Eccheli & Eccheli
[2024] FedCFamC1F 234
•12 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Eccheli & Eccheli [2024] FedCFamC1F 234
File number: SYC 1191 of 2024 Judgment of: SCHONELL J Date of judgment: 12 April 2024 Catchwords: FAMILY LAW – INTERIM PROPERTY – Where the parties each seek to exclusively retain net sale proceeds from properties – Where the husband asserts he will apply the proceeds toward family expenses and pressing financial needs – Where the husband’s financial affairs are less than transparent – Where there has been no independent valuation of the assets – Where the denial of interim funds to the husband may increase the likelihood of insolvency – Where the wife requires funds to pay her expenses – Orders made releasing net sale proceeds to both parties.
FAMILY LAW – INTERIM SPOUSAL MAINTENANCE – Where the wife seeks maintenance – Where the wife was the primary carer and homemaker during the marriage – Where after separation the husband initially paid, but ultimately withdrew, a monthly allowance to the wife – Where, given the interim settlement received, the wife did not establish an inability to support herself such that she required a periodic payment.
FAMILY LAW – ADULT CHILD MAINTENANCE – Where the wife seeks that the husband pay maintenance for the parties’ adult child – Where the parties are at issue about whether the child is disabled – Where the Court is unable to resolve the conflict in interim proceedings– Where the wife’s evidence did not establish that that the child is disabled and requires maintenance – Application dismissed.
Legislation: Family Law Act 1975 (Cth), ss 66H, 66J, 66L(1), 75(2), 79, 80(1)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), r 8.15(3)
Cases cited: Atwill and Atwill (1981) FLC 91-107
Bevan & Bevan (1995) FLC 92-600
Bing & Bing (2007) FLC 93-318
In the marriage of Tuck M.L. & Tuck, J.M. (1981) FLC 92-021
Medlow & Medlow (2016) FLC 93-692
Mitchell and Mitchell (1995) FLC 92-601
Re: AM (Adult Child Maintenance) (2006) FLC 93-262
Redman and Redman (1987) FLC 91-805
Rowan and Rowan (1977) FLC 90-310
Stacy and Stacy (1977) FLC 90-324
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Wenz v Archer (2008) 40 Fam LR 212
Wilson and Wilson (1989) FLC 92-033
Division: Division 1 First Instance Number of paragraphs: 77 Date of hearing: 2 April 2024 Place: Sydney Counsel for the Applicant: Mr Cox SC Solicitor for the Applicant: Broun Abrahams Burreket Counsel for the First Respondent: Mr Hollo Solicitor for the First Respondent: Taylor Rose Counsel for the Second Respondent: Ms Wilson Solicitor for the Second Respondent: Swaab Attorneys ORDERS
SYC 1191 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ECCHELI
Applicant
AND: MS ECCHELI
First Respondent
MS C ECCHELI
Second Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
12 APRIL 2024
THE COURT ORDERS PENDING FURTHER ORDER THAT:
1.The wife is granted exclusive use and occupation as between the husband and wife of D Street, Suburb E, New South Wales (“the Suburb E property”).
2.The husband pay, or cause to be paid, by way of spousal maintenance the monthly repayments of principal and interest pursuant to the Suburb E property home loan, and the utilities and outgoings in respect of the Suburb E property.
3.The husband, pending its sale, is granted exclusive use and occupation as between the husband and the wife of F Street, Suburb G, Queensland (“the F Street property”).
4.The parties shall do all acts and things and sign all documents necessary to authorise Swaab Attorneys to pay to the husband the balance of the proceeds of sale of H Street, Suburb J, Queensland (“the H Street property”), after deduction for the moneys to be paid to complete the purchase of the F Street Property pursuant to the Orders made on 4 April 2024, and after allowance for the moneys to be retained to meet the expenses of the second respondent pursuant to the Orders made on 2 April 2024.
5.Other than in accordance with these Orders and save in the ordinary course of business, the husband and wife be, and hereby are, restrained from selling, further encumbering, transferring, or in any other way dealing with or diluting their interests in any assets in the husband or wife's name, the joint names of the parties, or in the name of any commercial entity or trust in which either party is a director or shareholder, without providing the other party less than 28 days’ notice in writing of that party’s intention to do so.
6.Within 14 days of these Orders, and upon the husband providing notice in writing of no less than two business days, the wife make the following items available for collection by the husband from the office of the wife’s solicitor:
(a)The husband’s Will;
(b)Any Articles of Association, Trust Deeds or Deeds of Amendment, loan documents, contracts, registration papers and insurance documents in relation to motor vehicles;
(c)The husband’s jewellery; and
(d)The husband’s laptop and hard drives.
7.The husband’s Application in a Proceeding filed 18 March 2024, the interlocutory orders sought by the wife in her Response filed 22 March 2024, and the wife’s Response to an Application in a Proceeding filed 28 March 2024 be 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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
Before the Court are competing interim applications for financial relief, consequent upon the recent breakdown of the parties’ marriage. The matter has come on quickly to address what the parties contend is the necessity for the Court to urgently grant relief. In those circumstances, the orders made are very much of a stop-gap nature. The husband foreshadows that there may be a need for further applications. Whether that is the case is a matter for assessment by the Court at the appropriate time.
In the course of the hearing, the husband and wife resolved an issue about the joinder of their daughter in relation to her majority ownership of a property in Queensland, described in these reasons as the “H Street property”. Consent Orders were made on 2 April 2024, joining their daughter to these proceedings and dealing with part of the proceeds of sale of the H Street property. There was also agreement reached that a further part of the proceeds of sale of the H Street property be applied to complete the purchase, in the wife’s name, of another property in Queensland described in these reasons as the “F Street property”. The wife purchased the F Street property in her sole name in 2023 and, at the date of the interim hearing, settlement was anticipated to occur shortly.
Following submissions and pending judgement, the husband and wife submitted an agreed Minute of Order, which was made in Chambers. That Minute of Order also recorded a notation that they agreed the F Street property, once settled, would be on sold, and the net sale proceeds applied in reduction of the mortgage secured over a property in New South Wales, described in these reasons as the “Suburb E property” (Orders of 4 April 2024, Notation B).
The principal issue for determination is who should receive the balance of the net sale proceeds from the H Street property, which is estimated to be approximately $974,000, and the net sale proceeds from two properties in Region K (“Region K properties”), which are approximately $1,084,000. At the date of the hearing, the net proceeds from one of the Region K properties were held in the trust account of conveyancing solicitors, and the settlement of the sale of the second property was due shortly. The Region K properties, now sold, were registered in the wife’s name.
The husband broadly seeks orders for the release, to him, of the net sale proceeds of the H Street property and the Region K properties. From those moneys he proposes to meet various business and personal expenses of the family, pay spousal maintenance to the wife, mortgage payments and outgoings for her home and car, $100,000 to meet her legal fees (albeit his senior counsel conceded that a greater sum may be appropriate), meet various expenses of the parties’ adult children, and pay $997,602 to L Investment Firm (“L Investment Firm debt”), a financier to a unit trust in which the husband holds, through various corporate entities, approximately 71 per cent of the units.
The wife, for her part, seeks that she retain the net sale proceeds of the H Street property and the Region K properties. Additionally, the wife also seeks that: the husband pay her $41,500 by way of a lump sum interim spousal maintenance, and thereafter interim periodic spousal maintenance of $3,000 per week; adult child maintenance of $2,500 per week; meet other expenses and outgoings; and various disclosure orders.
The wife’s claim for adult child maintenance was made on the morning of the hearing, and without prior notice to the husband. To meet this new relief, the parties were directed to file written submissions and affidavits in reply. The husband filed affidavits and written submissions. The wife’s affidavits went well beyond evidence in reply, and included new evidence including further medical reports that were dated after the hearing.
I do not regard the further medical reports as evidence in reply. To permit reliance upon this new material would be procedurally unfair to the husband. I propose to only have regard to such further evidence of the wife that can be properly categorized as evidence in reply. The wife cannot be heard to complain, given she is the author of the delay. There was no proper explanation as to why the wife’s application for adult child maintenance was not filed in accordance with the trial directions.
The husband relied upon:
(1)Initiating Application filed 26 February 2024;
(2)Application in a Proceeding filed 18 March 2024;
(3)Affidavit of the husband filed 21 February 2024;
(4)Affidavit of the husband filed 18 March 2024;
(5)Affidavit filed of the husband 28 March 2024;
(6)Affidavit of the husband filed 3 April 2024;
(7)Affidavit of Mr M filed 3 April 2024;
(8)Financial Statement of the husband filed 21 February 2024;
(9)Case Outline filed 28 February 2024; and
(10)Written Submissions as to adult child maintenance filed 3 April 2024 and 5 April 2024.
The wife relied upon:
(1)Response to Final Orders filed 22 March 2024;
(2)Affidavit of the wife filed 22 March 2024;
(3)Affidavit of the wife filed 4 April 2024;
(4)Affidavit of Ms C Eccheli filed 4 April 2024;
(5)Affidavit of Ms N filed 4 April 2024;
(6)Financial Statement of the wife filed 22 March 2024;
(7)Case Outline filed 28 February 2024; and
(8)Written Submissions as to adult child maintenance filed 4 April 2024.
Each party’s affidavits contained a number of annexures and, in the case of the husband, annexures running to hundreds of pages. Rule 8.15(3)(e) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”) provides that annexures and/or exhibits are not accepted as evidence unless they are separately tendered. With the exception of one document tendered by the husband, neither party sought to tender any of the annexures to the affidavits. The wife’s counsel referred specifically to two medical reports annexed to the wife’s affidavit. In those circumstances I have not, for the purposes of my determination, had regard to any of the annexures other than the two medical reports referred to above.
BACKGROUND FACTS
The parties initially commenced cohabitation in 1990, married in 1992, and have three children who are now all over the age of 18 years. In late 2015, the parties separated. They divorced in 2017, resumed cohabitation in mid-2018, and remarried in 2019.
The parties separated on a final basis on 17 November 2023.
The husband is a professional. It would appear that the parties arranged their marital relationship on the basis that the husband took charge, and managed all aspects, of their finances.
It seems not in dispute the wife has been the primary homemaker and carer of the three children, and is financially dependent upon the husband. In her Financial Statement she contends that throughout the relationship, she was provided with funds by the husband. The wife says he would transfer her approximately $10,000 a month, and provide her access to a credit card. She contends that these payments continued after separation but were unilaterally ceased by the husband on 3 January 2024.
The parties’ finances are complicated. There are numerous companies and trusts that hold a substantial part of their wealth. In the husband’s initial affidavit, he asserted the following:
3.1. I am a [professional]. I acquire various residential and commercial premises either personally or via a group of entities collectively referred to as the [Q Group] with several other investors. For asset protection and estate planning purposes, the Wife and I have also purchased various properties in my sole name, in the Wife's sole name or jointly as tenants in common as between myself, or the Wife, and our adult children or either of them.
3.2Some of the properties that we have purchased in the past are tenanted and yield rental income; however, most properties are purchased for development, such that we are required to meet the holding and development costs until the property can be sold for a profit before we receive any benefit.
3.3.None of the properties in which either myself or the Wife have an interest in our personal capacities are currently producing any rental income. None of the commercial premises in which I have an interest via the [Q Group] are currently deriving profit that is available for distribution to the respective unit holders. Many of these properties are similarly in a state of development.
3.4.I receive a regular salary for the management of the [Q Group], paid to me on a monthly basis in the amount of $22,916, or $5,288 per week (after tax). This is my only source of regular income.
3.5. The personal expenses that I meet for the benefit of myself, the Wife and our adult children are in excess of $35,000 per week. Ordinarily, I supplement my regular income with the available net proceeds of sale from a property, if and when the same becomes available, which are in turn applied:
3.5.1. toward further investment opportunities; and/or
3.5.2. to meet the holding and further development costs of other presently owned properties (including properties owned via the [Q Group]); and/or
3.5.3. toward the personal expenses of the Wife, our adult children and myself.
…
3.8.I accept that I managed our families’ financial affairs throughout mine and the Wife’s marriage and that there is a level of complexity to our commercial interests in the [Q Group]...
3.9.…absent the Wife's agreement, which has not been forthcoming, or urgent Orders being made to facilitate the application of the available proceeds from the sale of the Villas in the manner sought in my Initiating Application, not only will the Wife and I will be unable to preserve our current financial position, it will be significantly and adversely affected. We are now at an immediate risk of:
3.9.1. defaulting on various home loan repayments, including the home loan secured over the former matrimonial home, at which the Wife and [Mr P] continue to live;
3.9.2. defaulting on regular, direct debit payments of certain expenses such as motor vehicle finance and insurance payments;
3.9.3. being unable to provide the level of financial support that the Wife and I have made available to our adult children by way of substantial contributions toward their rental and living costs; and
3.9.4. being unable to pay immediately due and payable business expenses, without which the subdivision of various lots at a development site will be unable to proceed, giving the purchasers of those lots the ability to terminate contracts for sale that have been entered into prior to the dates of anticipated settlement in [early] 2024 and [mid] 2024.
…
54.A key feature of the way that I have managed our family finances is selling current assets in order to realise capital to fund future development projects and meet family expenses. Then once those development projects are complete, I sell them, retain part of the proceeds for family expenses and reinvest the remainder in future development projects, and so the cycle continues. This has been the case since well prior to mine and the Wife's recent separation.
55.The cycle has enabled our family to accumulate wealth and enjoy an affluent lifestyle, but it has always depended upon the Wife and the children complying with requests I have made to purchase or otherwise dispose of assets in their names to maintain our cash flow. If the cycle stops, as is now occurring, we risk defaulting on future obligations and have no liquidity to meet our business and family expenses. Whilst I accept that the Wife and I will be required to separate our financial interests in various assets consequent upon the breakdown of our relationship and on a final basis, we are now facing immediate cash flow issues. Unless funds are released to me in order to meet our business and personal expenses and trade out of our current financial position, I consider it highly probable that my business interests in the [Q Group] and mine and the Wife's personal interests will be adversely affected.
(Affidavit of the husband filed 21 February 2024 p.1-4, p.14)
The broad contentions advanced by the husband do not seem to be the subject of challenge. Indeed the wife contended in her Case Outline, in slightly more catastrophic terms, the following:
71.The Husband has provided only sparse evidence about the financial position of his various enterprises conducted through third party trust vehicles or companies. As to the evidence he has provided, it very clearly demonstrates that these enterprises, being separate property developments or property assets held in special purpose trust structures, are insolvent or, if not, very likely to be. His evidence is that these enterprises cannot meet debts from their own income and financial resources. The commercial basis for his application for use of matrimonial funds is that very reason, yet he acknowledges that immediate and future liabilities will have to be managed carefully without providing any plan.
72.Given the admitted insolvent or financially precarious position that these enterprises are in, the Court (and the Wife) would expect a full independent accounting and disclosure of the overall position of the assets and enterprises in his control. Yet he provides little to no independent evidence. There is no independent accounting evidence of the financial position of these enterprises or evidence of asset valuations (only his estimates). There is no clear and transparent evidence of unitholder and ownership structures.
73.This places the Court (and the Wife) at risk of funds being distributed to him in circumstances where there is a prima facie serious insolvency risk with respect to the enterprises in his control. What his evidence plainly calls for is not the use of matrimonial funds to prop up third party enterprises that cannot meet their debts, but the appointment of an administrator to independently assess whether assets should be immediately sold to pay outstanding debts or whether any other form of imminent restructure should take place.
(Case Outline of the wife filed 28 March 2024, p.18 –19)
Despite such submissions, the wife did not move the Court for orders appointing an administrator.
The husband, in his Financial Statement, asserts the net assets of the parties have a value of approximately $5,400,000. The state at which the proceedings currently are is such that there has been no independent verification of the various entities referred to in the parties’ respective applications, affidavits, and case outlines.
SUBMISSIONS OF THE HUSBAND
The husband contends that it is necessary that he receive the net proceeds of sale of the H Street property and the Villas to enable him to continue to meet the various personal and business outgoings of the parties. He contends that doing so is entirely consistent with the way he has managed the parties’ financial affairs to date. The husband’s Case Outline contends that:
3.…The wife makes assertions unsupported by any proper evidence as to a risk of mismanagement of financial assets by the husband. She concedes that she has no knowledge [of] the business operations, yet she seeks to impede existing transactions. The husband has attempted to continue to engage and operate his property developments in the same manner he has always done, accessing capital and equity held by the parties to meet expenses for ongoing projects until they realise profit.
(Case Outline of the husband filed 28 March 2024 p.5)
The husband denies the wife’s broad contention that he has failed to provide disclosure. The husband contends that he needs access to the net sale proceeds of the properties to meet the L Investment Firm debt. The husband’s Case Outline contends:
9.In [mid] 2022 the [Q Unit Trust] purchased a property at [R Street, Suburb J] (“the [R Street] property”) as a development site as a mixed-services retail precinct. No works have been undertaken on the project.
10.To purchase the [R Street] property, [Q Unit Trust] borrowed $10,500,000 from [L Investment Firm]. On or before 31 March 2024, [Q Unit Trust] is required to make an amortization and interest payment in the amount of $997,602.69 to [L Investment Firm]. [Q Unit Trust] does not have any other source of funds from which to make this payment.
11.The sale of the [H Street] property was necessary and part of a plan by the husband to meet expenses such as that owing to [L Investment Firm]. There was previously no dispute raised by [Ms C Eccheli] or the wife as to the sale. The husband’s careful management of realising assets in a timely fashion to ensure the parties do not default on their ongoing obligations could not properly be criticised and should not be restricted.
12.In the event of default the risks of a forced sale of the [R Street] property will likely result in a diminution of the available assets for all parties. It is contended that there is no prejudice to meeting the payment as it will be secured in the equity of the [R Street] property.
(Bold emphasis in original, footnotes omitted)
(Case Outline of the husband filed 28 March 2024 p.7)
The husband’s senior counsel submitted that in the event that the orders the wife seeks are made, he will be unable to meet his obligations to the wife and meet all the other expenses he proposes to pay on behalf of her and the children. According to his Case Outline, the family’s personal expenses, including mortgage payments and rent, total approximately $85,000 per month.
The husband’s senior counsel submits that he anticipates there will be other capital available on a realisation of assets, but that there are short-term pressing financial needs.
SUBMISSIONS OF THE WIFE
The wife’s counsel submits that many of the assets in the husband’s financial empire are not generating an income and are running at a loss, and that the husband is seeking to prop up various assets where there is no evidence that in doing so, the value of those assets will be preserved. He submits that the husband provides no plan to get out of the obvious financial problems that the parties are facing. The wife’s counsel further submits that the husband provides no plan as to how he will meet expenses on an ongoing basis, and submitted that paying the L Investment Firm debt is merely “plugging a hole in a sinking ship”.
The wife’s counsel submitted that the husband has not provided an appropriate explanation, given the parties’ unit holding in the R Street Development is approximately 71 per cent, for why the parties are responsible for 100 per cent of the L Investment Firm debt. It was, so the submission went, but part of a wider pattern of non-disclosure.
The wife’s counsel submitted that the Court should make the orders sought in the wife’s Response to Initiating Application dated 22 March 2024.
APPLICABLE LAW
Each of the parties seek an order by way of interim property settlement. As far as the wife is concerned, such an order directed to the Region K properties is unnecessary where she is the legal owner. The jurisprudence on the circumstances in which the Court can make an order for what is colloquially called “interim property” is well settled. Such an order is made through a combination of s 79 and s 80(1)(h) of the Act. Section 79 is the source of power, while s 80 enables the making of the order.
The Court must initially be satisfied that it is in the interests of justice to make an order. An exhaustive assessment of the s 79 considerations is not required.
In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466, the Full Court observed at [132]:
In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the "overarching consideration" is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
Their Honours dicta in Strahan (supra) included approval of observations by Riethmuller FM (as he then was) in Wenz v Archer (2008) 40 Fam LR 212 at [53]:
It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property while the matter is litigated,… particularly where the parties are asset rich but have relatively modest incomes … Nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources, such as to meet debts which may result in the party being pursued by creditors, or the need for the party to make payments for the benefit of the children, or to take advantage of other financial opportunities…
Nor is it a necessary precondition to the making of an order that a party needs to identify a particular fund. The Full Court in Bing & Bing (2007) FLC 93-318 at [23] observed:
...The mere assertion that there are no immediately available funds to provide to the applicant to enable him or her to continue on with the proceedings cannot simply be accepted at face value. If it is apparent that one of the parties controls a vast pool of assets (irrespective of whether those assets are readily capable of liquidation) then the Court has a broad enough discretion to enable an order to be made for the provision of funds by the holder of those assets to enable the other party to continue on with litigation…
And further, the Full Court observed at [27]:
Finally it has been asserted that the husband was and remains unable to raise the capital sum sought by the wife. This is a matter which may become relevant if and when the husband defaults in the order and an enforcement application is brought. However, the question of enforcement of the order remains a separate question from the propriety of granting the order in the first place.
Finally, as their Honours in Medlow& Medlow (2016) FLC 93-692 at [86] observed:
The onus was clearly upon the husband to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat the wife's property claims. The onus was not on the wife to adduce such evidence.
In relation to the wife’s claim for spousal maintenance, the Full Court in Bevan & Bevan (1995) FLC 92-600 identified the requisite elements necessary to the making of a spousal maintenance order. The applicant for relief bears the onus of establishing that they are unable to support themselves adequately by reason of the matters set out in s 72 of the Family Law Act 1975 (Cth) (“the Act”), including having regard to any relevant matter referred to in s 75(2).
If the applicant cannot establish an inability (which will not be inferred) to support themselves, then an order for maintenance cannot be made (see Rowan and Rowan (1977) FLC 90-310 and Stacy and Stacy (1977) FLC 90-324).
What is adequate is not determined by reference to any fixed or absolute standard, but by reference to the matters referred to in s 75(2) of the Act (see Mitchell and Mitchell (1995) FLC 92-601 at 81,995). In Atwill and Atwill (1981) FLC 91-107, Nygh J at 76,792 held:
“Adequately” imports relativity. Subsistence may be adequate for some applicants but not for others. It must be viewed in the light of para. (g) of sec. 75(2) “a standard of living that is in all the circumstances reasonable” …
While in Wilson and Wilson (1989) FLC 92-033, their Honours held at 77,453:
… A standard of living that in all the circumstances is reasonable for the party claiming maintenance is not necessarily the same standard as that enjoyed by the party who is ordered to pay maintenance. … Similarly, the standard of living that in all the circumstances is reasonable for the wife in this case, is not necessarily the same standard as that enjoyed during cohabitation. …
In Redman and Redman (1987) FLC 91-805, the Full Court observed at 76,081:
… 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 190-505; (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 10 last for an indefinite period and can only be varied under sec. 83.
Part VII of the Act deals with applications for adult child maintenance. Section 66L(1) provides:
(1) A court must not make a child maintenance order in relation to a child who is 18 or over unless the court is satisfied that the provision of the maintenance is necessary:
(a) to enable the child to complete his or her education; or
(b) because of a mental or physical disability of the child.
The provision of the maintenance must be necessary in this case because of a mental or physical disability. In In the marriage of Tuck M.L. & Tuck, J.M. (1981) FLC 92-021 at 76,227 the majority of the Full Court (Evatt CJ and Murray J) held:
“Necessary” in this context means that the maintenance is needed by the child and that it is reasonable to require the parent to contribute, having regard to the parties’ financial circumstances and other relevant factors.
In Re: AM (Adult Child Maintenance) (2006) FLC 93-262 at 80,437 Carmody J said that the word “disability”:
…refers more to consequences than causes. A disabled person lacks mental power or a physical faculty (or both) and is restricted in the way he or she lives or moves.
Once the Court has determined whether an order should be made in accordance with the principles in s 66L, it is necessary to determine what order should be made, having regard to s 66H and s 66J of the Act.
DISCUSSION
These are interim proceedings and there has been no cross-examination. Each of the party’s affidavits make a series of broad sweeping allegations, including allegations by the wife that there has been a failure by the husband to provide full and frank disclosure. There are numerous factual controversies which, within the circumscribed nature of these proceedings, I am simply unable to resolve. I am left to determine the matter on the basis of the undisputed facts, and with the guidance of the relevant authorities to which I have referred.
The wife is suspicious and sceptical of the husbands’ actions. She contends that he failed to make adequate disclosure and points to various examples in her Case Outline, at paragraphs 39 to 42. She is also critical of how he has approached her financial need, namely by cutting off her access to money.
The husband has not assisted his case by seemingly changing his position and the need for relief during the course of the proceedings. In his first affidavit he proposed that the home occupied by the wife needed to be sold at the earliest possible opportunity in order to reduce debt (affidavit of the husband filed 21 February 2024, para 22.1), only to resile from that position at the hearing some six weeks later in circumstances where, on one view, the asserted financial position remained precarious.
The husband, when he commenced the proceedings, said he needed urgent access to the net proceeds of sale of the Region K properties to pay outstanding rates, totalling approximately $460,000, amongst other liabilities. By the time of the hearing, the husband said that the rates had been paid from other borrowings (and those borrowings did not seem to need to be immediately repaid), and that what was now pressing was the payment of the L Investment Firm debt.
The husband’s position in relation to the money necessary to meet the L Investment Firm debt likewise changed. In his affidavit he contended as follows:
25.6Loan repayments to [L Investment Firm] owing by [Q Pty Ltd] as trustee for the [Q Unit Trust] for a loan secured against […] a shopping centre located [in Town S] NSW. By the end of March 2024, we (being the unitholders of the [Q Unit Trust]) are required to pay $250,000 off the principal and $661,000 by way of interest in advance.
(Affidavit of the husband filed 21 February 2024, p.10).
That makes clear that all the unit holders would be required to pay approximately $911,000 of the L Investment Firm debt. However by the time of the husband’s affidavit sworn 28 March 2024, and according to the terms of his interim relief he then sought, it was seemingly only he who was required to make the entirety of this payment. There is thus some merit to some of the submissions of the wife’s counsel that the husband’s financial circumstances are less than transparent, and that a clear picture does not emerge in relation to his financial affairs.
The wife’s case is not without its problems. I accept that the wife has a need for funds to ensure a level playing field in the litigation, particularly in light of her limited knowledge of the parties’ financial position, the conceded complexity of these proceedings, and the husband’s concession that the wife has a need for interim spousal maintenance noting there is no serious challenge to her asserted personal expenditure of approximately $3,000 per week (Financial Statement of the wife, p.11).
The relief she seeks, however, fails to have regard to the necessity of establishing the requisite elements of s 72 of the Act, namely an inability to support herself. In the event her interim relief is granted, she would have a capital sum in excess of $2,000,000 pending final hearing. I am satisfied that if that sum were ordered, the wife would not cross the threshold required by the Act.
It is clear, from a reading of the husband’s affidavit as a whole, that he seeks to do with the parties’ property that which he has done throughout the course of the parties’ relationship. The wife does not seem to put in issue the contentions advanced by the husband. Rather, she submits that the parties’ financial affairs are so perilous that the husband should not be provided with any further funds, pending final hearing. The wife’s submissions are, in some respects, circular.
The wife says she has a limited understanding of the intricacies of the parties’ financial affairs. Her Case Outline sets out:
10.The Wife has an incomplete understanding of the Husband’s financial position and the overall matrimonial pool and requires the assistance of a forensic accountant. Her education came to an end in [high school] and she is heavily reliant on legal and accounting advice: W [35]. She has concerns with the Husband’s past use of matrimonial assets for his various businesses and is also concerned with the application of funds for present uses: W [28] – [30]. She has concerns with the Husband’s disclosure which appear to be incomplete: W [34], [37]. She is unable to obtain that advice in the proceedings without litigation funding: W [36].
(Case Outline of the wife filed 28 March 2024, p.5)
However, at the same time, the wife seeks to deny to the husband access to funds to do that which he deposes to having done over the course of the relationship. Whilst she asserts insolvency (which the husband does not), she does not move to preserve assets by seeking the appointment of an administrator but rather, on one view, she possibly, by her denial of the relief sought by the husband, increases the likelihood of insolvency. The wife’s counsel submits that the parties’ financial affairs are such that providing further money would only plug a hole in a sinking ship. The converse view is that a denial of funds may cause that which is possibly imperilled, to one that is irretrievable.
In the absence of cross-examination, the inability to make findings and, particularly, absent more detailed and fulsome valuation evidence, I propose to proceed cautiously and be alive to the possibilities that arise on each of the alternate proposals.
Whilst the husband’s evidence as to the need for a sum to meet the entirety of the L Investment Firm debt is not entirely clear on balance, I am satisfied that it is necessary to provide a fund of money to the husband to avoid the possibilities posed by the husband, and the insolvency suggested by the wife, but not in the amount sought by the husband. The husband’s senior counsel submits that the husband’s access to the H Street property net sale proceeds is legitimate, as it is, in reality, his money. His senior counsel submitted that the H Street property was held by the parties’ daughter, the second respondent, by way of a resulting trust on his behalf. It would appear, from the material filed, that the second respondent did not contend she was the beneficial owner of the H Street property. She did not assert who was. The wife did not assert that she was a beneficial owner of the H Street property, albeit I accept that the tenor of the wife’s evidence is that she has a very limited understanding of the intricacies of the parties’ financial affairs. However, given the consent orders made dealing with the net sale proceeds of the H Street property, the Court’s intervention is necessary.
The husband contends that his final entitlement should, by virtue of his relief sought, be something in the order of 55 per cent of the parties’ net assets. The wife contends that the husband should receive, on a final basis, 30 per cent. At this stage each may represent ambit claims, but there is sufficient evidence to be satisfied that each will receive a property settlement, measured against the available evidence and the parties’ respective contentions, of over a million dollars.
I am satisfied that it is in the interests of justice to make an order in favour of the husband for the reasons above, but not of the magnitude he seeks. In making an interim property order, I am required to be satisfied that the order is reversible or can be taken into account at the final hearing. The wife submits that it can, and I accept that submission.
I am satisfied that it is just and equitable to make an order that the husband receive the balance of the proceeds of the H Street property, after allowance for the money to be retained pursuant to the orders made in favour of the second respondent, and after allowance for the sum required to settle the purchase of the F Street property. This should provide the husband with a sum in excess of $950,000. That is a sum sufficient to meet the proportionate share, on a unit holding basis, of the L Investment Firm debt while leaving a surplus to meet other expenses. While the husband’s senior counsel submitted, from the bar table, that he was instructed there was an arrangement with the other unit holders that the husband meet all of the payment, that seems contrary to the husband’s sworn evidence. Even assuming that the husband’s earlier evidence was erroneous, it can be remedied by a subsequent application seeking to sell or realise other assets if necessary. As I observed earlier in these reasons, this matter has come on quickly and these orders are in the nature of stop-gap orders. The husband’s senior counsel foreshadowed that a further sale of assets may arise and, in light of the wife’s counsel’s submission, it would be difficult for her to oppose same.
I am not satisfied that it is in the interests of justice to make orders that the husband receive the proceeds of sale of the Region K properties. To do so would deprive the wife of access to her own capital, in circumstances where she needs funds. The husband’s orders concede the wife should receive $100,000 by way of interim costs, and his senior counsel properly conceded that the wife’s entitlement for interim funding could be higher. I note the wife’s costs memorandum makes a claim for a significantly larger sum, but that includes her estimated costs for the entirety of the proceedings which is unnecessary at this early stage. The wife’s Costs Memorandum asserts that she currently is indebted to her lawyers in the sum of $206,000. She has paid nothing toward her legal fees. The husband’s costs memorandum discloses that he has paid $109,000 to his legal fees, and there are further moneys held in trust.
The wife’s retention of the net sale proceeds of the Villas will provide her with sufficient funds to meet her legal fees. The husband has not explained why he has not provided the wife with funds since 3 January 2024. In circumstances where he knows she is entirely dependent upon him for financial support, such conduct reflects poorly upon him. I do not propose, at this stage of the proceedings, that she be left entirely dependent upon him.
Accordingly, I propose to make orders that the husband receive the balance of the proceeds of the F Street property. I am satisfied that orders to give effect to this are in the interests of justice.
The wife can retain the proceeds of the Villas. As this is in the wife’s name, an order is unnecessary. The wife will simply be accessing her own funds. The Court’s intervention is limited to that necessary to make a just and equitable determination, and no further.
The wife seeks periodic spousal maintenance of $3,000 a week, and payment of the mortgage and utilities on the Suburb E property and the expenses for her car. There is no challenge to the wife’s expenses. The issue is whether the wife establishes an inability to support herself adequately. The husband’s concession as to the wife’s need and his offer to pay was conditional on him having access to the net sale proceeds of the H Street property and the Region K properties. He contends that, absent receipt of those moneys, he did not have sufficient funds to otherwise meet the expenses of the family.
I am not satisfied that the wife has established an inability to support herself adequately, such that she requires a weekly periodic payment of spousal maintenance or the payment of motor vehicle expenses, when regard is had to the capital sum she will have. After payment of her outstanding legal fees, the wife will have at least $320,000 available to her from the net sale proceeds of the first Region K property, with the balance of approximately $550,000 from the other to come shortly. I am satisfied that, with such an amount, the wife will be able to support herself adequately, without the need for a periodic payment of $3,000 per week in spousal maintenance, or the husband having to meet the expenses for motor vehicles in her possession.
I am not, however, satisfied that she will also be able to meet the mortgage payments and utilities for the Suburb E property. In that respect I am satisfied that, notwithstanding retaining a capital sum, she will still have a need for spousal maintenance. I am satisfied that the husband will be able to meet those expenses from the capital sum he retains by these orders, the other assets he controls, and from his income.
On settlement of the purchase of F Street property, the husband will no longer need to pay rent, and, on its sale, the mortgage payments on the Suburb E property should reduce by about half. However, I expect he will need to resume paying rent.
The husband’s assumed moral obligation to pay the rent and expenses of his adult children does not supplant his legal obligation to support his wife, in the event she is unable to support herself. I will make an order that the husband pay the mortgage and outgoings on the Suburb E property.
The wife seeks an order for adult child maintenance in relation to the parties’ child, Mr P. Section 66L of the Act requires the Court to be satisfied that the provision of maintenance is necessary to enable the child to complete his or her education, or because of a mental or physical disability of the child. The wife’s case, as I understand it, is advanced on the second limb, namely, because of the mental or physical disability of the child.
The parties are at issue as to whether the child has a mental or physical disability. There is no single expert evidence before the Court. The wife contends, in her affidavit, that Mr P was diagnosed on the autism spectrum at about six years old, that he commenced attending, at about the age of thirteen, upon a child and adolescent psychiatrist, Dr T. She says Dr T assessed Mr P as having a moderate to severe disability. The wife, in her affidavit, gives evidence as to the impact upon Mr P of what she describes as his autism spectrum disorder. She gives evidence that Mr P has worked for the husband, and also for a business partner of the husband, Mr M. The central issue in the determination of this matter is whether Mr P has a mental or physical disability.
The husband puts in issue the diagnosis of Mr P. He does not agree that Mr P was diagnosed on the Autism Spectrum at about the age of six. He agrees that Mr P attended a psychiatrist and contends that the outcome of those assessments did not confirm that Mr P had a disability or was on the Autism Spectrum. He says he does not recall Dr T diagnosing Mr P as having a moderate to severe disability, nor does he recall Dr T ever saying words to the effect that “it is unlikely [Mr P] will ever be independent of [the mother]” (Affidavit of the husband filed 3 April 2024, para 3.3, p.3). The husband acknowledges that Mr P has experienced anxiety through his life and can become “fixated on 1 or 2 subjects at a time…” (Affidavit of the husband filed 3 April 2024, para 3.5, p.3).
These are interlocutory proceedings, and there has been no cross-examination or testing of the evidence. I am, therefore, unable to resolve the conflict on the evidence as between what the wife asserts and what the husband asserts.
The wife sought to rely upon two medical reports prepared by Dr U, a general practitioner. The reports are in relation to the wife, not Mr P, but the reports refer to Mr P having a disability. While the husband concedes that Dr U is the family general practitioner and that Mr P may have attended upon him from time to time, it is not apparent to me, on reading the reports, that Dr U has ever examined Mr P for the purposes of assessing whether he has a disability. The difficulty I have with the reports is that it is not clear, from the way the reports are prepared (notwithstanding the extravagant language used, which borders on advocacy), whether the source of Dr U’s knowledge of Mr P’s asserted disability is because he was told something by the wife or is a consequence of an assessment of Mr P undertaken by him. Consequently, notwithstanding that an application for adult child maintenance falls within Division VII of the Act, and the rules of hearsay and opinion evidence do not apply, I place little, if any, weight on the opinions of Dr U.
In all the circumstances, and given the interlocutory nature of these proceedings and the absence of cross-examination, I am not satisfied that the wife has established that Mr P has a mental or physical disability sufficient to attract the operation of s 66L of the Act.
I propose, therefore, to dismiss the wife’s application for adult child maintenance. Such dismissal is without prejudice to the bringing of a further application, based upon probative evidence.
The wife seeks that specified disclosure obligations be imposed on the husband. The Rules and jurisprudence are clear as to what is required of parties in respect of disclosure and the consequences of noncompliance. I do not propose to make specific orders.
There appeared to be agreement between the parties that the wife should have exclusive occupation of the Suburb E property, and the husband have exclusive occupation of the F Street property. Accordingly, I will make orders to give effect to this agreement. There also seemed agreement about some general restraints regarding disposal of assets without notice, and I propose to make the order sought by the husband. There were no submissions about the return of the husband’s personal possessions, so I will craft an order that gives effect to what seems, from the competing positions, to be common ground.
Otherwise, the interim relief sought by the parties will be dismissed.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 12 April 2024
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