DURKHEIM & HORTON

[2018] FamCA 719

FAMILY COURT OF AUSTRALIA

DURKHEIM & HORTON [2018] FamCA 719

FAMILY LAW – SPOUSAL MAINTENANCE – Variation – reduced income – all capital spent – order made.

Family Law Act 1975 (Cth)

APPLICANT: Mr Durkheim

RESPONDENT: Ms Horton

FILE NUMBER: MLC 1706 of 2017

DATE DELIVERED: 11 September 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 5 September 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Tulloch

SOLICITOR FOR THE APPLICANT: Carew Counsel Solicitors

COUNSEL FOR THE RESPONDENT: Mr Wraith

SOLICITOR FOR THE RESPONDENT: KHQ Lawyers

Orders

1. That paragraph 1 of the minutes attached to the orders made by consent on

   
   

   3 May 2017 is varied pursuant to s 83 of the Family Law Act 1975 (Cth).

2. The husband is to pay $400 per week by way of a payment of spousal maintenance to the wife, the first of such payment to be made when the next payment of $650 would otherwise be due.

3. That the applications for interim orders of the parties are otherwise dismissed.

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 Durkheim & Horton 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 1706 of 2017

Mr Durkheim

Applicant

And

Ms Horton

Respondent

REASONS FOR JUDGMENT

1. The proceedings before the court in the Judicial Duty List on 5 September 2018 between Mr Durkheim (“the husband”) and Ms Horton (“the wife”) arose out of an application in a case which was amended on 4 September 2018.  It contained matters associated with the distribution of some capital as between the parties pending their property settlement.  The parties were able to compromise those matters.  What was not compromised however was an application by the husband for a variation (by reduction) of his obligations under an order made by consent of both parties on 3 May 2017 for spousal maintenance in favour of the wife.  The wife opposed any such alteration.

2. When the parties appeared before Johns J on 3 May 2017 both were represented by counsel and upon the basis of the material before the court, they compromised their position.  The husband was ordered by consent to make a periodic payment to the wife of $650 per week.  In addition, he was obliged to pay various household expenses at the property which is the subject of the proceedings at B Street, Suburb C and also private health insurance.

3. It is only the $650 obligation that the husband seeks to discharge or vary and he proposes that it be reduced to $400 per week.

4. The notation to the order of 3 May 2017 notes that the husband consented to the order on the basis that the wife was estimating that she would receive payments of $660 per week from the child support registrar under an assessment.  The husband’s obligation is now $486 per week.

5. The circumstances under which the child support issue is relevant arise because apparently, subsequent to some parenting orders being made, the husband reduced his work hours to enable him to comply with the orders. 

6. The husband’s position is that the reduction in his income now justified the court in re-examining the whole position regarding his obligation but he also sought to reopen the maintenance on the basis that the wife no longer needed $650 per week.  Counsel for the husband conceded in submission that there was probably little point in that argument because the reality was that the wife’s only form of financial support at the moment is what the husband pays either by way of spousal maintenance or child support.

7. It is timely to remember that spousal maintenance is payable from not just income but property and financial resources.  It was difficult to get a sense of just what the parties are arguing about in respect of the property settlement dispute.  Notwithstanding they have had a mediation, they were unable to compromise the dispute.  However, neither party has pleaded with any particularity as to what their claim is.  Each has spent significant sums on legal fees but the court was not the wiser as to what the ambit of the dispute is.  I query whether the parties were aware of how far apart they were either.  The assets in this case are simple and there does not seem to be any significant argument about the respective financial positions of the parties and although I have not made any order for the parties to file amended documents indicating precisely what orders they are seeking, the parties would do well (having regard to the amount of money they have spent on lawyers) to do that as soon as possible so that the matter can be seen to be ready for trial.

8. The issue in the meantime therefore is the question of spousal maintenance.

9. Section 83 of the Family Law Act 1975 (Cth) (“the Act”) sets out the basis upon which a court may discharge, suspend, revive or vary an extant order.

10. Section 83(2) provides as follows:

    (2)      The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:

    (a)      that, since the order was made or last varied:

    (i)the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);

    (ii)the circumstances of the person liable to make payments under the order have so changed; or

    (iii)in the case of an order that operates in favour of, or is binding on, a legal personal representative—the circumstances of the estate are such;

    as to justify its so doing;

    (a)that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;

    (ba)in a case where the order was made by consent—that the amount ordered to be paid is not proper or adequate;

    (b)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.

11. Essentially therefore, the husband relies upon s 83(2)(a)(ii). It was also put that the court could be satisfied that where the order was made by consent the amount ordered to be paid was no longer proper. In my view it is not necessary for me to deal with that at all.

12. I am satisfied on the evidence of the husband who was cross-examined by counsel for the wife that his financial circumstances have changed since the order was made.

13. Counsel for the wife produced an aide-memoir to show that when one took account of what the husband was earning in 2017 as opposed to what he is now earning since his hours have been reduced, and after adjustments for taxation and child support, there is only $24 difference between the two sums and as such, any application should be seen to have no merit because it was a de minimis change.

14. I reject the argument put by counsel for the wife on the basis that in reality, a court has to allow reasonable living expenses from income and after those sums are taken into account, the court can only make an order to the extent that the husband is reasonably able to pay including from capital.  I am satisfied he has none. 

15. Counsel for the wife cross-examined the husband about how he had paid his legal fees and the use to which the husband had put capital including from the sale of shares.  There is no doubt that over the period up until May 2018, the husband periodically paid fees to his solicitor of significant sums of money.  I accept the husband’s unchallenged evidence that all of that money has been now used up in terms of capital.  He has not paid any legal fees since that time.  Counsel’s submission was that the husband had shown that using his capital he was able to live on his income bearing in mind that his position of reduced hours commenced in March 2018.  In my view all of these arguments are artificial.  The court has to look at the reality of the situation.  Since the capital sums have all been expended and the husband is now entirely reliant upon his income, the court needs to look at the expenditure and see whether any of it is reasonable in the circumstances.  That position was made more difficult in this case because counsel for the wife did not cross-examine the husband on any of those issues.

16. Before looking at the raw numbers, and for the sake of completion of the record, the wife is now also receiving a capital sum which will reduce her indebtedness.  Her lawyers have all been paid through a litigation funding system and the wife acknowledges that she needs to dispose of that loan having regard to the very high interest rate that she has been charged.  In addition, she has been using her credit card to purchase items and when the bill for the credit card arrived, she had usually discharged the payment that was required of her.  To a large degree therefore, her expenses were double-dipping.  She conceded as such.  However, none of that assists me on the basis that she has no other form of financial support other than what the husband provides.  Any reduction by the court in her expenses would make no difference to the bottom line.

17. The only issue therefore which I consider relevant is whether or not the husband has the capacity to pay spousal maintenance after reasonable expenditure is taken into account over and above his compulsory expenditure bearing in mind he is offering to pay $400 per week where he is also paying all of the other expenditure items associated with the wife to which I have earlier referred.

18. The husband pays rental for his own accommodation whilst the wife remains in the former home.  His expenses are asserted to be $597 per week for rent and there was no challenge to that figure.  The expenses associated with the order other than the cash payment amount to $502.

19. When the compulsory expenses are therefore taken into account and before spousal maintenance is paid otherwise, the husband has already spent $2836 out of $3760 per week.  He was not challenged in relation to his living expenses which he estimated to be $842 per week which includes his time with and responsibilities for, the children.  In addition, he has car registration fees of $15 per week.

20. When those amounts are added to the compulsory expenditure, his total expenses amount to $3693 per week leaving him with a net amount of about $67 to contribute towards spousal maintenance. 

21. Undoubtedly, there are discretionary items such as car maintenance, clothing and shoes, entertainment, holidays and the like not to mention some of the compulsory expenses such as rates which are not always paid on a weekly basis and therefore there is some cash available.  In my view it matters little because accepting that some of the “fat” in the husband’s expenses could be trimmed, there is still less than $650 per week available.  In fact there is not $400 per week as proposed by the husband.  In my view having regard to the fact that he has offered $400 per week, I can presume that he has the ability to make the payment from within his means.  In my view therefore the order should be reduced to $400 per week until further order.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 11 September 2018.

Associate:

Date:  11 September 2018