EXTON & EXTON

[2014] FamCA 1135

FAMILY COURT OF AUSTRALIA

EXTON & EXTON [2014] FamCA 1135

FAMILY LAW – PROPERTY – Whether there should be a stay of an interim order for sale of the home – Where interim order provided only modest distribution to the parties out of significant equity-  Where significant change in husband’s financial circumstances as to income after interim order made – Where ultimate identity of the asset pool and valuation of that pool remains uncertain – Where wife seeks to retain home on a final basis – Whether appropriate to order a stay of the interim order for sale – Where order for stay granted.

FAMILY LAW – SPOUSE MAINTENANCE – Variation of interim order – Where significant change in income circumstances of the paying husband subsequent to interim orders – Where wife unable to support herself adequately by reason of her modest income earning capacity – Where appropriate to vary interim order by way of increase in husband’s obligation for spouse maintenance.

Family Law Act 1975 (Cth) ss 72, 75, 79, 80, 83(1)(f)

APPLICANT: Ms Exton

RESPONDENT: Mr Exton

FILE NUMBER: PAC 3802 of 2013

DATE DELIVERED: 12 December 2014

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 8 December 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Rosic

SOLICITOR FOR THE APPLICANT: Rowlandson & Co Solicitors

COUNSEL FOR THE RESPONDENT: Mr Livingstone

SOLICITOR FOR THE RESPONDENT: Frankham Family Lawyers

Orders Pending Further Order:

1. That the order for spouse maintenance made on 25 March 2014 be varied by increasing the amount payable by the husband by way of spousal maintenance for the wife to the sum of $822 per week first payment to be made on the first Monday immediately following these orders and weekly thereafter into a bank account nominated by the wife within 7 days from this date.

2. That the husband pay as they fall due and payable:

   (a)       Car payments in relation to the wife’s car;

   (b)       Motor vehicle insurance payments in relation to the wife’s car;

   (c)       House and contents insurance relating to the former matrimonial home.

3. That the orders for sale of the former matrimonial home at K Street, Suburb G made on 25 March 2014 be stayed pending further order.

4. That otherwise all interim applications before the court be dismissed.

5. That the costs of the wife in respect to the interim applications are reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Exton & Exton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 3802  of 2013

Ms Exton

Applicant

And

Mr Exton

Respondent

REASONS FOR JUDGMENT

1. On 25 March 2014 the husband and wife agreed to interim property orders that provided for the sale of the former matrimonial home at Suburb G.

2. The orders provided that following sale and after payment of relevant sale costs the net proceeds of sale would be applied:

   a)Firstly in payment to the Australian Taxation Office of the husband’s taxation liability for the financial year ended 30 June 2013 upon production of documents evidencing such liability;

   b)Secondly in payment to the sum of $50,000 to the wife;

   c)Thirdly in payment of $15,000 to the husband; and

   d)The balance of funds to be invested in a controlled monies account on trust for the parties.

3. On the same day the parties consented to an order that provided for the husband to pay by way of spousal maintenance to the wife the sum of $600 per week pending further order.

4. On 16 September 2014 the wife filed an application in case seeking orders that in summary provided for a setting aside of the sale orders in relation to the matrimonial home and that the husband pay by way of spousal maintenance to the wife $1,500 per week.

5. The wife contends that by reason of a change in circumstances, particularly in relation to the husband’s income and valuation of other assets that it is appropriate that the order for sale of the home be discharge or stayed pending final determination of the parties’ property entitlements.

6. The wife further contends that there should be a variation of the order for spousal maintenance by reason of a significant change in the husband’s circumstances as to his income.

7. The wife is presently aged 54 and the husband aged 54.

8. The parties married in 1988 and separated in June 2013. Following separation and in August 2013 the husband vacated the matrimonial home and the wife has remained in occupation thereof since that time.

9. There are three children of the marriage presently aged 25, 22 and 21. The two youngest children continue to reside with the wife in the matrimonial home.

The Wife’s Evidence

1. At the time of marriage the wife was in employment as a health professional. During cohabitation she worked for significant periods of time interspersed with time off work relating to the birth of the three children particularly in the period from 1996 to 2002.

2. The parties resided in the United States for two periods, the first from 2002 to 2005 and the second from 2009 to 2011.

3. The wife obtained employment with the H Organisation in 2012 until April 2014 earning a net weekly income of approximately $500. Subsequently the wife obtained employment as a health professional with C Services Pty Ltd on a part-time basis earning approximately $250 per week net.

4. The husband was made redundant from his then employment as a chief executive officer in 2012/13 tax year.

5. In the financial year ended 30 June 2011 his taxable income was $503,197 with his after tax income being about $296,000 or $5,700 per week. In the financial year ended 2012 the husband’s taxable income was $619,121 and in 2013 his taxable income was $889,626.

6. Subsequent to ceasing PAYE employment the husband commenced a consulting company trading as X Pty Ltd. In his financial statement filed on 5 November 2013 the husband disclosed his weekly income from consulting as $1,158 per week in addition to which he was earning interest of about $79 per week on funds held in his Commonwealth and National Australia Bank accounts. At that time he was paying to the wife voluntary spousal maintenance of $600 per week together with health insurance cover, home insurance payments, Foxtel payments, the wife’s car loan, the gardener for the home and Council and water rates.

7. It is to be inferred that this was the wife’s understanding of the husband’s financial position at the time of the interim consent orders.

8. In April 2014 the husband received an offer of employment as a managing director. The husband’s offer of employment comprised a base salary of $450,000 per annum, a relocation allowance of $50,000, a short term incentive of 30 per cent of his base remuneration increasing to a short term incentive of 100 per cent of base remuneration upon achieving 100 per cent of budget. Otherwise the offer of employment provided the husband at his election with the opportunity of purchasing $1 million worth of shares funded by an interest-free non-recourse loan against the shares with a term of five years repayable on the husband’s departure from the business or at the end of five years, whichever is sooner.

9. The asset pool of the parties in its entirety is not yet known nor indeed the subject of any agreement or valuation. It is the wife’s primary application that she would retain the matrimonial home. Whether that is a realistic ambition depends upon the ultimate identification of the assets that comprise the asset pool, the evaluation and an assessment of the parties’ contributions and relevant section 75(2) factors.

10. Accordingly the wife seeks a discharge or stay of the consent orders for sale of the matrimonial home pending hearing. It was made clear to the parties that subject to valuation issues being resolved it was anticipated that property proceedings could be heard and determined by this court by about June 2015. In the scheme of things that is not an inordinate delay.

11. The wife’s financial statement filed on 16 September 2014 reveals income of $850 per week, being her present salary after tax and payments of maintenance received from the husband. Her two adult sons residing in the home with her have a combined income that she estimates at $1,350 per week.

12. The wife sets out her asserted expenses on an ongoing weekly basis in Part N of her financial statement. Those expenses total $1,322. Her expenses at the time of the consent orders are not known but it is to be inferred that they were probably in substance as they are now.

13. There was no real issue in relation to the expenses asserted by the wife as being reasonably necessary for her support.

14. She is, from her earned income, unable to support herself adequately.

The Husband’s Evidence

1. In his response to the wife’s application in a case the husband seeks an order that the application in a case be dismissed and that otherwise there be an order facilitating an auction of the matrimonial home within two months of order.

2. Subsequent to the consent order in relation to spouse maintenance the husband ceased making supplementary payments referred to above. However he continues to make periodic payments comprising the wife’s car and car insurance payments of $1,080 per month together with the home and contents insurance in relation to the home at $209 per month and health insurance at family rate of $400 per month.

3. The husband’s present net pay is about $20,140 per month. However the husband asserts that his ongoing employment is subject to the public listing of certain corporate entities. If that listing does not proceed he will receive six months’ pay on his employment becoming redundant.

4. The husband asserts that his current weekly expenditure is $2,552, that sum including $600 per week to the wife and other payments continuing to be paid by him as referred to above. His expenses include a provision for rent that will likely not be required once he relocates to Brisbane in his new employment. At this stage he has not relocated although his employer has rented for him at the employer’s expense a unit in Brisbane. He continues to maintain his Sydney residence as he is at present required in both cities. Thus on relocation the expenses asserted by him will be reduced by $770 per week and his actual expenses will be $1,782 per week.

5. Clearly the husband has a capacity to make a more significant contribution to the wife’s expenses by reason of his change in income since the original orders.

6. The husband asserts that should the home be sold the wife would have recourse to a capital sum of $50,000 with which to relocate herself and presumably pay rent in the short term. He further asserts that she may have available to her a capital sum of $200,000 that may be gifted to the wife by the wife’s mother.

7. The husband otherwise complains that he has paid certain expenses in relation to the proposed sale of the home in anticipation of the sale proceeding in an orderly fashion as provided for in the orders.

Discussion

1. It is clear that there is no pressing necessity for a sale of the matrimonial home. It is unencumbered. The husband has paid all but $5,000 of his outstanding tax.

2. The wife now contends that it is her application that she be able to retain that property. Whether she will be able to do so will depend upon a determination of the asset pool and the parties’ respective entitlements under section 79.

3. There is no doubt that the wife will have a significant entitlement to the equity in that home but a quantitative assessment of that entitlement will await final trial. It is somewhat perplexing that interim orders were made that provided for a most modest capital payment to the wife from the proceeds of sale having regard to her prospective entitlement when the property has a value estimated by both parties at $1,500,000 or more.

4. Although not clear in the terms of the consent orders referred to above it is to be inferred that the order relating to sale of the former matrimonial home was to facilitate an interim distribution of property to each of the parties under section 79 of the Act.

5. In such proceedings the general powers of this court in exercising its powers under Part VIII of the Act are set out in section 80. That section provides that the court in exercising its powers may, inter-alia, make any other order which it thinks necessary to make to do justice.

6. The wife and two adult children reside in the matrimonial home, the property is unencumbered and the husband continues to make a modest financial contribution by way of payment of property and contents insurance. Otherwise the outgoings in relation to the property are paid for by the wife. The wife seeks to retain that property particularly having regard to more recent issues in relation to the disclosure and valuation of the parties’ assets.

7. In the circumstances it is appropriate that the court order that the orders for sale of the former home made on 25 March 2014 be stayed pending further order. An order will be made accordingly.

8. Otherwise it was conceded on behalf of the wife that her application in relation to spousal maintenance was indeed an application for variation under section 83(1)(f) of the Act.

9. Any application for variation is constrained in that the court shall not make such an order increasing or decreasing an amount ordered to be paid unless the court is satisfied, relevantly in the circumstances of this matter, that the circumstances of the person liable to make payments under the order have so changed so as to justify the court doing so.

10. There is no doubt on the evidence that the husband’s circumstances since the making of the consent orders have significantly changed such as to justify the court looking at the level of his spouse maintenance obligation.

11. Otherwise the court is required to have regard to the provisions of section 72 and section 75.

12. Section 72 of the Family Law Act (Cth) (“the Act”) sets out the relevant provisions in relation to the right to spouse maintenance. Section 72 provides that a party to a marriage is a 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:

    a)By reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

    b)By reason of age or a physical or mental incapacity for appropriate gainful employment; or

    c)For any other adequate reason;

    having regard to any relevant matter referred to in subsection 75(2) of the Act.

13. The wife is unable to support herself adequately by reason of her modest income earning capacity.

14. Both parties are 54 years of age. The wife does not assert any adverse health circumstance. The husband does not assert any relevant health circumstances that impacts upon his capacity for employment.

15. The income and property of the parties has been referred to above and both parties are able to continue their present level of employment. There is some issue in relation to the wife working only part time but any supplementary income that would be earned by her in full-time employment would be in all the circumstances modest. Yet the wife asserts no reason why she has reduced her employment hours and consequently her income. Thus her capacity to earn income should be increased by a modest amount to $350 per week net.

16. The commitments of each of the parties for their self-support are referred to above.

17. Neither party has the responsibility of supporting any other person.

18. Neither party receives any pension or allowance under any Commonwealth or State law. The parties’ respective superannuation entitlements are the subject of valuation and await determination at a final trial.

19. It is to be inferred from the husband’s level of income particularly in the later years of cohabitation that the parties enjoyed a very reasonable standard of living. In that regard the wife remains living in the primary asset of the parties and there is a little issue in relation to what she contends to be her reasonable expenditure.

20. The wife over the years of cohabitation has contributed to the husband’s earning capacity in that she and the children have followed his employment overseas and for various periods she has been out of employment caring for the children.

21. It is to be inferred from the history of the 25 year relationship that the wife’s capacity to earn income has been significantly impacted by her absences from the workforce particularly in terms of pursuing her career as a health professional.

22. Otherwise in assessing the wife’s overall commitments it is appropriate to regard the circumstances that she has two adult children in the home both earning a modest income. It is reasonable to expect that they should make a contribution to their accommodation and its outgoings. Accordingly to a modest extent the wife’s asserted expenses should be reduced by $150 per week to reflect as best can be determined a level of board from those adult children.

23. The wife claims expenses of $1,322 per week. As referred to above these claimed expenses should be reduced by $150 a week by reason of the income earning adult children in the household. Thus the wife’s expenses are $1,172 per week. Her capacity to earn income is about $350 per week leaving a shortfall of $822 per week.

24. The husband has the capacity meet these expenses and continue to meet the other outgoings he presently pays.

25. It is appropriate that there be an order varying the husband’s spouse maintenance obligation to $822 per week with consequential orders that he continued to meet payments he asserts.

26. Orders will be made accordingly.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 12 December 2014.

Associate: 

Date:  12 December 2014