HARLAND & HARLAND

[2015] FamCA 1014

FAMILY COURT OF AUSTRALIA

HARLAND & HARLAND [2015] FamCA 1014

FAMILY LAW – PROPERTY SETTLEMENT – SPOUSAL MAINTENANCE – Interlocutory Application – Where whether a previous order providing for the husband to make a weekly payment to the wife should be characterised as spousal maintenance and supplemented by any additional periodic and/or lump sum payments by the husband to the wife – Where the wife has no need for extra periodic maintenance and the husband has no capacity to pay more spousal maintenance – Where whether the husband should be ordered to pay the wife a further lump sum to fund her legal representation – Where there is no basis upon which to make an order compelling the husband to pay the wife a lump sum, either by interim property settlement or costs –  Applications dismissed –  Where the parties were in agreement that orders should be made granting the wife sole and exclusive use of the former matrimonial home – Orders made accordingly

APPLICANT: Ms Harland

RESPONDENT: Mr Harland

FILE NUMBER: SYC 4699 of 2015

DATE DELIVERED: 5 November 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Austin J

HEARING DATE: 4 & 5 November 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton SC

SOLICITOR FOR THE APPLICANT: Mills Oakley Lawyers

COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC &
Ms Petrie

SOLICITOR FOR THE RESPONDENT: E & A Lawyers

Orders

1. As between the parties, the wife shall have sole and exclusive use and occupation of the real property situated at and known as B Street, Suburb C, New South Wales.

2. The parties’ costs of this hearing are reserved.

3. Otherwise:

   (a)The Amended Application in a Case filed 2 November 2015 is dismissed.

   (b)The Response to an Application in a Case filed 17 September 2015 is   dismissed.

   (c)Any and all outstanding applications for interim orders are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harland & Harland has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC 4699 of 2015

Ms Harland

Applicant

And

Mr Harland

Respondent

EX TEMPORE

REASONS FOR JUDGMENT  

1. These proceedings concern a dispute between the applicant wife and respondent husband over orders under Part VIII of the Family Law Act1975 (Cth) (“the Act”).

2. They have a child who is nearly three years of age. The parties separated at some point between January and June 2015 but it is impossible in these interlocutory proceedings to determine precisely when. The mother alleges their final separation occurred in January 2015, while the father alleges the separation did not occur until June 2015. Regardless, the proceedings were commenced by the wife on 13 July 2015, at which time she sought relief under only Part VIII of the Act. The parties engaged in consensual arrangements about the care of their child.

3. The current interim dispute before the Court relates to the parties’ disagreement over property and maintenance orders. Their dispute was partly, but not completely, determined by Watts J on 21 September 2015. On that date, with the parties’ consent, Watts J made orders which essentially bound the husband not to restructure the financial encumbrance over the former matrimonial home at Suburb C (at least without adequate notice the wife), required the husband to pay to the wife the sum of $1,000 per week, required the husband to maintain private health insurance for the family, required the husband to furnish the wife with a retail store card with a credit limit of $150 per week, required the husband to pay for the child’s day-care fees and swimming lessons, and otherwise required the parties to give comprehensive disclosure about particular aspects of their financial affairs.

4. Significantly, when those orders were made, Watts J made the following notation:

   I note that the orders I have made do not resolve all interim issues and the parties are seeking an opportunity on a further date to ventilate those issues.  It is estimated that the hearing time would take less than two hours.  The matter is referred to the list clerk for allocation of a hearing date.

5. The residue of the parties’ dispute was listed for hearing before me yesterday (Wednesday, 4 November 2015) but, by reason of lack of priority, could not be reached until late in the afternoon and was therefore adjourned part-heard for continuation and conclusion today. 

6. The wife moved on her Amended Application in a Case, filed belatedly on 2 November 2015. 

7. The husband moved on his Response to an Application in a Case, filed on 17 September 2015. 

8. Essentially, the residual dispute between the parties was confined to two issues. The first was whether the weekly payment of $1,000 made by the husband to the wife pursuant to the orders made on 21 September 2015 should be characterised as spousal maintenance (even though the presiding judge then expressly abstained from such characterisation at the request of the parties) and supplemented by any additional payment by the husband to the wife (the wife wanted an extra $400 per week, together with a lump sum payment of $50,000). The second was whether the husband should be ordered to pay to the wife an additional lump sum of $100,000 to fund her engagement of legal representation in this litigation, either in the guise of interim property settlement or costs orders. 

9. The parties were in agreement that the orders made on 21 September 2015 should be supplemented by further orders that granted sole and exclusive use of the former matrimonial home to the wife.

Evidence

1. The wife relied upon:

   a)Her financial statement filed on 25 August 2015;

   b)Her affidavit filed on 2 November 2015; and

   c)A series of documents which she tendered (marked Exhibits M1-M4, inclusive).

2. The husband relied upon:

   a)His financial statement filed on 17 September 2015;

   b)His affidavit filed on 17 September 2015;

   c)His affidavit filed belatedly on 4 November 2015;

   d)The affidavit of Mr D filed on 18 September 2015; and

   e)A document he tendered (marked Exhibit F1).

Spousal Maintenance

1. The wife deposed to her financial need in her financial statement. I accept the submission made by the husband that her needs were overstated in the financial statement. The husband contended for numerous deductions from, and excisions of, amounts claimed by the wife in the table at paragraph 60 of the financial statement. Without individually addressing the deductions and deletions for which the husband advocated, which will be apparent from the transcript of the hearing, a tabulation of the residual, reasonable expenses of the wife totals approximately $980 per week which, coincidentally, is almost identical to the weekly needs to which the husband deposed at paragraph 60 of his own financial statement filed on 17 September 2015.

2. Nonetheless, that is not the totality of the wife’s needs. I accept that after filing her financial statement on 25 August 2015 she needed to obtain a new vehicle to replace her former vehicle, which was unroadworthy.  Her evidence was she procured that new vehicle with a loan, which she repays at the rate of $120 per week. The financial statement of the wife also reveals that she has a debt of $15,000 in respect of credit card expenditure.  It is impossible to be precise, because she does not include it within her financial statement, but I expect the debit interest she accrues on that unpaid credit advance would approximate $3,000 per annum, which itself approximates about $60 per week.

3. Consequently, the extra weekly expenses incurred by the wife over and above those tabulated at paragraph 60 of her financial statement amount to about $180 and, added to the more reasonable sum of $980 per week derived from the schedule at paragraph 60 of the financial statement, I calculate her total weekly need at approximately $1,160. 

4. It is apparent the wife’s current income exceeds her reasonable needs. Her income is received from several sources.

5. Pursuant to Order 3 made by Watts J on 21 September 2015, the husband pays her $1,000 per week.

6. Pursuant to Order 4(b) made by Watts J on 21 September 2015, the husband also provides her with a G Pty Ltd store card, the value of which is $150 per week.

7. In addition, the wife earns her own income. In her financial statement she declared at paragraph 9 that she receives no income, but that is not correct. She is a talented designer and runs her own business as a sole trader. Evidence adduced by the husband in his most recent affidavit indicates that invoices rendered by the wife for work done by her since December 2014 results in a continuing income for her. Senior counsel who appeared for the wife indicated his disagreement with some of the calculations performed by the husband in his affidavit about the totality of the income earned by the wife and I accept that there may be room for disagreement about the calculation of her income and its average across any given period. However, there is a very reliable source for her current income. In the affidavit recently filed by the husband on

   
   

   4 November 2015 (at page 165) the husband annexed the copy of a written representation made by Mr E who is the accountant retained by the wife for her business. That fact is not the subject of controversy. The document is a representation by the accountant that the wife’s design business should derive a net profit in the vicinity of $35,000 for the 2016 year, which I impute to mean the financial year commenced 1 July 2015 and ended 30 June 2016. 

8. That representation was prepared by the wife’s accountant to support her application for the car loan which she obtained to enable her purchase of her new car. The accountant could only conceivably have written that letter on the instructions of the wife and she used that document to support her application for finance. Even though she did not prepare the document and sign it, she endorsed the accuracy of the contents by its use in that manner. In effect, it is an admission of the wife. It is a very strong basis for inference that the wife believes she will earn $35,000 gross in the current financial year. That income would, of course, be the subject of taxation in the hands of the wife as a sole trader. I impute income of $35,000 gross would result in taxation of about $10,000, meaning her net annual income is estimated at $25,000, which is near enough to $500 per week. 

9. When added to the amounts already paid to the wife by the husband, her total weekly income approximates $1,650 and exceeds her reasonable needs by something in the vicinity of $490 per week. I conclude the wife has no need for periodic maintenance over and above the amounts she already receives.

10. The wife also sought her payment of lump sum maintenance by the husband. In submissions it was asserted the lump sum was necessary to cover two liabilities either in existence or likely to arise in her life. The first was the credit card debt she has of some $15,000 and the other was described as “the vicissitudes of life”.

11. I have already taken into account the accrual of debit interest on her credit card liability in calculating her periodic needs on a weekly basis. There is consequently no foundation to order the husband to pay out the principal of her credit card debt, particularly when there is some disagreement about the reasonableness of some of her expenditure on that credit card.

12. There is no basis for ordering the husband’s payment of a lump sum to the wife for such a vague reason as “vicissitudes”. Senior counsel for the wife accepted in submissions that such a proposal was entirely arbitrary.

13. No other reason was advanced for the payment to her of lump sum maintenance. I conclude that there is no basis upon which the wife has an entitlement to payment from the husband of any further amounts which might be characterised as spousal maintenance.

14. Even if, contrary to my findings, the wife did have an existing need for maintenance, she has not sufficiently demonstrated the husband’s capacity to pay such maintenance to her. The evidence is a little uncertain about the precise nature of the husband’s income, but the best evidence is the quantification of his income in his employment contract, which is an annexure to an affidavit filed in the proceedings. The husband earns about $334,000 per annum gross, which is supplemented by a superannuation payment of about $18,000 met by his employer, and his provision of an expense-free motor vehicle. Allowing for the tax he would likely incur on a gross income of about $334,000 per annum, his net income could not be much more than about $240,000 per annum, which equates to about $20,000 per month.

15. The husband deposed to his current expenditure on fixed liabilities which are paid to favour only the wife and child. That calculation is found at paragraph 54 of his most recent affidavit and includes some $10,200 per month for mortgage repayments on the former matrimonial home which is now, and will in the foreseeable future, be exclusively inhabited by the wife, the $1,000 per week the husband pays to the wife pursuant to the orders made on

    
    

    21 September 2015, the amounts he pays to or for the benefit of the parties’ child pursuant to child support assessment and the orders made on 21 September 2015, the amount he pays for the family’s private health insurance pursuant to the orders made on 21 September 2015, and the strata fees and other rates that he pays as and when they fall due in respect of the former matrimonial home inhabited by the wife. In round figures, those liabilities compute to about $18,500 to $19,000 per month.

16. It will be remembered that the husband deposed in his financial statement to his living expenses being some $980 per week. I accept that to be a reasonable sum. No challenge was made about its reasonableness by the wife and, for the reasons to which I have already adverted, I calculate the wife’s own weekly needs at almost an identical amount. If the $980 of weekly living expenses incurred by the husband is added to his monthly commitment of not less than $18,500 for the fixed expenses I have already mentioned, the father’s expenses exceed the $20,000 per month net income I have calculated he receives. That calculation does not even incorporate any cost for separate accommodation by the husband. He is currently living with his own parents, which is probably not a situation that will prevail indefinitely. If and when the husband seeks alternate accommodation away from his parents, his accommodation costs will only exacerbate the shortfall between his income and reasonable expenditure.  On that basis, there is no scope for any orders for further spousal maintenance.

Litigation Funding

1. There are some incontrovertible facts that need recitation at the outset. 

2. Save in one respect, the husband has no legal or equitable interest in any corporate or trust entity associated with the valuable corporate network controlled by his family of origin.

3. The one exception is the single share held by each party in the company called Harland Nominees Pty Ltd, which corporation was established to be the corporate trustee of a family trust constituted by the parties. That intention was not realised because the parties separated before the trust was established.  Accordingly, Harland Nominees Pty Ltd is a corporate shell which has no value and the parties’ equal shareholding in it has no value.

4. The shareholding the husband currently holds or formerly held in the company F Pty Ltd is conceded to be worthless, since that entity ceased trading long ago.

5. The single appointor share that the husband has in ACN ... Pty Ltd is or was held legally by the husband, but is or was beneficially held and fully paid by his own father. Consequently, the husband has no apparent equitable interest in that company either. 

6. The upshot is that the only asset of significant value held by the parties is the former matrimonial home at Suburb C, which is indeed a valuable property.  The wife considers it to be worth $4 million and the husband considers it is worth $3.2 million. Regardless, it is very valuable. It is encumbered presently by a mortgage, the payout value of which is approximately $1.7 million.

7. The parties have agreed that the wife may continue living in that property for the foreseeable future. That is her wish and the husband acquiesced. It is the husband’s stated proposal to eventually maintain his individual legal and equitable interest in that property, come the time of final property settlement orders. Because he ultimately wants to retain the property and the wife wants to live in it for the duration of this litigation, it is not feasible for the property to now be sold in order to sate the wife’s desire for funds to pay her legal representatives.

8. The wife expected the husband should refinance the mortgage over the former matrimonial home to free up excess equity for payment to her, which she may then use to pay her lawyers in this litigation. I do not accept that should happen either.

9. To prosecute that proposal, the wife relied upon the documents that were tendered in evidence (being Exhibits M1 to M4 inclusive). Those documents reveal the parties approached a mortgage broker some months ago with a view to refinancing the current loan over the former matrimonial home. As I have said, the loan balance currently stands at about $1.7 million and the monthly repayments approximate $10,200. Those repayments are quantified on a principal+interest basis. It was contemplated that the property could be refinanced to discharge the current loan of $1.7 million and raise an extra $500,000 for a variety of reasons, which included building improvements to the property, repairs to the property, and perhaps payment of monies to the wife. It was envisaged the loan could be converted from a principal+interest loan to an interest-only loan, the result of which would mean the monthly repayments would be reduced to approximately $8,000, which would be about $2,200 less than the current monthly payments made by the husband.

10. It is clear the husband was predominantly responsible for interaction with the mortgage broker, but it is also clear the proposal mooted in June 2015 did not proceed. Exhibit F1 is a document signed by the wife, indicating her complicity in the planned refinance arrangement over the former matrimonial home. The wife deposed to having only signed that document under duress exerted upon her by the husband. It is unnecessary to make any factual determination as to whether her execution of that document was free and voluntary or subject to coercion. More significantly, it was conceded the mother deposed in a recent affidavit (not read in these proceedings) to her insistence the father desist from proceeding with the previously mooted refinance application. Her position now is directly inconsistent. She now expects that he do proceed with the refinance of the mortgage to free up some further funds for payment to her. 

11. I accept the submission put on behalf of the husband that there is no basis upon which to force the husband to restructure and extend his liabilities to give the wife money so she may pay her lawyers. No such order could bind any lending institution to approve the husband’s refinance application in any event, so the proposal was but a vain hope.

12. In my view, it would be quite improper to alternatively make an unconditional order for the husband to make a lump sum payment of any amount to the wife in either the hope or expectation he might be able to procure such moneys from his wealthy parents.

13. I am not satisfied there is any basis upon which to make an order compelling the husband to pay the wife a lump sum, either by interim property settlement or costs.

1. As was contended on behalf of the husband, this is not a complicated case.  Given that the only asset of significant value is the former matrimonial home, the case is relatively straightforward. There is no need for costly investigation of alleged undisclosed property interests. The only cost over and above orthodox legal representation in what appears to be a straightforward case concerning a short marriage is the need to procure a single expert valuation of the former matrimonial home, given the parties’ disagreement about its value.

Conclusion

1. The wife’s claims for both periodic and lump sum financial accommodation over and above that ordered in her favour against the husband by Watts J on

   
   

   21 September 2015 are dismissed. There is no need to vary those orders, which will continue to operate. 

2. The order I now make, with the parties’ consent, for the wife’s exclusive occupation of the former matrimonial home will operate independently, but in supplementation of, the orders made on 21 September 2015. 

3. The costs of this hearing will be reserved, consistently with Order 7 made on 21 September 2015, reserving the parties’ costs of the hearing before Watts J. 

4. For those reasons I make the following orders.

I certify that the preceding forty-five (45) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Austin delivered on 5 November 2015.

Associate:

Date:  18 November 2015