Dunn & Dunn (No 3)
[2022] FedCFamC1F 172
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Dunn & Dunn (No 3) [2022] FedCFamC1F 172
File number(s): ADC 5380 of 2020 Judgment of: BERMAN J Date of judgment: 22 March 2022 Catchwords: FAMILY LAW – ORDERS – Discharge – Application to suspend or vary interim spousal maintenance order – Where the husband is currently in arrears – Where the wife obtained part-time employment for a short period – Where the wife resigned due to the stress of the litigation, health concerns and wanting to care for the children – Where the gateway test is not satisfied to the extent of the wife’s employment – Consideration of each parties’ financial circumstances – Where the wife has established an entitlement and the husband has capacity to meet the sum – Application dismissed. Legislation: Family Law Act 1975 (Cth) s 72(1) Cases cited: Brown & Brown (2007) FLC 93-316
Hall & Hall (2016) 257 CLR 490
Maroney & Maroney [2009] FamCAFC 45
Stein & Stein (2000) FLC 93-004
Division: Division 1 First Instance Number of paragraphs: 71 Date of hearing: 28 February 2022 Place: Adelaide Counsel for the Applicant: Mr Anderson Solicitor for the Applicant: Clelands Lawyers Adelaide Pty Ltd Counsel for the Respondent: Mr McQuade Solicitor for the Respondent: Jordan & Fowler Family Lawyers ORDERS
ADC 5380 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DUNN
ApplicantAND: MR DUNN
Respondent
ORDER MADE BY:
BERMAN J
DATE OF ORDER:
22 MARCH 2022
THE COURT ORDERS THAT:
1.The Amended Response to an Amended Application in a Proceeding filed 7 December 2021 seeking to discharge the order for spousal maintenance made 17 March 2021 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Dunn & Dunn is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BERMAN J
INTRODUCTION
Ms Dunn (“the applicant”) and Mr Dunn (“the respondent”) remain unable to resolve their differences as to the future parenting arrangements for X born in 2015 and Y born in 2018 (collectively “the children”). The parties also remain in dispute in respect of settlement of property.
The proceedings had been listed for final hearing on 16 May 2022. By order made on 28 February 2022, the proceedings were bifurcated such that only the parenting proceedings remain listed for hearing.
The property proceedings are to be listed at a future date when the Court can be satisfied that the matter is ready for a final hearing, with particular regard to the orders sought in the Further Amended Initiating Application filed 22 February 2022 which includes particulars of claim and orders sought against Mr A Dunn (“the second respondent”).
On 17 March 2021, the following order for spousal maintenance was made in favour of the applicant:
4.That by way of interim spousal maintenance the respondent pay to the applicant the sum of ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500) per week in the applicant’s nominated bank account with such payments to be made on the Friday of each week.
By an Amended Response to an Amended Application in a Proceeding filed 7 December 2021, the respondent seeks that the order for interim spousal maintenance be either suspended or discharged. The applicant opposes any variation to the interim spousal maintenance order.
It is agreed that since 10 December 2021, the respondent has not complied in full with the spousal maintenance order made on 17 March 2021 and as at 14 February 2022, is currently $9,850 in arrears.
BACKGROUND
Paragraphs 67 to 76 inclusive of the applicant’s affidavit filed 28 September 2021, disclosed that on 28 June 2021 the applicant had gained part-time employment (0.6 FTE) as a manager for a commercial property in W Town (“the commercial property”).
The standard work hours were 9.00 am to 5.00 pm on each Monday, Wednesday and Thursday.
Paragraph 68 provides a summary of the children’s care arrangements consequent upon the applicant’s employment:
My new employment has had minimal impact on the care arrangements for the children. X is at school while I am at work and Y attends child care on Mondays and spends Wednesdays and Thursdays with the maternal grandparents, who also have the children’s cousins in their care on those days. The maternal grandparents are both retired school teachers and do not have any difficulty caring for multiple children.
The annual salary to be received by the applicant was $45,000 ($75,000 pro rata) and her net weekly pay was $750.39.
Notwithstanding the income received by the applicant, it was her contention that even bringing to account the spousal maintenance order of $1,500, there was still a weekly shortfall by way of expenses exceeding her income.
The applicant also advised that she had agreed with her lawyers that she would contribute $700 per week towards her legal costs in order that her solicitors would continue to represent her.
It is a feature of the arrangements between the parties that the applicant would not seek a child support assessment and accordingly, the current payment made by the respondent includes a component relating to the children’s expenses whilst in the applicant’s care.
Whilst in an application for spousal maintenance it is ordinarily necessary to distinguish between the expenses of a spouse seeking an order for spousal maintenance and the expenses of the children of the marriage or relationship, I propose to treat the children’s expenses as the necessary expenses of the applicant until such time as a child support assessment is sought and a determination of child support payable is made.[1]
[1] Stein & Stein (2000) FLC 93-004.
It is not controversial that the applicant is not in control of any of the property of the parties. There have been orders by way of partial property settlement and litigation funding but I am satisfied that any money received by the applicant have been paid to her solicitors.
The applicant concedes that the only employment that she applied for was with the commercial property in W Town. The applicant was assisted by a recruitment agent who also is a friend. The applicant did not apply for any other employment leading up to her successful application with the commercial property in W Town and it is acknowledged by her that there has not been any subsequent applications for employment.
The applicant commenced her employment in 2021, following an offer of employment made in 2021. I accept that the applicant accepted the employment on the basis that she considered arrangements for the children to be appropriate.
The applicant gave written notice of her resignation to her employer in 2022. Whilst it is difficult to ascertain a clear basis for the applicant’s resignation, a convenient summary appears at paragraphs 22 and 23 of the applicant’s affidavit filed 28 January 2022:
22.Since commencing my employment with Z Company, my stress and anxiety have made me feel completely overwhelmed. I feel constantly teary and whilst I put on a ‘brave face’ for the children. I often cry when they are asleep at night. I have trouble sleeping and I am constantly exhausted. This is difficult given that I have primary care for two young, active children who are awake early.
23.In addition, the stress and anxiety has caused my thoughts to become confused and clouded and I have found it difficult to express myself at times. I suffer from a hereditary heart arrhythmia condition. The stressors of working whilst I am experiencing such overwhelming stress has resulted in me experiencing symptoms of tachycardia, where my heart races. These symptoms arise without any warning. On one occasion on Monday 22 November 2021, I had to go home from work as I was unable to work with these symptoms.
The applicant considers that her energy and effort is best utilised by her providing full-time care for the children. She considers she is well suited to the role of homemaker.
The respondent contends that the applicant has a history of employment, is able to engage in social networking, is social media savvy and is well suited to the role of customer relations as undertaken by her during the course of the marriage and that she has a skill set that was utilised during her employment with the commercial property in W Town, to the advantage of her employer.
LEGAL PRINCIPLES
As discussed in the judgment of Ms Dunn & Mr Dunn [2021] FamCA 123, in the decision of Hall & Hall (2016) 257 CLR 490 the High Court spoke of the threshold test to be applied when considering an application for interim spousal maintenance as follows:
3.…The gateway to the operation of Pt VIII in relation to spousal maintenance is in s 72(1). That subsection provides that “[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 … having regard to any relevant matter referred to in [s] 75(2)”.
In the earlier judgment, I found that the applicant had a capacity for employment and was in paid employment until Covid-19 resulted in her employment being terminated in April 2020.
The onus of establishing the extent to which the applicant is unable to support herself adequately falls to the applicant.
By her own admission, the applicant secured employment with the commercial property in W Town that was consistent and commensurate with her skill set. There is no suggestion that she was unable to perform her duties nor is there any evidence from her employer that she was not able to discharge her duties of employment.
The applicant accepted the employment with the commercial property in W Town after having given careful consideration to the necessary care arrangements for the children. There is no reason to doubt the applicant’s assessment that the arrangements for the children were other than appropriate.
As considered, the applicant ceased her most recent employment on the basis that she was stressed by the litigation, was fearful that continuing employment might exacerbate an underlying heart condition and other comorbidities and that on reflection, she considered she needed to devote her full attention to the children’s care.
There is little doubt that the litigation between the parties is highly conflicted and stressful for each of them. The extent to which that stress might impact adversely on the applicant’s health is not substantiated by medical evidence. The reference by the applicant to her concerns that her underlying medical conditions may be exacerbated by her work, in the absence of more, is a button faintly pressed.
The applicant has not sought any other employment and is content to rely upon an assertion that her skills are better suited to the full-time care of the children.
No further evidence has been presented to support the contention that the care of the children was compromised as a result of the applicant’s standard work week of a total of about twenty four hours across three days.
X is currently aged seven years and is in school. Y is soon to be four years of age and has been in childcare with the likely transition to preschool or kindergarten.
More is required to satisfy the threshold test than the assertion of a party that their preferred use of their time is as the primary caregiver to the children. In the absence of evidence that establishes the mother’s original intentions were forlorn of hope, I do not consider that the applicant has satisfied the gateway test in s 72(1) to the extent of her employment with the commercial property in W Town.
I am able to find that the employment enjoyed by the applicant was an appropriate compromise of her ability to work and maintain appropriate parenting of the children.
The annual salary received by the applicant was $45,000 and her net weekly pay of $750 (rounded down) is a reasonable measure of her ability for employment and an appropriate measure of remuneration.
QUANTUM OF CLAIM
The applicant relies upon her Financial Statement filed 28 January 2022, setting out her fixed and discretionary expenditure.
By reference to Part G of the Financial Statement, the applicant sets out the following weekly expenditure:
Description Amount Rent $650 Motor Vehicle registration $15 NAB Visa Credit Card payments $64 AA Bank Visa Credit Card payments $119 W Company (Centrelink debt) $50 Legal Costs to Clelands Lawyers $700 TOTAL $1,598
The applicant has not been in a position to pay rent and whilst the landlord is apparently on friendly terms with the applicant, I do not consider that the accommodation for the applicant and the children is free. I propose to bring to account the amount sought by the applicant in the sum of $650 for her rent.
I propose to deduct the sum of $700 per week, being legal costs paid to her current solicitors.
The preparedness of the applicant’s current solicitors to continue representing her is a live issue. There is no satisfactory explanation as to the extent to which the applicant is and will be represented at least for the purposes of the upcoming parenting proceedings and more generally to the conclusion of all outstanding matters.
The respondent makes the reasonable observation that the legal fees incurred by each of the parties and anticipated to be incurred to the conclusion of proceedings may well render any outcome in respect of the property of the parties, pyrrhic.
Of more recent date, the respondent agreed to sell motor vehicles and animals that were under his control. There is some uncertainty as to the extent of money that will be generated by the sale but some at least is likely to assist the applicant in her legal fees.
I propose to exclude the weekly charge of $700 per week in legal costs to the applicant’s solicitors, resulting in an assessment of the applicant’s current fixed weekly expenditure in the sum of $898.
The applicant seeks Part N discretionary expenditure of $661 for herself and $720 for the children, resulting in a total of $1,381 per week.
The respondent sought to challenge several of the discretionary expenses.
In Brown & Brown (2007) FLC 93-316 at [161], the Full Court summarised the principles to be applied as follows:
•The word “adequately” is not to be determined according to any fixed or absolute standard.
•The idea that “adequate” means a subsistence level has been firmly rejected.
•Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.
•In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.
•It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.
•However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
The respondent’s complaint in respect of the adequacy of the applicant’s average weekly expenses was not made out. It is difficult to focus on any particular item of expenditure and determine that it is either excessive or unnecessary.
The challenge on behalf of the respondent focussed on the sum of $110 representing the applicant’s hairdressing and toiletries expenditure.
It is not controversial that when the parties were in an intact relationship they enjoyed and considered it appropriate to do so, a high standard of living.
The respondent spent countless hours and no doubt incurred significant cost in the detailed transaction by transaction interrogation of the applicant’s bank and credit card statements. I consider that the respondent’s in-depth enquiry was unnecessary and unhelpful.
A much easier measure of the applicant’s expenditure is as set out in Part N of her Financial Statement.
The applicant did not set out to establish by evidence each and every item in Part N. I consider that I am entitled to exercise my discretion particularly where the expenditure appears to be modest and certainly consistent with the standard of living previously enjoyed by the parties (see Drysdale & Drysdale [2011] FamCAFC 85 at [40]).
I bring to account the total of the Part N expenses at $1,381 and when added to the fixed expenses, the total sum representative of the applicant’s needs is $2,279. From that figure, I propose to deduct the sum of $750 being the amount that I consider represents a reasonable assessment of the applicant’s ability to find employment and the net amount that should be brought to account. I assess the applicant’s reasonable financial needs by way of spousal maintenance in the sum of $1,529, noting that $720 represents the component for the children.
THE ABILITY OF THE RESPONDENT TO SATISFY AN ORDER
In determining the “reasonable ability” of a party to satisfy an order for interim spousal maintenance, the Court is not confined to considering only that party’s income, but rather:
Once a party … establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse’s reasonable needs, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or borrowings against capital assets.[2]
[2] Maroney & Maroney [2009] FamCAFC 45 at [56].
The respondent operates a business that specialises in commercial matters.
The value of M Pty Ltd is the subject of challenge. The parties jointly instructed Mr V as a single expert to value the respondent’s interest in his business. The valuation dated 2 February 2022 is not agreed, in particular as to the recoverability of substantial outstanding debtors.
Mr V determined that up until the year 2020, the respondent did not receive formal remuneration through the payroll system. At paragraph 62 of the valuation report, Mr V sets out the respondent’s remuneration history as follows:
•2018 – Directors fees $60,000
•2019 – Directors fees $24,000
•2020 – Wages $38,400
•2021 – Wages $73,600
In determining the value of the respondent’s interest in the business, Mr V adopted a notional salary of $200,000.
By reference to the respondent’s Financial Statement filed 11 February 2022, he records his total salary before tax in the sum of $1,538 per week. That sum is broadly consistent with the respondent’s wages for the 2021 financial year.
The respondent lists his total weekly income as set out in Part D of the Financial Statement as follows:
Description Amount Total salary $1,538 Bank interest $1 Benefit from business (maintenance payment) $1,500 Benefit from business (mobile phone, rent allowance & drawings from mortgage payments) $1,131 TOTAL $4,170
It is notable that of the respondent’s total income, $2,631 is by way of benefit from his business. It is also a convenient crosscheck that the total average weekly income for the respondent is similar to the notional income considered reasonable by Mr V.
The husband’s personal expenditure is set out in Part G of the Financial Statement as follows:
Description Amount Income Tax $340 Superannuation contribution $153 Rent $450 Mortgage payments $671 Motor Vehicle registration $35 Maintenance payments $1500 TOTAL $3,149
The total of the Part N discretionary weekly expenditure in the Financial Statement, including a modest component for the children, is in the total sum of $785.
There is no challenge to the quantum of any of the items and in the circumstances of this case, the amounts claimed appear reasonable. I bring to account the sum of $785 and when added to the fixed expenditure the total of the respondent’s expenditure is $3,934.
At item 33 of the Financial Statement, the respondent considers that his total personal expenditure is in the sum of $6,065. The difference is revealed by a consideration of the notation in item 32 as follows:
Item 14 ($1,311) Item 60 ($785) + Legal Fees (criminal and family) E$1,000
The expenditure in items 21, 23 and 31 are offset almost to equality (I have ignored the mobile telephone component of $10) by the ability of the respondent to draw from the business a total sum of $2,631, as set out in item 14.
I am uncertain as to the respondent’s arrangements with his solicitors in respect of the purported agreement to repay them at the rate of $1,000 per week, however for the purposes of the proceedings, I have not brought to account the applicant’s agreement with her solicitors to repay them at the rate of $700 per week and in the absence of any further evidence, I do not consider that it is appropriate to bring to account the respondent’s arrangements in respect of his legal fees.
Moreover, the only legal fees that are disclosed in the respondent’s Financial Statement is the sum of $13,803 to his current solicitors. It is understood that his solicitors have made an open commitment that the respondent will be represented throughout the course of the proceedings.
Accordingly, the total income from all sources received by the respondent is in the sum of $4,170 as against his total expenditure of $3,934. Included in that sum is a specific component for maintenance payments in the sum of $1,500.
I note that the respondent holds property at D Town and Suburb J in the total sum of $975,000, with a total mortgage commitment of $340,000. The respondent appears keen to retain the properties and whilst the weekly mortgage repayments would be similar to a rental commitment, consideration may have to be given as to whether one or both of the properties held by the respondent are able to be retained.
As discussed, a spousal maintenance obligation can be satisfied from the capital assets of the parties in circumstances where the liable party’s financial circumstances do not allow for the payment of a sum as may be ordered. A further consideration is whether the significant legal fees of each of the parties may need to be satisfied from the sale of the remaining assets available to them.
Accordingly, I consider that the applicant has established an entitlement to $1,500 per week and I consider that the respondent has the capacity to meet that sum.
I make orders as appear at the commencement of these reasons.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman. Associate:
Dated: 22 March 2022
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