Kanelos and Kanelos and Ors

[2014] FamCA 466

FAMILY COURT OF AUSTRALIA

KANELOS & KANELOS AND ORS [2014] FamCA 466

FAMILY LAW – PROPERTY – Enforcement of interim orders – Where the wife sought to enforce interim maintenance orders – Where in response, the husband sought to vary orders made for interim spousal maintenance – Where the husband claims that he cannot afford the payments – Where the husband did not challenge the maintenance orders initially made by the Court – Where there is evidence that the husband suffers medical conditions – Where the husband has not made a case which would warrant a change in the orders – Where the wife seeks an order that the arrears be made or alternatively that the Court make a declaration as to the arrears – Where the Court declared the value of the arrears owed by the husband – Where the parties’ applications were otherwise dismissed.

Family Law Act 1975 (Cth) s 83

APPLICANT: Ms Kanelos

RESPONDENT: Mr Kanelos

SECOND AND THIRD RESPONDENTS: Mr T Kanelos and
Ms U Kanelos

FILE NUMBER: SYC 6320 of 2013

DATE DELIVERED: 10 June 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 10 June 2014

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

COUNSEL FOR THE RESPONDENT: Mrs Breeze

SOLICITOR FOR THE RESPONDENT: V L Macri Lawyers

COUNSEL FOR THE SECOND AND THIRD RESPONDENTS Mr Ladopoulos

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: Laliotis Lawyer

Orders

1. For the purposes of the enforcement of Orders 1.1 and 1.2 made on 4 February 2014 the Court declared that the arrears owed by the husband in relation to Order 1.1 stand at $7,303.14 and that the recurrent payment required is $1,035.59 per fortnight.  For the purposes of Order 1.2 the Court notes the arrears at $752.49 in respect of insurance and $517.30 in respect of rates and that the recurrent payments are $250.83 per month by way of insurance and $517.30 per quarter in respect of rates.

2. Otherwise and without prejudice to the right of either of the parties to renew their applications in relation to enforcement or in relation to variation of maintenance, the Application in a Case filed 3 April 2014 and a Response filed on 22 April 2014 are dismissed.

3. The question of the costs of the parties, including the third parties, of and incidental to these proceedings is reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym  Kanelos & Kanelos and Ors 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

And

Mr T Kanelos and Ms U Kanelos

Second and Third Respondents

EXTEMPORE JUDGMENT

1. These are proceedings, in effect, to enforce interim spousal maintenance orders and by way of a Response there is an application to vary those orders.

2. Some orders were made by Stevenson J earlier in the year – the hearing was in January and orders were made when judgment was published on 4 February 2014. Relevantly, the orders included an interim order whereby each of the husband and wife were to pay half of the mortgage instalments owing to the ING Bank on a property at Suburb C, the husband was to pay all of the rates and insurances in respect of the property and he was to forthwith cause the sale of a motor vehicle. Otherwise the interim applications and responses were dismissed.

3. I think there was some reference to child support in those proceedings but the issue was not pressed and I understand there may well be child support proceedings underway through the Agency.

4. By way of background, her Honour identified that the husband and wife were 43 and 38 years of age, that they lived together from 1994/95, married in 1996 and separated in August 2012. Physical separation occurred on 9 September. 

5. The parties have two children – E, who is soon to be 13, and S, 10. They live predominantly with the mother. Her Honour noted that they were spending time with the father on the weekends. I am not sure that that still applies. There were then parenting orders and I understand there may be parenting proceedings that were commenced by the father filing his Response to the mother’s Application.

6. In terms of enforcement, enforcement is a discretionary remedy. There is a choice as to whether and how to enforce. Enforcement proceedings are summary proceedings and, in this case, there was no application to take any oral evidence. Therefore there was no capacity, to test any of the evidence. Formal objections were not taken to documents, although, in the course of submissions, arguments were made to the effect that some propositions in the affidavits were not adequately supported by original documents.

7. I should say that the background of the proceedings involves a modest pool of assets and that raises the concern that I expressed to the parties about the costs of contested proceedings not bearing any sensible proportion to the matters at issue. Although there will be a dispute about the valuation, the assertion is that the husband’s interest in a property he co-owns with his parents in Greece might be worth something of the order of $450,000. His equity in a property at Suburb V which he co-owns with his parents and sister might be something like $250,000, and the parties’ equity in a property at Suburb C, courtesy of an injection of funds of the order of $100,000 by the wife’s parents, might be about that same sum. If it costs anything like the normal fees paid for a contested hearing, then it will not be possible to make a just and equitable distribution of the value of the parties’ interests in those properties. Too much money will be spent on legal fees for that to occur.

8. The reality is there are some cases that really need to be settled rather than litigated, and this is one of those. The same arguments do not apply in relation to parenting issues, of course. There are different considerations in those proceedings. 

9. In relation to the husband, his Application must rely on s 83, which says there can be a variation of a maintenance order provided there is evidence of a change of circumstances.

10. The other general proposition in terms of enforcement, while it might not be possible to enforce an order immediately, the order has its own protections built into it. The rules of court provided for interest to run on debts. Provided there is ultimately a property settlement made to the payer, then, if there is a shortfall in maintenance, it can be adjusted in the final property settlement. That said, it is not always the case that there is a ready mechanism for enforcement. 

11. The wife’s Application is for several things to happen. She made an Application which ultimately was not pressed – although, as I acknowledged during the course of submissions, I think more because of something I said than anything else – for the sale of the co-owned property between the husband and his parents in Greece. 

12. It is clear from the affidavit of the husband’s father that the evidence will be from that side of the case that the property was bought entirely with funds paid or borrowed by the husband’s parents. The property was acquired, they say, for a hundred thousand drachmas and developed by them for €295,000. It consisted of two apartments and two shops. The apartments were sold for four hundred and something thousand euros and the shops remain. It is asserted, as I said, that the husband’s 80 per cent interest might be worth $450,000. The parents’ intention was to lure the parties and their children, to Greece but it was the intention of the husband’s parents that they too would have the benefit of that property. That will be their case on a final basis. Thus there is a case to be heard in relation to the husband’s parents retaining the benefit in specie of their interest in the property in Greece. That case would be frustrated if I was to order the sale of the property. 

13. There is a Mozambique rule which says that courts do not make orders in relation to immovables in another jurisdiction. I am told on behalf of the applicant that there is a mechanism for this court to put in place an arrangement which would cause the sale of that property. I do not need to look at that because, in my view, it is not proper to order a sale for the reasons I have indicated. But again normally courts are reluctant seek to deal in a way which has a direct effect on the title of a property if it is outside the court’s jurisdiction. In effect it is a rule of private international law and has impact on forum disputes and so on. 

14. A lesser remedy might have been ordering the husband to realise his interest, but the practicalities of that on an interim basis would probably mean that it could not be achieved.

15. Next, an order was sought in respect of her Honour’s specific order for the sale of a Renault motor vehicle. Her Honour found that it had a value of $48,000 and was subject to a chattel mortgage of about the same amount. I suggested to the wife’s solicitor that a solution, if she was convinced that that was workable, was to make her the trustee for sale of that piece of property. That offer was not taken up by the wife. Well and good. The husband, for his part, said that the value of the property is, in fact, less than the amount owing on it and he did not have the capacity to bridge the gap. It may be that that proposition has been tacitly accepted. Anyway, that method of enforcement in respect of the order for sale of the car was not taken up by the wife.

16. Next, although it is not an automatic or self-executing method of enforcement, the wife seeks that the orders that are made in terms of payment of certain outgoings be expressed in dollar terms so that those amounts can be added to the liability running between the parties in respect of a child support debt and can therefore be collected administratively by the Child Support Agency. I can see some sense in that. It means that, if there is some break in the husband’s financial circumstances which has expression in terms of a fund of money in a bank account, in a line of income or in a debt that is owed by somebody else to him, then the Agency could take action to recover the debt. I am told that the Registrar is drawing something like 40 cents in the dollar on his payments and I am told that the child support debt is about $22,000 – $21,700-odd – as at 27 May. 

17. The argument against that really boils down to that would just further add to the pressure on the husband. It is his case that he could not afford to pay the amount when it was ordered; he cannot afford to pay it now and if, for example, he was to reduce his hours of work, it might get to a point where that garnishee affected his capacity to pay his rent or some other outgoings. Also such an order would mean that the case he wants to make that the maintenance obligation should be set aside or varied; is rejected. I accept the logic of those two arguments. However, all other things being equal, the proposal seems sensible and would not cause any mischief of itself. It would not increase the flow of money from the husband. Importantly, it would probably do nothing to address the main problem for the wife - that there are arrears of the mortgage payments, I think standing at $12,000, $7,303 of which can be sheeted home under the husband’s non-compliance with orders.

18. The wife does not have to demonstrate that there is some hardship caused to her if the order is not enforced. She is entitled as a matter of right to the maintenance that has been ordered and, in the normal course, if there is a mechanism for enforcement, subject to some other matter being identified, she would be entitled to the orders she seeks. 

19. I turn to the husband’s Application. He starts in a difficult place because it is his case that he could never afford the payments. A judge of this Court has decided that he can, and her judgment was not challenged. I cannot simply make a different decision. 

20. Next of concern is that, to the extent that there is evidence that there has been a change of circumstances that satisfies s 83 that would warrant a variation, the husband did not bring the proceedings to court. He did not apply to have the orders set aside or varied or discharged. It was the wife who brought the matter to court seeking enforcement, and only in response to the enforcement was there an application to vary.

21. Those two propositions make life very difficult for the husband. If he was not satisfied that there was a change of circumstances warranting a change in the orders, why would I be satisfied, for example. The husband is caught with the facts he relies on and the husband’s evidence is basically, “I told you so”. He opposed the orders in the first place; he did not think they were appropriate or viable and he opposes them now.

22. The weakness of these sorts of proceedings is identified in her Honour’s reasons: it is not possible to get to the very bottom of everything. Her Honour made some observations about the state of income of the parties and outgoings. She did not make a specific finding about the net income available to the husband, just that he had certain income, certain outgoings and that his outgoings were exaggerated. Her Honour made a similar observation in relation to the wife. I have not been provided with a Financial Statement sworn by either of the parties. Therefore I cannot even compare the information that her Honour had with current evidence to see whether something has changed in the parties’ financial circumstances.

23. As the wife’s solicitor identified, the husband’s evidence boils down to, “My accountant has had a look at things and here is a table setting out the peaks and troughs of my income.” That is not an admissible way to make the case. If a party wants summary opinion evidence to be taken into account then it has to be given through an expert who qualifies themselves as an expert or, if it is a summary of source material, then the summary has to be provided to the other side under the provisions of the Evidence Act. Thankfully, no one has given me the source material, because I would not be terribly assisted by it in a hearing conducted after the matter was referred to me at about 3 o’clock today from the duty list.   

24. So, in summary, the husband cannot make the case that warrants a discharge of the orders that were thoughtfully made by a judge in February of this year and not challenged. On that basis the defence to the enforcement order fails. 

25. There are some other issues. The husband says, “Well, there’s medical evidence,” and her Honour makes some reference to that, accepting over the objection on behalf of the wife, evidence from two doctors. The husband has given some further evidence about that. As is said on behalf of the wife, we do not really know what the import of those circumstances would be in relation to income insurance, for example. The husband does have income insurance. It is not clear on the face of the evidence what the practical impact would be if he was not able to work, whether it was reducing his hours in relation to concerns about his mental health or whether it was having two weeks off or so related to eye surgery.

26. There is an overlay to all this. As I noted during the course of submissions, there is material that suggests that motivation other than impecuniosity might have affected the husband’s decision not to pay. A letter was written by him to the wife in September last year where he appears to seek to trade off school fees for the children against time with the children. Whatever one might say about that in terms of being child-focused or not, it is not a trade-off permissible in terms of these proceedings; and it raises a suspicion that maybe every effort was not being made in a particular quarter for reasons other than a lack of capacity. 

27. That said, there is evidence that the husband suffers certain medical conditions. As I say, he has been treated in relation to mental health, I think depression and anxiety, and has had very serious injury to at least one eye in terms of a torn or detached retina, I gather, and may also have cataracts. He is a healthcare professional by trade and those conditions would no doubt impact on his capacity for work, at least, in the short term. He gives evidence about his medication and so on. 

28. Evidence about mental health cannot be contested without another expert giving evidence. That said the reality is that these proceedings are themselves stressful. The breakdown of a marriage is of itself stressful. Some level of alienation from your children is stressful. Both parties must be concerned about the potential upset and embarrassment the children might suffer if they need to leave their schools, for example. There is a practical reality about those matters. The Court has awesome powers, but it cannot order somebody to work full-time or to work seven days a week or to work diligently. The overwhelming proportion of parents want to do the best by their children and the overwhelming proportion of people want to pay their debts and so on. Unfortunately one needs to rely of those motivations rather than expecting that a Court can resolve these issues at an interim hearing.

29. There will be some opportunity for detailed analysis of the parties’ finances. There are on foot proceedings in relation to child support and those administrative proceedings have a capacity for some analysis of the dollars and cents. If a departure application is granted, that will make a change to the balance of financial support between the parents.

30. The other thing I should have said in relation to the house is there is no suggestion that the payment of the husband’s arrears of $7303.14 would deter the bank, which is owed $12,000, from acting on its s 57(2)(b) notice, its right to recover. On the face of it, the parties’ finances do not come close to adding up and perhaps the home should be sold. The parties and their children have been the beneficiaries of great generosity from the grandparents. Her Honour made some note in relation to that when she was canvassing the proposal of the wife to buy the husband out, requiring as it would the servicing of a $700,000 mortgage plus perhaps some payment to the husband. So there are some things that there is no evidence about in terms of the generosity and forbearance of the in-laws on both sides. Perhaps that explains why this leaky ship continues to sail along as it does.

31. So it follows that the husband has not made a case which would warrant a change in the orders. Some of the case made by the wife is not pressed. There is said to be some doubt about the arithmetic. I have not checked it myself. I will make the orders as asked. If a problem is identified that is just arithmetic and the parties can agree on what the real figures are, then they come back to me and I can amend the orders.

32. The Application seeks that I make an order that the arrears be paid. There is no identified source of funds for that to happen. What is sought by way of fallback position, really, is that I make a declaration as to the arrears. Again, I have not done the calculations. They are revealed to some extent in the wife’s material. If there is a genuine dispute about that, then well and good, the matter can come back.

I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 10 June 2014.

Associate: 

Date:  30 June 2014