Hogan and Orwell
[2016] FamCA 505
•22 June 2016
FAMILY COURT OF AUSTRALIA
| HOGAN & ORWELL | [2016] FamCA 505 |
| FAMILY LAW – SPOUSAL MAINTENANCE – Application by the wife that the husband contribute one half of the monthly mortgage payments with respect to the former matrimonial – where the husband has contributed to the mortgage since separation – where the husband says that he can no longer contribute to the mortgage due to other liabilities of the parties –where the wife disputes any significant change in the financial circumstances of the parties – no evidence to demonstrate a change in the husband’s financial circumstances – where the husband consents to the sale of an investment property in the event that he cannot contribute to the mortgage – interim orders made that the husband contribute to the mortgage repayments over the former matrimonial home and for the sale of an investment property in the event of his default |
| Family Law Act 1975 (Cth) |
| Brown & Brown [2007] FamCA 151; (2007) FLC 93-316 |
| APPLICANT: | Ms Hogan |
| RESPONDENT: | Mr Orwell |
| FILE NUMBER: | MLC | 11219 | of | 2015 |
| DATE DELIVERED: | 22 June 2016 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Johns J |
| HEARING DATE: | 8 June 2016 |
REPRESENTATION
| THE APPLICANT: | In Person |
| THE RESPONDENT: | In Person |
Orders
(1)That until further order the husband pay or cause to be paid to the Bendigo and Adelaide Bank as and when they fall due, one half of the monthly repayments due on the mortgage secured over the property situate at and known as B Street, Suburb A in the State of Victoria (“the Suburb A property”).
(2)That in the event of the husband’s non-compliance with paragraph 1 hereof for a period of 30 days, the parties forthwith do all acts and things and sign all documents necessary to cause the property situate at and known as C Street, Suburb D in the State of Victoria (“the Suburb D property”) to be sold on such terms and conditions as agreed between them and in default of agreement as follows:-
(a)By a licensed real estate agent (“the Estate Agent”), either as appointed by the parties, or failing agreement, the Estate Agent as appointed by the President of the Real Estate Institute of Victoria; and
(b)At an agreed reserve price, or failing agreement at a price to be determined by the Estate Agent.
(3)That there be liberty to apply with respect to the terms and conditions of the sale of the Suburb D property.
(4)That the proceeds of sale of the Suburb D property be applied as follows:-
(a)First, to pay the costs of and incidental to the sale including agent’s commission and advertising;
(b)Second, such amount as required to discharge the mortgage secured over the Suburb D property;
(c)Thirdly, to apply such sum as is required to discharge any arrears outstanding with respect to the mortgage on the Suburb A Property;
(d)Fourth, the balance then remaining to be paid into an interest-bearing account in the names of the parties to be applied as follows:-
(i) In payment of the husband’s liability under the mortgage to the Suburb A property pursuant to order 1 hereof; and
(ii) The balance remaining to be held on trust until further order.
(5)That the question of the husband’s liability with respect to interest and costs incurred as a result of his failure to meet the mortgage liability secured against the Suburb A property be reserved to the trial judge.
(6)That the wife’s Application in a Case filed 21 April 2016 and the husband’s Response to an Application in a Case filed 3 June 2016 be otherwise dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hogan & Orwell 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 MELBOURNE |
FILE NUMBER: MLC 11219 of 2015
| Ms Hogan |
Applicant
And
| Mr Orwell |
Respondent
REASONS FOR JUDGMENT
This matter came before me in a Judicial Duty List upon the applications of the wife and the husband seeking orders with respect to maintenance and interim property.
The wife’s application seeks orders that:-
·the husband continue to contribute to one half of the repayments in respect of the mortgage secured against the title to the former matrimonial home at B Street, Suburb A (“the former matrimonial home”);
·the husband pay all late fees incurred as a result of his failure to contribute to the mortgage; and
·in the event that the husband is unable to contribute to the mortgage that the investment property owned by the parties at C Street, Suburb D (“the Suburb D property”) be sold and the proceeds of sale be applied to the reduction of the mortgage secured over the former matrimonial home.
It is the wife’s case that the husband has the financial capacity to pay half of the mortgage repayments on the former matrimonial home; the husband made those payments from separation in January 2015 until April 2016 and it is her position that he should continue to do so.
The husband opposes the wife’s application. It is his case that he can no longer afford to meet his share of the mortgage payments due to the parties having accrued significant liabilities; the husband maintains that assets must be sold to alleviate the financial pressures upon the parties.
The wife seeks to retain the former matrimonial home as part of the final property orders and opposes an order for its sale.
Both parties appeared before me in person.
The Parties
The wife is the applicant in this matter. She is aged 57 and is a consultant. The wife operates Hogan-Orwell Consulting through Hogan-Orwell Consulting Pty Ltd.
The wife also conducts a small agricultural business, Business E, from the former matrimonial home.
The husband is the respondent. He is aged 59 years. He conducts business through Orwells Pty Ltd.
The parties have three children, Mr F aged 24, Mr G aged 23 and H aged 16. Mr F and Mr G are independent. H is in Year 10 at I School where he attends as a full time boarding student; when he returns home H lives with the wife at the former matrimonial home.
The parties married in 1990 and separated in January 2015.
Material Relied Upon
In support of her application, the wife relied upon her Application in a Case filed 21 April 2016 and her Affidavits filed 21 April and 6 June 2016. The wife further relied upon Exhibit W1, the Bendigo Banking E-banking Account History in respect of account number … for the period 22 March 2011 to 1 June 2016 (inclusive), which she tendered in the course of her submissions.
The husband relied upon his Response to an Application in a Case filed 3 June 2016, his Affidavit filed 3 June 2016 and his Financial Statement filed 3 June 2016. The husband also relied upon Exhibit H1, a summary of the husband’s claimed expenses, which he tendered in the course of his submissions.
Orders Sought
The wife seeks orders as contained in her Application in a Case filed 27 April 2016 as follows:-
1.For the Family Court to make an urgent order for the applicant Mr Orwell to continue to contribute 50 per cent of the repayments on the mortgage on the family home at B Street.
2.For the Family Court to order the applicant to sell an investment property in Suburb D if he is unable to contribute to the mortgage and for the proceeds to be paid into the mortgage on the family home until this matter is decided by the Family Court.
3.For the applicant to pay all late fees incurred as a result of the non-payment of his share of the mortgage repayments.
The husband in his Response to an Application in a Case filed 3 June 2016 sought orders as follows:-
1.That the Wife’s Application in a Case be dismissed.
2.That the property situate at [B Street, Suburb A] be sold forthwith and the mortgage to Bendigo & Adelaide Bank registered number … be discharged.
3.That the balance of the sale proceeds then remaining be applied as follows:
a.Firstly, to pay the outstanding Owners Corporation fees for the [J Flat];
b.Secondly, to pay for valuations of the businesses [Orwells Pty Ltd] and [Hogan-Orwell Consulting Pty Ltd] as separate entities by [K Forensic Accountants], or such accountants as otherwise agreed;
c.Thirdly, to pay for sworn valuations of the property situated at [C Street], [Suburb D] and the [J Flat];
d.The net proceeds (if any) be held in trust pending settlement.
4.That the Wife pay the Husband’s costs of this proceeding.
Although at the commencement of the hearing before me the husband sought the sale of the former matrimonial home, he later amended his position and stated that he would agree to the sale of the Suburb D property or the J Flat in the event that the mortgage liability secured over the former matrimonial home cannot be met. The husband did not therefore press the orders sought in his Response to an Application in a Case filed 3 June 2016 save that he resisted the orders sought by the wife with respect to his contribution to the mortgage.
The Hearing
The hearing was conducted on the papers. Each party relied upon the material referred to above and submissions made.
Both parties represented themselves during the hearing, albeit the husband was represented up until one week prior to the hearing and had the benefit of his former solicitors having prepared the documents relied upon by him for the purposes of the hearing.
Prior to the commencement of the hearing I gave both parties the opportunity to attend upon the duty lawyer present at Court; neither party elected to do so. At the commencement of the hearing I explained to both parties the manner in which the hearing was to be conducted.
Given the nature of the hearing, contentious facts cannot be determined without evidence being properly tested. Accordingly, in determining the matter, I have relied upon those facts which are agreed or not in issue.
Legal Principles
The orders sought by the wife for the husband to contribute to the mortgage are orders for spousal maintenance.
Section 72(1) of the Family Law Act 1975 (Cth) (“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 whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
The threshold issue in considering a claim for spousal maintenance is whether the applicant, in this case the wife, is able unable to support herself adequately. The Full Court in Brown & Brown [2007] FamCA 151; (2007) FLC 93-316 at paragraph 161, adopting propositions set out by the trial judge, said as follows:-
·The word “adequately” is not to be determined according to any fixed or absolute standard.
·The idea that “adequate” means a subsistence level has been firmly rejected.
·Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.
·In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.
·It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.
·However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
If the wife is able to demonstrate an inability to adequately support herself, the capacity of the husband to meet a spousal maintenance order must then be considered.
Section 74 of the Act provides for the court to make such order as it consider proper for the provision of maintenance; in exercising jurisdiction under s 74 the court shall only take into account the matters referred to in s 75(2).
Discussion
The wife operates a consulting business and has also commenced a small agricultural business.
The wife did not file a Financial Statement in support of her application.
The wife’s most recent Financial Statement, filed 1 March 2016, indicates that her weekly income generated from her employment as a consultant is approximately $4,000. The wife does not receive any income from the agricultural business.
The wife’s weekly personal expenses are deposed to as being $3,508 per week, comprising of income tax of $1,200; mortgage payments of $1,000; school fees for the youngest child of $788 and a credit card payment of $20. The wife also lists a weekly payment of $500 with respect to the agricultural business. The wife’s expenses do not include provision for food, household supplies, utilities, motor vehicle or other expenses.
As at 1 June 2016 the parties’ liability under the mortgage was $6,742.32 per month. During the course of the hearing the wife stated that she is presently contributing $3,800 per month to the mortgage, or $876 per week. It is her position that she does not have the capacity to meet the whole of the liability from her income and it is on that basis that she seeks an order that the husband meet one half of that liability.
It is the wife’s case that the husband has not demonstrated a significant change in his financial circumstances to justify his sudden refusal to contribute to the mortgage, particularly where he had been contributing to the mortgage since the parties’ separation in January 2015.
The husband did not seek to challenge the wife’s income or expenses. Rather, it was his position that he cannot afford to meet the liability from his income. I am satisfied, having regard to the wife’s income and expenses disclosed in her Financial Statement and having regard to the fact that she has not included provision for her daily living expenses, that she does not have the capacity to meet payment of the whole of the mortgage liability.
The husband relied upon his Financial Statement filed 3 June 2016. He deposes that his income received from his accounting business is $3,173 per week. The husband also receives $682 from a rental property and $135 being a transition into retirement pension drawn from the parties’ self-managed superannuation fund. Accordingly, he asserts that his income from all sources is $3,990 per week.
At paragraph 16 of his affidavit filed 3 June 2016 the husband deposes that he has received transition to retirement pension payments of $34,000 in the financial year ending 30 June 2015 and $7,000 in the current financial year from the self-managed superannuation fund. There is no explanation proffered by him as to why there has been a reduction in his income from that source. In the previous financial year he received an income of $653 per week from that source. Presumably he continues to be able to draw income at that level should he so choose. Having regard to his drawings from that source in the 2015 financial year, I am satisfied that it is likely that the husband has the ability to draw an income at that level should he elect to do so; based on the 2015 drawings, it would appear he has the ability to increase his income by a further $518 per week.
The husband alleges in his Financial Statement that his total personal weekly expenditure is $7,423. That amount is comprised of $1,006 in income tax; $894 in mortgage payments with respect to the former matrimonial home; $635 in mortgage payments with respect to the Suburb D property; rates/unit levies of $379; rent of $295; credit card payments of $668; child support of $363; and “other expenditure” of $3,183.
Exhibit H1 is a spreadsheet tendered by the husband during the course of his submissions; it has been prepared by the husband as an aide to explain his financial position and in particular the claim of $3,183 per week for “other expenditure”.
Although the wife did not object to the tender of that document, she submitted that that document “grossly misrepresents” the financial situation of the parties.
Exhibit H1 is neither a source document nor sworn evidence and the husband did not produce any source documents in support of his claimed expenses.
With respect to expenses claimed by the husband in Exhibit H1, the wife conceded that the husband pays weekly expenses of $150 for groceries and $295 for rent. However the other expenses asserted by the husband in Exhibit H1 were either disputed or not conceded by the wife.
The husband submits the parties’ financial situation is untenable. He says that the parties have been able to pay the mortgage due to their non-payment of other liabilities, including credit card liabilities in the husband’s name totalling $135,000 and the husband’s personal tax liability of $115,000.
In his affidavit the husband deposes at paragraph 5 as follows:-
Over many years, the wife and I have spent more than we have earned, purchased large properties requiring on-going maintenance and incurred hundreds of thousands of dollars in school fees at [I School] educating our children. The shortfall has accumulated in credit cards in my name and unpaid tax obligations. I have been required to move money around our various accounts and incurred credit card debt of over $175,000 to meet our debt repayments, tax and expenses. Family credit cards are primarily in my name because at the time they were obtained, I was the main income-earner and became the primary name on the cards. Our debt position is crippling.
Whilst the husband asserts in his affidavit that the credit card debt exceeds $175,000 in his Financial Statement he deposes that he has credit card liabilities of $135,000. At the time he swore his first Financial Statement on 27 November 2015 he asserted that his credit card liabilities totalled $100,000.
Those allegations are disputed by the wife, it being her position that all but one of the credit cards listed by the husband relate to his accounting business and are business expenses payable by that business. The issues in dispute between the husband and the wife with respect to those liabilities are not issues about which I can make findings at an interim stage where the evidence has not been tested.
The wife complains of a failure by the husband to disclose source documents; she says she is unable to accept many of the expenses alleged by the husband in circumstances where he has failed to disclose documents that would support his position.
In support of that submission the wife relied upon Annexure PAH5 to her Affidavit filed 6 June 2016, which is an email sent by her on 17 May 2016 to the husband’s former solicitor and copied to the husband; that document is the wife’s request that the husband provide specified financial documents, including bank statements for the first quarter of 2016. The husband confirmed during the hearing that he did not respond to that email although he stated that details of one account up to March 2016 had been provided to the wife.
Chapter 13 of the Family Law Rules 2004 sets out the duty of disclosure between parties in financial cases. The rule requires that parties in financial cases exchange significant documentation.
Rule 13.01(1) provides that each party to a case has a duty to the Court and to each other to give full and frank disclosure of all information relevant to the case in a timely manner.
The duty of disclosure is a continuing obligation (rule 13.01(2)).
The husband conceded that he has failed in his obligations to make full and frank disclosure. There is enormous inconsistency between the matters asserted in his affidavit and across his two Financial Statements. Those inconsistencies compound the difficulties he faces in maintaining a positon that he cannot afford to continue to meet an obligation which he has serviced since January 2015. That the wife did not accept those assertions was evident from the material filed by her. It was incumbent on the husband to prove his case with respect to his financial circumstances. He has failed to meet that obligation.
In Exhibit H1 the husband asserts that he has “other expenditure” of $3,183 per week. That figure includes provision for payment of school fees, which the wife asserts and the husband concedes he is not currently paying, and prior-year tax and legal fees. The husband is not currently paying the tax liability and is currently representing himself in these proceedings. Hence there is no basis for his claims in respect of those expenses, which with the school fees total approximately $2,272 per week. In those circumstances, I do not consider it appropriate to make allowance for those expenses.
Further, the husband makes a general claim under the heading ‘Living expenses’ of $34,800 per annum or $669 per week; that is in addition to his claim for groceries of $150 per week.
The husband filed his first Financial Statement some six-and-a-half months ago. He deposed in that document that he had total personal expenditure of $3,796 per week.
If one excludes the expenses to which I have referred above, the husband’s total expenses in his recently filed Financial Statement are markedly similar to those set out in his first Financial Statement; excluding the claim for “other expenditure”, the husband’s expenses total approximately $4,240 per week. The increase in the husband’s claimed expenses in his second Financial Statement is largely referable to an apparent increase in his weekly credit card liability. In his first Financial Statement he deposed that his liability for his credit cards totalled $231 per week whilst in his second Financial Statement that liability has apparently increased to $668 per week. In his first Financial Statement his credit card liabilities totalled $100,000 and in his second Financial Statement sworn approximately six months later, that liability had increased to $135,451.
In circumstances where the husband proffers no explanation for that increase in his liability and further produces no primary source documents to explain the increase, I am not satisfied on the balance of probabilities that the unexplained increase in that expense is one which I should take into account in determining the husband’s capacity to meet the wife’s claim. Allowing say $250 per week for his credit card liabilities, the husband’s weekly expenses are approximately $3,822. On that basis the husband has a surplus of income over expenses of approximately $170 per week.
The expenses claimed by the husband in both Financial Statements sworn by him make provision for payment of the mortgage on the former matrimonial home.
Having regard to the matters to which I have referred with respect to the husband’s income and expenses, I am satisfied that the husband has the capacity to continue to meet one half of the payments in respect of that liability.
Given the husband’s concession with respect to the sale of the Suburb D property, I will make orders that provide for the sale of that property in the event of the husband’s continuing default on the payment of the mortgage over the former matrimonial home. Although the husband submitted that he would also consent to the sale of the J Flat, that was not an issue put before the Court and accordingly I make no orders with respect to that property.
A sale of the Suburb D property will ensure that the husband has available a further $635 per week (being the mortgage liability on the Suburb D property) to apply towards the mortgage liability on the former matrimonial home. Further, he will be relieved of the obligation to meet expenses with respect to the Suburb D property.
The wife also sought orders that the husband make payments with respect to interest and costs incurred as a result of his failure to meet the mortgage liability. The arrears are said to be $16,695.29.
As noted earlier the husband asserts that he is not in a position to meet that liability. On the face of his Financial Statement he does not currently have a pool of funds from which he can meet that liability. In my view, that claim is one more appropriately dealt with at the final hearing where the evidence of the parties can be tested. Accordingly, I will order that in the event of a sale of Suburb D, the arrears be paid from the sale proceeds with the question of any adjustment between the parties with respect to the arrears to be determined by the trial judge.
The orders I make are as follows:-
(1)That until further order the husband pay or cause to be paid to the Bendigo and Adelaide Bank as and when they fall due, one half of the monthly repayments due on the mortgage secured over the property situate at and known as B Street, Suburb A in the State of Victoria (“the Suburb A property”).
(2)That in the event of the husband’s non-compliance with paragraph 1 hereof for a period of 30 days, the parties forthwith do all acts and things and sign all documents necessary to cause the property situate at and known as C Street, Suburb D in the State of Victoria (“the Suburb D property”) to be sold on such terms and conditions as agreed between them and in default of agreement as follows:-
(a)By a licensed real estate agent (“the Estate Agent”), either as appointed by the parties, or failing agreement, the Estate Agent as appointed by the President of the Real Estate Institute of Victoria; and
(b)At an agreed reserve price, or failing agreement at a price to be determined by the Estate Agent.
(3)That there be liberty to apply with respect to the terms and conditions of the sale of the Suburb D property.
(4)That the proceeds of sale of the Suburb D property be applied as follows:-
(a)First, to pay the costs of and incidental to the sale including agent’s commission and advertising;
(b)Second, such amount as required to discharge the mortgage secured over the Suburb D property;
(c)Thirdly, to apply such sum as is required to discharge any arrears outstanding with respect to the mortgage on the Suburb A Property;
(d)Fourth, the balance then remaining to be paid into an interest-bearing account in the names of the parties to be applied as follows:-
(i) In payment of the husband’s liability under the mortgage to the Suburb A property pursuant to order 1 hereof; and
(ii) The balance remaining to be held on trust until further order.
(5)That the question of the husband’s liability with respect to interest and costs incurred as a result of his failure to meet the mortgage liability secured against the Suburb A property be reserved to the trial judge.
(6)That the wife’s Application in a Case filed 21 April 2016 and the husband’s Response to an Application in a Case filed 3 June 2016 be otherwise dismissed.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 22 June 2016.
Associate:
Date: 22 June 2016
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