Griswald and Griswald

[2008] FamCA 374

FAMILY COURT OF AUSTRALIA

GRISWALD & GRISWALD [2008] FamCA 374

FAMILY LAW  -  PROPERTY  -  interim injunctions  -  interim spousal maintenance

Family Law Act 1975 (Cth)

HUSBAND: Mr Griswald

WIFE: Mrs Griswald

FILE NUMBER: MLC 1692 of 2008

DATE DELIVERED: 29 April 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: 29 April, 2008

REPRESENTATION

COUNSEL FOR THE HUSBAND: Mr J. P. Grigg

SOLICITOR FOR THE HUSBAND: Bowlen Dunstan & Associates

COUNSEL FOR THE WIFE: Mr G. J. Combes

SOLICITOR FOR THE RESPONDENT: Susan Snyder

Orders

1. That paragraph (3) of the orders made herein on 16 April, 2008 be discharged. 

1. That until further order, the husband pay by way of spousal maintenance to the wife :

   (a)all mortgage repayments, rates, taxes and insurances in relation to the former matrimonial home at M;

   (b)all lease repayments, registration, insurance and maintenance on the Toyota Kluger, registration number … and the wife have the use and possession of that vehicle; 

   (c)the sum of $150 per week, computed from this day, the first payment to be made on 6 May, 2008;  and

   (d)that part of the HBA medical and hospital cover referred to as spousal maintenance in paragraph (3) hereof.

1. That until further order the husband maintain the family HBA medical and hospital cover at its current level  PROVIDED THAT  :

   (a)one-quarter of the cost be attributed as spousal maintenance for the wife;  and

   (b)the balance be characterised by the trial judge. 

1. That until further order the husband pay and be fully responsible for all payments due in respect of the line of credit secured (in part) over the former matrimonial home and that payments made pursuant to this order be characterised by the trial judge. 

1. That paragraphs (1) to (3) of the interim orders sought in the initiating application filed by the wife on 26 February, 2008 be otherwise dismissed. 

1. That the following applications be adjourned to a date to be fixed after the conciliation conference, which the court notes is to be held on 29 May, 2008 :

   (a)all applications and responses referable to final financial orders;

   (a)paragraph (4) of the interim orders sought by the wife on 26 February, 2008;  and

   (b)paragraphs (1) and (2) of the interim orders sought by the husband this day.

1. That the reasons for judgment this day be transcribed and copies made available to the parties

1. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1692 of 2008

MR GRISWALD

Husband

And

MRS GRISWALD

Wife

REASONS FOR JUDGMENT

1. The applications before the court for determination today are those contained in paragraphs 1 to 3 of the interim or procedural orders sought by the wife in the initiating application she filed on 26 February 2008.  In that application, she sought final property orders and that she be excused from particularising those orders until the husband had provided full disclosure of his financial circumstances.  At the time she filed the application, she also filed an affidavit and a statement of financial circumstances sworn by her.

2. The matter was initially before Registrar Riddiford on 18 March.  At that time, the husband was ordered to file and serve a number of documents, including a financial statement, within 14 days.  That did not occur. 

3. On 16 April, the matter was before Dessau J.  Both parties were represented.  It was her Honour who adjourned the paragraphs I have referred to to this list today, together with paragraph 4 of the application, to which I will make further reference in a moment. 

4. The husband was required to file and serve a response, a statement of financial circumstances, and any affidavits upon which he relied, by 4:00 pm. on 24 April 2008, which was last Thursday.  That did not occur.  The husband has referred to a family death, and to being interstate for a part of the period since orders were made on 16 April.  With leave, he filed a response, an affidavit, and a statement of financial circumstances this morning.

5. In his response, by way of final property orders, he sought that the parties' property be divided as to 60 per cent to the wife and the balance to the husband.  He did not directly respond to the interim orders sought by the wife but sought orders in respect of an investment property, to which I will refer. 

6. The orders sought by the wife are that the husband pay spousal maintenance of $500 a week; that he continue to make all payments in respect of the mortgage secured over the former matrimonial home at M, together with all rates, taxes and insurance in relation to that property; that he continue to pay interest on the line of credit, which is effectively a business account, but which is secured over the former matrimonial home and the investment property; that he continue to make lease payments and pay registration, insurance and maintenance on the car driven by her; and, in paragraph 4, that he forthwith arrange to either pay to her the sum of $28,000 (being an amount noted as having been distributed to her in the year ending June 2007 from the B Family Trust) or vary the accounts of the trust so that that sum be credited to the husband in lieu of her.

7. It is clear that that figure of $28,000 was allocated as income to the wife through the trust in her 2007 taxation return.  It was taken into account when assessing child support.  It was also taken into account when assessing her entitlement to Centrelink payments.  That is the reality.  That part of the application was not pressed today. 

8. The parties own an investment property at M2, adjoining the former matrimonial home.  The husband sought that that be sold, and that the net proceeds of sale be invested in an interest‑bearing account, pending final resolution.  Until that happened, he sought that all payments received be applied towards payment of the mortgage over that property and that neither party encumber it without the consent in writing of the other.

9. As that application was brought only this morning, the wife was not in a position to put material responsive to it before the court, and I have not heard it. 

10. A practical proposition has been put forward.  The parties are to attend a conciliation conference on 28 May.  It is suggested the decision as to whether that application needs to be litigated be deferred until after that conciliation conference.  I will make orders to that effect.

11. In terms of the material of the husband, it must be said it is inadequate.  Neither his affidavit or financial statement allow the court to form any view of his business situation.  In the witness box he has described the corporate structures in place when the parties were together, and changes to those arrangements since separation.  That is the first time those arrangements have been spelled out to the court. 

12. Perhaps more to the point, a notice to produce was served on the husband on 9 April.  It is not denied that no documents were produced pursuant to that notice until today, when some statements in respect of three bank accounts were faxed to the husband here at court. 

13. Importantly, there has not been compliance with rule 12.02 of the Family Law Rules 2004, which requires the parties, at least two days before the first court date in a property case (which in this matter was some time ago) to exchange copies of documents, including the parties' three most recent taxation returns and assessments, and copies of the financial statements and tax returns for the three most recent financial years of any corporation or trust in respect of which the party has an obligation of disclosure. In this case it is now clear that that provision catches a number of such entities.

14. By way of background, I must say little.  The parties married in March 1998.  They have a daughter, Y, who is 11, and a son, L, who is nine.  They separated in April 2007.  The wife remained in the former matrimonial home in M.  The husband obtained rented premises.  The children have been living with their father on each alternate weekend, from the conclusion of school on Friday until the commencement of school on Monday, and on each Wednesday from the conclusion of school until the commencement of school on Thursday.  They have spent holiday time with both parents. 

15. For convenience sake I will say something, albeit briefly, about the business arrangements, as described by the husband.  He is an engineer and has been employed in that capacity throughout the marriage.  He operated through a partnership called C & G Partners, his partner being Mr C.  Two corporate entities made up the formal partnership, being C Pty Ltd and G Pty Ltd.  The husband is the sole director of the latter company.  It provided engineering services and staff and equipment to the partnership.  A trust, the B Family Trust, operated; its trustee was G Pty. Ltd.  In simple terms, the profit from the partnership went into the trust. 

16. The husband's evidence is that in October or November last year, that is, six or seven months after separation, that partnership was, to use his expression, informally dissolved.  I understood his evidence to be that other ventures of his partner proved particularly profitable and that was one reason to disband this partnership venture.  He and Mr. C aimed for a dissolution of partnership as at 30 June 2008, but there are “a few outstanding issues”.  His partner is not all that desperate to tidy it up, given the price for which he recently sold his group.  The husband’s evidence is that the partnership would probably not be formally ended until 30 June 2009.  Cross‑examined, he said he would, in due course, have to pay out his partner some $26,000.

17. At the time that decision was taken another entity was created, being CG2 Pty Ltd.  Again, the husband is the sole director.  It became the trustee of a new trust, the Griswald Family Trust, and in the same way, the income and profits earned as a result of the husband's exertion and that of staff employed by him are funnelled through to that trust.  As I understand his evidence, the business has four full‑time employees and two part‑time employees. 

18. There is then another enterprise, the M Centre, in which the parties invested in about August 2006, some eight months prior to their separation.  Again, there is a partner;  this time it is Mr N.  This is a 50:50 partnership.  The wife is employed in that business as a bookkeeper.  Mr. N’s wife also has some paid employment in that business. 

19. The husband's evidence is that the arrangement had been that he and Mr. N would take $500 a week from that business.  Some time ago, because it was not doing well, they dropped that sum to $250 a week.  He said that a couple of weeks ago, after taking advice, they moved to considering whether to take nothing out of the business which, it is said, is running at only a marginal profit.

20. The husband has a jukebox and a billiard table at the M Centre, which are his assets, as opposed to the partnership's.  Any profits from those come his way.  He has explained their role as being something of a teaser, and deposed to only earning about $8 per week from them.

21. Save for the bank statements to which I have referred, there are no documents before the court in respect of the companies, the trusts or the partnerships.  It is simply not possible for the court today to make findings about the true financial position of the parties. 

22. The husband's own evidence, for example, was that the engineering business showed a $30,000 loss last year.  Having regard to all the evidence on both sides, that is illustrative of the illusory nature of mere taxable income figures;  no reliance could be placed on that figure, having regard to evidence of lifestyle and outgoings. 

23. There has also been mention of another company, Y Pty Ltd, of which the husband was appointed a director on 28 November 2007.  His evidence is of ceasing that role on 19 April 2007, some five days after separation.  He said he went into that business, which had hoped to set up a one‑stop building shop with an engineering division, with an architectural draftsman, with whom he had previously worked, being Mr L.  Although Mr L remains a friend, the husband's evidence is they had a disagreement about business, and resolved that it would not be prudent for them to remain in partnership.

24. The evidence in the husband's financial statement - and, as I say, this is not supported by any financial statements or tax returns of any of the entities involved - is of a weekly income of $1605, including rent from the investment property.  That rent is $210.  If one looks at that financial statement, and at the little other evidence before the court, one can see that the husband is asserting a significant shortfall of income as opposed to expenditure.  The expenditure listed in his form 13 is $2,246 per week.  To that, needs to be added the $710 per week in part N, which gives a figure of $2,956 per week plus the amount he has been paying in respect of the wife's car which, on his evidence, is $810 per month.  That car lease repayment is presently paid by the business but the husband would add another $187 per week.  To that needs to be added expenditure through a horse syndicate of, say, $23 per week.  These total an expenditure of $3,166 per week.  That leaves a real shortfall of $1,561 per week or $81,172 per annum. 

25. The husband’s evidence is of having to borrow, since separation, some $9,500 from his parents and $5,000 from his former partner, and still friend, Mr L.  His oral evidence was, as I recall it, that credit card liabilities have grown from $26,000 to $35,000.  In his financial statement that figure might be $37,000.  At $37,000, there would have been an $11,000 increase in the credit card debt which, added to loans, has increased his debt by $24,500 in the last 12 months.  That leaves alive the question of where the balance of the $81,000 shortfall has been found. 

26. The wife's financial statement is also thin, substantially because many of her expenses have been paid by the husband since separation.  I will say something about that in a moment. 

27. The wife deposed to income of $390 per week, of which $90 is a means‑tested pension.  She has conceded receiving another $60 in cash at the moment, but says it will be taken into account in due course.  She deposed to fixed expenses of $29 per week and weekly expenses for herself and the children of $600 per week. 

28. As I understand the evidence, until 23 January - so for some nine months after separation - the husband continued to meet almost all the significant expenses of her household.  He paid the mortgages on both that property and the rental property, the payments made through the business line of credit.  He paid the rates and the insurance.  He made lease payments on her car, plus maintenance, registration and insurance and, indeed, petrol.  He paid her mobile phone.  He paid many of the household expenses, the children's school fees and for some of their recreational activity.  There is mention of Kung Fu and swimming, and the wife spoke of soccer and football. 

29. On or about 23 January, the husband ceased making those payments.  The reasons for that have not been specifically traversed today.  About a month later, he recommenced all payments, save for the petrol card, which had been connected with the business, and the phone. 

30. Each of the parties was challenged about some of their expenses.  One might whittle away a dollar here and a dollar there but not to much effect.  What the court has is a family living a comfortable middle class life, who, after separation, must run two households, and are struggling to maintain the standard of living they enjoyed before.  I do not think much will be gained at this time by considering whether the wife should be buying a motor mower and mowing the lawn or whether the husband should be handwashing his shirts rather than sending them off to the laundry for $15 a week.  The parties have co-operated in supporting the children and both have tried not to let their financial problems impact too heavily on the children.

31. The separation is only a year old.  Some people, at that point, are moving on.  Sometimes that is not the case.  Observing the parties in the witness box, one sees a deal of sadness, grief and frustration, and some anger. 

32. In terms of the relevant law, I need say nothing more than that each of the parties to a marriage has an obligation to support the other party to the extent the other party is not able to support him or herself. The court is required to make such order as is proper. It is required to take into account the matters set out in s.75(2) of the Family Law Act 1975. There is no fixed or absolute standard by which a court must decide whether a person can support him or herself adequately. It is not a question to be determined upon a subsistence level, and one of the matters to be taken into account is a standard of living that is appropriate.

33. In essence, the husband's case is that he has no capacity to pay. If that is right, the court would not move to look at s.75(2) factors.

34. The wife's case is the husband must have access to more income than that which he has disclosed to the court.  Were she to accept his expenses (which she does not concede) he could not be maintaining them on his own evidence.  There is no doubt that the wife does not have the capacity to support herself.  I have heard cross‑examination about her capacity to obtain additional employment, and her evidence of what she has done.  I am comfortable, on the evidence, of finding she does not have the capacity to adequately support herself.

35. It is clear that the husband was frustrated by what he saw as harping on his failure to produce documents but this is not a minor matter, particularly when a party deals through corporate entities.  Proper financial disclosure is essential;  the court cannot simply look at asserted weekly drawings and make assumptions about income and financial resources.  

36. It is put by the wife that bank records for the period 15 October 2007 and 29 January 2008 show that the husband regularly withdrew $3,000 a week.  His evidence is that that included staff wages, lease payments and other expenses.  There is nothing corroborative of that before the court.  He said only about $1,300 a week came to him.  I note that in his form 13 he concedes another $95 per week, reporting an income from those sources of $1,395 per week.

37. As found, the husband’s figures reveal a significant discrepancy between admitted income and asserted expenses.  His own evidence suggests he has had access to additional funds and he has failed to produce essential financial records. 

38. The bank statements he produced do not help the court very much.  In the brief time available, it is not possible to determine what expenditure is personal.  For example, the G Pty Ltd account statement includes expenditure which is clearly personal, as well as business expenditure.  There is reference to L’s game money, to Visa, to at least two energy companies.  One or both might be for business premises; it is possible one is for residential premises.  The personal account statement includes items marked as wages.  Both the business accounts which have C & G in the name (one being the partnership account before it was abandoned, and the other the new company account) are substantially records of Internet banking transactions.  Without a lot more evidence it is just not possible for the court to assess those transactions.

39. I am satisfied spousal maintenance should be paid.  The husband did concede it is not his application.  I accept, through his counsel, that he would, in the short term, be prepared to continue to make the mortgage payments on the home.  I propose to require those payments to be made, and they will be by way of spousal maintenance.  I note Dessau J’s injunction, which was to operate until further order, provided for the husband to be fully responsible for mortgage payments on the M property and the car, but her Honour did not characterise the payments in any way. 

1. The wife sought a cash sum of $500 per week.  The court must disregard her means‑tested pension.  I am not satisfied the husband has, on the material before me, the capacity to pay $500 per week.  For someone in the wife's position, and I have found that she has a significant shortfall, anything short of $500 will be seen as a small amount.  Nevertheless, I am satisfied that it is appropriate for the court to make an order that she receive $150 per week by way of spousal maintenance, in addition to the mortgage payments, rates, taxes and insurances on the former matrimonial home, lease repayments, registration, insurance and maintenance of the Toyota and that part of the HBA cover maintained by the husband which relates to her, which I assess as one quarter.

2. I am not satisfied I should make orders requiring payment of  the mortgage over the investment property.  The parties are going to have to decide what happens to the property;  it may have to be sold.  However, I am concerned that the line of credit is secured over the former matrimonial home.  I am minded to make an order that, until further order, the husband continue to make payments due in respect of the line of credit, but they be characterised, in due course, by the trial judge. 

3. I will adjourn paragraph 4 of the interim application (relating to the $28,000) and the whole of the husband's interim response (that is, the application for the sale of the investment property) to a date to be fixed after the conciliation conference.  The reasons for judgment will be transcribed and a copy made available to the parties. 

I certify that the preceding
42 paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the           day of            2008.

…………………………………………
Associate.