Foley and Foley

[2008] FamCA 873

FAMILY COURT OF AUSTRALIA

FOLEY & FOLEY [2008] FamCA 873

FAMILY LAW – PROCEDURAL – Interim applications

Family Law Act 1975 (Cth)

APPLICANT: Ms Foley

RESPONDENT: Mr Foley

FILE NUMBER: ADC 5437 of 2007

DATE DELIVERED: 22 September 2008

PLACE DELIVERED: Adelaide

JUDGMENT OF: Strickland J

HEARING DATE: 22 September 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr D Berman

SOLICITOR FOR THE APPLICANT: Angela Ferdinandy

COUNSEL FOR THE RESPONDENT: Mr D Burrell

SOLICITOR FOR THE RESPONDENT: David Burrell & Co

Orders

1. That the Application Alleging Contravention filed by the wife on 21 February 2008 be dismissed and removed from the active pending cases list.

2. That paragraphs 4 and 5 of the Response filed by the husband on 30 June 2008 be dismissed.

3. That the response filed by the husband on 30 June 2008 be dismissed and removed from the active pending cases list.

4. That further consideration of paragraph 7 of the Amended Application in a Case filed by the wife on 3 July 2008 be adjourned to 10:00am on 6 November 2008.

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

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 5437 of 2007

MS FOLEY

Applicant

And

MR FOLEY

Respondent

EX TEMPORE REASONS

1. I have two applications before me.  One is the husband's Response filed on 30 June 2008, but specifically paragraphs 4 and 5.  The other is paragraph 7 of the wife’s Amended Application in a Case filed on 3 July 2008.

2. In relation to the Response I am told by Mr Burrell that his client does not today pursue paragraph 5, and he seeks an adjournment of that paragraph of the application to the first day of trial, which I am told is in December.  In my view, it is either dealt with today or it is dismissed.  There is no basis to adjourn that part of the application.  It is not pursued today and therefore, I dismiss paragraph 5 of the response filed by the husband on 30 June 2008. 

3. With paragraph 4, the effect of what the husband seeks is that his income tax assessment of approximately $11,500 be paid out of moneys that are being held on behalf of the parties, being the balance of proceeds of the sale of various properties.  There is approximately $190,000 being held, and it seems from what I am being told that that is probably the principal asset that the parties have left and to be argued about when this matter gets to trial.

4. The husband's case in support of that paragraph is that there was an amount of $33,000 in an account.  He says it was an amount saved to meet the parties' income tax - the wife has not challenged or disputed that - and it was an amount saved whilst the parties were together.  They separated in April 2007.  The tax that the husband wants paid out of the moneys held is his tax for that particular financial year, namely the 2007 financial year.

5. Pausing there, on that basis, if that is an accurate statement of the facts, then that income tax would have been paid out of that $33,000, as would have the wife's.  It was being saved not just for the husband's tax but the wife's as well.

6. However, what is common ground is that the wife withdrew that $33,000 on or about 19 July 2007.  She used $7,000 of it to meet her previous year's tax, or a portion thereof, and the rest has been used for her legal costs in relation to these proceedings.  The husband says he was aware that the money was withdrawn but he was not aware until some time later as to what the money was used for.

7. He says that he does not have the ability to meet his tax assessment out of his ongoing share of the profits of the business.  What has happened in that regard though is that for a period of time, which is in dispute itself but between four, five or six months or thereabouts, the husband paid himself $10,000 each month prior to distribution of the profits of the business as payment of wages for the work that he alone was doing in that business.  This is subsequent to separation, of course.

8. Thus the wife says that, when you look at what the parties have had, she has had the $33,000, the husband, though, has had that $10,000 gross per month for at least four and maybe as much as six months after separation.  The wife says that the husband should have made arrangements out of that income or his ongoing share of the profits outside of that to meet his income tax liability.  The wife says that she only resorted to withdrawing that $33,000 because, as she puts it, the husband had cut off her access to the business and the business accounts and withheld her income.  There does not appear to be any dispute that that is so.

9. There have been proceedings in the Federal Magistrates Court, orders made and an appeal to this court, which coincidentally I heard.  The matter is now in this court.  The current position is that the business is continuing to be operated by the husband.  The husband says that the parties are equally sharing the profits, but the wife complains about moneys that the husband is paying from those profits before distributing what he says is an equal share to the parties.

10. I do not have any evidence before me - at least I have not been referred to any - which tells me precisely what those profits have been over the last few months.  The most significant argument that the wife puts though is that the husband has had more money than her out of the business as a result of him paying himself $10,000 gross per month.

11. Prima facie it would seem that the husband has had that greater income from the business.  Mr Burrell of course reminds me, quite properly, that that is a gross figure, and there will be tax assessed on that which the husband will have to pay in due course, but Mr Burrell has not been able to put to me any figures.  Thus the husband has not had all of the $10,000 per month for him to spend as he wants.  He will ultimately have to pay tax on that income.

12. The wife says that she does not want any money out of the proceeds of the sale of the properties.  She says she is able to meet her tax liability.  She has not yet put in a tax return though, which is concerning.  That may mean there are penalties and interest payable, but that is her position.  She says she is aware of what the liability will be and she will be able to pay it.  Mr Burrell queries that, but that is not for me to delve into. 

13. In summary then, the husband says that the wife has had that $33,000, but it was meant to pay the tax.   His tax has not been paid and he has not had enough out of the business to be able to meet that tax liability.  The wife says that that is not right.  The husband has received far more than she has out of the business and he should have been able to make arrangements to meet the tax, which is $11,500.

14. I accept the submissions of the wife.  There is no basis for the husband to have access to the moneys held from the proceeds of the sale of the properties to pay an amount of $11,500, given what he has received from this business.  He has had the wherewithal to make arrangements for this $11,500 to be paid.

15. I consider the $33,000 issue a red herring.  It has been used by the wife, but I have taken into account all of the moneys that have been available to both parties.  I can say that there is a paucity of evidence presented to me in relation to this issue, but I have done the best I can from the various affidavits that I have been referred to.

16. Turning then to the other application that is before me.  In paragraph 7 of the wife's Amended Application in a Case filed on 3 July 2008 she seeks an injunction.  However, Mr Berman has been quite candid in putting to me that what the wife really wants is something different than what is sought, namely she wants to have a direct say in any disbursement from the income of the business prior to there being a distribution of profits.  Indeed, even if I look at it strictly and literally, from Mr Berman's submissions to me, if it was framed in the terms of an injunction, what the wife is saying to me is that she wants an injunction preventing the husband from making any payments from the income of the business prior to distribution equally to the parties.  However, as I have said I would not be currently disposed to make such an order.

17. In summary, I am not prepared to deal with the application in its current form given the moveable feast in terms of what actual orders are sought and what evidence is before me.  Thus I propose to adjourn that application to enable, firstly, the wife to amend her application, if she is so advised, and to file a further affidavit setting out precisely the facts on which she relies in support of the order that she finally settles upon.

18. It would be unfair for the husband to be called upon to deal with that today in the circumstances.  The wife has to set out what she wants, and then the husband knows what he is dealing with and he then has to file a response wherein he sets out the orders he wants and files a supporting affidavit setting out the facts on which he relies.

I certify that the preceding 18 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered 22 September 2008.

Associate