H and H
[2002] FMCAfam 324
•3 October 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| H & H | [2002] FMCA fam324 |
| FAMILY LAW – spouse maintenance – not necessary to sell jewellery or painting- “drawings” different from “earnings” and “earning capacity” – reasonableness in the circumstances – fund to pay Wife’s valuation and accounting expenses. Family Law Act 1975, ss.72, 74 & 75 Bevan & Bevan (1995) FLC ¶92-600 |
| Applicant: | R A H |
| Respondent: | T L H |
| File No: | LNM2616 of 2002 |
| Delivered on: | 3rd October 2002 |
| Delivered at: | Hobart |
| Hearing Date: | 18th & 19th September 2002 |
| Judgment of: | Roberts FM |
REPRESENTATION
| Counsel for the Applicant: | Mr. Doolan |
| Solicitors for the Applicant: | Doolan & Brothers |
| Counsel for the Respondent: | Mr. McGuire |
| Solicitors for the Respondent: | McGrath & Co. |
ORDERS
That until further order the Husband T L H pay to the Wife R A H the sum of $250.00 per week by way of spouse maintenance such to commence within seven days of the date of these orders.
That in addition to the spouse maintenance referred to in Order No. (1) hereof, the Husband pay to the Wife within thirty days a further sum of $2,500.00 by way of interim lump sum spouse maintenance.
That until further order the Husband do keep the Harley-Davidson motorcycle in his possession or control in good order and condition and he be restrained from disposing of, or in any way encumbering or charging that motorcycle.
That the parties have liberty to apply generally in relation to these Orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
LNM2616 of 2002
| T L H |
Applicant
And
| R A H |
Respondent
REASONS FOR JUDGMENT
Background and applications
The Applicant, R A H (“the Wife”) and the Respondent, T L H (“the Husband”) were married on 18th November 1972. They separated after approximately twenty nine years, on 17th October 2001. The Wife is aged forty nine years and the Husband is aged fifty two years.
The parties have three adult children. One resides with the Husband at the former matrimonial home and I shall refer to her later in these Reasons.
On 12th August 2002 the Wife filed an Application seeking final orders for property settlement on the basis of a division of 65% in her favour and 35% in favour of the Husband. She also sought an order that the Husband pay her $250.00 per week spouse maintenance.
In that Application the Wife sought interim orders which were modified at the time of the interim hearing on 18th September 2002. In essence, she is seeking the following:
a)Interim spouse maintenance at the rate of $250.00 per week, backdated to the date of the Application (being 12th August 2002);
b)A payment to her of $2,500.00 “to fund the Wife’s valuation and accounting expenses”;
c)That a valuer nominated by her be permitted at all reasonable times to inspect the furniture and chattels in the possession or control of the Husband including those at two specific addresses;
d)A payment by the Husband within seven days of the sum of $4,090.64 owed by her to the Australian Taxation Office;
e)A release to her or her nominee of a 1995 Harley-Davidson motorcycle within forty eight hours (and pending the release of that motorcycle the Husband keep it safe and secure and not in anyway deal with it);
f)The ability to sell that motorcycle for $13,000.00 if the Husband defaults by a period of more than seven days in relation to any of the payments referred to in (a), (b) and (d) above;
g)The ability to sell an investment property in her sole name on the basis that she invests the proceeds in trust for the parties.
The Husband filed a Response on 17th September 2002 seeking final orders by way of property settlement on the basis of a division of 45% to the Wife and 55% to him. He also sought an interim order that a valuer agreed to by the parties be permitted to inspect the furniture and chattels in possession or control of both parties.
Both parties are seeking orders for costs.
The hearing time had been initially estimated by counsel to take approximately ninety minutes. In fact, the hearing spread over two separate half days and the evidence dealt with primarily with the Wife’s application for spouse maintenance.
The Law
The law in relation to spouse maintenance is governed primarily by Sections 72, 74 and 75 of the Family Law Act 1975 (“the Act”). The inter-relationship of those sections has been the subject of much discussion in many cases, but it seems clear from Bevan & Bevan (1995) FLC ¶92-600 that to make an award of maintenance requires the following:
a)a threshold finding under Section 72;
b)consideration of Sections 74 and Section 75(2);
c)no fettering principle that a pre-separation standard of living must be automatically awarded where the Respondent’s means permit; and
d)discretion exercised in accordance with the provisions of Section 74, with “reasonableness in the circumstances” as the guiding principle.
I shall not set out those Sections in full in these Reasons, but I have had regard to them in coming to my decision.
Evidence and findings
The Husband is a physiotherapist who runs his business from premises in two towns on the North West Coast of Tasmania.
The Wife is unemployed and is in receipt of a NewStart Allowance.
The Wife’s evidence is that she is unemployed and has not worked in any capacity since 1991. She has no qualifications and, being a forty nine year old female without qualifications on the North West Coast of Tasmania, she is not optimistic of obtaining either part-time or full-time employment in the near future.
At this point it should be noted that counsel for the Husband made a submission at the conclusion of the Wife’s evidence that the Husband had no case to answer because the Wife had not satisfied the threshold test in Section 72. Inter alia, he submitted that the Wife had not satisfied the Court that she was not able to be employed or that she did not have the resources to support herself. After argument, I rejected that submission and I generally took judicial notice of the difficulties that a forty nine year old woman with no qualifications would have finding employment, compounded by the high unemployment rate in Tasmania, and in particular on the North West Coast of Tasmania. Further, I found that the Wife did not have assets that she should sell to meet her needs.
Although the Wife appears to have an interest in her late father’s Estate and she could receive approximately $50,000.00, I accepted the Wife’s evidence that a distribution is not imminent because one of the beneficiaries is disputing the distribution. It is therefore clear that she satisfies the threshold test in Section 72.
The Wife’s Financial Statement (Form 17) shows that she has expenses of $295.00 per week. She comments further that she is living frugally and in recent times has not been able to afford some expenses in relation to food, household supplies and car expenses. She says that she is living on the bread line. Because her only source of income is a NewStart Allowance of $218.00 per week, that is hardly surprising.
No serious challenge was made in relation to the Wife’s expenditure other than in relation to $20.00 per week that she claims for medical and dental and education expenses. As a consequence, I have no hesitation in finding that the Wife’s reasonable weekly expenditure is in the vicinity of $275.00 per week.
The Wife’s NewStart Allowance is excluded from my consideration by virtue of subsection (3) of Section 75. Consequently, the Wife has needs of $275.00 per week and, for the purposes of these proceedings, she has no ability to meet those needs.
An argument was put to me that the Wife should use some of her resources, including jewellery and a painting to meet her maintenance needs. I reject that argument. The only reasonable evidence that I have of the value of the chattels taken by the Wife is to be found in a valuation report attached to her affidavit. The painting that was referred to is worth only $750.00 and the jewellery is worth only $1,210.00. In my view, it would not be within the principles set out in Bevan (supra) to expect the Wife to sell any of those assets to fund her own maintenance.
As stated above the Husband is a physiotherapist. He is suffering from a medical condition known as “Ankylosing Spondylitis”. However, it is clear from his own evidence that while that condition causes him some pain and difficulty in mobility, he is able to continue his employment as a physiotherapist.
The Husband claims to be earning only $375.00 per week from his physiotherapy practice. While he is also receiving the rent from the investment property that is registered solely in the Wife's name, it is also clear that he is meeting the expenditure in relation to that property, which slightly exceeds the rent received.
I have some significant difficulty accepting that as a physiotherapist, the Husband earns only $375.00 per week.
The sum of $375.00 per week may well be all that the Husband is drawing from his business to meet his personal expenditure. However, it is a mistake to confuse the difference between “drawings” and either “earnings” or “earning capacity”.
It was put to me by counsel for the Wife that the Husband’s lifestyle has not changed since separation. It is clear that he is able to afford to do those things that he wishes to do, and I have no doubt that he will continue to be able to do so in the future. A good example of a lifestyle expense still being met by the Husband is his renewal of his membership of the Qantas Club.
Prior to the parties’ separation, the physiotherapy business allocated an income to the Wife and during the financial year ended 30th June 2001, that was $18,900.00. In addition, during that financial year the business also allocated a bonus to her of $17,042.00. That is a total of nearly $36,000.00.
During the same year, the business also allocated a bonus of $17,042.00 to the Husband as well as a business income of $25,297.00, making a total of $42,339.00.
The Husband sought to explain that particular year as being abnormal due to some form of roll-over of income for tax purposes into that year because of a change in the structure of the business from a corporate structure to that of a sole trader. Frankly, I do not accept the Husband’s explanation.
It seems clear to me that during the financial year ended 30th June 2001, the business was able to produce a total income in excess of $75,000.00 and that was split between the parties for tax purposes. While I do not have any evidence of what the business is now earning (other than the Husband’s estimate of $375.00 per week, which I reject), I am satisfied that the business has the potential of earning at least $1,000.00 per week (i.e. $52,000.00 per annum).
The Husband claims to have fixed expenses of $294.00 per week and general living costs of $391.00 per week, making a total of $685.00 per week. I am quite sure that his income tax liability will be higher than that shown in his Financial Statement. However, I have no hesitation in coming to the conclusion that he has the ability to pay the Wife the sum of $250.00 per week that she is seeking by way of interim periodic spouse maintenance. That is less than her needs as referred to in paragraph 16 above.
The Husband claims to be supporting an adult daughter of the parties and her child. While that is laudable, it is clear that his legal liability to maintain his wife comes before his moral duty or responsibility to support an adult child or a grandchild.
In relation to the Order that the Wife is seeking for $2,500.00 to enable her to pay past valuation costs and future valuation and accounting costs, it seems to me to be clear that the Court has the power to make such an award under a number of sections of the Act. In short, the power appears to exist under the maintenance provisions, the costs provisions and the interim property settlement provisions of the Act.
In this regard I refer to the judgment of Gaudron J in Re JJT & Ors; ex parte Victoria Legal Aid (1998) FLC ¶92-812, where she said:
The power conferred by s 117(2) of the Family Law Act 1975 (Cth) (“the Act”) is a power to “make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.” That power is not simply a power to make an order for costs. Were it so, it would only authorise orders to indemnify for “costs actually incurred in the conduct of litigation”. However, a power to make an “order as to costs” is a broader power. And when regard is had to the consideration that s 117(2) expressly authorises interlocutory orders, that sub-section must, in my view, be construed as authorising orders requiring a party to proceedings under the Act to provide another party with funds to conduct those proceedings.
Doubtless, the power to award maintenance under s 74 of the Act also extends to orders that a party to the marriage provide the other with funds to conduct proceedings under the Act. I mention this matter because, as between parties to a marriage who are also parties to litigation, an order to provide funds for the conduct of litigation as to their mutual rights and obligations is as aptly described as a maintenance order as an “order as to costs”.
In relation to the Court’s power to make such orders, see also Wilson (1989) FLC ¶92-033 and Zschokke (1996) FLC ¶92-693.
When an applicant is seeking such an order, it is usual to set out the need for the lump sum in more detail than the Wife has provided in this case. In this regard, the application would usually also be supported by an affidavit from the Wife’s legal adviser or accountant setting out the anticipated costs. However, in this case the Wife is seeking a rather small amount to fund her valuation and accounting expenses (i.e. $2,500.00), and I can easily come to the conclusion that such a sum is reasonable. Her unchallenged evidence is that she has already incurred valuation expenses in the sum of $352.00 that she cannot pay, and I have no hesitation in accepting her evidence that she cannot afford to pay for further valuation expenses or for accounting advice.
It is also quite clear from the Wife’s evidence that she does not currently have the facilities to fund that herself. She had a capital sum of approximately $6,000.00 when she separated but she has spent that, in the main, by paying out the lease balance on a Toyota motor vehicle and purchasing a more modestly priced vehicle. The Husband has criticised her for selling that Toyota at a price that was too cheap. While that may or may not become an issue in relation to the parties’ eventual property entitlements, I note that the sale of the Toyota freed the Husband from an obligation to pay lease payments in the sum of $550.00 per month.
I find that the Husband has demonstrated a capacity to find funds when he needs to. This is shown quite clearly by his ability to pay $6,364.00 off the Wife’s tax liability on 19th March 2002 and his ability to pay the Wife’s current income tax liability of $4,094.64. I accept the Husband’s statement that he was going to pay that latter sum on the day after the hearing of this matter. Consequently, I do not need to make an order in relation to that.
The husband was also able to find the capital to buy the parties’ daughter a car.
Given that the Husband has a capacity to raise funds from time to time, it is my intention to give him a period of thirty days in which to raise the sum of $2,500.00 to enable the Wife to fund her valuation and accounting costs. While it appears from Wilson (supra) that the Full Court of the Family Court decided that a lump sum payment should not be characterised as maintenance, that case involved a payment of $100,000.00 (of which $72,000.00 related to legal costs). It therefore seems to me that this case can quite easily be distinguished on quantum alone. Further Wilson was decided before Gaudron J made her comments in the High Court in Re JJT & Ors; ex parte Victoria Legal Aid that I have quoted above.
I am therefore of the view that it is appropriate to treat the payment of $2,500.00 as an interim lump sum spouse maintenance payment.
Because the parties’ financial circumstances could change rapidly (e.g. as a result of the sale of the investment property or the receipt by the Wife of benefits from her late father’s Estate), and because the Orders that I am making are essentially interim, I will be giving the parties liberty to apply in relation to the matter generally.
I now turn to the order sought by the Wife in relation to the Harley-Davidson motorcycle.
The Husband has a Harley-Davidson motorcycle in his possession which, according to his latest valuation, is worth $15,000.00. The Wife’s evidence is that it could be sold for more than that.
The orders that the Wife seeks in relation to that motorcycle are clearly designed to protect the Wife in relation to the possibility that the Husband will not pay the interim periodic maintenance, interim lump sum maintenance or her tax.
Of the assets of the parties as detailed in their affidavits and Financial Statements, the Harley-Davidson motorcycle is clearly the single valuable item that can be easily disposed of. In addition, it does seem that it is somewhat surplus to the Husband’s needs. I accept the Wife’s evidence that he used it infrequently and, in my view, that appears to fit with the Husband’s own evidence about how his medical condition restricts his mobility.
However, I will be granting liberty to apply so the only order that I need to make at this time in relation to the Harley-Davidson is that the Husband keep it in good order and condition and not deal with it in any way.
Both parties are seeking interim orders in relation to valuation of property. I was not addressed by either counsel in relation to those orders, so I shall not make any orders of that nature. However, it is clear that the parties should cooperate with each other in relation to the valuation of the assets under their control if they wish to avoid unnecessary proceedings.
The Wife also seeks an order to enable her to sell the investment property that is registered in her sole name. In his evidence in chief, the Husband clearly indicated that he believed that property to be half his property. It was clear to me that he led the Wife to believe that he was lodging a caveat over the title. However, by the time he was cross-examined, he had clearly thought better of that attitude and he is now not putting any hurdle in the way of the Wife selling that property. After all, it is in the Husband’s interests to have that property sold because the outgoings exceed the income. I therefore do not think there is a need to make any orders about that property at this time.
In the circumstances, I shall make orders to take account of the matters that I have set out above.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Roberts FM
Associate:
Date: 3rd October 2002
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