Johanson & Johanson
[2021] FedCFamC1F 148
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
Johanson & Johanson [2021] FedCFamC1F 148
File number(s): BRC 6694 of 2017 Judgment of: BAUMANN J Date of judgment: 21 October 2021 Catchwords: FAMILY LAW – PROPERTY – Where the Court delivered Reasons for its declaration that a financial agreement is binding upon the parties – Where the Respondent has filed an appeal in respect of that decision – Where the Applicant seeks to enforce the binding financial agreement – Where the Respondent seeks the order be stayed – A conditional stay granted on the basis the Respondent pay the Applicant a sum of $6,000 spousal maintenance per calendar month Legislation: Family Law Act 1975 (Cth) s 90KA
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 13.12
Cases cited: Aldridge & Keaton (Stay appeal) [2009] FamCAFC 106 Jackamarra v Krakouer (1998) 195 CLR 516 Division: Division 1 First Instance Number of paragraphs: 22 Date of hearing: 7 October 2021 Place: Brisbane Counsel for the Applicant: Mr Linklater-Steele Solicitor for the Applicant: Naughton McCarthy Family Lawyers Counsel for the Respondent: Ms McLennan Solicitor for the Respondent: Morgan Mac Lawyers ORDERS
BRC 6694 of 2017 BETWEEN: MS JOHANSON
Applicant
AND: MR JOHANSON
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
21 OCTOBER 2021
THE COURT ORDERS BY CONSENT UNTIL FURTHER ORDER:
1.That pursuant to section 90KA(c) of the Family Law Act 1975 (Cth) (“the Act”), clause 4.2(a) of the Binding Financial Agreement entered into between the parties dated 22 January 2014 (“the financial agreement”) regarding the payment of spousal maintenance to the Applicant by the Respondent is to be enforced as if it were an order of the Court.
2.That pursuant to section 90KA(b) of the Act, the Respondent is liable to the Applicant for interest on any amounts payable to the Applicant pursuant to clause 4.2(a) of the financial agreement, from the time that each amount became due and payable, at the rate prescribed by subsection 117B(1) of the Act and Rule 10.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
3.That the Respondent pay to the Applicant the sum of $587,632 pursuant to clause 4.2(a) of the financial agreement, representing payments outstanding as of 7 October 2021.
4.That the Respondent pay to the Applicant the sum of $88,096.53, representing interest outstanding on payments required to be made pursuant to clause 4.2(a) of the financial agreement as at 7 October 2021, and increasing in the amount of $98.21 per day, as calculated by Annexure A to the affidavit of Ms Johanson filed contemporaneously with the Application in a Proceeding filed 23 September 2021.
THE COURT ORDERS PENDING DETERMINATION BY THE FULL COURT OF THE FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA OF THE RESPONDENT’S NOTICE OF APPEAL:
5.That the further hearing of the Applicant’s Enforcement Application filed 3 July 2017 and the Application in a Case filed 23 September 2021 be stayed, subject to Order 6.
6.That the Respondent make a payment of $6,000 per calendar month to the Applicant with the first payment to be made on 28 October 2021 and on the twenty-eighth day of each month thereafter.
7.That otherwise the Applicant’s pending Applications are adjourned for Case Management Hearing on a date to be fixed.
IT IS NOTED:
A.That Order 7 should not be construed as a variation of clause 4.2(a) of the binding financial agreement, but as a condition imposed on the grant of a stay.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Johanson & Johanson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
On 19 August 2021, the Court delivered Reasons for its declaration that a financial agreement dated 22 January 2014 is binding upon the Applicant, Ms Johanson, and the Respondent, Mr Johanson.
From that Judgment the Respondent has filed an appeal, and as a result, on 6 October 2021, the Respondent filed an Application in a Proceeding seeking an order “pursuant to Rule 13.12 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”), that the order made by the Court on 19 August 2021 in this matter be stayed until further order.”
The Applicant, who the history of the substantive proceedings demonstrates, had initiated enforcement proceedings in July 2017, also subsequent to the declaration being made, filed an Application in a Proceeding on 23 September 2021 seeking the following orders:
Spouse maintenance
1.That pursuant to section 90KA(c) of the Family Law Act 1975 (Cth) (the Act), clause 4.2(a) of the Binding Financial Agreement entered into between the parties dated 22 January 2014 (the financial agreement) regarding the payment of spousal maintenance to the Applicant by the Respondent is to be enforced as if it were an order of the Court.
2.That pursuant to section 90KA(b) of the Act, the Respondent is liable to the Applicant for interest on any amounts payable to the Applicant pursuant to clause 4.2(a) of the financial agreement, from the time that each amount became due and payable, at the rate prescribed by subsection 117B(1) of the Act and Rule 10.17 of the Family Law Rules 2021.
3.That the Respondent pay to the Applicant the sum of $587,632 pursuant to clause 4.2(a) of the financial agreement, representing payments outstanding as of 7 October 2021.
4.That the Respondent make the ongoing payments to the Applicant pursuant to clause 4.2(a) of the financial agreement on the 28th day of each month.
5.That the Respondent pay to the Applicant the sum of $88,096.53, representing interest outstanding on payments required to be made pursuant to clause 4.2(a) of the financial agreement as at 7 October 2021, and increasing in the amount of $98.21 per day, as calculated by Annexure A to the Affidavit of Ms Johanson filed contemporaneously with this Application in a Proceeding.
6.That the Respondent attend an enforcement hearing at the Federal Circuit and Family Court of Australia on a mutually agreed date and failing agreement within 7 days of this order, at 9am on the 21st day from the date of this order.
7.That the Applicant may serve upon the Respondent a set of specific questions, such questions to be in writing, limited to 20 questions, and not to be vexatious or oppressive.
8.That the Respondent must file and serve an affidavit within 21 days after receiving the specific questions pursuant to Order 7, and the Respondent must in the affidavit answer, fully and frankly, each specific question, or object to answering a specific question (such objection to specify the grounds of the objection and to briefly state the facts in support of the objection).
Insurance
9.That pursuant to section 90KA(c) of the Act , clause 5.2(o) of the financial agreement regarding the payment of premiums for a life insurance policy in the Applicant’s name is to be enforced as if it were an order of the Court.
10.Costs.
(as per original)
After the Court had made orders by consent on 6 September 2021 for further discovery, the competing Applications in a Proceeding were listed for determination before me on 7 October 2021, when the Court heard brief oral submissions from Mr Linklater-Steele of counsel for the Applicant and Ms McLennan of counsel for the Respondent. I also received written submissions, which have now been considered.
Before moving to the issues which need to be determined, as a result of the oral submissions, where Ms McLennan (on her instructions) did not oppose the making orders 1, 2, 3, and 5 of the Applicant’s orders sought, as a result, those orders are now made.
I recall, however, that before Ms McLennan confirmed the Respondent’s lack of opposition to the making of those orders, I drew to her notice that although the Respondent did not cavil with the calculations (specifically deposed to by the Applicant in her affidavit filed 23 September 2021), the making of an order as sought by the Applicant of the debt being owing could conceivably found a Bankruptcy Notice being presented by the Applicant. Ms McLennan did not convey to the Court any change of position by the Respondent as a result.
It follows therefore, that the issue to be determined now is whether the Enforcement Application the Applicant has pending before the Court should progress or be stayed pending the determination of the Respondent’s appeal, and further, if stayed, whether a condition of the stay is, as the Applicant contends, that the Respondent pay to the Applicant the ongoing payments pursuant to clause 4.2(a) of the financial agreement.
In response, the Respondent says he has no capacity to make any payment to the Applicant and he relies upon his affidavit filed 5 October 2021 and Financial Statement filed 20 September 2021 to support his position.
THE STAY APPLICATION
The principles to be applied when considering a stay application are not controversial and were contained within the respective written submissions of counsel, relying upon the well‑known authorities such as Aldridge & Keaton (Stay appeal) [2009] FamCAFC 106 and Jackamarra v Krakouer (1998) 195 CLR 516. I propose to grant the stay on conditions, because:
(a)although not surprising, the Respondent contends they are “confident” that their appeal will succeed and the Applicant contends that the appeal (particularly grounds 1 and 2) are “never likely to succeed.” I accept that the grounds are at least “arguable”;
(b)I accept that a prejudice arises to the Applicant if a stay is granted, in seeking to recover the current debt (with interest) exceeding $670,000, even though the Respondent’s Financial Statement (yet to be properly tested), deposes to available assets of $1,450,028 being exceeded by asserted liabilities of $2,690,273. To some extent this is, it seems, largely due to the fact that the Respondent, at item 35, allows for less than 100% of the value of the jointly owned P Street, Suburb Q property, whilst at item 46, brings into account 100% of the home mortgage; and
(c)if a stay was not granted, then the Applicant would seek to enforce payment, at least, of the debt and, again on the Respondent’s current evidence, part of the debt might be received from the Respondent’s nett interest in the Suburb Q home. If that course was adopted, that would obviously affect not only the Respondent, but the interests of his wife, Ms R. In these circumstances, if a stay were not granted, the appeal may be rendered nugatory – a finding which the authorities make clear is a substantial factor to be considered.
However, it is open for the Court to consider if any condition to the grant of a stay should be imposed, in the exercise of discretion. I deal with this issue next.
IF A STAY IS GRANTED, SHOULD THE RESPONDENT BE REQUIRED TO PAY ANY FUNDS TO THE APPLICANT, PENDING THE DETERMINATION OF THE APPEAL?
The Applicant says that:
(a)the Respondent has an obligation to pay the Applicant $10,833 per month;
(b)the Respondent concedes his gross income is $21,473.85 per week (paragraph 14) but with the addition of a salary paid to his wife of $675 nett of tax per week and a 50% share of the nett profit for S Pty Ltd of $1096 per week, the Respondent’s total gross income amounts to $23,244.85 per week – or a figure of $100,724 per month;
(c)for the reasons set out at paragraphs 16 to 26 of the Applicant’s submissions, the Applicant contends that the Respondent’s weekly expenses of $19,871.15 should be reduced to $13,952.40 a week (see paragraph 27); and
(d)on this basis, the available weekly income of the Respondent is $9,292 ($40,265 per month), and after reasonable living expenses, it is submitted the Respondent “can clearly pay and should be required to pay the monthly amount provided for under the agreement”.
The Respondent says that:
(a)although his nett personal income to 30 June 2020 was $10,642.73 per week, for the year ended 30 June 2021 it increased to $21,473.85 per week, and after deductions of income tax payments he makes, being PAYG of $9,054 plus an additional sum of $4,000 a week – his nett “take home income” is only $8,473.85 to meet expenses estimated at paragraph 20 of the Respondent’s submissions (with the $13,000 tax paid) of $8,764.39 – a claimed deficit of $290.54 per week; and
(b)because of the work commitments (six days a week) and “unrelenting stress caused by these proceedings he has been required to undergo psychiatric treatment.”
DISCUSSION
The analysis to be undertake, as to whether or not a condition for the granting of the stay is the payment by the Respondent to the Applicant of a regular payment pending the determination of the appeal, is not akin to a spouse maintenance application.
The Applicant is not obliged to, for example, demonstrate she is unable to adequately support herself. She has the benefit of a provision of a binding financial agreement, which obliges the Respondent to pay her $10,833 per month. The Judgment that the financial agreement is to be binding is presumed to be correct and Applicant is entitled to the benefit of the Judgment.
I have considered the submissions of the parties. The exercise of this discretion does not requires a detailed analysis of the untested sworn evidence, particularly of the Respondent, who should pay the Applicant something if he has the capacity to do so, in my view.
Despite the Respondent’s protest to the contrary, he does have the capacity to pay to the Applicant at least $6,000 per month, for these brief reasons:
(a)I accept the submissions of the Applicant that the Respondent’s gross income is approximately $23,244 per week. It is not clear on what basis he personally pays his current wife a nett “wage” of $675; and
(b)This gross income would total an estimated gross annual income of $1,208,680. His accountant estimates the Respondent’s tax liability as $663,394. The current payments of $13,000 per week amount to $676,000 per annum. In the year ended 30 June 2020, on a total taxable income of $957,306 (some $250,000 less the current estimate of $1,208,680), he attracted a tax liability of approximately $423,000 (including the Medicare levy), but as Annexure “J-1” makes clear, his PAYG deductions of $334,873 were insufficient, and after allowance for a further withholding tax credit, he had to pay a sum of $65,995.80 by 15 June 2021. Clearly his payment of the additional $4,000 per week is calculated to cover and therefore avoid a lump sum payment as occurred for the 2020 tax year. I find that taking into account the increase in taxable income and the estimate of tax offered by the Respondent’s accountants, his decision to pay $13,000 a week to the Australian Taxation Office, on the current untested evidence, is reasonable.
However, from the gross income of approximately $23,244 a week, after allowance for the tax being paid of $13,000 a week, a nett of, at least, $10,000 remains available to the Respondent. Whilst he currently has decided to pay his wife $675 nett, I do not take into account this “income splitting” when considering his available funds to live on.
Whilst I have considered the submissions of counsel for the Applicant as to the “double counting” of various expenses, I am not persuaded this has occurred in every case.
The Respondent submits that (at para 20(c) of his submissions) his weekly expenses (ignoring tax) amount to $8,764.39. If those expenses were adopted, the Respondent would have approximately $2,000 a week available for general living expenses ($1245 + 675 = $1920).
However, two discretionary payments he makes, in my view, stand out as having much less priority to the legal obligations he has to the Applicant under the binding financial agreement, being:
(a)his voluntary superannuation commitments of $250 per week, where his current member benefits amount to around $871,126 already; and
(b)$1,000 per week which relates to voluntary payments made to the children of his wife, to whom he holds no legal duty.
The Respondent’s Financial Statement chose not to reveal his general living expenses (either at item 32 or Part N of his Financial Statement), however, doing the best I can, I am satisfied the Respondent can manage his finances, so as to pay $6,000 a month to the Applicant without unreasonably affecting his right to live (and support his wife) to a reasonable standard.
For these reasons, the stay in which I order, is conditional upon the Respondent paying to the Applicant the sum of $6000 a month, payable to a bank account nominated by the Applicant on the twenty-eighth day of each month, commencing 28 October 2021.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 21 October 2021
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