate considerably, but for profits of a company to fluctuate considerably less.  What the true position is I do not know, and the husband would say that he does not know either, because all of the books and records of the company have been taken and retained by the wife.  I do not know whether that is true or not.  There is a dispute about it, and I can not make any findings of fact about that issue.  What is clear though are the following facts:

   a)that the husband was able to pay from company funds in August and September something close to $8516 to meet mortgage repayments in respect of properties which seem to have been owned by he and the wife, not the company;

   b)that he was able to draw a net wage of $1448 per week in the period between July and September.  I note that those drawings include the mortgage payments to which I have just referred.  But that is at a time long after the relevant scheme which led to an increase in the turnover for the company had ended. 

   c)that the husband was able to draw company funds to the extent of $12,000 to pay his lawyers.

6. His Honour’s observations and references to the particular matters identified by him were able to be relied upon in making an assessment of the husband’s capacity to meet an interim spousal maintenance order. In observing as he did, his Honour clearly recognised the limitations upon his ability to make findings of fact.

7. The learned Federal Magistrate then recorded:

   20.The husband’s evidence about the purchase of the ski boat in that respect is telling, and, in some respects, unconvincing.  Similarly, the husband’s evidence about the company vehicle, the BMW, was also unconvincing.  The impression that I am left with is that the husband has not caused the company to properly disclose in these proceedings the company’s financial position.  Whilst it might be the case that the wife has removed company documents from the husband’s possession, the company, as I understand the evidence, is a going concern.  The company is, and does continue to trade.  It has employees and the like, and therefore it must, on a day-to-day basis keep records about its trading activities.

8. Having read the evidence the husband gave before the learned Federal Magistrate, none of those findings could be successfully challenged. The husband’s evidence before the learned Federal Magistrate was that the payments on the BMW vehicle amounted to $500 per week, although this is paid for by the company. Other evidence given by the husband in relation to what may be described as “discretionary spending” was also supportive of his Honour’s ultimate conclusion as to the husband’s capacity.

9. His Honour reiterated the limitations on his ability to make findings of fact and, choosing his words carefully, found that in the circumstances he was “satisfied that the husband’s income-earning capacity is limited to $800 per week, as he claims” (para 21). Nothing to which this Court has been referred establishes that such a conclusion was not reasonably open to the learned Federal Magistrate.

10. Moreover, to the extent that the husband’s case involves a challenge to the learned Federal Magistrate’s finding with respect to his capacity to pay interim spousal maintenance of $500 per week, as his Honour made clear, that capacity was not regarded as limited to “income” as that might be defined by reference to revenue statutes. His Honour had regard, and permissibly so, to what the evidence before him revealed to be “a financial resource upon which he can call at his discretion to meet payments that he thinks ought to be met” (para 21). His Honour said further in that regard:

    22.That he considers that the company’s business is for him and him alone appears very clearly from his affidavit material.  He talks about him making decisions for the company about the sale of certain property.  He talks about how he will deal with, and what plans he will make for a loan, which allegedly is owed by both the husband and the wife to the company.  These are matters not for the husband alone, of course, in the context of these matrimonial proceedings, but these are matters for both of the parties together to make decisions about.  …

11. Although not necessarily recorded in the context of the husband’s capacity to pay interim spousal maintenance of $500 per week, his later discussion of the parties’ circumstances before they separated provides further support for the learned Federal Magistrate’s conclusion as to the husband’s capacity to pay interim spousal maintenance. At paragraph 25 of his judgment, the learned Federal Magistrate said:

    25.The parties’ circumstances before they separated seemed to be one which was characterised by having a high amount of disposable income.  The wife drove a BMW X5 motor vehicle, which the husband described as costing $120,000.  The husband was able to buy a ski boat, which he agreed with counsel for the wife was nothing more than a toy, for some $70,000 although he entertained customers of the business on from time to time.  I have no doubt these parties enjoyed a relatively luxurious lifestyle.  They have, at least it seems between themselves and their companies, eight properties, some of which, or most of which are income producing, although they are mortgaged, but on some of the figures, in particular the figures in the wife’s financial statement, they have net assets in excess of a million dollars.

1. This proposed challenge fails.

The “fallback” position of the husband

1. It remains only to consider what was referred to during the course of submissions as the husband’s ultimate “fallback” position. That was that, at the very least, the difference between what the learned Federal Magistrate thought that the wife was receiving by way of child support ($17 per week), and what she was, or would be, receiving ($150 per week), should be deducted from the $500 per week determined by the Federal Magistrate to be the wife’s reasonable entitlement to interim spousal maintenance. The logic underpinning that submission has some attraction given that the learned Federal Magistrate fixed the wife’s entitlement to interim spousal maintenance by reference to the undifferentiated expenses of the wife and the children of the marriage. Having done so, as a matter of justice, his Honour was obliged to have regard to what the husband would be paying during the currency of the interim spousal maintenance order by way of child support.

2. With respect to Counsel for the husband, the logic underpinning this complaint breaks down when it is remembered that the learned Federal Magistrate awarded the wife $500 per week by way of interim spousal maintenance, notwithstanding that he found the reasonable weekly needs of the household of herself and the children to be approximately $880 per week. As noted earlier, even if one deducted, contrary to s 75(3) of the Act, the $200 per week Centrelink payments which the wife was receiving, and, permissibly, the $150 per week which the wife would receive by way of child support, the wife’s reasonable weekly expenses as found exceeded the total funds coming into her household, albeit only by approximately $30 per week.

Conclusion

1. None of the proposed challenges to the Federal Magistrate’s decision being shown to have merit, the husband’s application for leave to appeal should and will be dismissed.

Costs

1. Counsel for the husband sought the opportunity to make submissions in opposition to any order for costs of the appeal being made against his client. Counsel for the wife did not oppose Counsel for the husband having such leave if, as transpired, the husband’s application were found to lack merit.

2. The orders of the Court will be that, save as to costs, the husband’s application for leave to appeal be dismissed.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 8 April 2011.

Associate:

Date: 08.04.11