HAWKINS & HAWKINS

FAMILY COURT OF AUSTRALIA

HAWKINS & HAWKINS

[2014] FamCA 1065

FAMILY LAW – PROPERTY – Interim – Where the wife seeks an order that with effect from 21 December 2012 she be paid 50 per cent of all monies received directly or indirectly by the husband or various entities owned or controlled by him – Where the wife seeks an order for the husband to pay her weekly interim spousal maintenance in the sum of $1,397 – Where the wife seeks interim relief or injunctions to have the husband restore funds to superannuation which she asserts have wrongfully been withdrawn – Where proceedings have been on foot in this Court for some 7 years – Where the husband and wife hold a one third interest in certain business entities – Where the wife instituted proceedings in the Supreme Court against the other interest holders in the business claiming that she had been subjected to oppressive conduct and sought orders for the winding up of the corporate entities – Where the wife’s Supreme Court claim was entirely unsuccessful and she was ordered to pay the costs of all nine defendants/respondents to it of the whole of those proceedings on an indemnity basis – Where following separation the wife, without reference to the husband, increased the parties’ mortgage loan account by $620,000, increasing the debit balance to $700,000 – Where there are issues as to how much of the $700,000 loan the wife has spent entirely for her own use, without any benefit to the husband, mainly on legal costs for her ill-fated and apparently misconceived Supreme Court proceedings

Corporations Act 2001 (Cth)

Family Law Act 1975 (Cth)

Bevan & Bevan (1995) FLC 92-600
Farr & Farr (1976) FLC 90-133
M & M (2006) 36 Fam LR 97
Nutting & Nutting (1978) FLC 90-410
Page & Page (1981) FLC 91-025
Polletti & Polletti (1990) 15 Fam LR 794
R v Dovey; Ex parte Ross (1979) 141 CLR 526
Saxena & Saxena (2006) FLC 93-268
Sieling & Sieling (1979) FLC 90-627
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Wilson & Wilson (1989) FLC 92-033
Wray & Wray (1981) FLC 91-059

APPLICANT:

Ms Hawkins

RESPONDENT:

Mr Hawkins

FILE NUMBER:

BRC

6561

2007

DATE DELIVERED:

2 December 2014

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Kent J

HEARING DATES:

24 March 2014; 28 April 2014; and 19 June 2014

REPRESENTATION

FOR THE APPLICANT:

Self Represented

SOLICITOR FOR THE RESPONDENT:

Wrightway Legal

Orders

It is ordered that:

The Wife’s application for an order that, with effect from 21 December 2012, 50 per cent of monies received directly or indirectly by the Husband, E Pty Ltd and The Hawkins Family Trust from the F Trust and the G Trust, be paid to the Wife is dismissed.
The Wife’s application for an order that the Husband pay spousal maintenance to her in the amount of $1,397 per week is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hawkins & Hawkins 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 BRISBANE

FILE NUMBER: BRC 6561 of 2007

Ms Hawkins

Applicant

And

Mr Hawkins

Respondent

REASONS FOR JUDGMENT

Ms Hawkins aged 51 years (“the wife”) and Mr Hawkins aged 66 years (“the husband”) have been engaged in substantive property settlement proceedings pursuant to s 79 of the Family Law Act 1975(Cth) (“the Act”) since, remarkably, 2007.
These proceedings are yet to reach the trial stage. The parties are yet to file their final affidavits for trial. Thus, disputed issues of fact relevant to a final determination have not necessarily all yet been identified, let alone be capable of resolution at this interim stage.
On that basis the following observations as to the background of the marriage and lengthy period of separation of the parties; and the issues arising within the proceedings are necessarily incomplete but, more importantly, cannot be treated as being concluded findings by the Court.
Rather, the following observations and discussion of issues is of a preliminary and tentative kind on the basis that findings of fact at a trial may ultimately be significantly at variance, or opposite, to them.
The purpose of making the following observations and the following discussions is simply to provide some context to the interim applications heard on 24 March; 28 April and 19 June 2014 respectively and the issues which exist in the substantive proceedings relevant to those issues.

Relevant history

The parties married in 1994. They separated in July 2006, now more than eight years ago. Their divorce was pronounced on 25 September 2007.
There are no children of the marriage. Part of the husband’s case would seem to be that the wife’s two children, aged about nine and ten respectively when the parties commenced their relationship, were financially supported by him during the marriage and until about 2004, a period of about ten (10) years. Both of those children are now adults.
The husband contends that when the parties’ relationship and cohabitation commenced he owned two unencumbered real properties worth about $600,000 (on his estimate) and he asserts that he had $500,000 in bank savings. He was then the managing director of the company H Pty Ltd. The husband was then earning, he says, a substantial salary of $30,000 per month.
The husband contends that whilst as at the commencement of the parties’ relationship the wife was operating her small importing business he says this was not a profitable business and soon after the parties’ cohabitation the wife ceased operating that business.
It seems uncontroversial that in 1994 the parties, and the wife’s children referred to, relocated as a family unit to the Country I where the husband pursued his employment as CEO of H Inc, receiving, he says, salary commensurate with his erstwhile Australian salary.
From mid-1995 until early 2000 the family lived in Country J where the husband was engaged in working for another company. Presumably as an example of the level of earnings he derived, the husband specifically deposes to earning $990,000 Canadian dollars, or the equivalent of AUD $1.1 million, in the 1997 year.
On the husband’s version, during the period whilst the family lived in Country I the parties bought and sold several homes. He estimates that the net retained proceeds of these transactions ultimately was between AUD $400,000 to AUD $500,000 when the parties returned to Australia in 2000.
The husband deposes to the parties purchasing a property at K Street, Suburb L, M Region in about March 2000 for $750,000. He deposes that the majority of this purchase was funded from the funds brought to Australia from Country J; together with a loan from the Commonwealth Bank of Australia.
The husband deposes that it was towards the end of 2000 that the K Street home was sold, he says, for approximately $1.1 million. He deposes that it was then that the property at B Street, Suburb C (“B Street”) was purchased for approximately $750,000.
The husband contends that only a small loan obtained from the Commonwealth Bank of Australia was required to fund this purchase given the funds already held. B Street was purchased in the sole name of the wife. It is a property that remains in that it continues to be held in the name of the wife although, in circumstances to be discussed further, the husband currently resides in it and meets mortgage payments.
The parties were living in the B Street home until their separation in July 2006.
The husband says that at the time of separation there was only about $80,000 owing on the mortgage over that property to the Commonwealth Bank of Australia.

F business – E

It seems that when the parties returned to Australia in 2000 they both secured work with an Country I firm called “N Pty Ltd” in assisting that firm in establishing its Australian operations.
In about 2002 the parties established their own business marketing products via their company O Pty Ltd (“O”). This company later changed its name to E Pty Ltd (“E”).
In 2003 O/E had been purchasing products from the manufacturing company P Pty Ltd (“P”), a company then owned and controlled by Mr and Ms Q (“the Qs”); and Mr R (“R”).
The parties together with the Qs and R apparently resolved to combine their respective business interests and efforts and together they formed a new company, F Pty Ltd (“F”).
F acquired the respective assets and businesses of each of O/E and P to put that plan into effect.
It appears that each of the Qs; R and the husband and wife (jointly) assumed a one-third interest in F although as regards the parties, the wife was the named shareholder. Mr Q was the named shareholder on behalf of the Qs and R held his shareholding in F via a company he owned or controlled.
It also seems that whatever were the actual directorships/shareholdings established, all five individuals involved were employed by F and participated in the organisation of F and all three family interests or groups (Hawkins, Q and R) each had equal one third beneficial ownership of F.
Whilst not entirely clear it seems that the wife had an administrative/financial management role in F whilst the husband directed himself to marketing, given his experience in that field.
F proved to be a successful business. It seems that over a period in 2005/2006 F underwent substantial restructuring over a lengthy period to address, primarily, taxation issues and asset protection.
As best as can be gleaned from the material and submissions of the parties, it appears that the restructure involved F selling its assets to a new company the same individuals owned and controlled via trusts, G Pty Ltd (“G”); and to then commence paying licence fees to G to use those assets to continue manufacturing and marketing products, as it had been doing. Thus whilst F remained the trading entity for the business, it no longer held any assets of substance. Conversely, G did not trade but held the assets.
In essence, and perhaps stated crudely and incompletely, such a restructure transferred the trading profits of F to G via the ongoing payment of licence fees by F to G.
The asset protection benefit was that the trading entity, F, no longer held any assets of substance.
The taxation advantage, apparently, was that G was structured to be the trustee of a unit trust. Each of the Qs; R and the Hawkinss held one third of the units in that unit trust via their respective trustee company of a family discretionary trust. In the case of these parties, the unit holder was E as trustee of the Hawkins Family Trust, a family discretionary trust controlled by the husband.
The restructure provided taxation advantages to the five individuals involved, as compared to the previous structure.
The wife ceased her active involvement in the business of F, in terms of working within the business, sometime between about mid-to late 2005 and certainly no later than July 2006, when she separated from the husband. It appears that it was in about mid-to late 2006 that the restructure referred to was finalised, even though it had commenced before that.
For his part, the husband seems to have parted company with the Qs and R and F, in terms of his continuing active involvement in working within F/G in late 2006, and he resigned as a director.

The wife’s Supreme Court proceedings

Following the parties’ separation the wife apparently made some attempts to negotiate with the other parties concerned a sale of any interest she might hold in the business interests referred to, but these attempts did not come to fruition.
It would seem that there was some contemporaneity between finalisation of the restructure of F in about mid-2006 and the breakdown of the parties’ marriage and their separation in July 2006.
The restructure referred to appears to have been the genesis for the wife (in 2007) instituting proceedings in the Supreme Court against all other parties, including the relevant corporate entities, and including the husband. The consequences of those proceedings and their outcome have assumed prominence in these proceedings.
In summary, in 2007 the wife launched proceedings against nine respondents/defendants including the Qs; R and the husband and the corporate entities referred to claiming that she had been subjected to oppressive conduct within the meaning of the relevant provisions of the Corporations Act 2001 (Cth). Relief sought by the wife included orders for the winding up of the corporate entities.
At least part of the basis of that claim was that the shareholding in F (which had actually been held in the name of the wife on behalf of the husband and wife) diminished in value when the assets of F were transferred to G as part of the restructure as earlier discussed.
As will be further discussed, the wife consumed very substantial funds in legal fees in pursuing this action. Whilst launched in 2007 it was not finalised for five (5) years, until the end of 2012, after a lengthy trial. That litigation was obviously pursued by the wife contrary to the husband’s wishes or desires given that he was one of the defendants/respondents named in the proceedings.
The wife’s Supreme Court claim was ultimately entirely unsuccessful. So unsuccessful was it ultimately found to be, or perhaps more accurately so lacking in merit were the claims made by the wife found to be, that the wife was ordered to pay the costs of all nine defendants/respondents to it (including the husband) of the whole of those proceedings on an indemnity basis.
There is evidence that the amount of the husband’s assessed indemnity costs exceeds $200,000. The husband says he spent more than $300,000 in defending the wife’s claims in the Supreme Court proceedings. It is unclear on the current state of the evidence as to how much in total the wife owes in costs to all of the defendants/respondents pursuant to the orders made in the Supreme Court; or how much she spent in total in pursuing that litigation.
In 2013 the wife pursued an unsuccessful appeal to the Court of Appeal of the Supreme Court from the decision at trial. That proceeding also resulted in the wife being ordered to pay the costs of all of the same respondents of the appeal proceeding.
The consequence or potential consequences of the wife’s Supreme Court proceedings is a topic re-visited later in these reasons given that it has relevance to both the interim financial orders sought by the wife and the substantive property proceedings.

Distributions from F/G

At an early interim stage of the wife’s Supreme Court proceedings (on 5 June 2007) an interim order was made in those proceedings requiring, in effect, that E’s proportion of distributions received from F/G be paid to the husband and wife in equal proportions.
There had in fact been a pre-existing agreement between the parties prior to that order being made that each party would receive half of the monthly payment received into E’s bank account. In an affidavit of the husband filed in the then Federal Magistrates Court on 29 May 2007 the husband deposed to this agreement as follows:
36.Regardless of what occurs at [F] the respondent and I receive approximately $30,000 per month paid into the bank account of [E Pty Ltd]. We agreed that each of us would take half of the amount deposited until our personal financial affairs are settled.
37.This agreement has been adhered to by the respondent and myself. Annexed and marked as “C1, C2” are copies of bank statements showing the deposits from [F] and showing the withdrawals by the respondent and myself.
One issue raised by the husband is that when the wife ceased to be an eligible beneficiary of the Hawkins Family Trust upon the parties’ divorce on 25 September 2007 one consequence was that the taxation burden upon the share of distributions the wife received thereafter fell to the husband.
The husband also agitates issues surrounding what the wife did, or failed to do, with the share of distributions she was receiving in terms of any enhancement of the parties’ asset position.
These are obviously issues that can only be properly analysed and considered at a final trial of these proceedings. However, the husband raises these issues in the context of the wife’s criticisms of the husband’s access to, and use of, funds including superannuation, discussed later in these reasons.
The wife has sought to place significant emphasis upon the husband’s deposition in his affidavit filed 29 May 2007 referred to as to the “agreement”; as well as upon the interim order of the Supreme Court of 5 June 2007 referred to whereby the parties were to each receive half of relevant distributions.
This emphasis appeared to be to support the proposition that until there is a final determination of these proceedings it ought follow that the agreement referred to be maintained. Alternatively it seemed that the wife sought to portray the husband’s conduct in her ceasing to receive the payments as being in breach of the “agreement” referred to; if not contrary also to the terms of the order.
However, as was contended by the husband or on his behalf in the hearings of these interim applications heard on 28 April 2014 and 19 June 2014 (the husband gave oral evidence under cross-examination at the earlier date):
a)The husband could not reasonably have known or anticipated, when he deposed to his May 2007 affidavit about “until our personal financial affairs are settled” that many years were to elapse without that finality being achieved. It still has not been achieved.
b)The husband could not reasonably have known or anticipated when he so deposed in May 2007 that the Supreme Court proceedings, then only recently instituted by the wife, would ensue thereafter for more than five years, involving a trial over many days, at substantial cost to the husband; and involve very substantial expenditure by the wife, sourced from borrowings upon the B Street property, as discussed further below.
c)The husband could not reasonably have known or anticipated at the time of swearing his affidavit that the level of distributions received by E would dramatically reduce. These distributions were, as the husband deposes, $30,000 per month in 2007 but as at the stage of these interim hearings had reduced to less than half that amount.
d)As to the Supreme Court interim order, that obviously ceased to operate upon the final determination and orders (in December 2012) of the wife’s Supreme Court proceedings in which her claims were dismissed and she was ordered to pay indemnity costs.
I interpolate here that an issue flagged by the husband is that the wife’s unmeritorious Supreme Court proceedings adversely impacted upon not only the previously existing goodwill between the parties, on the one hand, and the Qs and R on the other; but also on the business of F/G.
Whilst it is not entirely clear on the evidence at this stage, it seems that there were injunctions or like restraints imposed by interim orders of the Supreme Court in the course of those proceedings. It is understood that the husband may ultimately argue that the business of F/G was adversely affected by these such that the level of distributions made to E was adversely impacted. These are issues that can only be resolved at a trial.
In terms of these distributions the wife in fact received, (it seems on a tax free or tax reduced basis), one half of the distributions made to E from the business from 2007 until the final orders were made in the Supreme Court, more than five years later, in December 2012.
The wife submitted during the hearing on 24 March 2014 that she received approximately $15,000 per month in 2007; and $10,000 to $12,000 per month in ensuing years; gradually reducing to the $8,000 she received for the month of December 2012 (when the Supreme Court made final orders); and she has not received any distribution since those orders were made.

I can accept the husband’s evidence that the payments received by E have reduced from the $30,000 per month in 2007 to an average of about $13,600 per month in 2014 as that does not seem to be in issue.
The husband is, at age 66, now retired and his sole source of income is the $13,600 monthly distribution referred to. I accept the husband’s evidence that such distribution attracts a taxation impost of about $4,400 per month, so the after-tax amount is $9,200 per month.
From that sum the husband meets the monthly mortgage payment of about $4,200 on the B Street property leaving about $5,000 per month or about $1,250 per week.
Obviously enough the mortgage payment is a significant impost. It arises in circumstances now to be discussed.

B Street mortgage

The parties occupied the B Street property, owned in the name of the wife, as at the time of their separation. The husband has continued to occupy that property since. I accept his evidence that as at separation the mortgage debt on the B Street property stood at a debit balance of only about $80,000.
On or about 20 April 2007 the wife, without any reference to the husband and thus without his knowledge or consent, negotiated a new loan secured by mortgage on the B Street property in the amount of $700,000 and the wife received the proceeds of that loan.
A striking feature of the wife’s presentation of her case throughout these proceedings is that whilst she urges scrutiny of the husband’s conduct and his use of funds over the, now, eight year post-separation period; she seems to have a curious capacity to dismiss or minimise her own conduct in respect of this unilateral conduct on her part.
One obvious effect of the wife’s conduct is that interest on an additional mortgage loan of about, $620,000 (being the difference between the $700,000 loan and what was then owing) has now been incurred over a period of more than seven (7) years, since April 2007. The current mortgage debt balance, taken from the wife’s financial statement filed in March 2014, is in the order of about $720,000. For illustrative purposes only, if an average interest rate of, say, 7 per cent is applied then interest alone on that difference over seven (7) years would be $300,000.
The interest burden aside, there are issues as between the parties as to how much of the $700,000 loan the wife initially obtained has she spent entirely for her own use, without any benefit to the husband, mainly on legal costs for her ill-fated and apparently misconceived Supreme Court proceedings.
On 29 May 2007, after discovering the wife’s unilateral conduct, the husband filed an urgent application in the then Federal Magistrates Court to injunct the wife’s access to the loan funds. That application was heard by a Federal Magistrate on 5 June 2007 at which time interim orders were made pursuant to minutes of consent. Order 4 of those orders provided for the wife to pay the mortgage over the B Street property.
In accordance with the order of 5 June 2007 the wife paid the mortgage payments on the B Street property mortgage. Of course these were in a very significantly increased amount because of the debt incurred by the wife unilaterally; and the wife had the capacity to make the payments from the loan funds she had obtained; as well as from the share of distributions from E she was then receiving, as earlier discussed.
As will be discussed, the wife continued to meet these mortgage payments until she ceased paying them in about July 2013. Whilst the wife seemingly sought to emphasise in these proceedings that her meeting the mortgage payments on B Street over that period was a matter of her conserving marital property; the fact is that the mortgage debt of in excess of $700,000 was created by the wife’s unilateral conduct; and she met the payments from the sources referred to.
As at July 2013 the wife ceased making payments on the basis that she did not have the funds to do so. On the first return date of the interim application on 24 March 2014 the wife sought to link the order for her to make the payments to the fact that she was receiving 50 per cent of the distributions from E. For his part the husband contended that the interim order for the wife to pay the mortgage was unrelated to any such distributions. On his case the reason the parties agreed to the order for the wife to pay the mortgage repayments each month was due to the wife obtaining the $700,000 loan without the husband’s knowledge or consent.
In the event, on 24 March 2014 the parties agreed to an interim order that order 4 of the orders of the then Federal Magistrates Court referred to dated 5 June 2007 be discharged. A notation appears on the orders of 24 March 2014 to the effect that pending further order, the husband pay the monthly mortgage payments for the B Street property.

Wife’s use of the $700,000 loan

Admitted and marked as Exhibit 1 at the mention of the wife’s application on 24 March 2014 is the wife’s outline of submissions. At paragraph 49 and also tab 49 of those submissions the wife outlines her case as to how she has applied the $700,000 in loan funds. In particular, in June 2007 the wife transferred $500,000 to an interest bearing deposit account with McCullough Robertson pursuant to her costs agreement with that firm with respect to her Supreme Court proceedings.
Pursuant to order 5 of the 5 June 2007 consent orders the parties agreed that from the $500,000 invested by McCullough Robertson in an interest bearing deposit account there be disbursements of the following:
·$60,000 to be paid to the husband via his solicitor’s trust account;
·$120,000 to be paid to McCullough Robertson’s trust account on behalf of the wife (for legal fees for the Supreme Court proceedings); and
·$320,000 balance to be held and not withdrawn down without the wife giving the husband 21 days notice in writing of her intention to do so.
Pursuant to later orders made in the then Federal Magistrates Court on 4 December 2007 an order was made, by way of interim partial property distribution to the wife, for $220,000 of the funds held in the McCullough Robertson interest bearing deposit account to be transferred to McCullough Robertson for the purpose of payment of legal fees (for the Supreme Court proceedings).
On 16 April 2013 a further order was made in the Federal Circuit Court that the wife receive a further $80,000 from the funds held in McCullough Robertson’s trust account by way of part property settlement.
On 24 March 2014 this Court made an order that the then remaining $20,000 retained in the McCullough Robertson trust account be paid to the single expert Mr S for the purposes of the valuation of the parties’ interests in any entity comprising their business interests; for the purpose of these proceedings. That report is yet to be received.
It is thus the husband’s case that apart from the approximately $86,000 that was used to discharge the then existing mortgage debt on B Street in April 2007; the $60,000 he received pursuant to the above order; and the $20,000 used to fund the expert report of Mr S; the wife has had the benefit of the balance of the total loan of $700,000 and has largely spent that balance on legal fees for the Supreme Court proceedings. Thus it is the husband’s case that the wife has had the sole benefit of an amount exceeding $500,000.
For her part, the wife appears to acknowledge that she has had the benefit of $420,000 approximately out of the loan funds with most or much of that sum being spent on her legal fees for the Supreme Court proceedings.
Whilst the resolution of this issue as to actual amount must await a final trial it is clear that on either party’s version a very substantial amount of capital has been effectively lost by the wife in her ill-fated pursuit of her Supreme Court claims; and in turn the husband has lost a substantial amount in legal fees.

Sale of the B Street property

Taken from the wife’s financial statement filed on 14 March 2014 she estimates that the B Street property has a value of $800,000.
The husband adopts or provides the same estimate of $800,000 in his financial statement filed 24 April 2014.
In circumstances where the mortgage debt approximates $720,000 then, if allowance is made for prospective costs of sale, the equity held in this property is less than $80,000; assuming sale at a price of not less than $800,000 can in fact be achieved.
Thus the position is that in order to preserve and maintain equity of a modest amount, probably less than $80,000 in total, in this property, a monthly mortgage payment of as much as $4,200 is being made. There is no relevant tax deduction for the mortgage payment.
This position obviously lacks commerciality. During these hearings that feature was, repeatedly, drawn to the wife’s attention.
The husband apparently recognises this because, despite the feature that he has continued to reside in the B Street property, the husband has consistently maintained during these interim hearings that the property should be sold so that the mortgage debt burden is thereby extinguished.
In contrast, the wife has steadfastly maintained her opposition to sale of the B Street property on the basis that she harbours ambitions to retain that property in any final property settlement; even, it would seem, if the property ultimately is retained by her with a substantial amount of mortgage debt attached. The wife asserted in submissions to the effect that retaining the B Street property might be her only opportunity to own a home.
Whilst any logic in the wife’s opposition to interim orders for sale of the B Street property is impossible to identify; her steadfast opposition means that a substantial proportion of the E receipt each month continues to be devoted by the husband to payment of the mortgage.
That is, for reasons later discussed, of significant relevance to the other interim financial orders that are sought by the wife.

Superannuation

On the husband’s version it was at about the same time as F was established in 2003 that the parties established the self-managed superannuation fund styled “The Hawkins Superannuation Fund” (“HSF”).
Both parties thereafter made contributions to that fund.
In early 2006 HSF used its accumulated funds to purchase a property at Suburb T for $365,000 plus stamp duty of $11,250.
Upon the parties’ separation in June 2006 neither party made further contributions to HSF. Its income thereafter comprised any net rental received for the Suburb T property owned by the fund.
The husband confirms in his affidavit filed 30 June 2014 (paragraph 9) that he removed $55,000 from the bank account of HSF. He asserts he did so out of fear that as a signatory to the bank account the wife could remove those funds.
The husband used approximately $25,000 of those funds to pay the costs assessor retained to prepare an assessment of the husband’s costs of the Supreme Court proceedings, the subject of the order against the wife earlier referred to.
The husband deposes that, despite demand, the wife has not paid his costs, assessed in the amount of $202,742.66. That assessed amount includes the costs of obtaining the assessment referred to funded in the manner referred to.
In February 2008 the husband created another self-managed superannuation fund styled “The Mr Hawkins Superannuation Fund” (“MHSF”). He used the share of income he received via E/F to make further contributions to that fund. Taken from his most recent Financial Statement the husband continues to make contributions to MHSF.
The husband deposes to withdrawing approximately $235,000 from the MHSF to fund his legal expenses of the wife’s Supreme Court proceedings.
Taken from the husband’s financial statement filed on 24 April 2014, HSF has an estimated value of $414,000 (presumably made up of, largely if not entirely, of the value of the Suburb T property owned by HSF).
Again taken from the husband’s financial statement, MHSF has an estimated value of $43,000.

Nature of interim relief sought by the wife

Some of the interim orders agitated by the wife, who is self-represented, in relation to the husband’s use of, or access to, superannuation funds in the now lengthy post-separation period may be a reflection of the wife’s lack of understanding as to the manner in which the Court will ultimately determine, in the substantive s 79 proceedings, any adjustments of the property interests of the parties.
For that reason, and in the hope that it may address concerns of the wife, some observations about that will be made.
Pursuant to s 79(2) of the Act the Court hearing and determining the final proceedings will need to be satisfied that circumstances exist which result in the conclusion that it would be just and equitable to make orders adjusting the existing legal and equitable interests of the parties, or either of them, in property.
Assuming that threshold question is resolved in favour of orders being made; the task for the Court, in the first instance, is to identify and value the existing legal and equitable interests of the parties, or either of them, in property.
Next, in summary, the Court considers the contributions (of the kinds identified in s 79) made by each party to the acquisition, conservation or improvement of any property whether or not that property still exists. The kinds of contribution are specified within the section but, again in summary, such contributions include financial and non-financial; direct and indirect; and relevant contributions of a non-financial kind such as, for example, the contribution as homemaker or parent.
There is then the assessment of the s 75(2) factors, sometimes conveniently referred to as the “future needs” factors of each party; and ultimately the Court determines orders which are just and equitable to give effect to the Court’s overall assessment under s 79.
Relevant to this case, within that process the Court will undertake consideration of the facts and events from the commencement of the parties’ cohabitation up until separation; as well as those matters in relation to the now lengthy post-separation period.
It seems obvious that the husband will agitate that he made an initial capital contribution to the relationship greater in value than that made by the wife. The husband will also argue that his contributions to the wife’s children of her prior relationship weighs in his favour either as a matter of contribution or under the s 75(2) factors which includes “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account” (in sub-section (o)).
No doubt there will be potential issues as between the parties as to “who did what” with respect to the formation of F and how each party’s contribution to the success of that group is to be weighed.
Post-separation conduct, including financial conduct, is a factor which also weighs in the assessment. Clearly, the husband will seek to have the Court place significant emphasis upon the wife’s post-separation conduct concerning her ill-fated Supreme Court proceedings and all of the consequences of those proceedings.
For her part, it is clear that the wife seeks to agitate issues concerning the husband’s use of superannuation funds in the post-separation period.
The above is by no means intended to be an exhaustive list of either the matters the Court is obliged to consider nor, necessarily, the matters either party might raise. All that is sought to be demonstrated, particularly to the wife given she is self-represented, is that the Court has a wide discretion in determining final orders under s 79 and a wide range of factors are relevant and come into the assessment process.
In particular, in the circumstances of this case it is clear that each party will be tested on the party’s post-separation use of funds sourced to property existing as at separation, in particular F.
As a general proposition the Court takes into account (and adjusts for) financial conduct of two kinds. First, if it is shown that one party has solely benefitted from a premature distribution, to that party, of capital that would otherwise remain for both. Second, if it be shown that losses of capital have been incurred through wanton, reckless or negligent conduct. Over-arching this is the Court’s consideration of the parties’ contributions and comparison of the contribution each party has made. In this case it is obvious that each party agitates issues about the other party’s post-separation conduct.
As a result, for example, it is strictly unnecessary for the wife to pursue interim relief or injunctions to have the husband restore funds to superannuation which she asserts have wrongfully been withdrawn when this is a matter that can be brought to account and adjusted for in the final assessment process referred to, if that is what justice and equity requires.
In this respect, given the interim issues agitated by the wife, it bears some emphasis that on the current state of the evidence, even putting the wife’s various complaints at their highest, it seems unlikely, from what follows, that it will ultimately be established that the husband’s financial conduct post-separation has diminished the property now available to the parties or either of them to the extent that the wife’s ill-fated Supreme Court proceedings have so done.
This is illustrated by the following matters of evidence. The husband deposes that his legal costs in defending the wife’s Supreme Court claims exceeded $300,000. Whether that was reasonable remains to be seen but the fact is that the wife’s proceedings were on foot for more than five years.
There is evidence (yet to be tested at a trial) that the wife may have devoted up to about $400,000 (or perhaps more) in funding her legal costs of the Supreme Court proceedings. Thus it seems that, between them, the parties may have spent something like $700,000 (or more) on the Supreme Court proceedings.
If account is taken of the interest on a mortgage debt increased from about $85,000 to $700,000 (a difference of $615,000) paid over a period in excess of 7.5 years to date (and continuing) it may ultimately be established at trial that the wife’s Supreme Court proceedings have thus cost the parties a combined amount in the order of $1 million. I reiterate that as a result of the issues being tested at trial very different conclusions might result, but this appears an available conclusion on the current state of the evidence.
This is, I repeat, subject to the underlying issues and facts being tested at a trial. However, a loss of as much as $1 million has obvious significance to any property case and its relative significance will ultimately depend upon the overall worth of the parties combined, as at the trial of the proceedings.
There are also, as already noted, the husband’s issues concerning the business of F having suffered financially by reason of the wife’s pursuit of the Supreme Court litigation; with any consequent loss of value and distributions from the business to the parties that can be identified and proven at a trial as a result.
There is also, as already noted, the issue raised by each party as to the use made by the other of funds received from E/F from the time of the parties’ separation in 2006.
There is necessarily significant speculation in much of the foregoing until such issues can be properly ventilated and determined at a trial. The point to be made is that most of these disputed issues can only properly be resolved at a trial; rather than at an interim stage of proceedings when evidence cannot be tested.
As will be discussed further in these reasons, it is of relevance to the interim financial orders the wife seeks that the husband is pursuing a case in the substantive proceedings that the wife ought be held responsible for the financial consequences to the parties (whatever they are actually proven to be) of her Supreme Court claims and proceedings.

Interim orders sought by wife

As is reflected in the Orders that were made on 24 March 2014 and 19 June respectively, a number of issues agitated during the course of these interim proceedings have been resolved by those orders.
Relevantly, the Orders of 24 March 2014:
a)Provided for Mr S (Chartered Accountants) to be appointed the single expert to undertake a valuation of the parties’ entities and business interests; and provided for funding for that purpose (orders 1 and 2);
b)Provided for each party to make disclosure of financial records for the period from May 2007 (order 4);
c)Discharged the previous Federal Magistrates Court Order requiring the wife to meet payment of the B Street mortgage (order 6) and recorded, in a notation to the Order, the husband’s agreement that he would pay that mortgage.
Relevantly, the Orders of 19 June 2014:
a)Restrain the husband from any further dealing with superannuation (orders 2 and 3);
b)Required further disclosure by both parties of documents identified in the order, since May 2007, concerning any superannuation fund (order 4);
c)Required disclosure by both parties to the single expert Mr S of financial records since 30 June 2006 as identified in the order (order 5);
d)Required the husband to file and serve an affidavit with supporting documents detailing, in summary, his use of any superannuation funds held as at July 2007 (order 6).

Superannuation orders

The wife, whom I repeat is self-represented and in relation to whom it thus may be inferred that she is either partly, or wholly, unaware of the Court’s approach, in final s 79 proceedings, to post-separation financial conduct as outlined above; has seemingly proceeded on the footing that if the husband has withdrawn any superannuation funds in the post-separation period (now of many years) it is somehow axiomatic that orders ought now be made on an interim basis for the husband to repay or return any funds so withdrawn.
I have sought to demonstrate, in the preceding discussion, that the husband’s conduct in withdrawing superannuation cannot, on the current state of the evidence (albeit yet to be tested at a final trial) be simply characterised as the husband having unreasonably made to himself some premature distribution of capital which otherwise would be available to both parties.
In other words, this is not a case where the order sought by the wife on an interim basis is justified as simply preserving the status quo pending the final trial of these proceedings or; expressed in the language of injunctive relief, it can be said that the balance of convenience favours an obligation being imposed on the husband by order to now make such repayment.
I will not repeat in full the foregoing discussion concerning the circumstances in which the husband’s use of superannuation funds has occurred. Suffice to note, in summary, that:
a)The husband had to defend himself in the Supreme Court proceedings launched by the wife and he incurred significant legal costs in so doing. He ultimately succeeded in obtaining an order from the Supreme Court for costs in his favour against the wife, on an indemnity basis.
b)Part of the husband’s use of funds was to pay the costs assessor retained to prepare an assessment of the husband’s costs of the Supreme Court proceedings, the subject of the order against the wife.
c)The wife has not paid the husband’s costs of the Supreme Court proceedings assessed in the amount of $202,742.66.
d)As long ago as February 2008, almost two years post-separation, the husband created the MHSF and he used his share of income received via E/F to make contributions to that fund. In other words, it was post-separation income (and the wife was receiving that income or more when taxation considerations are brought into account) which the husband used to fund the MHSF. It was from the MHSF that the husband made the major withdrawal to fund his legal costs of the Supreme Court proceedings.
As has been emphasised already, if at a final trial of the proceedings the wife is able to characterise the husband’s conduct in withdrawing superannuation funds as either a premature distribution of capital; or as conduct amounting to wanton, reckless or negligent conduct; then the Court can take that into account in the s 79 process in determining final property orders which are just and equitable.
For these reasons, on the current state of the evidence the Court is not persuaded that the order sought by the wife on an interim basis for the husband to repay superannuation can be justified.
It may be added that the wife’s arguments or criticisms directed to the husband’s use of superannuation post-separation ring somewhat hollow when it is the fact that the subject superannuation, or most of it, was accumulated by the husband conserving the distributions he was receiving from E/F whilst it would not seem that the wife can point to any like accumulation of capital from the amounts she received over the five year period already discussed.
This part of the wife’s application was adjourned (the orders for disclosure relating to superannuation having been made) and the wife should therefore have a final opportunity, if she presses it, to convince the Court as to the making of any further orders concerning the husband’s withdrawal of superannuation, on an interim basis. However, unless and until the wife can meaningfully address the issues raised with respect to the husband’s use of superannuation the Court is not persuaded, on the current state of the evidence, that any interim orders of the kind sought by the wife can be justified.

Other financial orders

Whilst it seemed that originally (as per the wife’s Amended Application in a Case filed 14 March 2014) that the wife was seeking either her being relieved of having the obligation to pay the B Street mortgage (and the husband assuming that obligation) or an order that she receive 50 per cent of the monies received by E via F; or spousal maintenance in the amount of $1,397 per week; as matters have evolved during the interim hearings of these proceedings the wife’s position seems to have crystallised to the following.
As has already been noted, the relevant order of the (former) Federal Magistrates Court which obliged the wife to pay the B Street mortgage has been discharged by the order made on 24 March 2014; and the husband (as noted on that order) has assumed that obligation.
In that context the wife’s interim applications for financial orders crystallised into the following alternatives:
a)The wife receive 50 per cent of monies received by E via F; or
b)The husband pay the wife spousal maintenance in the amount of $1,397 per week.
Alternative (a) above was framed by the wife without specific identification by the wife of the source of power relied upon for the Court to make such an order.
In the manner in which (a) was agitated by the wife in both written and oral submissions it seems that the wife seeks that order by the Court exercising power to make an interim property order; or in exercise of an injunctive power; or in exercise of the Court’s power to make an order as to costs. Each of those sources of power will be considered in turn.

Interim property order

The manner in which the wife frames the orders sought (i.e. “with effect from 21 December 2012 50% of monies received directly or indirectly by the Husband, [E Pty Ltd] and The [Hawkins] Family Trust from [F Trust] and [G Trust]…”) ignores a couple of matters earlier discussed.
First, the distributions from F in the amount of $13,600 per month on average attracts taxation of about $4,400 per month; leaving an after-tax amount of $9,200.
If the order were made in the terms as sought by the wife then because, as the husband points out the wife is not a beneficiary of The Hawkins Family Trust post the parties’ divorce, the whole of that taxation burden would fall to the husband.
Second, from the net (after tax) monthly amount of approximately $9,200 the husband is meeting the monthly mortgage payment of about $4,200 on the B Street mortgage; in circumstances where the wife maintains her opposition to sale of that property and thus the extinguishment of that mortgage debt which could be achieved by selling the property.
As earlier noted, after taxation and the mortgage payment it seems there is only about $5,000 per month left from the payment. The wife’s order, as framed, would thus see her receiving more than the net amount actually available when account is taken of taxation and the mortgage payment.
Following Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) some fundamental principles of particular relevance to this case can be identified in relation to the exercise of the s 79 power on an interim basis, namely:
·The discretion to make an interim property order is not confined to cases where there are “compelling circumstances”. What must be shown is “a proper case in all the circumstances” to render it “appropriate” to make an interim property order. Usually, the Court is best placed to consider property orders at a final trial.
·The exercise of power under s 79 on an interim basis must be performed within the framework of s 79. Thus the Court must consider relevant s 79 matters and the Court must be positively satisfied that the remaining property (after an interim property order) will be adequate to meet the legitimate expectations of both parties at the final hearing, so that the interim order which is contemplated must be capable of being reversed or adjusted if necessary.
The fundamental difficulty on the current state of the evidence here is that the expert report of Mr S is yet to be received or provided in evidence. Thus there is no reliable evidence as to the value or likely value of relevant business interests/entities. The wife estimates in her Financial Statement, effectively that, the combined value of the parties’ interest in F is worth approximately $1.66 million. The husband’s estimate is $1 million. However, these are no more than estimates provided by each party.
On the face of it, distributions of $13,600 (gross) on average per month equating to approximately $163,000 (gross) per annum via F would indicate that this interest has significant value. However, until the Mr S report is obtained there is no reliable estimate of value.
However, there is currently no reliable evidence before the Court as to an important matter which would likely be addressed in the Mr S report, that is, the negotiability or marketability of any interest held in F.
It seems that the restructuring resulted in each family grouping (Hawkins, Q and R) having, effectively, a one third beneficial interest in F via each family’s respective trusts. However, for example, there is no evidence before the Court as to whether the restructure documents contain any contractual provisions so far as any family or party exiting the group. That is, whether any mechanisms were provided for the manner in which an interest would be valued for that purpose and how any sale or transfer of any interest might be effected if a party sought to exit.
Commonly, there is a discount applied in arriving at a value of a minority interest because of lack of control. Further discounting may be applied because of lack of marketability. In other words, in a case such as this, where the only true “market” might be the preparedness of other “shareholders” in the existing enterprise to purchase the interest of the exiting member, it may be appropriate to apply discounting for lack of marketability in arriving at a value for the interest.
In the absence of the Mr S report all that can be gleaned at the moment as to the parties’ property interests is that the parties have very modest equity in the B Street property and the superannuation interests already referred to; plus an unknown value for the relevant entities/business interests.
Against that background the husband mounts a case, already discussed, concerning the wife being held responsible or accountable for very substantial losses to both parties sustained as a consequence of her Supreme Court proceedings.
In my judgment, at least until the Mr S report is received and there is some evidence of value of the relevant interests; and more particularly the issue of marketability of the asset or how it might be crystallised into a lump sum (and the consequences of that); the Court cannot be satisfied that this is a proper case for an interim property order as sought by the wife; or that the effect of such an order can be adjusted for or reversed in the final trial, given the issues agitated by the husband with respect to the consequences of the wife’s Supreme Court proceedings vis-á-vis any remaining entitlement the wife has or is found to have at the conclusion of s 79 proceedings.
In short, on the current state of the evidence it cannot be seen that it would be “proper” or “appropriate” to exercise the power under s 79 to make the order directed to the property represented by the distributions, once received, in the manner contended for by the wife.

Injunction

For the reasons earlier discussed neither the fact that the parties had the “agreement” earlier referred to back in 2007 for each to receive one half of the distributions from F; nor the fact that the Supreme Court granted an interlocutory injunction giving effect to that at an early stage of the Supreme Court proceedings provides reasons, in and of themselves, to support an injunction to like effect now being made.
As has already been discussed, the Supreme Court injunction was made in the context of those proceedings and the claims that were being advanced by the wife in the context of those proceedings. That was an interlocutory injunction and part of the final orders made by the Supreme Court terminated that injunction.
Likewise as earlier discussed, any “agreement” as existing in 2007 was predicated upon circumstances that long ago ceased to operate; in particular the change in circumstances brought about by the Supreme Court proceedings and the substantial capital that has been lost by reason of those proceedings.
Section 114(1) confers a general power on courts exercising jurisdiction under the Act to make such order or grant such injunction as it thinks proper with respect to the matter to which the proceedings relate; see R v Dovey; Ex parte Ross (1979) 141 CLR 526.
The term “proper” has been held to mean “reasonable and just in the circumstances”; see Farr & Farr (1976) FLC 90-133; and Page & Page (1981) FLC 91-025.
The Court should also take into account the balance of hardship and the balance of convenience between the parties in considering any injunction; see Sieling & Sieling (1979) FLC 90-627; and Wray & Wray (1981) FLC 91-059.
Relevant to consideration of the balance of hardship and the balance of convenience between the parties is, usually, conduct of the applicant for injunctive relief.
In my judgment the balance of hardship and the balance of convenience between the parties does not support the grant of injunctive relief in terms of an order being made as sought by the wife. Whilst I reiterate that the evidence remains to be tested; it is the husband’s case that the wife’s conduct in pursuing the Supreme Court proceedings has had very profound consequences for the parties in terms of loss of capital and that is clear, even on the wife’s version. The husband has had to defend himself, on his evidence at very considerable expense, in the wife’s Supreme Court proceedings and the order for costs made in his favour by the Supreme Court remains unpaid; as does the order made by the Court of Appeal following the wife’s unsuccessful appeal.
Again, in the absence of the report from Mr S there is no evidence by which an assessment can be made of whether or not the ultimate outcome of the s 79 proceedings will result in an order in favour of the wife if the husband’s case as to her taking responsibility for the consequences of the Supreme Court proceedings is ultimately successful.
That is, whilst it remains an issue in the substantive trial proceedings as to whether or not it is the wife who should be held solely accountable for losses attributable to her Supreme Court proceedings, regard must be had to the fact that it is part of the husband’s case in the substantive proceedings that that should be so. In the absence of any reliable expert evidence as to the current value of the relevant business interests; and how any such interest might be crystallised into a lump sum; it cannot be concluded at this stage that the grant of injunctive relief would be proper or reasonable or just in the circumstances.

Costs power – s 117

As was observed in Strahan (at [79]) “the need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years.”
In Wilson & Wilson (1989) FLC 92-033 the Full Court referred to situations where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties; where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case (see also Polletti & Polletti (1990) 15 Fam LR 794).
Undoubtedly there is desirability for both parties in family law proceedings to have legal representation.
However, the wife offers no evidence of any attempts she has made to secure legal representation on the basis that payment of her legal fees is deferred pending the outcome of final orders. More fundamentally, the wife offers no evidence as to her prospective legal costs of representation. Her figure of $30,000 seems to be no more or less than a figure nominated by the wife without reference to any basis for that, or any other figure.
It follows from Strahan and the cases discussed in Strahan that three matters are relevant consideration to an order as to costs being made to fund litigation expenses, namely:
i)A position of relative financial strength on the part of the respondent;
ii)A capacity on the part of the respondent to meet his or her own litigation costs;
iii)An inability on the part of the applicant to meet his or her litigation costs.
On one level, the husband is in control of the parties’ “wealth” in terms of the business interests discussed in that The Hawkins Family Trust which he controls receives the payments from F.
However, it is out of his control that a substantial proportion of the distribution has to be paid to meet the B Street mortgage. That is, if the husband had his way that property would be sold and the substantial debt represented by that mortgage would be extinguished. That would “free up” about $4,200 approximately per month.
The only reason that the mortgage debt continues to be paid is because the wife maintains her steadfast opposition to sale of the B Street property. In that respect the wife is exercising “de facto” control of the distributions referred to at least to the extent of the $4,200 per month that has to be paid to meet the mortgage on B Street.
If the B Street property were sold and the mortgage debt extinguished the position would be fundamentally different. There would then be an additional $4,200 per month approximately within the husband’s control. In that context it would be difficult to conclude otherwise than that the husband was in a position of relative financial strength as compared with the wife.
However, when it is recognised that at the husband’s age he is retired and dependent on the payments; and the payments are in fact in a net amount of about $5,000 per month after paying taxation and the mortgage; I am not satisfied that the husband is in a position of relative financial strength to the wife (who can work and earn an living) when regard is also had to the feature that the husband must fund his own litigation expenses for these proceedings.

With respect to the husband funding his legal expenses for these proceedings it is evident that the wife has a capacity to agitate numerous issues and to file lengthy material in support of those issues. That is, when regard is had to what the husband spent in defending himself in the Supreme Court proceedings; it would seem to be likely that the husband will require significant financial resources to fund his legal expenses of these proceedings, partly because of the wife’s manner of conduct of the litigation.
This is not intended as a criticism of the wife but as an observation of the manner in which she identifies and pursues “issues” in the course of the proceedings.
In summary, if it were the position that the B Street property was sold and that mortgage debt extinguished there would be, it seems, a basis for there to be an order made pursuant to the costs power to facilitate the wife receiving some part of the distributions under discussion as a means of funding her legal expenses of these proceedings. She has failed to pay him any of the costs she was ordered to pay him by the Supreme Court.
However, whilst the position remains as it is I am not satisfied that it would be a legitimate exercise of the costs power to make an order for the wife to receive a share of the net balance of the distributions made via F.
Moreover, any order as to costs under s 117 must be seen to be “just” in all of the circumstances of the case. The difficulty on the current state of the evidence is that the husband would seem to have a basis for contending that the very significant capital losses are attributable to the wife’s conduct of the Supreme Court proceedings.
To this may be added the feature that the husband agitates the issues he does concerning the wife having received a half share of the distributions over the five year period from 2007 until the end of 2012 in circumstances where he had to bear the taxation burden for the full payment.
I am therefore not satisfied that it would be legitimate to exercise the costs power in favour of an order along the lines sought by the wife.

Interim spousal maintenance

Section 72(1) of the Act provides that:
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…
Section 72(1) sets out the three circumstances which may cause the need for maintenance to arise and, relevantly here, provides in sub-paragraph (b):
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; …
having regard to any relevant matter referred to in subsection 75(2).
In Bevan & Bevan (1995) FLC 92-600, the Full Court of this Court set out the process for assessing a spousal maintenance claim as:
Taken together then, we would state the law as being that an award of spousal maintenance requires:
1. A threshold finding under s 72 [now s 72(1)];
2. Consideration of s 74 and s 75(2);
3. No fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit;
4. Discretion exercised in accordance with the provisions of s 74, with ‘reasonableness in the circumstances’ as the guiding principle.
The first question is whether the Wife is unable to support herself adequately.
In Nutting & Nutting (1978) FLC 90-410, Lindenmayer J interpreted “adequately” within the meaning of s 72 of the Act as importing:
A standard of living which is reasonable in the circumstances, including the circumstance that the parties are no longer husband and wife and that the assets and resources which were formerly available to them both in common have now been divided between them.
In Saxena & Saxena (2006) FLC 93-268, Coleman J set out the four steps that the Court should follow as:
1. To what extent was the Wife unable to support herself?
2. What were the Wife’s reasonable needs?
3. What capacity did the Husband have to meet an order, if one were made?
4. If steps 1 to 3 favoured the Wife, what order would be reasonable having regard to s 75(2) of the Act?
The Full Court of this Court, in M & M (2006) 36 Fam LR 97, addressed the threshold proposition in the following terms:
[31] …The question whether an applicant can support his or herself “adequately” is not to be determined by reference to any fixed or absolute standard but by having regard to the matters referred to in s 75(2): Mitchell (above at Fam LR 59; FLR 306; FLC 81,995).
[32] The question is not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances: Mitchell (above); Evans and Evans (1978) FLC 90-435; Brady and Brady (1978) FLC 90-513 at 77,701; Gamble and Gamble (1978) FLC 90-452; Wilson and Wilson (1989) 13 Fam LR 205; FLC 92-033; and Bevan and Bevan (1993) 19 Fam LR 35; (1995) FLC 92-600.
[33] It is not necessary for an applicant for maintenance to use up all of his or her assets and capital in order to satisfy the requirement that he or she is unable to support him or herself “adequately”: Mitchell, above.
The wife’s income according to her Financial Statement filed 14 March 2014 is only an average of $412.00 (gross) per week.
On behalf of the husband it is contended that the wife is not limited to such modest earnings. It is contended that the wife is capable of working fulltime in a range of administrative positions, given her past experience.
The wife obviously has the onus of proof on this application. There is little in the way of persuasive evidence in the wife’s case that $412.00 is the limit of her earning capacity.
For reasons which will be discussed there are some fundamental difficulties with the wife’s evidence relevant to the issue of spousal maintenance and those difficulties pervade her case. The Court is not satisfied that the wife’s capacity for appropriate gainful employment sees her limited to earning the modest level of income she currently claims, but the obvious difficulty is attempting to assess what she might be capable of earning.
In circumstances where the wife has the onus of proving her reasonable needs the wife’s claimed weekly expenses total about $1,809 including credit card payments of the extraordinary amount of $866.00 per week.
In an attempt to explain that amount, the wife asserts in her Financial Statement that after December 2012 (when the final orders were made in the Supreme Court and the wife received the last of her payments, via the husband, of F distributions) she “needed to rely on credit card funding”.
What is extraordinary is that, taken from Part K and the “additional information” contained in her Financial Statement it appears that between December 2012 and her Financial Statement filed 14 March 2014 (a period of one year and approximately two months) the wife accumulated a total of $246,272.01 in overall credit card debt, via some 14 separate credit card accounts.
This equates to expenditure on credit cards of about $18,944 per month throughout that period.
The wife thus contends via her Financial Statement that her needs include $865.54 per week for the payment of her accumulated credit card debts totalling $246,272.01.
The wife provides no evidence whatsoever or any reasonable explanation in her affidavit evidence as to how it came to be that she has accumulated the extraordinary total amount of approximately $246,000 in total credit card debt. There is no evidence particularising how that debt funding has been applied by the wife.
This has particular significance when it is remembered that on 16 April 2013 the wife obtained an order from the Federal Circuit Court for her to receive payment of the sum of $80,000 by way of part property settlement from the monies held in the trust account of McCullough Robertson Lawyers.
Perhaps the $80,000 referred to was consumed in Supreme Court legal fees. That is speculation but the point is that it would seem that in addition to the $80,000 referred to, the wife has also accumulated the extraordinary amount of credit card debt referred to.
In the course of her oral evidence during cross-examination on 28 April 2014 the wife referred to paying mortgage payments on B Street.
However, the wife ceased making such payments from July 2013. Assuming she made seven (7) such payments between December 2012 and including July 2013 (and that the payments were in the order of $4,200 per month) this would account for only $29,400.
Also in oral evidence the wife seemed to depart somewhat from her sworn Financial Statement in that she referred to some of the subject credit card debt having been accumulated prior to December 2012. That is difficult to understand in circumstances where the wife was receiving the distributions earlier referred to.
As already noted, the wife was receiving about $15,000 per month in 2007 and by December 2008 her last payment was in the order of $8,000.
Thus it is that over the five year period between 2007 and 2012 the wife was receiving an annualised income of between $180,000 at the start of the period referred to, and the equivalent of $96,000 by the end of 2012.
I do not accept, particularly given the lack of particularity in the wife’s evidence, that the wife’s credit card debt and her need to meet monthly payments with respect to that debt can be identified as “reasonable” in terms of the wife’s reasonable needs.
I should add that the wife’s expenses, other than with respect to her credit card debt, do not explain how she could have accumulated such an enormous credit card debt. Taken from her Financial Statement the wife’s expenses are as follows:
Taxation  $    20.00
Rent  $   500.00
Life insurance  $    18.00
Car insurance  $     14.00
Motor vehicle registration  $    21.00
Expenses set out in Part N (not including “other”)           $ 370.00
TOTAL  $ 943.00
DEDUCT WEEKLY INCOME  ($ 412.00)
NET$   531.00
If allowance is made for the wife to earn some increased income (which of course would bring an increased taxation burden) I do not see how her reasonable weekly needs in excess of her income could be seen as exceeding $500.00. Of course I ignore the credit card debt and the credit card payments in assessing that to be the probable maximum of the wife’s reasonable needs over and above her income.
In terms of the husband’s capacity, for reasons which follow I am not satisfied that whilst the husband has to meet the monthly mortgage payments on B Street that he has any capacity to pay interim spousal maintenance.
According to the husband’s Financial Statement filed on 24 April 2014 his weekly expenses of $4,571 exceed his average weekly income of $3,300 by an amount of $1,271.
As already noted the husband is retired and F distributions already discussed are his sole source of income.
There are some reductions that can reasonably be made to the husband’s claimed expenses. For example, the husband claims a weekly contribution of $481.00 to MHSF. In a spousal maintenance setting, it would arguably not be legitimate to allow the husband to treat contributions to his own superannuation at this level as an expense.
The husband also claims a weekly payment of $750.00 towards credit card debt. However, he has accumulated funds in his bank account of an estimated $25,000 and his credit card debt totals $3,000. That could easily be paid from accumulated funds so as to extinguish the weekly payment. Likewise the husband could repay or extinguish the Royal Bank of Country J loan in a total amount estimated by the husband at $20,000 and thereby relieve the expense of $88.00 per week paid towards that loan.
In terms of the expenses claimed in Part N of his Financial Statement the husband fails to specify (as is required) what the $100.00 for “other necessary commitments” is for.
However, even with those adjustments, it seems to me that whilst the husband continues to pay the B Street mortgage he does not have sufficient excess capacity enabling him to make payment of interim spousal maintenance to the wife.

Conclusion

Until the single expert report of Mr S is available there is no reliable evidence of the value of the parties’ interest in F; or how marketable is that interest in terms of converting that interest into a capital sum available for division in the substantive proceedings.
Without that value it is impossible to assess potential outcomes of the s 79 substantive proceedings and in that context the husband’s claims and expectations that the wife be held accountable, from any property settlement she would otherwise receive, for the losses occasioned to the parties by her failed Supreme Court proceedings.
Sale of the B Street property would enable that substantial mortgage burden to be extinguished. That would put the interim financial orders the wife has sought in a somewhat different context.
However, for the reasons already outlined, whilst the husband has the obligation to pay that mortgage the other interim financial orders sought by the wife’s applications are to be dismissed.

I certify that the preceding two hundred and seventeen (217) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 2 December 2014.

Associate:

Date: 2 December 2014

[2014] FamCA 1065

2 December 2014

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Family Law

Equity & Trusts

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