Kanelos and Kanelos

[2014] FamCA 36

FAMILY COURT OF AUSTRALIA

KANELOS & KANELOS [2014] FamCA 36

FAMILY LAW – PROPERTY – Interim – Where the wife sought interim orders that the husband pay the mortgage and other outgoings associated with the former matrimonial home, that she and the children have exclusive occupation of the former matrimonial home, that restraining orders be made for her personal protection, that the husband sell one of his motor vehicles, that the husband pay the wife’s costs and that the husband provide disclosure material as requested by the wife – Where the husband sought in response that the parties sell the former matrimonial home and that the wife pay all arrears of mortgage repayments and all mortgage instalments – Relevant legal principles applied – Where it is determined that sale of the former matrimonial home is premature at this stage of the proceedings – Where the court declined to make a finding that the wife has an actual shortfall of expenditure as claimed – Where the court found that the husband has the capacity to pay spouse maintenance – Where the court declined to make an order for exclusive occupation of the former matrimonial home given that the husband has established an independent residence – Where it is open to the wife to seek an apprehended violence order pursuant to State legislation – Where the court made an order for sale one of the husband’s motor vehicles – Where the court declined to make an order for costs in favour of the wife.

Family Law Act 1975 (Cth) s 72
Family Court Rules 2004 15.41

APPLICANT: Ms Kanelos

RESPONDENT: Mr Kanelos

FILE NUMBER: SYC 6320 of 2013

DATE DELIVERED: 4 February 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 23 January 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wong

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

COUNSEL FOR THE RESPONDENT: Mr Livingstone

SOLICITOR FOR THE RESPONDENT: H Danalis & Co

Orders pending further order:

1. 1.1      That each of the parties pay promptly one half of all mortgage repayments of principal and interest as required from time to time by ING Bank in respect of the liability secured on the title to the property situate at and known as B Street, Suburb C in the State of New South Wales.

   1.2      That the husband pay all rates and insurances in respect of the Suburb C property.

2. That the husband forthwith do all things necessary to effect the sale of the … Renault … motor vehicle and apply the proceeds thereof to the discharge of the chattel mortgage to D Company.

3. That all outstanding applications and responses seeking interim orders are otherwise dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6320 of 2013

Ms Kanelos  

Applicant

And

Mr Kanelos

Respondent

REASONS FOR JUDGMENT

the proceedings

1. By an Amended Application filed on 22 January 2014 the wife, Ms Kanelos, sought a number of interim orders which were summarised as follows in the case outline submitted on her behalf:

   2.As set out in the Wife’s Amended Initiating Application filed 21 January 2014, the Wife seeks interim orders that would essentially see the Husband:

   (a)Provide outstanding disclosure material requested by the Wife (Order 2);

   (b)Meet mortgage repayments and other expenses referable to the former matrimonial home where she and the children live, and discharge the current arrears in respect of the mortgage (Order 3);

   (c)Pay child support (including periodic and non-periodic amounts) for the parties’ two children, [E] and [S] (Orders 4 and 5); and

   (d)Be restrained from attending the former matrimonial home and otherwise assaulting, molesting, harassing or otherwise interfering with the Wife, and that the Wife have sole use and exclusive occupation of the former matrimonial home (Orders 6 and 7);

   (e)That the Husband sell the … Renault motor vehicle registered in his sole name, and apply the sale proceeds (excluding sale costs) to reduce/discharge the chattel mortgage to [D Company] (Order 8); and

   (f)Costs (Order9).

2. By a Response filed on 17 January 2014 the husband, Mr Kanelos, sought orders which may be summarised as follows:

   (a)that the parties effect the sale of the former matrimonial home at B Street, Suburb C (“the Suburb C property”) and invest the net proceeds in a term deposit, pending agreement or orders as to distribution thereof

   (b)that the wife pay all arrears of mortgage repayments in relation to the Suburb C property within 14 days

   (c)that the wife pay all mortgage instalments in respect of the Suburb C property until completion of its sale.

3. At the commencement of the interim hearing on 23 January 2014 counsel for the wife informed the court that she did not press her application for child support departure orders.  That application included an order that the husband pay the children’s private school fees.

4. The husband and wife, who are aged 43 and 38 respectively, began to live together in late 1994/early 1995 and married in November 1996.  They separated under one roof on 8 August 2013, according to the husband, and it was common ground that he moved out of the former matrimonial home on 9 September 2013.

5. The parties have two children:

   E born in July 2001 (12)    and

   S born in September 2003 (10).

   The children live in the Suburb C property with the wife.  It seems that they spend time with the husband on weekends as agreed between the parties.  Currently, there are no parenting orders in force. 

6. The husband lives in rented premises at Suburb A.  He works as a healthcare professional, on contract with a company known as F Group Pty Limited.  The husband’s level of income was an issue in the proceedings. 

7. On 2 December 2013 the wife commenced full time work in healthcare with Business G, on a salary of approximately $87,000 per annum.  Her employment is subject to a probationary period which expires in March 2014.

8. The children attend private schools, being H School for E and I School in the case of S.  Both parents signed their enrolment forms during the marriage.  Some of the school fees have been paid by the parties’ parents.

9. The Suburb C property was purchased by the parties jointly for $830,000 in May 2006.  They borrowed approximately $730,000 from the ING Bank and the wife’s parents contributed a sum of $100,000.  Currently the mortgage repayments are in arrears in an amount of $8,234. 

10. Shortly after the separation the wife withdrew $26,000 from a joint account and lodged these funds in her Commonwealth Bank account.  According to her Financial Statement of 21 January 2014 the balance of this account had decreased to approximately $3,946.  In her affidavit of 21 January 2014 the wife deposed that she applied $12,527 from the original sum of $26,000 to meet mortgage repayments.  Otherwise, she used this money to cover expenses of the children.

11. According to the wife she received a total of $3,363 from the husband on account of child support between the separation and 21 January 2014.  The husband deposed that he made an additional payment of $164 on 1 February 2014, constituting a total of $2,527.

12. The Child Support Agency issued an assessment on 10 January 2014 (exhibit 15 to the husband’s affidavit) which requires the husband to pay a total of $4,137 per month for both children.  There was no suggestion that he has sought to vary this assessment.  According to a Statement of Arrears issued by the Agency (annexure B to the wife’s affidavit of 21 January 2014) the husband has a current debt of $17,516.  He pays a total of $392 per week but the new assessment will require him to increase that sum to approximately $955.

13. The husband owns two motor vehicles, both of which are encumbered by either a hire purchase contract or a chattel mortgage.  The Audi has a present market value of some $32,000 and the payout figure in relation to the hire purchase contract is about $45,000.  The Renault has a present value of $48,000 and is subject to a chattel mortgage in approximately the same amount.

CONSIDERATION AND CONCLUSION

1. The Husband’s Application for Sale of the Suburb C Property

2. In my view, an order for the sale of this property would be premature at this stage of the proceedings.  On a final basis, the wife seeks to retain the former matrimonial home and I consider that she should retain that opportunity.  She has the prospect of ongoing employment at a gross annual salary of some $87,000.  Accordingly, she may well be able to secure a mortgage loan which would enable her to acquire the husband’s interest in the property.  Additionally, I cannot discount the possibility that she may be able to obtain financial assistance from a non-commercial source.  I am conscious that her parents provided $100,000 when the parties purchased the property and it may be that they will provide further financial assistance to her.

3. The Wife’s Application for Orders that the Husband Pay the Mortgage and Other Outgoings in Respect of the Suburb C Property

4. The wife expressly sought these orders by way of interim spouse maintenance. Accordingly, she must establish that she is unable to support herself adequately for the purposes of section 72 of the Family Law Act. If she can establish such a need, the next step is an enquiry into whether the husband has the capacity to pay spouse maintenance.

5. The wife’s uncontradicted evidence was that the mortgage repayments amount to $2,071 per fortnight.  According to her Financial Statement the rates are $58 per week and insurance approximately $50 per weeks, if these figures are converted to weekly sums.  The wife thus seeks orders that the husband pay spouse maintenance amounting to approximately $1,144 per week without any allowance for the arrears of mortgage instalments.

6. The wife’s currently gross weekly income from salary is $1,673.  The current child support assessment requires that the husband pay approximately $954 per week, which would mean that the wife receives a total amount of $2,627.  She pays tax of $351, which would leave a net weekly amount of $2,276.

7. None of the expenses set out in Part G of the wife’s Financial Statement of 21 January 2014 seem excessive or unreasonable and amount to a total of approximately $2,009 per week.  This figure includes mortgage repayments and rates.

8. The wife’s expenses as set out in Part N of her Financial Statement of 21 January 2014 include a sum of $700 per week on account of private school fees.  As noted, the wife did not press her application for a child support departure order which included provision for the husband to pay these fees.

9. Leaving aside the sum of $700 per week for school fees, the wife’s total weekly expenditure thus amounts to approximately $3,969, which includes the mortgage and other outgoings in respect of the Suburb C property.  In my view, some of the expenses which appear in Part N of her Financial Statement appear to be inflated, for example, $60 per week for gifts and $140 per week for medical, dental and optical expenses in addition to the cost of health insurance. 

10. In these circumstances, I find that the wife has established that she is unable to support herself adequately for the purposes of section 72 of the Family Law Act.

11. I do not find that the wife has an actual shortfall of income over expenditure of $1,693 per week, being the difference between $3,969 and $2,276.  I decline to make such a finding because I consider that the wife could well have exaggerated or inflated some of her expenses and her evidence will not be tested until a final hearing takes place.

12. The next question is whether the husband has the capacity to pay spouse maintenance and, if so, in what amount.  As noted, there was a significant issue as to the level of the husband’s income.  He also raised an issue as to his ongoing capacity to engage in gainful employment to the correct extent.  His uncontradicted evidence was that he suffers from a depressive illness and will require further surgery to correct a detached retina.  I will consider  below the wife’s objection to the evidence relating to the husband’s health.

13. The husband obtained registration as a healthcare professional in 1996.  Between that time and 2000 he worked at J Hospital, while undertaking specialist training.  In about January 2001 he commenced contract work for Business K, which continued until he and the wife established a partnership known as “L Partners” in 2005.  The wife’s role in the partnership was that of practice manager. 

14. The husband’s uncontradicted evidence was that he worked in this practice for six or seven days per week until he closed the business in January 2012, because of his depressive illness.  He was admitted to M Hospital for one day and then N Clinic for two weeks, under the care of Dr O.  Since 2005 the husband had been consulting a psychiatrist, Dr P.

15. The husband’s uncontradicted evidence was that he did not work between January 2012 and the end of April 2012, during which period he received income from an insurance policy.  He then took on work for one day per week at Q Hospital.  In May 2012 he began to work for F Group Pty Limited for two to three days per week, which increased to full time employment over the next few months.

16. In his Financial Statement of 16 January 2014 the husband deposed to a gross weekly income of $3,036, consisting of contract payments of $2,960 and $76 on account of rental from an investment property which he owns with his parents and sister.  He deposed that he pays tax of $938, leaving a total net weekly income of $2,098. 

17. In his affidavit the husband deposed that his gross weekly income for the period 1 July 2013 to 18 December 2013 was $84,529.  He estimated a taxable income for the period 1 July 2013 to 31 December 2013 of $74,000, including rental and after deduction of business expenses. 

18. Exhibit 1 consisted of statements in relation to the husband’s IMB personal debit card account for the period 16 August 2013 and 7 January 2014.  These statements show a pattern of deposits from F Group Pty Ltd at the midpoint and the end of each month, although there were three injections of funds from that source during December 2013.  The following deposits can be identified from the statements:

16.8.13	$8,210
30.8.13	$7827
13.9.14	$4,061
27.9.13	$3,893
11.10.13	$10,288
24.10.13	$4,766
8.11.13	$7,880
22.11.13	$5,249
6.12.13	$6,779
19.12.13	$8,388
24.12.13	$2,870
Total:	$70,210

I reject the wife’s evidence, in her affidavit of 21 January 2014, that the husband also received a payment of $8,000 from F Group Pty Ltd on 17 December 2013.  The relevant statement reads “[D Company], Lodg Ref Drawdown Request”.  The sum of $70,210 equates to $14,042 per month or roughly $3,500 per week.

1. Counsel for the husband conceded properly that some of his expenses, as set out in his Financial Statement “fall outside of what is necessary” and cited as an example the operation of two motor vehicles.  The husband travelled to Greece late in 2013, although it seems that the wife may have commenced some kind of proceedings in that country in relation to property owned by the husband and his family. 

2. Exhibit 4 contained, inter alia, copies of the husband’s HSBC credit card statements.  These documents establish that he spent $3,700 on audio-visual equipment in September 2013 and $1,294 at JB HiFi the same month.  Although the husband was required to establish independent accommodation after the separation, it seems that he has furnished his apartment comfortably.  The wife gave uncontradicted evidence that the husband declined to take certain furniture and contents from the former matrimonial home, saying words to the effect:  “no, they won’t match my new place”. 

3. Part N of the husband’s Financial Statement 16 January 2014 would suggest that he spends $250 on food and $110 per week for entertainment for himself.  As was my view in relation to some items of the wife’s asserted expenditure, it appeared that there was an element of excessiveness to some of the husband’s supposed recurring costs. 

4. Documents produced on subpoena by D Company (exhibit 2) showed that the husband purchased a Renault motor vehicle for $48,990 on 26 March 2013, by way of a chattel mortgage in the sum of $48,990.  The repayments are $686 per month, or approximately $158 per week.  It seemed that husband offered no real opposition to the wife’s application that he sell this motor vehicle and discharge the associated debt.  His available income would thus increase by some $158 per week.

5. It was submitted on behalf of the wife that the reports of Dr O and Dr R should not be admitted into evidence.  Firstly it was submitted that these reports were not verified by affidavit.  Secondly, it was contended that their contents exceed the boundaries of Rule 15.41.  I reject both of these submissions, although to a limited extent in respect of the second proposition.  In my view I may receive the reports of these two medical practitioners, in this form, in the context of interim proceedings.  I would take a very different view in a final hearing.  For present purposes it seems to me that I am charged with doing no more than “steadying the ship” until all issues between the parties can be properly considered and determined on a final basis.

6. There is no doubt that both Dr O and Dr R are treating medical practitioners of the husband.  In my view Dr O was entitled to make all of the comments set out in the first paragraph of his report (exhibit 8 to the husband’s affidavit) and, in my view, I may properly have regard to this material.  Dr O there set out the history of his treatment of the husband; his diagnosis of “severe major depression with melancholic features” and his recommendation that he reduce his workload.  I have no regard to the material contained in the balance of Dr O’s report, which in my view does exceed the boundaries of Rule 15.41.

7. I see similar difficulties in the final paragraph of the report of Dr R (exhibit 9 to the husband’s affidavit).  In the first two paragraphs Dr R merely set out his treatment of the husband’s retinal condition and his opinion that “right vision is significantly compromised from retinal detachment and silicone oil in the eye”. 

8. Accordingly, I find that the husband suffers from depression and a retinal problem.  It may be that either or both of these conditions will adversely affect his ongoing ability to engage in gainful employment.  That finding, however, is not open on the existing evidence.

9. I was left with some uncertainty as to the level of the husband’s income and his legitimate expenditure.  It seems to me, however, and I find that the husband has the capacity to pay spouse maintenance. 

10. Given my doubts as to the reliability of the evidence in relation to the expenses of both parties and the husband’s income, I was left in a position of making an interim order that the parties share responsibility for payment of outgoings in respect of the former matrimonial home.  I take into account, inter alia, that the husband must finance his own accommodation and the wife has the benefit of occupation of the former matrimonial home.

11. It seems to me that the parties should bear equally the mortgage repayments and that the husband should meet the costs of rates and insurance.  Accordingly, I will make orders to that effect.

12. There was evidence from the wife as to the possibility of an arrangement with the mortgagee in relation to the existing arrears.  She deposed that the husband’s solicitors invited her to join in a “hardship application”, whereby the arrears would be added to the principal.  On her instructions, her solicitors responded that she would do so only on condition that the husband would be solely liable to meet any additional interest and increased principal in the event that he is found to have capacity to service the loan.

1. In my view, findings as to the husband’s capacity to service the entirety of the mortgage debt must await a final hearing.  It is, at this stage, a matter for the parties whether they wish to present a “hardship application” to their mortgagee bank.  There was no evidence that the husband has access to the liquid funds sufficient to discharge the arrears, hence I decline to make such an order.

2. The Wife’s Application for Exclusive Occupation of the Suburb C Property and Restraining Orders for her Personal Protection

3. The parties gave conflicting accounts of an incident at the former matrimonial home on 7 December 2013.  Each party alleged that the other was the aggressor and there was no independent evidence to corroborate either version.  There was no evidence that the police saw fit to take any action against either party.  In the context of these circumscribed interim proceedings, I have no reason at all to prefer one parties’ version of these events to that of the other.  I would observe that, if the wife has genuine fears for her safety or security, nothing whatsoever prevents her from seeking an apprehended violence order against the husband pursuant to State legislation.

4. Similarly, I decline to make an order for exclusive occupation of the former matrimonial home in favour of the wife.  The husband is a joint owner of the property but he has voluntarily established an independent home.  In my view, the evidence given by and submissions on behalf of the wife fell well short of establishing any proper basis for such an order. 

1. The Wife’s Application for Sale of the Renault Motor Vehicle

2. As noted, it seemed that there was no real resistance on the part of the husband for sale of this asset and discharge of the debt to D Company.  The husband has available an Audi motor vehicle for his personal use, thus there will be no practical disadvantage to him of such an order. 

3. The Wife’s Application that the Husband Pay her Costs

4. There is no basis, in my view, for such an order.  The wife certainly has been far from wholly successful in the present proceedings.  In any event, I have no evidence of the quantum of her costs.

5. The Wife’s Application for Disclosure by the Husband

6. It was conceded on behalf of the wife that the solicitors for the husband received a request that he produce certain documents by facsimile at 2:19pm on the day prior to the interim hearing.  I intend to allow the husband and his lawyers an opportunity to fulfil his disclosure obligation in a timely manner.

I certify that the preceding forty seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 4 February 2014.

Associate:     

Date:              4 February 2014