Ferguson and Ferguson

FAMILY COURT OF AUSTRALIA

FERGUSON & FERGUSON

[2008] FamCA 306

FAMILY LAW – MAINTENANCE – interim spousal maintenance/child support
FAMILY LAW – COSTS – legal costs
FAMILY LAW – INJUNCTIONS

Family Law Act 1975 (Cth)

APPLICANT:

Mrs Ferguson

RESPONDENT:

Mr Ferguson

FILE NUMBER:

SYC

8866

2007

DATE DELIVERED:

24 April 2008

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

LOUGHNAN JR

HEARING DATES:

23 April 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Peter Batey

SOLICITOR FOR THE APPLICANT:

Gayle Meredith & Associates

COUNSEL FOR THE RESPONDENT:

Mr John Lloyd

SOLICITOR FOR THE RESPONDENT:

Slade Manwaring

Orders

That forthwith upon the wife making a written election between the following options to the solicitor for the husband the parties do all things and sign all documents necessary to:

(a)extend the borrowings secured on the former matrimonial home at W by $200,000 or such other sum as the parties may agree; and/or

(b)sell the W property for the best price reasonably obtainable; and/or

(c)draw on superannuation held in the joint names of the parties or in the name of the husband to the extent of $200,000 or such other sum as the parties may agree; and/or

(d)sell investments held in the joints names of the parties or the in the name of the husband sufficient to raise $200,000 or such other sum as the parties may agree.

That the parties do all things and sign all documents necessary to cause the amount or amounts raised pursuant to Order 1 to be held in a controlled moneys account on trust for the parties, if the parties cannot agree to the contrary that is to be in a fund held in the name of the solicitor for the wife and unless the parties agree to the contrary that fund is to be drawn on only for the following:

(a)to meet the costs of complying with Order 1, including the recurrent costs of servicing additional borrowings pursuant to Order 1(a), any GST or capital gains impost arising from that compliance;

(b)to pay to the wife or as she may direct $974.00 per week or such further sum as the parties may agree, calculated from the date of these orders, the first payment, including any arrears is to be made within 7 days after the establishment of the fund and payments are to be made weekly thereafter pending further order of the Court;

(c)to pay any necessary balloon payment upon that payment falling due, in relation to the BMW motor vehicle registered number … currently in the possession of the wife; and

(d)to pay to the solicitor for the wife amounts for legal costs and disbursements for these proceedings, forthwith upon presentation of an invoice in relation to a disbursement and within 30 days of presentation of an invoice for the solicitor’s professional costs.

Except as is necessary to comply with these orders and in the absence of the prior written consent of the wife, the husband is otherwise restrained from further encumbering the W or T properties, from selling or encumbering investments held in his name or in the joint names of the parties, except in the ordinary course of those investments, and from encumbering or drawing on any superannuation interest.

The Court noted that the character of the payments made pursuant to these orders is a matter for the Trial Judge in the final property proceedings.

That an order be made in terms of the order sought by the wife at paragraph 4.3 of her Application in a Case filed 4 March 2008 as set out hereunder:

“4.That pending further order, that the husband be restrained by way of injunction from:

4.3removing the wife as a member of the private health care policy currently covering the husband, the wife and the children of the marriage and that the husband pay all premiums relating to the policy.”

That an order be made in terms of the order sought by the wife at paragraph 2 of her Application in a Case filed 4 March 2008 as set out hereunder:

“2.That pending further order that the husband make all payments as they become due and payable with respect to:

2.1the mortgages secured on the property situated at [T] and the property situated at [W].

2.2the council and water rates, home and contents insurance and all other outgoings referable to the [W] property.”

That an order be made in terms of the order sought by the wife at paragraph 10 of her Application in a Case filed 4 March 2008 as set out hereunder but deleting the words in paragraph 10 after the word “school” where it last appears:

“10.That pursuant to Section 124 of the Child Support (Assessment) Act 1989 that the husband pay by way of child support on account of the child [J] in addition to the periodic amount pursuant to the administrative assessment of the Child Support Agency all school fees and other expenses shown on the school account during such time for [J’s] attendance at [B] School for the period that he continues to attend the school.”

The costs of the parties of and incidental to these proceedings are reserved.

Otherwise the wife’s Application in a Case filed 4 March 2008 and the husband’s Response filed 4 April 2008 are dismissed.

Leave to the parties to restore the proceedings before Judicial Registrar Loughnan by arrangement with his associate in relation to the form of these orders on giving at least 24 hours’ notice to the Court and to the other party.

IT IS NOTED that publication of this judgment under the pseudonym Ferguson & Ferguson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 8866 of 2007

MRS FERGUSON

Applicant

And

MR FERGUSON

Respondent

REASONS FOR JUDGMENT

These are proceedings for interim spousal maintenance, either interim child support departure or an interim order for substitution payments, interim costs, and various injunctions including mandatory injunctions, some by way of Mareva injunction and some by way of what might be described as the protection of assets or spousal maintenance.
The wife seeks orders in accordance with her Application in a Case filed 4 March 2008. She seeks:
·interim spousal maintenance at $1500 a week, an interim order whereby the husband is required to pay as they fall due mortgages on two properties, at T and W, and the outgoings referable to the W property, council and water rates, home and contents insurance and other outgoings;
·that the husband be restrained by way of injunction from doing anything to cause a BMW motor vehicle being used by the wife to be removed from her sole use, and that he pay all moneys as they become due and payable in respect of lease or hire purchase agreement referable to the vehicle;
·that he be restrained by way of injunction from drawing on any entitlement under a S Company superannuation fund or any other fund in relation to S Company or in relation to the Family Superannuation Fund without the written consent of the wife;
·that he be restrained in the interim from drawing down any moneys on a St George home loan facility secured on the W property, from removing the wife as a member of the private health care policy which had previously covered the husband, the wife and the children, and that he maintain premiums in relation to the policy;
·that he forthwith do all acts necessary to restore the wife's travel entitlement as a spouse or nominated travel companion under the S Company travel benefits scheme;
·that they list the W property for sale within 21 days and apply the net proceeds of sale to a controlled moneys account in the name of her solicitor pending further order and subject to one alternative order that I will come to;
·that within seven days the husband pay to the trust account of the wife's solicitors $100,000 by way of interim costs. In the alternative to that order she seeks that $100,000 be paid from the proceeds of sale of the W property and be applied to that same purpose;
·as an alternative to the orders for interim costs she seeks a dollar for dollar order whereby within seven days of a payment by the husband to his solicitors, to his counsel, or to any accountant or valuer or expert engaged by the parties in respect of these proceedings, the husband cause a similar payment to the wife's solicitors. And in aid of that, within 24 hours of a payment the husband is to cause the wife's solicitors to receive a memorandum setting out the amount or amounts paid. Further she seeks that any moneys paid to the husband's solicitors for costs be held in trust and not be applied to the payment of his costs and disbursements until a similar payment has been made to the wife's solicitors. In the event that the payment to the wife's solicitors has not been made within seven days after the advance to the husband's solicitors, then the husband is to cause his solicitors to pay half of the amount held directly to the wife's solicitors;
·that pursuant to s 124 of the Child Support (Assessment) Act, an order be made whereby the husband pay child support on account of the child, J, in addition to any periodic amount under an assessment, all school fees and other expenses shown on the school account for the child's attendance at B School, and all expenses relating to extra-curricular activities for the child; and
·that the husband pay her costs.
By a response filed on 4 April 2008 the husband seeks;
·that the parties forthwith join in listing the W property for sale at the best price reasonably available, that they have the right to come back to Court in relation to the terms of the sale, that upon the sale the sum of $100,000 be paid to each of the husband and the wife and that the balance be held in a controlled moneys account I the name of the husband's solicitors for the parties as joint tenant;
·as an alternative to that order, it is sought that the parties do everything they can to draw down on an existing loan facility secured against the W property for an additional amount of $200,000, or if necessary to achieve that, to sign any documents to have a further loan contract with the St George Bank secured on that property to enable that advance. And upon those moneys becoming available, they be applied equally to the parties. He seeks that the categorisation of those payments be a matter for the trial Judge to determine in the final proceedings for settlement of property;
·that the wife pay when they fall due all mortgage instalments due in respect of the T property, all rates, taxes and outgoings in respect of that property, all lease payments in respect of a BMW motor vehicle, and in default of those payments being made, that the wife forthwith surrender the vehicle to the husband;
·that she pay one half of the mortgage instalments, rates and outgoings in respect of the former matrimonial home at W;
·that on 22 September 2008 the wife surrender possession of the BMW motor vehicle to the husband or as he may direct. As an alternative to that, he seeks that she pay $59,000 to BMW Australia being the final balloon payment due under a lease for that vehicle. If that last order is made, and complied with, the husband seeks an order that he be required to forthwith transfer the ownership of that vehicle to the wife;
·otherwise he seeks that the wife's application of 4 March be dismissed; and
·that she pay his costs of these proceedings or as an alternative, that the costs be reserved to the trial Judge.
The matter was something of a moveable feast and I was told that by way of further alternative as a source for the funds which would make up the $200,000 to be distributed equally between the parties, the husband offered an option for the parties to join in the sale of investments - I think that means shares in publicly listed companies, there may be additional investments - and/or a drawing on the superannuation entitlements of the parties. Thus the four options raised in the husband's case are, the net proceeds of sale of W property, a further drawing on the security of W property, the sale of shares, and a drawing on superannuation.
By way of reply to that - this is not in a formal document - the wife opposes initial recourse to joint funds other than her alternative option in relation to interim costs. When pressed her counsel conceded that if for want of such an arrangement her application for interim spousal maintenance would fail, then she would countenance a resort to joint funds. I was not told and I did not ask about the wife's preference for the options in the event that we get to that stage of borrowing against the home, distributing the proceeds of sale of the home, drawing on superannuation, or the sale of shares, although it is a common application that the W property be sold.
Turning first to Spousal Maintenance. The wife seeks a payment of $1500 a week. Having said that, it was conceded by her counsel that the weekly outgoings shown in her financial statement are $1,374, made up of fixed and living expenses. She deposes to a current income of $400 a week, so the shortfall is current $974 per week.
The background, more broadly, is a wife and husband at 53 and 63 years of age respectively. They married in September 1985 and separated in about December 2006, although physical separation occurred in March 2007. They have two children, E and J, who I understand are 19 and 17 years of age respectively. E studies at a Sydney University and J is engaged in year 12 studies at B School.
The parties have ongoing proceedings for settlement of property and other financial relief, and this application was made by the wife, she says, because the husband discontinued making financial provision for her and her household at the level that he had been providing.
Maintenance is a remedy available to the parties to a marriage, whether the marriage is on foot or not. Where one party is unable to adequately support themselves from their own resources, the other can be required to provide support to the extent that he or she is able. That is all found in s 72 and 74 of the Family Law Act. Section 75 sets out the matters that one would take into account in making an assessment about maintenance.
It is the husband's case that the wife can adequately support herself from her own resources. He says that she has an income earning capacity that matches her outgoings, but that in any event her undivided share of the matrimonial pool can be used to meet her needs. The wife puts her weekly outgoings, as I say, at $1374, that includes living expenses of $1196 and the rest made up of fixed expenses. I was not taken to any particular expense, fixed or living, that was said on behalf of the husband to be excessive or inappropriate. It was asserted on behalf of the wife and without complaint from counsel for the husband, that her expenses did not compare unfavourably to the corresponding expenses in the husband's weekly budget.
The wife deposes to a current income of $400. She says that the position involves sales work and is temporary. She is not confident about that position being extended beyond 3 May 2008. It is her evidence that she ceased work with S Company 20 years ago and she has been out of the paid work force since. The husband says that the wife pursued a number of ventures, personal colour training, Jewellery Parties, and Conference Seminars. He does not know the extent of the wife's financial benefit or income from those ventures. The wife says the income was little or nothing.
Complaint was made in the submissions on behalf of the husband of the lack of evidence in the wife's case of job applications. As I said at the time, the fact that the wife sought and obtained work clearly evidences an attempt to secure paid employment. For the purposes of these proceedings I am satisfied that the wife is exercising her earning capacity. She is 20 years out of the paid work force and that was an arrangement that came out of the parties' marriage. There is nothing about the breakdown of the marriage that better fits a person for paid employment than was the case during the marriage, often quite the contrary. We do not live in times of full employment, and for the purposes of interim proceedings I accept that position.
I am satisfied for the purposes of these proceedings that the wife has a weekly shortfall of income over liabilities of $974 a week in addition to other outgoings that are listed in her application, that she cannot adequately meet from her own resources. The husband does not cavil with the need for mortgage payments and other outgoings on the wife's house at T, her need for a motor vehicle in general, or in relation to her use of the BMW motor vehicle in particular.
Now, that takes us to the second part of the inquiry, which is the husband's capacity to meet the payments. The husband's case is that he has a weekly shortfall of $7,000 in his budget and can no longer make all of the payments he was making to and on behalf of the wife. He deposes to an income of $3400 per week, made up of $3000 in payments under a contract as a mortgage manager for a company called C Pty Ltd, and $400 per week in dividends from publicly listed shares. He receives benefits from his employer of $100 a week in the form of a mobile telephone and a car space. I have said from his employer, I suppose strictly speaking he works under a contract. But it probably does not matter for the purposes of these proceedings.
The husband lives with Ms T, who is in paid employment, but he is not aware of her income. I know about the employment because I was told that she leases accommodation for her work from C Pty Ltd.
The evidence reveals a little more about Ms T’s financial situation. In the period 1 July 2007 to 13 March 2008 C Pty Ltd lent Ms T $45,571 to buy a car. It paid her $588.88 for parking and $240 for a mobile telephone. That is of interest because C Pty Ltd is part owned by Ferguson Holdings Pty Ltd. The husband says the extent of that holding is 55 per cent, the wife says 84 per cent. I cannot resolve that dispute today. But it seems to be an agreed fact that the parties own Ferguson Holdings Pty Ltd in equal shares. From the husband's financial statement I know that Ms T does not pay anything for his benefit, and save for some unidentified part of his claim of $200 per week for entertainment, he does not pay anything towards her expenses.
As to the husband's income, it is the wife's case that the husband significantly understated that income. It is submitted that payments to the husband disclosed by C Pty Ltd in exhibit 2 are significantly more than $3000 per week. For the husband it is submitted that by including the GST figures and some other matters, the difference is not significant.
Trying to put the two contentions in the same terms, I understand the wife's assertion to be that the husband receives over $4000 per week in addition to dividends, and the husband says that he receives $3400 per week, made up of $3300 by way of his contract fee, plus GST, and $100 in the form of parking and telephone, in addition to the dividends. By way of confirmation of the assertion about GST, the husband's bank account shows regular transfers from C Pty Ltd of $3300.
The evidence is that over the period 1 July 2007 to 13 March 2008 the husband received $144,825 in subcontractor fees, $22,752 in interest - I presume that interest relates to the parties' loan to the company - $2944.38 on car parking, and $400 on his mobile telephone. That totals $170,921 or $4619 per week over the 37 weeks covered by that period from July to March. The husband declared a business income for the 2007 financial year of $170,633.

I cannot do any more to reconcile the figures. As I will refer to later, in interim proceedings I am not permitted to make a finding of fact on a disputed issue of fact without independent evidence that excludes one version or events or wholly supports another. I am not allowed, in other words, in the absence of an opportunity to test the parties' evidence in the witness box and in the absence of independent evidence of the sort that I have identified, to simply pick one of the assertions made by the parties.
Moving then to outgoings. The husband puts them at $7445 per week. The items that the wife would have particular attention drawn to are mortgage payments on the T property, a $1000 per week minimum Visa card commitment, and payments contributed to investments for the children. In March 2007 the parties cooperated in the purchase of a property at T for the purpose of providing accommodation for the wife and of course for the children when they are with her. There is some evidence about the genesis of that, that an approach was made by the wife I think in late 2006, she having identified the property. But the net effect is that the parties cooperated in the purchase.
The total cost of the purchase was $948,440, funded it is said as to $461,730 by the sale of investments, and as to $500,000 obtained through C Pty Ltd. As to the mortgage payments on the T property the wife asserts that the loan was structured as part of a portfolio loan through C Pty Ltd. The husband says that he makes payments on the St George portfolio loan of $438 a week. It may be that those two references to a portfolio loan are references to the same loan, in which case the husband says that he pays the moneys and the wife says that the payments are made by C Pty Ltd.
Exhibit 3 contains copies of statements of transaction histories for a St George Bank portfolio loan and a cheque account, which I am asked to accept is that of the husband. Notwithstanding a puzzling endorsement on one of the monthly statements of, "Interest [E] IOOF", the statements seemed to support the husband's contention that he makes the payments. Loan payments for January, February and March of 2008 are matched by similar transfers out of the husband's account.
Turning then to the Visa card payments. They are not adequately explained, the husband says that the minimum payment due on his Visa card is $1000 a week, and that he pays $1000 a week. In the circumstances of a financial statement, where there is a list of fixed outgoings and a list of living expenses, what that leaves is no accounting for the application of the $1000. However, in circumstances whereby the husband declares a shortfall of the order of $3000 a week in his budget, that could well explain the need for recurrent expenditure on a credit card.
In relation to investments, I think the situation is that the parties approved and the husband continues, a pattern of putting regular amounts to a fund for investments in the names of the children. In the statement of monthly expenses attached to his affidavit the husband says that he contributes $700 per month per child. In the table that he provides it is described rather oddly as $500 for E IOOF investment, $500 for J shares, IOOF shares for E and J $200 per month each. His Financial Statement says something else. It puts the amount at $115 per week per child. Whatever the sum is, it was conceded in the husband's case that those payments would and could give way to an obligation to support the wife.
Although not particularly raised in the course of submissions, there are also HECS payments made in relation to E’s university studies. I am not even sure that they are still called ‘HECS’, but I understand what the husband is saying.
The problem with the case is that even if the wife is right and there is an amount missing in the husband's income, it takes $3000 of undisclosed income, not the $600 that she raises, or the $1200 that is the difference between my calculation of his weekly income and his claim in his financial statement, to balance the husband's budget. And that is before any consideration of a cash payment to the wife. As I said, these are interim proceedings, they are conducted on the papers, and therefore without any real opportunity for findings of fact on disputed issues.
There are aspects of the evidence that are suggestive of there being some additional capacity in the husband to make payments out of income. The exact dollars of his income are not fully explained in the evidence. There may be a doubt about the commerciality of financial arrangements between C Pty Ltd, as I say, largely owned by the parties and the husband's new partner. But before I make an order which must be met out of what is unambiguously the husband's income I need to be satisfied that the order can be complied with and if necessary, enforced. And today I am not satisfied about that.
I am reinforced to some extent in that view by the background facts which include an increase in family expenses since separation. For example, the parties borrowed $500,000 to buy a property for the wife to live in, new furniture and appliances were bought for that property. It is trite to say that the living expenses for the family will have increased because of the parties' separation. Thus there is a need for a payment to the wife, but I cannot find there is any capacity for it from the husband's income alone.
It is certainly not a matter beyond argument. The wife's case is that prior to her move from the former matrimonial home the husband was paying the mortgage payments in relation to both properties, or had agreed to pay the mortgage payments for both properties, the lease on the BMW motor vehicle, an E-tag account, instalments on private medical insurance covering the wife and the children, her mobile phone bills, Foxtel account at the T property, private school fees and associated expenses and uniforms for J, HECS fees for E, E-tag account, car registration, insurance and repairs for a car driven by E, and mobile phone bills for the children, pocket money for the children, in addition to a sum of $1000 per week to the wife.
She says at that time, as far as she knew, she and the children were to continue to enjoy travel benefits under the S Company scheme, and there was an agreement that she would continue to use the joint ANZ credit card. I do not know that there is a huge discrepancy in the husband's case about that, but certainly he says that he found that the wife’s use of the credit card facility was out of all proportion to the capacity of the joint resources of the parties to manage it. So there needs to be a reconciliation done of the difference between those sorts of commitments and the current commitments. That was not done for me and I have not done it independently. Thus I have found that there is a need for a payment, but I am not comfortable making a finding that there is a capacity to meet that payment from the husband's income alone.
I propose to make an order that facilitates a payment of $974 a week, but to make a provision that at least in the first instance the payment come from capital. Any mischief between the parties can be addressed directly by an adjustment or by reference to the assessment of contributions in the proceedings under s 79.
There is a risk that the pool of assets will be depleted by this approach to an extent which cannot be adequately repaired, but there are some things to say about that. Firstly, the parties have already depleted their capital and they each propose at least in the alternative for the future the depletion of assets to meet some expenses, whether legal fees or other expenses. So it is permissible in the minds of the parties for some purposes to go to capital. The caution about this arises in relation to the pool of assets. In a decision In the Marriage of Harris (1993) 16 FLR 579 at 586, the Full Court said the exercise of power, and this relates to an exercise of power in relation to what is described as interim or partial property settlement:
Should be confined to cases where the circumstances presented at that time are compelling.
The Full Court later went on:
Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases beyond the maintenance power where an order in favour of one party is necessary to preserve or maintain a home for or as otherwise necessary for the welfare of the children.
And later:
It is an exercise of the section 79 power. Consequently it must be performed within those parameters. Since it is not the final hearing the Judge is unlikely to have the final findings, but the exercise must fall within the general framework and the material available at that time.
Thirdly:
Of necessity it is likely to be a somewhat imprecise exercise. Consequently, it must be exercised conservatively. The Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so.
That is Harris & Harris.
Here there are problems in relation to knowing what the pool is. The husband says that at separation the parties had a property, the former matrimonial home, which he says he and the wife thought was valued at about $2.5 million. He had entitlements in a S Company superannuation scheme, an equities portfolio estimated at about $390,000, the interests in the Family Superannuation Fund, and a 55 per cent interest in a business known as C Company. Just stopping there, I was told yesterday that in relation to a valuation exercise, and I think it was probably a valuation exercise of the parties' company, far from an estimate that the wife had put on that company at $1.5 million, a single expert had identified a value of half a million dollars in relation to that entity. Whether part of that valuation or not, a loan that had been advanced by the parties to that company, C Company. There are sundry items of personalty and the equity in the recently acquired T property.
The husband says that they then owed $420,000 on the former matrimonial home, a portfolio loan at $300,000 obtained for the purchase of the investments and also secured against the former matrimonial home, and a mortgage on the T property secured on that property at half a million dollars, taxation liabilities of $60,000, car lease liabilities of $14,000, and what he describes as "my potential liabilities in respect of certain civil and criminal proceedings", in respect of which he would elaborate later.
What he says about those is that he was employed with S Company for about 10 years. He says that there were proceedings against S Company and against him and others, that S Company entered a plea of guilty and was fined a large sum. He understands that the plea bargain settling those proceedings expressly excluded the liability of S Company staff. He understands that in what he describes as a comparable example a prosecution in relation to price fixing in relation to the paper and packaging industry, senior executives were fined approximately $1.5 million. He says that S Company paid his legal fees up until December 2006 and thereafter advised him that it would no longer do so. He says that the employment with S Company fell fully within the period of the marriage. He says that he has received advice from S Company that it will no longer indemnify him in relation to those proceedings. He says that he has retained separate lawyers in relation to that. He says that there is an ACCC investigation which could involve civil liability and costs, he wants to challenge S Company’s refusal to indemnify, he says that he understands he is subject to investigation in a number of jurisdictions and late last year travelled under an amnesty for the purposes of interview in relation to that matter.
Further, he says that he has been joined personally in litigation in the New South Wales Supreme Court, along with two companies, in relation to the purchase of the business which is now C Pty Ltd. He says that it is alleged in those proceedings that the purchase was under-value. He has been served with originating process, he is going to defend it, and has legal representation.
So all that is a way of saying in this case above all others it is difficult to know what the pool of assets will be. It is certainly the case, and I was told by her counsel yesterday, that the wife strongly objects to bearing any responsibility for the consequences of what may be found to be wrongful acts by the husband in connection with his previous duties with S Company. One can see an argument along the lines of the authorities of Black & Kellner or Kowaliw as to the way in which those responsibilities might be available. But the central point here is I need to be particularly careful about the defraying of the body of assets because here there are those contingent or possible liabilities.
The next thing to say about - and perhaps it to some extent ameliorates the problem, there is provision, albeit not yet claimed in these proceedings, under the Family Law Act, for final orders for spousal maintenance. There is provision of course in the child support scheme for an adjustment in relation to ongoing financial support between parents in respect of a child. The scope for that might be defeated I suppose by J turning 18, but there is some provision there.
As to the form of orders, I will leave that to be a matter for the wife as to the way in which recourse would be had to joint funds for the recurrent payments. I explained to the parties yesterday afternoon that there is no evidence before me as to the relative merits of the various options, whether there are capital gains tax issues in relation to the shares, balancing the impact on the husband's budget of the loss of dividends if the share option is taken up, the implications for the compliance status of superannuation funds, particularly I suppose the parties’ self managed superannuation fund, the tax implications of the various options and so on. So as I foreshadowed, I will leave that as a matter for the wife.
Turning then to the question of Interim Costs. Interim costs is not a remedy that has a place identified neatly under the Family Law Act. It has been accepted over many years, decisions such as Barrow, Hogan, Poletti and Zschokke, that a Court can make an order for the application of joint funds to the costs of one of the parties. The source of power is variously described in relation to s 114, s 117, s 79, and reference is sometimes made to the omnibus section, s 80. But it is certain that there is a power to make the provision.
Classically, the need arises where there is a complexity in the parties' affairs, one party is not adequately able to fund the litigation without recourse to those funds, and the other party controls what is described in Poletti as the patrimony of the family. That is to say more access to funds by way of income and assets, and a greater degree of knowledge about the financial affairs of the parties. This case is not Poletti in terms of a financial structure, but there is some complexity of course in fact of multiple sets of litigation.
The real point of the authorities is to preserve a proper exercise of discretion under s 79 by making sure that the parties are able to litigate on an even footing. The only probative evidence in this case is that the wife has retained her lawyers on the basis that her costs will be paid. Disbursements are payable on request and interim accounts for professional costs, solicitor's costs, which can be sent monthly are on terms of 30 days. There is some evidence about the costs incurred to date but I could not quite follow it. The claim is for $100,000, there was an identified amount of $86,000, that is not the amount that has been billed and incurred to date, but it represents an estimate I think into the near future for disbursements and profit costs.
The husband seeks no similar specific provision in relation to costs and there was no similar evidence in relation to any arrangement with his lawyers. He does not say that they are pressing him for payment, that they will not act without payment, and so on. That is probably why he seeks not formal order. There is some mention of costs in his evidence - he says that there is remaining some $37,000 from a drawing he made on superannuation, which he intends to apply at least in part to legal costs.
The wife has made a case for interim costs and the husband does not have a similar application. In my view, an order is needed to address the wife's circumstances, but there is no need for a general payment in advance. I intend to order that the wife be able to drawn on a fund to meet her costs as they arise.
As to claims for Other Payments, the wife does not seek the release of a general fund. The husband does, but unless I have missed it, he has not identified a particular need for a fund. The best of his case might be said to be the fact that in a letter of December 2007 he flagged that ongoing support for the wife would need to be sourced in assets. He does seek as I said that the wife meet certain recurrent payments for example all of the mortgage payments on T property and half of the payments on W property, payments for which he has previously been solely responsible, albeit that is in the context of him seeking an order that capital funds be released to each of the parties.
In my view, the corollary of the finding I made about the wife's claim applies. Just as I cannot be satisfied today that the wife's need for maintenance cannot be entirely met from the husband's income because of questions raised about that income, the same questions mean I cannot be satisfied that payments for which the husband has been responsible should fall now entirely or largely to the wife. I have already mentioned the fact that he has identified a small fund, being the residue of the drawings on the super, which as to part he intends to apply to legal costs. As to the other part, that is a fund available to him.
In those circumstances I will order that the husband continue to pay or make provision for the T and W mortgages and the outgoings on the W property.
I should say as a general proposition that I am dealing with the parties' money. Absent these proceedings the parties would be free to apply their funds to their debts or to their expenses or to give their money away. If it was not for the counsel of authorities such as Harris's case and that line of cases, there needs to be an understanding by each of the parties that life does not stand still during proceedings and the parties should accept, as ultimately if there is evidence, the Court will accept, that parties will have legitimate need to access their own funds during that time. They have already recognised that in this case by the agreed purchase of the T property and other expenditure.
As to Injunctions, the wife seeks injunctions in relation to the parties' assets. Of the parties the husband has more flexibility in terms of income and financial resources and he has exercised and has greater control over the parties' assets. Despite the wife's concern I do not know that his stewardship of the joint assets has miscarried. The purchase of the T property was undertaken for the wife's benefit and with her concurrence. Since the decision of Waugh & Waugh the Full Court has explained that properly understood that judgment did not intend to prescribe as a fundamental or threshold question whether a scheme to defeat a judgment exists to be answered in the affirmative in every case before an injunction should be granted. See the decision of Mullen & De Bry.
The concern in Waugh's case was that the Court at first instance granted an injunction on suspicion, with little more than a threat in relation to the parties' assets. And as we now know, the Court did not mean to prescribe any requirement of there being a proven malfeasance or threat to the parties' assets before an injunction could be granted.

Here the wife says there was a statement by the husband. She says in the course of a conversation with the husband later in 2007 he said words to the effect, "I'm going to wind up the company, retire and travel the world with [Ms T].". Such things are said in the heat of the moment but the fact is that the parties are now in a different interest. When they were married they made arrangements whereby the husband had control day to day of various things on their behalf. Now that they are in a different interest, in my view, it is appropriate that the wife be consulted and have an opportunity to be heard in relation to dealings with joint assets. For those reasons I propose to grant an injunction in relation to the assets, exempting of course compliance with orders and arrangements made by consent. I would say to the wife if her consent is unreasonably withheld, then there can be costs consequences if the husband is put to coming back to Court to justify some necessary payment.
There are a number of smaller issues. The question of the health fund involves the wife seeking an injunction requiring the husband to restore her coverage on the family health benefit. The wife's evidence is that she was given to understand that her coverage or removal was not a matter that involved any additional cost or any saving to the husband. This was not a matter addressed in submissions on behalf of the husband, and I do not recall any evidence in his case about it. On that basis I will grant the injunction.
Nextly as to a travel concession. The husband has a residual family travel benefit from his former employment with S Company and has changed the spouse nomination from the wife to a nomination of Ms T. No submissions were made on behalf of either party in relation to that issue and I will make no order about it.
Nextly child support. It is not clear to me the extent to which the application is an application under s 124 seeking a substitution payment or an application for departure seeking that in addition to the administrative assessment there be certain payments such as school fees. Departure is not a matter about which this Court has unfettered discretion. There is no formal provision in the Child Support (Assessment) Act 1989 for such a thing as an interim departure. Here the claim could be characterised as substitution. There is speculation - decisions such as Lightfoot v Hampson discuss the issue of whether ss 123 and 124 constitute a separate head of power whereby one can increase the overall impost of child support by making an order for a payment in a form other than periodic payment. Here there has been an assessment, it is not I do not think in evidence, but the wife says on 28 February 2008 she sought an assessment of child support from the agency:
I was advised by an officer of the agency that they had made an assessment but I have not received a copy of the administrative assessment.
She refers to a letter dated 1 March 2008 from the husband in which he said, among other things:
If I'm forced to pay money to the CSA I'll just have to reduce my expenditure to the children.
I take it in those circumstances that the wife is not receiving an assessed amount and is concerned that the husband may seek a set off against the assessed liability for J’s payments, such as for school fees. That is not literally what he says, so it may be that that concern is unwarranted. I hasten to say lest I forget there is no suggestion from him or on his behalf that he would do anything to jeopardise J’s attendance at school. And one could see why, the boy is trying to cope with Year 12 and no doubt his parents' separation, and the last thing he needs is to have some cloud or embarrassment arising in relation to school fees.
As I have said, there is some scope, in my view, in the husband's budget for support for J in addition to school fees. I have made reference to the voluntary payments for investments for the children, which the husband in his affidavit, not his Financial Statement, says total $1400 a month. There is reference to the payment of HECS fees in respect of E. In fact in circumstances of E’s age, the father's obligations in relation to her fall into a different category and would give way to his obligations in relation to the child, J.
The legislative criteria in relation to child support, in relation to substitution orders, are similar to those in relation to departure, although there is no requirement for a ground. Section 124 says:
The Court must have regard to the administrative assessment in force in relation to the child, the care entitled to support on the liable parent. Any determination enforced under part 6(a).
That is a provision for administrative reviews:
Any order enforced under division 4.
That is an order made by a Court for departure:
Whether the carer entitled to child support is in receipt of an income tested pension, allowance or benefit.
And:
Whether the circumstances of the carer are such that taking into account the effect of the order proposed to be made by the Court, the carer would be unable to support himself or herself without an income tested benefit.
And:
The effect of making by the carer entitled to child support of an application under section 120A.
That deals with pensions, and the amount by which the pensioner is entitled to reduce the recurrent payment does not apply here. In determining the application the Court has to be satisfied, says 124(1), whether it would be just and equitable as regards the child, carer and liable parent, and otherwise proper to make an order.
We do not have much here, for example, I do not even know what the amount is in the assessment. However, in my view, there is an argument here for making the arrangement explicit for the short term. By that I mean not leaving it up in the air as to whether there will be proceedings seeking, without the parties being able to adequately address them, to set off against any recurrent child support assessment the payment of school and school related expenses. There are circumstances in which there has been an acceptance by the Registrar of a claim for non agency payments in respect of a recurrent periodic assessment. In other words it is possible to set off of school fees against the amount needed for support.
In the first instance I think in order to keep the peace it would be sensible to isolate those things. That is not to say that there might not be some change in relation to payments made directly to the children, that there might not be some change as I have said in relation to things such as HECS fees and in relation to the addition to the investment portfolio for the children. So I will make an order, as sought by the wife, but limited to school fees and related expenses. She seeks an order that covers extra-curricular expenses, and in my view that is too vague and I do not understand what it would mean.
I will set out my orders and of course if the parties feel that the orders that I make do not adequately reflect the reasons I have given then they are at liberty to restore the proceedings by arrangement with my Associate in relation to that task.

I certify that the preceding sixty eight (68) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan

Associate:

Date: 2 May 2008

[2008] FamCA 306

24 April 2008

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Injunction

Costs

Remedies

Jurisdiction