DUBOIS & KUSUMO
[2019] FamCA 567
•21 August 2019
FAMILY COURT OF AUSTRALIA
| DUBOIS & KUSUMO | [2019] FamCA 567 |
| FAMILY LAW – PROPERTY – Interim Property Settlement Application – refundable accommodation deposit – application to transfer $550 000 from funds held in trust from sale of respondent’s former matrimonial home – applicant in the proceeding contending that no more than $275 000 should be transferred – actuarial evidence given as to economic consequences of both sums being transferred – $275 000 ordered. FAMILY LAW – SPOUSAL MAINTENANCE – claim by respondent – de facto wife in parlous financial circumstances – application refused. FAMILY LAW – PROPERTY – Interim Property Settlement Application – by de facto wife for $50 000 from funds held in trust – de facto wife in parlous financial circumstances – she has significant needs – capacity of the respondent to provide – relevant additional considerations taken into account – order made. |
| Family Law Act 1975 (Cth) ss 72, 74, 75, 79, 80 |
| Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 Finazzi & Finazzi [2012] FamCA 102 Gabel & Yardley (2008) 40 Fam LR 66 Hall v Hall (2016) 257 CLR 490 In the Marriage of Redman and Redman (1987) 11 Fam LR 411 In the Marriage of Stein (2000) 25 Fam LR 727 Makita (Australia) Pty Ltdv Sprowles (2001) 52 NSWLR 705 Strahan & Strahan (2009) 42 Fam LR 203 Zschokke & Zschokke (1996) 20 Fam LR 766 |
| APPLICANT: | Ms Dubois |
| RESPONDENT: | Mr Kusumo |
| FILE NUMBER: | MLC | 8329 | of | 2017 |
| DATE DELIVERED: | 21 August 2019 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 14 August 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr L Wraith |
| SOLICITOR FOR THE APPLICANT: | Peter Szabo Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr J Stanley |
| SOLICITOR FOR THE RESPONDENT: | Waterson Legal |
Order
On or before 4pm 22 August 2019 parties are to bring in a minute that gives effect to these reasons.
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 Dubois & Kusumo 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).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 8329 of 2017
| Ms Dubois |
Applicant
And
| Mr Kusumo |
Respondent
REASONS FOR JUDGMENT
Introduction
On 14 August 2019, while sitting in the Judicial Duty List, I heard an application by the respondent to this proceeding (he being the de facto husband) for the release of $550 000 from the money held in trust following the sale of the respondent’s former matrimonial home to be applied as a bond for the respondent’s residential care at a nursing home known as B Aged Care. The applicant opposed the application of funds of that magnitude, contending that the more modest sum of $275 000 should be paid instead. In support of the payment, a report was prepared by Mr C who, as an actuary, posited five separate scenarios by which the respondent’s residential care requirements could be met.
The issue for me was whether a payment of $550 000 should be authorised in favour of B Aged Care or whether at this time the sum of $275 000 should be ordered, there being no debate that some amount (albeit the precise amount was contentious) should be paid. Other applications were also argued in relation to interim property settlement orders and spousal maintenance.
Synopsis
For the reasons that follow, in my view the amount to be paid to B Aged Care should be $275 000, being the sum canvassed as scenario four.
I refuse the respondent’s application for weekly spousal maintenance.
I grant the applicant’s application for an interim property order of $50 000.
Short Factual Recital
It was common ground that the respondent suffered a stroke in December 2016 resulting in his hospitalisation and later transfer for private rehabilitation. He presently resides at B Aged Care where he is likely to remain into the foreseeable future as he is unable to care for himself. On 10 October 2018 Ms D, a solicitor, was appointed as the respondent’s guardian pursuant to orders made by the Victorian Civil and Administrative Tribunal. Ms D made an affidavit on 1 July 2019 in which she deposed to the following –
a)the respondent’s fortnightly expenses aggregate $3 398.73, the largest of which being expenses associated to the respondent’s living at B Aged Care (bond interest, daily care fees, additional service fees, means tested fees) and the administrator’s fees;
b)the respondent does not have a stream of income and he is not entitled Centrelink benefits;
c)K Group is the respondent’s administrator;
d)to date, the respondent’s expenses have been met from his superannuation fund, the remaining balance of which was $528 773 when Ms D’s affidavit was made;
e)the proceeds of sale of the respondent’s former home at E Street, Suburb F in the sum of $619 887.83 are held in trust pursuant to court order;
f)the respondent and his deceased wife Ms G were the registered proprietors of the Suburb F property;
g)Ms G predeceased the respondent in March 2017 since which date, pursuant to survivorship laws, the respondent has been the sole registered proprietor of the Suburb F property;
h)pursuant to the accommodation arrangements with B Aged Care, it requires payment of a bond which, once paid, cannot be withdrawn in whole or in part;
i)until the respondent pays the bond he will incur interest equating to $31 000 per annum;
j)if the bond is paid in the amount of $550 000 the respondent’s weekly expenses will be reduced by $603 per week; and
k)at the current rate of expenditure in the sum of $90 000 per annum, the respondent’s assets will be exhausted in a few years.
This proceeding involved a claim by Ms Dubois against Mr Kusumo for orders altering property interests of the parties who have lived in a de facto relationship for a number of years. The precise duration of the relationship is a fact in issue. In her affidavit affirmed 28 May 2018, Ms Dubois made several statements of present relevance –
a)she and the respondent lived together in a domestic relationship between 1997 and 2017;
b)when the two commenced their relationship the respondent told the applicant he had separated from his wife Ms G with whom the respondent had three adult children;
c)the applicant had divorced her former husband with whom she had two children when the applicant and the respondent commenced their relationship;
d)in the early years of the relationship between the applicant and the respondent, the respondent told the applicant he intended to divorce Ms G and after a couple of years of living together, the respondent told the applicant he had in fact divorced Ms G (an untruth, as it happened);
e)upon the occurrence of the respondent’s stroke, the applicant discovered the respondent remained married to Ms G; and
f)in January 2017 the applicant and the respondent separated.
Ms G died thereafter.
The applicant opposed the orders sought by the respondent in relation to the deposit to B Aged Care. She said that if the payment to B Aged Care comes from the proceeds of the former matrimonial home her claim in this proceeding will be severely prejudiced (her words). She said her ultimate claim in this proceeding was for a 50/50 division.
An accountant with over 36 years experience and additional qualifications as an accredited financial planner gave evidence by affidavit made on 25 July 2019. He did not exhibit a letter of instructions but neither party took issue with the information on which his report was based, as may have been open based on the decision of the Court of Appeal of the Supreme Court of New South Wales in Makita (Australia) Pty Ltdv Sprowles[1] and based on the decision of the High Court in Dasreef Pty Ltd v Hawchar.[2]
[1](2001) 52 NSWLR 705
[2](2011) 243 CLR 588
At all events, Mr C (the accountant) revealed that the scope of his engagement was to produce a scenario analysis of the estimated aged care fees income asset position and cash flow surrounding the payment of a refundable accommodation deposit (“RAD”) of $550 000 to [B Aged Care] by the respondent. The financial information about the respondent’s financial condition given to Mr C which neither party challenged was as follows –
a)cash in trust $619 900
b)respondent’s superannuation $528 700
c)motor vehicle $15 000 .
$1 163 600
Less
d)legal fees $47 529
net asset position $1 116 071
Mr C proceeded on the basis that the respondent earns interest at 1.75% on the sum of $619 900 held in trust thereby deriving an annual amount of $10 800 and that he generates interest on his superannuation earnings at the rate of 6% thereby deriving an annual amount of $31 700. He also proceeded on the basis (uncontradicted) that the respondent’s annual living expenses were $13 500 indexed by 5%.
Mr C examined the respondent’s financial circumstances under five separate scenarios, each involving the payment of a different amount by way of RAD. Scenario 1 involved no RAD being paid. Scenario 2 involved a $100 000 RAD being paid. Scenario 3 involved a $200 000 RAD being paid. Scenario 4 involved a $275 000 RAD being paid. Scenario 5 involved a $550 000 RAD being paid.
Before going to the economic aspects of each scenario it is relevant to point up that Mr Stanley on behalf of the respondent propounded scenario 5 whereas Mr Wraith on behalf of the applicant propounded scenario 4. It is also relevant to point up that no medical evidence was adduced about the respondent’s life expectancy. Mr C used a 10 year life expectancy as a means of illustrating the operation of the scenarios yet neither party seriously posited the respondent’s life expectancy as 10 years, he presently being 73 years of age and in poor health.
Scenario 4
It will be recalled that under scenario 4 the administrator proposed to take $275 000 from the funds held in trust and apply that amount to the RAD, correspondingly reducing the sum standing in the credit balance of the trust account. Once that payment was made, Mr C calculated the respondent’s asset position to be as follows –
a)cash at bank $295 000
b)superannuation $528 000
c)motor vehicle $15 000
d)refundable RAD $275 000
$1 113 000
Mr C calculated the respondent’s income, after payment of the $275 000 RAD, to be $36 843. That was made up of the following –
a)age pension $0
b)interest on $295 000 @ 1.75% $5 163
c)superannuation earrings on $528 000 @ 6% $31 680
$36 843
So far as expenses were concerned under scenario 4, Mr C calculated them to be $77 678 annually. Most expenses related to fees levied by the accommodation provider. Mr C said that by the respondent making a deposit of $275 000 (as opposed to making no deposit at all) with the accommodation provider, the respondent derived a cash flow saving of $13 289.
Mr C provided appendix D to his report to illustrate over a nominal 10 year period the respondent’s asset balance on the assumption that under scenario 4 the respondent applied $275 000 RAD. The respondent’s asset position was as follows –
year 1 $1 071 215
year 2 $1 029 842
year 3 $991 393
year 4 $956 514
year 5 $925 222
year 6 $908 635
year 7 $893 333
year 8 $877 643
year 9 $860 950
year 10 $843 217
Under scenario 4 the respondent’s cash flow position improved over the nominal 10 years that Mr C made his projections. Mr C’s arithmetic commenced with a negative cash flow position of $40 835 at year one and ended at year 10 with a negative cash flow position of $11 592. That seemed to be explained by the diminution in total expenses over the 10 years surveyed because total expenses stood at $77 678 at year one yet they stood at $73 210 at year 10.
Under scenario 4, Mr C pointed out that in year 5 the respondent would be entitled to an age pension partway through year 2 and the respondent would have met the lifetime maximum amount for the means tested care fee by the end of year 5.
Mr C stated that under scenario 4, at the end of the 10 year period the respondent’s estimated financial position was $827 800. That was made up of the following amounts –
a)RAD $275 000
b)cash at bank $51 800
c)superannuation $501 000
$827 800
The financial implications of scenario 4 were to be contrasted with the situation where the respondent was making daily accommodation payments to the accommodation facility. Mr C characterised that as scenario 1. Under that scenario the starting point was the respondent’s asset position of $1 113 000, annual income of $41 655 and annual expenses of $95 779. Mr C calculated that at the end of 10 years, the respondent’s net asset position would be $630 000, mainly because the respondent would have paid expenses from cash at bank. In monetary terms, the respondent’s net asset position under scenario 1 at the end of 10 years would be made up of cash at bank of $129 000 and superannuation. As with all scenarios, under scenario 1 the respondent would become entitled to an age pension yet under scenario 1 the pension would become enlivened partway through year 6.
As has been stated above, the applicant in this proceeding did not argue that no RAD should be paid. Instead she said that scenario 4 was the appropriate scenario. Conversely, the respondent relied on scenario 5. It is utile to examine the minutiae of that latter scenario.
Scenario 5 contemplated the payment of the whole RAD amount of $550 000 from the respondent’s cash reserves. His asset position would remain at $1 113 000, even with that payment of $550 000 RAD. Under scenario 5 the respondent’s annual estimated income would be $49 150, made up in part of $31 680 in superannuation earnings and the age pension of $17 120. Under scenario 5 the respondent’s annual expenses were $63 858.
Mr C calculated the respondent’s net asset position at $1 028 000 after 10 years if the respondent paid the RAD of $550 000. That was to be contrasted with the net financial position under scenario 4 of $827 800, a difference of $200 200. The position with superannuation was largely similar, with the amount under scenario 4 being $501 000 after 10 years and the amount being $460 000 after 10 years under scenario 5. That difference was explained by the immediate availability of the pension under scenario 5 and by the respondent having met the lifetime maximum amount for the means tested care fee by the end of year 4.
Mr Stanley submitted that scenario 5 was the preferable option. The immediate availability of the pension and the respondent meeting the lifetime maximum amount for the means tested care fee by the end of year 4 were the two important factors that rendered scenario 5 more financially attractive than scenario 4. He said it was not possible, and neither counsel attempted, to gainsay the respondent’s life expectancy. The respondent needed to survive for at least four years, preferably five, for scenario 5 to become in fact financially superior for the respondent. Under scenario 4 and scenario 5 the modest sum of $40 000 represented the difference in superannuation entitlements. Under both scenarios, the respondent’s entitlement to an age pension would be enlivened part way through the second year and by the end of year 5 the respondent would have met the lifetime maximum amount for the means tested care fee.
In debate with both counsel, submissions were advanced about property division orders especially about the percentages in which the divisions should be made. The respondent said that in very approximate terms the percentage should be 70% in his favour having regard to the fact that he contributed the proceeds of his former matrimonial home he previously owned with Ms G. On behalf of the applicant, Mr Wraith said the percentage by which assets should be divided was 60% in favour of the applicant if the respondent passed away relatively soon and if he survived to trial, then the division should be on a 50/50 basis. In view of the modest value of assets available for division, Mr Wraith for the applicant submitted that I should err on the side of caution by not authorising such a large sum as the respondent sought to be committed to the RAD. Mr Wraith submitted that I should only order the sum of $275 000 canvassed under scenario 4.
Each party initially advanced applications for partial property division orders. On behalf of the respondent, Mr Stanley argued that he did not press that application if he succeeded in his application for the sum of $550 000 to be paid by way of RAD. On behalf of the applicant, Mr Wraith pressed his application for a partial property settlement order of $50 000 from the sum held in trust. The applicant stated in her affidavit mentioned above that the sum of $60 000 in her savings at date of separation had been exhausted on legal fees and that the part time work she performs generates a weekly amount of $1 300. She stated that a boarder she took in assists to defray weekly expenses yet she has no capital reserves.
HOW MUCH FOR THE RAD – $275 000 OR $550 000?
Neither party opposed payment of some amount by way of RAD. It seemed that their respective positions, whether articulated by counsel or divined from the operation of the respective scenarios, could be distilled in the manner set out below. Scenario 4 offered the following positive aspects –
a)the sum to be withdrawn from the respondent’s cash at bank was $275 000 rather than double that amount as scenario 5 postulated;
b)being a lesser sum, once the $275 000 RAD is paid a greater amount was preserved in the trust fund;
c)at the end of 10 years the available asset position would be $827 800; and
d)the respondent would become entitled to the age pension during year two and he would meet the lifetime maximum amount for the means tested care fee by the end of year five.
Scenario 4 involved significant expenses annually of $77 678 resulting in recurrent net cash shortfalls of $40 835. However, on Mr C’s analysis those shortfalls would prevail for the first three years only.
Conversely, under scenario 5 different aspects emerged. They included the following –
a)a significant RAD deposit of $550 000 seriously eroded the balance in the trust fund;
b)the superannuation sum was the same as under scenario 4 ($528 000);
c)at the end of 10 years the asset balance would be $200 200 greater namely $1 028 000 rather than $827 800;
d)under scenario 5 total earnings would be $49 150 compared to $36 843 under scenario 4;
e)under scenario 5, the applicant would be entitled to the age pension immediately (not during year two under scenario 4); and
f)by the end of year 4 the respondent will have met the lifetime maximum amount for the means tested care fee by the end of year four (rather than by the end of year five under scenario 4).
When properly analysed, several issues may be compared. They may be expressed shortly. Under scenario 4 –
a)a lesser RAD sum is paid;
b)a lesser asset position at the end is achieved;
c)a pension is payable after a time; and
d)the maximum means tested care fee is met at the end of year 5.
Conversely under scenario 5 –
a)a larger RAD sum is paid;
b)a more favourable end asset position is achieved;
c)a pension is payable immediately; and
d)the maximum means tested care fee is achieved earlier than under scenario 4.
Mr Stanley submitted that when compared, scenario 5 was more economically attractive than scenario 4 because, so he said, scenario 4 offered no pension, it attracted significant interest payments and at the end of 10 years there was a lesser end result in terms of assets under scenario 4. Strictly speaking, it was not correct to say that scenario 4 did not involve a pension at all. It did. Yet under scenario 5 the pension was paid immediately whereas under scenario 4 it was deferred.
Expressed in those terms, the economic comparison favoured scenario 5. That said, Mr C’s calculations were predicated on the respondent surviving for 10 years. Mr C did not undertake calculations by which a net asset position under either scenario 4 or scenario 5 could be ascertained on the assumption that the respondent survived for a lesser number of years. It might safely be hypothesised that the difference in the net asset position over 10 years under scenario 4 ($827 800) as opposed to scenario 5 ($1 028 000) will be less if the respondent does not survive for the next 10 years. The absence of medical information about the respondent’s medical prognosis renders the task little better than guesswork. Put differently, I am unable to say that on the balance of probabilities the respondent will live for 10 years so as to render scenario 5 not only economically more favourable but likely in its occurrence.
THE UNFORTUNATE PASSAGE OF THIS CASE
This case has already suffered an unfortunate interlocutory history. This proceeding commenced in this court on 16 August 2017. Consent orders were made by a registrar on 14 November 2017. On 6 April 2018 the same registrar made various interlocutory orders and transferred the proceeding to the Federal Circuit Court of Australia. No reasons were given for that transfer. On 19 June 2018 her Honour Judge Jones of the Federal Circuit Court made orders adjourning the further hearing of the proceeding to 13 August 2018 before her Honour Judge Mercuri. On 13 August 2018 her Honour Judge Mercuri fixed the proceeding for a one day trial on a date not before 30 September 2018. On 19 November 2018 the matter again came before her Honour Judge Mercuri who vacated the trial date previously ordered and instead adjourned the proceeding for further hearing before her Honour Judge Small on 1 March 2019. On 1 March 2019 her Honour Judge Small made certain discovery orders and adjourned the further hearing of the proceeding to 22 May 2019. On 22 May 2019 her Honour Judge Small made orders transferring the proceeding to this Court reasoning that her Honour had been informed that the case was likely to take more than four days at trial. On 3 July 2019 a registrar of this court made orders for applications in this case to be brought in the Judicial Duty List on 14 August 2019. The case was allocated to me on that date. On at least two hearings in this case, the applicant was represented by senior counsel. The case has not progressed a particularly long way on its path to trial. It is likely that a large sum in costs has been expended to date over a modest number of assets having a comparatively modest value.
THE APPLICATIONS BEFORE ME
In view of the confusing number and nature of the applications on foot originally in this court then later in the Federal Circuit Court, it is necessary to record precisely which applications were before me on 14 August 2019. In the respondent’s response to the initiating application, the respondent sought orders –
a)for the applicant to pay him $500 per week in periodic spousal maintenance; and
b)within seven days that $550 000 be released by the respondent’s litigation guardian from funds held in trust from the sale of the land and improvements at E Street Suburb F for the purpose of paying the bond for the respondent’s residence at B Aged Care.
The applicant sought orders for the payment of $50 000 by way of security for costs or by way of interim property settlement.
As has been canvassed above, Mr Stanley submitted that his application for periodic maintenance was not pressed if orders were made in his client’s favour in relation to the RAD payment of $550 000. But if I made orders as urged by the applicant in relation to the RAD, namely, for payment of $275 000 rather than $550 000 the respondent pressed his application for periodic spousal maintenance. Irrespective of the RAD payment, the applicant pressed for payment of $50 000 by way of security for costs or interim property settlement.
DISPUTED DURATION OF COHABITATION
Although faintly debated before me, the duration of the parties’ cohabitation was a much contentious issue. The applicant said the duration was of 20 years or thereabouts. Conversely, the respondent said the duration was in the order of no more than five to six years. That significant variable no doubt explained why each party pressed for the percentage divisions so differently, the applicant arguing for something in the order of 50/50 whereas on the respondent’s version of events with a relatively short relationship and he having provided the major asset being the proceeds of sale of his former matrimonial home, he argued for something in the order of a 70/30 percentage division in his favour.
Counsel for the applicant told me that a large number of witnesses will be called in an endeavour to substantiate the applicant’s contentions about the duration of the de facto relationship between the applicant and the respondent.
CONSIDERATION OF THE RAD QUESTION
Mr Wraith helpfully deconstructed the basis of his client’s resistance to the full RAD being deposited. He said that once the sum (whether $275 000 or $550 000) is taken from the trust account and paid by way of RAD that sum cannot be released and it remains with the accommodation facility provider until the respondent’s death at which point it passes to his estate. On that analysis –
a)the unused amount of the RAD at date of death goes to the estate of the respondent; and
b)even though under scenario 5 the respondent is paid a pension and the eventual asset position is enhanced, any such enhancement of the asset position will not enure to the benefit of the applicant.
The applicant’s submissions in support of proposition 4 were not based solely on the desirability of adopting a conservative approach towards the limited assets in issue in this case. Her submissions recognise that if $550 000 is deposited by way of RAD payment, the unused portion of it at the date the respondent’s death goes to the respondent’s estate and is not available for division between the applicant and the respondent. Unsurprisingly, the applicant is keen to have recourse to as many assets as she can having regard to her contentions about the existence of a de facto relationship that spanned 20 years.
Expressed in those terms, the attraction of the respondent receiving immediately the age pension somewhat diminishes. Put differently, I am reluctant to go beyond authorising the RAD explained under scenario 4. It follows that an authorisation to expend $275 000 from the trust account and to apply it by way of RAD payment for B Aged Care is prudent. An order for the deposit of double that sum means that $275 000 is thereafter out of the reach of the applicant because the unused part of the RAD will go to the respondent’s estate. Further, both counsel contended that nothing prevented the making of an RAD payment on top of the sum $275 000.
Counsel referred to two authorities only, Strahan & Strahan[3] and Finazzi & Finazzi,[4] the former being a decision of the Full Court and the latter being a decision of a single judge of this court. Both provide utile guidance. Certain propositions of law may be extracted from each. They include the following –
[3] (2009) 42 Fam LR 203
[4] [2012] FamCA 102
a)the majority of the court in Strahan held that when consideration is being given to the appropriateness of an order being made for an interim property settlement order, more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party;
b)balance must be given to the risks of unduly limiting the final orders that can be made against the circumstances said to show that it is just and equitable to make interim orders;
c)in Strahan it was held that the first stage of any consideration of an application for a partial property settlement order requires a determination of whether the interests of justice require the exercise of power under s 79 and s 80(1)(h) on an interim basis;
d)compelling circumstances need not be shown by an applicant for a partial property settlement order, as was held in Strahan;
e)ordinarily an order under s 79 is made once only after a final hearing, as was held in Strahan at [132];
f)consideration must be given to the reversibility of the order, as was held in Zschokke & Zschokke[5] and Gabel & Yardley;[6]
g)in addition, a court entertaining an application for a partial property settlement should consider the need for and effect of interim orders weighed against the risks that the exercise of the power on an interim basis will interfere with the power of the court to make just and equitable orders on a final basis;
h)further, a court entertaining an application for a partial property settlement order should consider that the order is just and equitable according to at least a preliminary view of the likely range of outcomes;
i)further, a court entertaining an application for a partial property settlement order should balance the risks by considering not only the quantum of the orders but also the risk of unduly limiting the final orders that can be made or even potentially defeating parties’ claims; and
j)a court entertaining an application for a partial property settlement should take into account that a party should not be denied the ability to liquidate assets where there are real needs for those resources such as meeting debts due to creditors.
[5] (1996) 20 Fam LR 766
[6] (2008) 40 Fam LR 66
Applying those legal principles to the facts of this case, I am persuaded that scenario 4 should prevail. I say that for several reasons. They include the following –
a)the applicant submitted, correctly in my view, that any unused portion of the RAD beyond $275 000 at the date of the respondent’s death will pass to the estate and therefore be unavailable for consideration in the division of assets in this case;
b)while the overall asset position will be greater under scenario 5 than under scenario 4 at the end of 10 years the extra $200 200 that scenario 5 offered at the end of 10 years when compared with the amount offered by scenario 4 at the end of 10 years was less than the differences in the amount of the RAD under scenario 4 ($275 000) than under scenario 5 ($550 000). In other words, the extra $275 000 RAD required by scenario 5 did not achieve a commensurately beneficial outcome after 10 years;
c)the alleged benefit of receiving the age pension immediately under scenario 5 was more apparent than real; and
d)under scenario 4 the respondent will nevertheless receive the age pension, albeit not immediately, once depositing the $275 000 RAD.
To my mind, the respondent’s contentions about the economic benefits of scenario 5 did not dominate in this case to such an extent that justified an order the effect of which put out of reach $275 000 (the difference between the amount under scenario 4 and scenario 5) for division between the parties. If the respondent is correct in his contentions that the relationship, as found, was comparatively short, then the percentage of the available assets to be divided might turn out to be, as he says, nearer 70% in which case he can devise those assets in whatever way he chooses. But on the other hand, if the applicant is correct in her contentions that the relationship was long and her claim is nearer 50%, then she will wish to ensure the value of the assets that are available for division are as plentiful as can be in the circumstances. Naturally, a RAD deposit of $550 000 is antithetical to that.
Applying the principles set out above from Strahan and Finazzi, several matters may be stated. They are as follows –
a)I have addressed this case by considering matters beyond merely whether the applicant is likely to be the recipient of a property settlement order in her favour of either amounts of $275 000 or $550 000;
b)I have balanced the risks of unduly limiting the final orders that can be made against the circumstances said to show that it is just and equitable to make interim orders;
c)I have considered whether the interests of justice require the exercise of power under s 79 and s 80(1)(h) and concluded that they do;
d)neither party needs to demonstrate compelling circumstances;
e)if the sum of $550 000 is paid the unused balance of $550 000 will go to the respondent’s estate and thus the unused amount cannot be reversed;
f)I have considered whether the making of the interim orders sought will interfere with the power to make just and equitable orders on a final basis and have concluded that the interim orders sought will not so interfere;
g)I have considered the range of possible outcomes, guided by counsel and, as stated above, on the applicant’s case the division is in the range of 50% whereas on the respondent’s case the division in his favour is in the order of 70%;
h)the parties’ respective claims are not potentially defeated by the interim orders proposed; and
i)the orders proposed in this application recognise that the respondent retains his ability to liquidate assets with a view to meeting debts due to creditors.
In those circumstances, I will make an order in terms of scenario 4, the precise details of which I direct counsel to formulate and email to my associates by 4pm on Thursday 22 August 2019.
THE RESPONDENT’S APPLICATION FOR SPOUSAL MAINTENANCE
In her affidavit made 26 July 2019 the applicant spoke of her current health and financial circumstances. Both were bleak. She stated –
a)she suffers from a medical condition requiring lifelong treatment at the J Hospital in the oncology unit;
b)at work she has been placed on a performance improvement plan because her employer is unhappy with her work performance;
c)after exhausting her annual leave and long service leave entitlements subsequent to December 2018, her hours have reduced to four days a week with a corresponding reduction in her income by 20%;
d)apart from her superannuation, old furniture and $200 in her bank account, she has no assets;
e)she has exhausted the sum $62 000 that was her life savings by spending it on legal costs, she has borrowed $12 000 from relatives and she owes $16 000 to her solicitor;
f)in an endeavour to defray domestic expenses the applicant took in a boarder a year ago who contributes $800 per month; and
g)she does not have the capacity to pay maintenance to the respondent.
In debate about the applicant’s financial circumstances with Mr Stanley, he said the applicant’s material revealed discretionary spending by the applicant that should be contained. He cited $80 per week in gifts, $60 per week in entertainment and $100 per week in clothing. That totalled $240. It was hardly an inordinate amount. In any event, it was less than half the amount of $500 per week the respondent sought. Aside from issues about the respondent’s need for spousal maintenance, I was far from persuaded that the applicant had any capacity to meet the sum sought by the respondent.
So far as the spousal maintenance claim is concerned, ultimately the issue is determined by application of the principles in ss 72 and 74 of the Family Law Act, a matter addressed by the Full Court in In the Marriage of Stein.[7] There, the Full Court (Kay, Holden and Dessau JJ) held as follows[8] –
Spousal maintenance is ultimately governed by the provisions of ss 72 and 74, namely there being no right to spousal maintenance unless there is a capacity to meet it and an inability by the claimant to meet the claimant's own self-support.
[7] (2000) 25 Fam LR 727
[8] Ibid (at [55])
In Hall v Hall[9] the High Court described the legislative gateway to the operation of Part VIII of the Family Law Act in relation spousal maintenance as being s 72(1) of the Act. The High Court pointed to the power conferred by s 74(1) to make an interim order as distinct from the power conferred by s 77 to make an urgent order. Under s 77 two preconditions were required, namely, the immediate need of financial assistance and, second, it must not be practicable in the circumstances to determine immediately what orders if any should be made. Conversely, under s 74 the making of an interim order calls for satisfaction of the threshold requirement in s 72(1) plus any relevant matter in s 75(2). On that last issue the High Court affirmed the observations of the Full Court of the Family Court in In the Marriage of Redman and Redman.[10] Hence, the High Court in Hall v Hall held that in an application for an interim order under s 74 the court cannot determine the application without finding on the balance of probabilities on the evidence before it the threshold requirement of s 72(1) are met plus any relevant matters in s 75(2).
[9](2016) 257 CLR 490
[10] (1987) 11 Fam LR 411
Section 72(1) is in the following terms –
A party to a marriage is liable to maintain the other party, to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
by reason of age or physical or mental incapacity for appropriate gainful employment; or
for any other adequate reason; and
having regard to any relevant matter referred to in subsection 75(2).
Even at this interlocutory stage of the litigation, in this case the evidence revealed that the applicant – not the respondent – was in parlous financial circumstances. I was unable to determine that the respondent was unable to support himself adequately in any of the ways canvassed by s 72 of the Act. His cash at bank under the control of his administrator revealed an asset base that was adequate to meet his financial needs. For that matter the respondent’s main application before me related to a proposal for his transfer of over half a million dollars to the accommodation facility. That was not consistent with a person who required spousal maintenance of $500 per month.
I refuse the application made by the respondent in paragraph 1 of the respondent’s response to the initiating application. It follows that I grant the applicant the relief she sought in paragraph 1 of her reply dated 26 July 2019 to the response for final orders.
APPLICATION FOR $50 000 BY WAY OF INTERIM PROPERTY ORDERS
In paragraph 2 of the applicant’s reply dated 26 July 2019 she sought an order for the payment of $50 000 as an interim property settlement.
For the reasons that follow I grant that application.
Mr Stanley referreed to Strahan as well as to Finazzi. In Strahan the plurality of the court (Boland and O’Ryan JJ) held that by force of s 80(1)(h) of the Act, orders in the nature of interim property settlement orders may be made notwithstanding the purport and effect of s 79 of the Act that the usual order for the division of property is on a once and for all basis after a final hearing. Thus, an applicant seeking orders in the nature of interim property orders is not required to establish compelling circumstances that such an order should be made. Instead, as the Full Court held in Strahan the overarching consideration is the interests of justice. The Full Court held that all that is required in the circumstances is that it is appropriate to exercise the power. In Finazzi & Finazzi a similar approach was taken.
In this case the extent to which the assets are divided in favour of the applicant will be determined in part by a decision about the duration of the relationship. If the court ultimately accepts the applicant’s version of events about the duration of the relationship, approximately 20 years, then it is within the rage of acceptable outcomes for property interests to be divided in half. On that analysis, the applicant is assured of a division of an amount greater than $50 000. But even on the respondent’s arithmetic, applying a percentage corresponding to a relatively short relationship as adopted by the respondent (70/30% in the respondent’s favour) a payment to the applicant of the sum of $50 000 is assured. For the reasons set out in paragraph 45 above, a deeper consideration is involved, however.
I have additionally considered –
a)more than merely whether the $50,000 payment that is proposed will be the limit of assets to be divided in the applicant’s favour upon the full hearing of the trial for property settlement orders;
b)the balance to be struck between the risk of unduly limiting final orders that can be made against the justice and equity of making interim orders for the division of property;
c)whether it is just and equitable to make orders under s 79 and s 80(1)(h) on an interim basis and I have concluded that it is;
d)that compelling circumstances need not be shown;
e)the reversibility of any proposed interim property settlement order;
f)the need for and effect of interim orders weighed against the risk that the interim exercise of power will interfere with the power to make final orders in the nature of property settlement order and I conclude no such interference will arise;
g)at least a preliminary view of the respective entitlements of the parties;
h)the risk that by making the interim property order sought the respondent’s claims may be somehow compromised and I conclude they will not be compromised; and
i)whether the applicant has a real need for assets to be liquidated (in this case released) in order to meet debts due to creditors and I conclude she does have such a real need.
In my view it is appropriate to make an order for the sum of $50 000 to be released to the applicant as a partial property settlement, such amount to be paid from the trust account controlled by the respondent’s administrator. If the applicant’s contentions in this case are ultimately upheld, she may well be the recipient of a division of assets on a 50/50 basis. By the making of the order she seeks, the court’ power or ability to divide the assets even in the proportions contended for by the respondent is not compromised as 30% of a little over $1 000 000 is in the vicinity of $330 000, vastly more than the $50 000 she seeks. That payment should be paid within 14 days.
CONCLUSION
I direct the parties bring in minutes as ordered above to give effect to these reasons.
I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 21 August 2019.
Associate:
Date: 21 August 2019
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