Galitsis & Galitsis

[2007] FamCA 328

FAMILY COURT OF AUSTRALIA

GALITSIS & GALITSIS [2007] FamCA 328

FAMILY LAW - PROPERTY – Exclusive Occupancy – need for current material – Wife’s indication of intention not to proceed with the application during the course of negotiations

FAMILY LAW - SPOUSAL MAINTENANCE –Wife satisfies threshold test notwithstanding lack of evidence but husband does not have capacity to pay

APPLICANT: MRS GALITSIS

RESPONDENT: MR GALITSIS

FILE NUMBER: MLF 2826 of 2006

DATE DELIVERED: 19 April 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 11 April 2007

REPRESENTATION:

COUNSEL FOR THE APPLICANT: Ms Smallwood of Counsel

SOLICITOR FOR THE APPLICANT: Berger Kordos Lawyers

COUNSEL FOR THE RESPONDENT: Mr Mawson of Counsel

SOLICITOR FOR THE RESPONDENT: Mason Sier Turnbull

Orders

1. The Form 2 Application in a Case filed on 29 September 2006 and the Response to an Application in a Case filed 30 November 2006 are dismissed save as to any application for costs by either party.

2. Any application for costs by either party be filed by way of a letter addressed to the Associate to the Honourable Justice Cronin by 4.00pm on Friday 27 April 2007 requesting any such order and setting out any written submission in support thereof accompanied by evidence of service of such application and supporting submission upon the other party.

3. In the event that any such application for costs is filed by the due date, the other party respond by submission in reply by no later than 4.00pm on Friday May 4 2007.

4. Subject to any order for costs, all interim application be otherwise removed from the list of cases awaiting a hearing.

5. The parties have liberty to reply generally in respect of these orders.

6. For the purposes of Rule 19.50 of the Family Law Rules 2004, it is certified that this matter is one in which it was reasonable to engage Counsel.

7. All exhibits be returned to the parties.

AND THE COURT NOTES:

1. The proceedings between the parties otherwise await a Trial Notice listing.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2826/2006  of 2006

MRS GALITSIS

Applicant

And

MR GALITSIS 

Respondent

REASONS FOR JUDGMENT

1. I have been asked to determine two issues arising out of a Form 2 Application in a Case filed by the wife to which I shall return in more detail in a moment.  This application came before me in the Duty List on 11 April 2007.  I commenced hearing the matter on the papers and on submissions just prior to 4.00pm and reserved judgment to enable me to have an opportunity to read the papers in some detail.  I have now done that.

2. The two issues that I have been asked to determine relate to the future occupancy of the matrimonial home in which the husband is now living by himself and the question of the entitlement of the wife to spousal maintenance.

3. The material that the wife relied upon was her Form 2 Application in a Case filed 29 September 2006 supported by an affidavit and financial statement.  The husband filed a Response to the Application in a Case on 30 November 2006 and supported that response with an affidavit in reply and a statement of his financial circumstances.

4. The wife is aged 38 years and is a teacher’s aide by occupation.  In her material, she refers to the fact that she works on a casual basis and her financial statement reports that her earnings when averaged out, come to $525.00 per week. 

5. The husband is employed as a financial controller.  He is 41 years of age.  He earns approximately $100,000.00 per annum and has the benefit of a motor vehicle.

6. There are two children of the marriage, a daughter born in May 1998 who is therefore almost 9 years of age and a son born in September 2001 who is therefore 5 years of age.  Both children live with the wife. 

7. The parties were married in 1992.  They separated under the one roof in April 2006 and the wife left the home in September 2006. 

8. There are a number of matters in the affidavit of each party which are highly contentious and without the evidence being properly tested, I am unable to make any findings of fact.  I intend to determine these proceedings on the basis of material which is clear to me and relatively uncontroversial. 

The application for exclusive occupancy

1. As I have pointed out, there was a separation under the one roof for some months before the wife left the home taking the two children with her. 

2. Prior to leaving, the wife engaged solicitors.  On 28 May 2006, those solicitors wrote to the husband requesting that he vacate the home.  He did not do so and the parties remained under the one roof.  In the months that followed, the wife changed lawyers.

3. On 13 September 2006, the new solicitors acting for the wife wrote to the husband requesting that he vacate the home.  Again he refused to do so.

4. In September 2006, the wife vacated the home taking the children with her.

5. On 29 September 2006, the wife filed proceedings in this Court seeking a number of orders relating to both property settlement and children.  In an application for interim orders, she sought:

   “That until further order the wife have the sole use and occupation of the former matrimonial home known as and situate at [M] …

   That the husband pay to the wife the sum of $700.00 per week by way of periodic spousal maintenance, such payment to be made by 5.00pm each Friday.”

6. There were a significant number of other orders sought, some of which appear to have now been resolved by the effluxion of time but I was advised by Counsel for the wife that she did not propose to seek any other orders than those to which I have just referred.

7. As part of the process of leaving the matrimonial home, the wife changed the schooling of the daughter who, at that time, was the only child at school.

8. On 17 November 2006, the husband swore an affidavit in reply to the wife’s material and filed it on 30 November 2006 (and presumably served it around that time) which sets out the facts responding to the application for exclusive occupancy.  It is quite clear from that affidavit that the husband not only did not want to vacate the home but that he wished to retain it as part of the property settlement. 

9. Significant for my purposes is the fact that the first hearing in this Court occurred on 21 November 2006 before Registrar Hunt.  Obviously there was no agreement between the parties because the Registrar on that occasion adjourned the various applications for an interim hearing on 3 January 2007.  The only inference that I can draw is that on that occasion the orders sought by the wife to which I have referred above were those that she intended to seek on 3 January 2007. 

10. On 19 December 2006 however, the wife, through her solicitors, wrote to the solicitors for the husband indicating that she was not intending to pursue the application for exclusive occupancy.  The relevant letter specifically refers to the wife’s application and then goes on to say:

    “Although our client still wishes to retain the former matrimonial home as part of an overall property settlement, she no longer intends to pursue her sole use and occupancy application as an interim issue at the hearing on 3 January 2007.”

11. On 3 January 2007, the matter came on before Watt J and the file discloses that an order was made adjourning the interim applications of both parties to the Judicial Duty List on 5 March 2007.  However, for my purposes, there is an interesting notation to those orders which reads:

    “The parties seek the adjournment provided for in these orders as they are close to finalising the children’s and financial proceedings on a final basis and wish some time to conclude their negotiations.”

12. It is clear from the file that that notation was not something that Watt J determined himself as the notation appears to be in the handwriting of one of the representatives of the parties.

13. Consistent with the indication in the letter of 19 December 2006, it transpires that the wife enrolled the son for his preparatory year of schooling in a primary school near where she was then living. 

14. Sadly, it would appear that the hopes of the parties as indicated by the notation on the order of 3 January 2007 were not fulfilled. 

15. The matter came before Registrar Hunt again for a conciliation conference on 23 February 2007.  On that day, the record shows that the parties were unable to resolve the matter on a permanent basis and the Registrar specifically adjourned the matter for an interim hearing before me on 11 April 2007.

16. Notwithstanding that the applications had been respectively filed by the wife in September 2006 and the husband in November 2006, and the parties had been before the Court on three occasions until February, and they were indicating that they were girding their loins for an argument on 11 April 2007, no new material was filed by either party.  The husband asserted that he had not been warned of the wife’s change of heart about the exclusive occupancy until as late as a day or so prior to this hearing.  That seems consistent with the fact that the wife filed no further material subsequent to the orders of Registrar Hunt at the end of February.  It is the lack of material that, to a very large degree in this case, has made my task difficult.

17. The question of exclusive occupancy of a matrimonial home was determined by the Full Court in S & S [2002] FamCA 59. What the Full Court there determined was that with such an application, there were four matters to be considered in the exercise of what is clearly a discretionary matter. Those four were:

    (a)the means and needs of the parties;

    (b)the needs of the children;

    (c)hardship to either party or to the children; and

    (d)where relevant, conduct of one party which may justify the other party in leaving the home or in asking for the expulsion from the home of the first party.

18. Having regard to the fact that in this case there is now no new material to assist me to determine those matters, making a determination in favour of the wife is extremely difficult.  The parties’ counsel respectively insisted that the matter be dealt with on the affidavit material and not on “evidence from the bar table”.  Because there has been no material filed subsequent to 23 February 2007 and also because of the letter dated 19 December 2006, I do not have sufficient evidence to exercise my discretion to determine the matter in favour of the wife on this evidence, particularly having regard to the requirements in S & S.  Accordingly, that part of her application is dismissed.

The spousal maintenance issue

1. To some extent, the question of the application for spousal maintenance suffers from the same difficulty of the absence of current material.

2. The wife asserts in her affidavit, which it must be remembered was sworn in September 2006, that she is employed on a casual basis as a teacher’s aide.  She asserted that she was the primary caregiver of the children throughout the marriage and the husband concedes that was so.  However, it is a matter of contention just how much the wife is working.  The husband says she works fulltime and the wife says it is a casual basis but it would appear to be between Monday and Friday. 

3. The only other evidence that the wife put before the Court was in paragraph 30 of her affidavit in which she swore that her financial position was precarious and that she had significant credit card debts and was reliant upon borrowings from family and friends.

4. The husband has asserted that the wife has been less than candid.  He asserts that she has an interest in an unencumbered property at A and that the property is not only unencumbered but also tenanted and generates income by way of rental to the extent of $30,000.00 per annum.  Mr Mawson of Counsel on behalf of the husband asserted that I should find that this absence of evidence in relation to the rental was “fundamental and fatal” to the wife’s spousal maintenance application.  I do not agree.  However, the absence of the reference to the A property in the affidavit to some extent is cured by its reference by the wife in her financial statement.  Again, however, the problem was that one had to search for the answers to enable me to draw appropriate inferences.  There is clearly no evidence of what happens to the rental asserted by the husband and the wife is silent about that issue.  There is no evidence of what arrangement the wife has with her brother about the conduct of that investment property.  Neither party produced any tax return which would have given any indication as to whether or not income was earned from the property or whether its expenses had been deducted for taxation purposes.

5. The husband’s affidavit refers to two rental investment properties that were purchased by the parties in the latter part of the marriage and after the wife had received the interest in the A property with her brother.  The evidence clearly indicates that there was a shortfall in the mortgage commitment and that that was being met by the parties themselves in respect of their own investment properties prior the separation.  It would seem that subsequent to the separation, the husband has been entirely responsible for meeting those obligations.  One of the matters to which I shall turn in a moment is the question of whether the sale of the parties’ two investment properties would make any difference to the financial position in the short term to assist me in the determination of the spousal maintenance question.

6. The other dilemma is that the husband sets out in his financial statement that he has obligations of about $49,000.00 for credit cards as at November 2006.  There are a number of cards and, as such, there are obviously a number of weekly payments.  The husband, in his affidavit, says that he was unable to continue to meet these significant credit card debt payments.

7. Generally, the husband’s material indicates that he does not have the capacity to make any payments over and above what he is currently making.  Both parties have asked me to draw inferences from various material.  In respect of the A property, the wife shows the property as an asset in which she has an interest.  This is in her financial statement.  In her liabilities column, she shows an obligation to her family for mortgage commitments.  Whilst the form requires a deponent to show their interest in an asset and the value that they place on that interest, there is a clear dispute in this case as to exactly what the interest is and what equity the wife has.  Having regard to the restrictions that each party placed upon each other about what evidence I could use to determine the matter, I am unable to be at all certain as to not only what the equity is but what, if any, income could be earned from the A property.  If, for example, one concludes that there is no equity in the property because the asset and liability position is as outlined by the wife, I would not be able to say that the wife should endeavour to recover some of the rental to help support herself.  On the other hand, if I concluded, as the husband would have it, that the title is unencumbered inconsistent with that which the wife asserts, I could draw the conclusion that the wife is not endeavouring to obtain a source of income for her own support.  Because of the fact that the assertions of each party are untested, I am unable to make any finding about that particular issue.  As I have already pointed out, I was not prepared to draw any adverse inference about the disclosure issue having regard to the fact that inferences as suggested by either side could probably be drawn. 

8. In this case, I am prepared to ignore the potential for the wife to draw income from the A property primarily because of the issues to which I shall now turn.

9. Ultimately this matter turns on the way in which I deal with the figures provided by each party in their respective financial statements.  Again I stress the fact that the material, particularly of the wife, is largely out of date. 

10. In the wife’s financial statement as at September 2006, she deposed to having an average income from her employment of $525.00 per week.  She receives no government benefits.  Her only other source of money comes from child support and that figure has significantly increased since September 2006 to $480.00 per week.  

11. In this case, I am determining a spousal maintenance claim and I am conscious of the fact that, if possible, I need to exclude the funds directed towards the children and expenses incurred by them.

12. On the assumption that the income is $525.00 per week and $150.00 tax is taken, the wife has a net sum of $375.00 per week to live on.  Out of that she pays $230.00 per week and then has her own living expenses of $237.00 per week.  She clearly cannot live within her means. 

13. It is important also to recognise that none of the figures in relation to living expenses have been challenged nor could they be in the truncated hearing which the parties have undertaken.

14. Even if I added to the $525.00 per week earnings from her employment, the sum of $480.00 per week for child support, and then deducted the totality of the expenditure in the financial statement for both the wife and the children, there is still a shortfall on a weekly basis.

15. In relation to an application for spousal maintenance, s 72 of the Act reads:

“Right of spouse to maintenance

(1) A party to a marriage is 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 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).

(2) The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.”

1. It is clear, therefore, there is a threshold the wife has to reach. Before I look at any question about the husband’s capacity to pay, I need to be satisfied that the wife cannot adequately support herself by reason of the matters set out above and in particular having regard to the matter set out in s 75(2) of the Family Law Act.

2. Accordingly, in relation to the matters that I have just set out, drawn from the financial statement of the wife, I find that she does reach the threshold and is unable to adequately support herself. 

3. The second limb of the test in s 72 of the Act makes it clear that the husband in this case only has a liability to maintain the wife to the extent that he is reasonably able to do so.

4. Turning to the financial statement of the husband, he has an income of $2,420.00 per week but after tax of $788.00 and all of the mortgages and rates, he has a net sum of $528.00 per week to meet other obligations.  It is common ground that his child support obligation is $480.00 per week.  He therefore has $48.00 per week to cover living expenses, a car on a lease arrangement and health insurance.  He asserts in his statement that he requires $276.00 per week to live upon, $124.00 per week for a car and $54.00 per week for his health insurance.

5. It was asserted by the wife in submissions that the car lease ran out in October 2006 at which time there was a residual payment to be made.  The same problem in relation to the wife’s material occurs here in that I have had to accept from the bar table a statement by the husband’s counsel that the residual payment was not made but rather, the lease was continued and, as such, I am asked to accept that the husband is continuing to pay $124.00 per week. 

6. At face value therefore, looking at the financial statement, the husband is living well beyond his means as he would allege.

1. The question then remains as to whether or not some of the figures can be shifted around.  For example, if the husband sold the two investment properties, the mortgage commitment of $1054.00 per week would clearly drop.  However, so would the income to be received by way of rental.  I do not have evidence of whether the taxation sum of $788.00 that I have allowed would change.  I have presumed that the shortfall is being deducted for negative gearing purposes.  It is not for me to hazard a guess as to what the husband’s new net position would be after the taxation question is reconsidered.

2. If, however, there was a sale of the two investment properties and the husband’s income was then $1,923.00 per week, allowing a tax payment of $788.00 (which I am not confident about at all), he would then be left with $1,135.00 per week to live on.  Taking then the child support, the car payment, the health insurance and living expenses of $276.00 per week, he would still have approximately $200.00 per week over.  However, if I was then obliged to allow him the $258.00 per week that he asserts he is paying towards the credit cards, he is clearly left in a similar position to which he is currently, without the sale of those properties. 

3. Even if the properties were sold, the credit card liability which was approximately $49,000.00 in November 2006, would then have to be discharged as well. 

4. Ironically, there is no application by the wife for the sale of those properties at this stage to meet those debts and it is interesting that each party appears to want to retain the matrimonial home.  The impasse is obvious.  However, the question of how one could obtain any money from the husband’s earnings to satisfy a spousal maintenance obligation conjures up the obvious question of the art of the possible.  I am satisfied that it cannot be done in this case and, on the evidence before me, I am satisfied that the husband does not have the capacity to meet any obligation that he would otherwise have to pay spousal maintenance.

5. Accordingly, the wife’s application for spousal maintenance is dismissed.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:      ………………………..

Date:              19 April 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as GALITSIS & GALITSIS