Keogh and Meys
[2008] FMCAfam 719
•31 July 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KEOGH & MEYS | [2008] FMCAfam 719 |
| FAMILY LAW – Property – sole occupancy of marital home pending final hearing – matters to be considered – needs of the parties – hardship – conduct – convenience of parties interim spousal maintenance – reasonable and proper. |
| Family Law Act 1975, ss.72; 74; 75, 114 |
| O’Dea & O’Dea (1980) FLC 90-896 Scholte & Scholte (2002) FamCA 59 Davis v Davis (1976) FLC 90-062 Bassett v Bassett (1975) 1 AER 513 Price (unreported) Family Court (Lindenmeyer J) delivered 12 July 1982 Sieling v Sieling (1979) FLC 90-627 MG & JGG [2004] FMCAfam 300 Bevan & Bevan (1995) FLC 92-600 Redman v Redman (1987) FLC 91-805 Briese & Briese (1986) FLC 91-713 Black & Kellner (1992) FLC 92-287 Weir & Weir (1993) FLC 92-338 Luciano & Luciano (unreported) Family Court (O’Ryan J) delivered 8 May 2000) |
| Applicant: | MR KEOGH |
| Respondent: | MS MEYS |
| File Number: | ADC 5890 of 2007 |
| Judgment of: | Brown FM |
| Hearing dates: | 29 May, 6 & 18 June 2008 |
| Date of Last Submission: | 7 July 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 31 July 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr McQuade |
| Solicitors for the Applicant: | David Burrell & Co |
| Counsel for the Respondent: | Mr McGinn |
| Solicitors for the Respondent: | Diane Myers Pty Ltd |
ORDERS
The wife’s application for interim spousal maintenance and sole occupancy of the parties’ jointly owned property situated at Property U is dismissed.
The parties’ applications for settlement of property are fixed for final hearing on 18 and 19 February 2009.
The applicant pay the hearing fee or obtain a Remission Certificate in respect thereof within 28 days of the date hereof.
The applicant file and serve all affidavit evidence and an updated statement of his financial circumstances he proposes to rely on at trial on or before close of Registry filing on 21 January 2009.
The respondent file and serve all affidavit evidence and an updated statement of her financial circumstances she proposes to rely on at trial on or before close of Registry filing on 3 February 2009.
IT IS NOTED that publication of this judgment under the pseudonym Keogh & Meys is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 5890 of 2007
| MR KEOGH |
Applicant
And
| MS MEYS |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to an application for interim spousal maintenance and the right to solely occupy the parties’ jointly owned home, pending trial.
Mr Keogh “the husband” and Ms Meys “the wife” were married in April 2000. They had lived together for the previous four months or so. The husband is fifty-four years of age, the wife is sixty-three. Both had previously been married and both brought assets to the marriage, including real property.
On 10 October 2003, the parties purchased a property at Property U to be their family home. Both disposed of their previously individually held real properties and put the proceeds into the Property U property. There are significant disputes between the parties regarding the extent of their financial contributions to this property, as well as other disputes regarding their other respective contributions, both financial and otherwise, during the marriage.
The marriage between the parties produced no children. The parties separated, under the one roof at Property U, in May of 2007. The wife asserts that it is now emotionally untenable for her that both parties remain living in the one property.
She characterises the husband as having been violent and emotionally abusive towards her, both before and after the parties’ separation. She says she has neither the financial resources to rent alternative accommodation nor access to anyone else with whom she could temporarily lodge. Accordingly, she seeks the husband’s eviction from the Property U property.
The husband disputes the wife’s characterisation of him. To the contrary, he says the wife is out of touch with reality and misconstrues the most trivial events as incidents of extreme violence, either unconsciously or for some ulterior motive, related to the final outcome of these proceedings. He also asserts that the wife lacks insight into the inappropriateness and provocative nature of her own behaviour, particularly her profligacy with money.
In essence, the husband asserts that the wife has no idea about matters financial, living in a world of her own and so cannot be relied upon to be a truthful witness, particularly as she is determined to retain control of the Property U property, come what may.
As a result, the husband seeks the dismissal of the wife’s claim regarding sole occupancy. In support, he points to the fact that the Property U property is large and as such provides ample accommodation to allow both parties to lead separate but comfortable domestic lives.
It is also his position that he lacks the financial resources to provide himself with alternative accommodation and in the circumstances it would be unreasonable to evict him from the property in which he has a sizable financial interest.
Ancillary with her application for sole occupancy, the wife has sought an award of spousal maintenance in the sum of $600.00 per week[1]. It is her position that her age and fragile state of health preclude her from seeking any form of paid employment.
[1] However, in her final submissions, the wife has moderated this amount to $400.00 per week.
The wife has been consulting a psychiatrist, Dr G, who has diagnosed her as suffering from “chronic situational disturbance with a chronic adjustment disorder marked by violent martial relationship, anxiety and chronic stress.” The husband disputes this diagnosis and asserts that it is based on an unreliable history provided by the wife to Dr G.
The husband is employed by X. It is his position that his annual income is around $85,800.00 per annum[2] and that currently his weekly expenditure exceeds his weekly income. This expenditure includes the payment of all outgoings on the Property U property. Accordingly, it is his position that he has no capacity to pay the wife spousal maintenance and is any event providing financial support for her by way of his payment of the outgoings on the Property U property.
[2] See husband’s statement of financial circumstances at paragraph 9
More importantly, it is the husband’s position that the wife has both the physical capacity and resources to derive income for herself. The wife presents herself as having [omitted] abilities. In the past, she has conducted a business known as C Pty Ltd.
Customers of the business are able to telephone the wife and receive her prognostications, which are charged either to their credit card or telephone account. The wife is later credited with a payment for her services, after the expenses of either the telephone provider or credit provider have been deducted.
It is the husband’s case that the business has been highly successful in the past and has provided the wife with a comfortable income. It is also his position that it is both within the wife’s physical and mental capacity to continue to provide [omitted] services to members of the public, who are willing to telephone her and that there is a significant demand, within the community, for services of this kind.
In support of his case, the husband points to the fact that the wife continues to advertise her services in the “Yellow Pages” and in a woman’s magazine “Woman’s Day”, which enjoys a large circulation in Australia. He submits that the existence of this advertising suggests that the wife continues to gain an income from her [omitted] business. He is highly critical of the wife for being obstructive in providing him with information regarding the financial state of the business, particularly its current level of receipts and ongoing viability.
It is the wife’s case that her business is essentially moribund, being killed off by [competitors] in the United States, who offer free services via the internet; pre-paid mobile phone services, which prevent calls to businesses such as hers, which charge the caller by the minute; and recent legislative change. The wife has deposed that her only current source of income is an aged pension.
In her statement of financial circumstances,[3] the wife asserted that her income from the business was nil and the business itself was “inoperative”. The husband disputes both these assertions and submits that, at best, the wife is mistaken regarding the financial circumstances of the business and at worst is being actively disingenuous. Accordingly, it is the husband’s position that the wife’s application for interim spousal maintenance should also be dismissed.
[3] Wife’s statement of financial circumstances filed 21 December 2007
The parties’ respective applications for final property orders have been fixed for hearing on 19 and 20 February 2009. It is the husband’s position that the wife should transfer to him her interest in the
Property U property in consideration of the payment to her of $350,000.00. He asserts that the property is worth around $735,000.00 and the parties have equal shares in it.
On the other hand, it is the wife’s position that the husband should transfer his interest in the property to her. She does not specifically specify what sum of money she should pay Mr Keogh for his interest in the property. Ms Meys accepts that the Property U property is worth $735,000.00. However, it is her position that she already owns 75% of the property. Something which Mr Keogh does not accept.
The proceedings before me are interim in nature. They will not determine the final disposition of the parties’ property. This will occur in February of next year. Notwithstanding this fact, the proceedings before me were vigorously contested and I am fearful that they have consumed a significant component of the parties’ readily available financial resources. It is my apprehension, possibly mistaken, that the vehemence of the proceedings before me was emblematic of the parties struggle for possession of the Property U property.
The English and Australian common law traditions have long respected the sanctity of proprietorial interests. As such, it is a very serious matter to turn a husband or wife out of their home. It is not to be done lightly.[4] Accordingly, it was appropriate that a full hearing, involving the taking of evidence and cross-examination, be undertaken in respect of the sole occupancy issue.
[4] See O’Dea & O’Dea (1980) FLC 90-896 at 75,648 per Murray J
The legal principles applicable
The basis of the wife’s occupation for sole occupancy of the former matrimonial home lies in section 114(1) of the Family Law Act 1975. The relevant portion of this section reads as follows:
“114(1)…the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including –
…
(b) an injunction restraining a party to the marriage from entering or remaining in the matrimonial home or the premises in which the other party to the marriage resides, or restraining a party to the marriage from entering or remaining in a specified area, being an area in which the matrimonial home is, or the premises in which the other party to the marriage resides are, situated;”
The court has authority to make such orders in proceedings which relate to a matrimonial cause. Proceedings relating to the division of matrimonial property and spousal maintenance are such matrimonial causes. Accordingly, in the present case, the court has authority to grant an injunction restraining the husband from entering the Property U property, notwithstanding he is one of the proprietors of it at law.
The Full Court of the Family Court has described the criteria to be applied to a sole occupancy application as “surprisingly vague”.[5]
The seminal case regarding the use of section 114, in sole occupation applications, is Davis. In that case, it was said that the matters to which the court should have regard, in its deliberations, as to whether it was “proper” to make a sole occupation included the following:
·The means and needs of the parties;
·The needs of any children concerned;
·Hardship to either party, including any relevant children;
·If relevant, conduct which justifies one party being expelled from the former matrimonial home. [6]
[5] See Scholte & Scholte (2002) FamCA 59 at paragraph 32
[6] See Davis v Davis (1976) FLC 90-062 at 75,309
More recent cases have focussed on issues related to strict practicality, within the context of “the realities of family life”. The question which it has been said the court should pose for itself being: “is [it] really sensible to expect a wife … to endure the pressures which the continued presence of the other spouse will place upon them.”[7]
[7] See Bassett v Bassett (1975) 1 AER 513 at 520 approved in Page v Page (1981) FLC 91-025
Inconvenience to the parties concerned is not sufficient to justify a sole occupancy order. The court has been directed to be alive to the risk that a spouse may use a sole occupancy injunction as a tactical weapon in the ongoing matrimonial conflict. Accordingly, caution is required in assessing whether such an order should be made, particularly as, at the interim stage, it is likely to be difficult for the court to predict who of the parties ultimately is likely to retain control of the property concerned, as issues to do with contribution have not as yet been determined.
In Price Lindenmeyer J indicated there had been a “softening of the court’s attitude” towards exclusive occupation orders. There was now no onus on an applicant for such an order to demonstrate irrational, intolerable or awful behaviour on the part of the party whom it was sought to exclude. Rather: “the court should regard the situation between the parties as being such that it would not be reasonable or sensible or practicable to expect them to continue to remain in the home together.”[8]
[8] See Price (unreported) 12 July 1982 approved in Scholte (supra) at paragraph 35
As the power to grant an injunction is a discretionary one, it must not be exercised lightly, particularly if any interference with a spouses proprietorial interests is envisaged. As such, the court should not proceed on “vague or uncertain claim[s]”.[9]
[9] See Sieling v Sieling (1979) FLC 90-627 at 78,264
In my view, these authorities demonstrate that the court must move cautiously in determining whether to exclude a spouse from a jointly held property, pending resolution of competing claims in respect of that property.
The court must examine the entire circumstances of the parties concerned and determine, whether on the facts of the particular case, such an order is justified. Essentially, the court must determine whether any order is proper and ensure that individualised justice is delivered.[10]
[10] See MG & JGG [2004] FMCAfam 300 at paragraph 18
Pursuant to s.74 of the Family Law Act 1975, the court may make such order as it considers “proper” for the provision of maintenance to the wife in accordance with the provisions of Part VIII of the Act.
In particular, s.72 deals with the right of a spouse to maintenance and reads as follows:
“S.72(1) 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).”
Given the factual basis of this case, the relevant matters referred to in sub-s.75(2) are likely to be the following:
a)the age and state of health of each of the parties;
b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
d)commitments of each of the parties that are necessary to enable the party to support:
i)himself or herself;
g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration.
Pursuant to s.75(3) of the Act, the court is directed to disregard any entitlement of a party to the proceedings to an income tested pension, allowance or benefit. Accordingly, the fact that the wife is receiving a Centrelink benefit is not a relevant consideration in this matter.
The Full Court of the Family Court in Bevan & Bevan[11] determined that the approach to be taken in respect of applications for spousal maintenance involved a four step process as follows:
a)a threshold finding under s.72;
b)consideration of s.74 and s.75(2);
c)no fettering principle that a pre-separation standard of living must automatically be awarded where the respondent’s means permit;
d)discretion exercised in accordance with the provisions of s.74 with “reasonableness in the circumstances” as the guiding principle.
[11] Bevan & Bevan (1995) FLC 92-600 at 81,981-2
In Redman v Redman[12] the Full Court of the Family Court considered the procedural and evidentiary requirements which attach to interim spousal maintenance proceedings. The Full Court said as follows:
“…the very fact that the order is limited in time imports certain different considerations. One of these is that such an order is intended to be reconsidered, quite apart from a variation under section 83. …the most common purpose of an interim order is to make provision for the spouse and children pending the determination of the property settlement. …Another consequence is that on an application for interim maintenance the court conducts not as final or exhaustive a hearing as would be the case if one were hearing the matter finally. …The evidence need not be so extensive and the findings not so precise. Having regard to those factors, and the general injunction of section 97(3), the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period and can only be varied under section 83.”
[12] Redman v Redman (1987) FLC 91-805 at 76,081
These proceedings are directed to resolving these issues pending the trial of the parties’ competing property applications next year. In these reasons for judgment, findings of fact are made on the balance of possibilities, following my observations of the witnesses concerned and my consideration of any relevant documents.
The evidence
The wife relied on the following documents:
i)an affidavit of herself filed on 21 December 2007;
ii)a statement of her financial circumstances filed on 21 December 2007;
iii)a medical report of her general practitioner, Dr C dated 21 April 2008;
iv)two medical reports of her psychiatrist, Dr G dated 22 April 2008 and 9 May 2008.
The husband relied on the following documents:
i)an affidavit of himself filed on 16 November 2007;
ii)a statement of his financial circumstances filed 13 November 2007;
In addition, the parties exchanged lists of documents. Accordingly, a significant number of documents were tendered into evidence.
In addition, the wife served a subpoena on the South Australian Police, which was directed towards the production of documents related to the husband’s involvement with the police, particularly in respect of allegations of his previous misconduct towards the wife.
Both parties were represented by skilful and well prepared counsel.
As a result, each of the parties was skilfully and extensively cross-examined by counsel for the other party. In addition both Dr C and
Dr G provided additional evidence to the information contained in their respective reports. Dr C in person and Dr G by telephone.
These proceedings, despite being interim in nature, were lengthy, occupying about three hearing days. They were bitterly contested and the positions of the parties are polarised in the extreme. Accordingly, it is necessary for me to make findings regarding the credibility and reliability of each of the parties concerned.
It is, I think, becoming increasingly recognised that it is difficult for courts to make findings of fact about myriad issues, which have arisen over many years in a marital context, through the imperfect tool of assessing evidence provided in the artificial (and to many intimidating) confines of the witness box and through the reading of formal and very often professionally prepared affidavits.
Unfortunately, but for obvious reasons, the parties in adversarial proceedings, such as these, tend to emphasise, in the presentation of their respective cases, the failings of the other party concerned and minimise their own. The same tendency very often occurs in regards to the parties’ respective assessments of their overall individual contributions made during their marriage.
In addition, where there are significant differences in the temperaments of the parties concerned, it is a common phenomenon that former spouses can hold diametrically opposing views about what occurred in regards to a particular incident, yet both genuinely believe their respective recollection to be the correct one. The extreme emotions created by proceedings, such as these, blur perceptions and recollections of past events.
For all these reasons, the court must be cautious about making findings of fact. However, imperfect though it may be, the process still requires an adjudication, which adjudication can only be made on the basis of the evidence presented before the court. Necessarily therefore, the court must form some impression of the parties and the witnesses involved, so that this adjudication can occur.
The wife presented as fey and other-worldly in the witness box. She described herself as a [omitted] and an artist. In keeping with these descriptions, she professed to have no head for business affairs or figures generally, frequently asserting that she left all such matters to her accountants, whom she trusted implicitly. I did not find this professed financial naivety particularly compelling. I think the wife knows more about her business affairs than she lets on.
The picture the wife wished to present was of a person who had no idea what was in her bank account at any time and who signed whatever documents her accountants and lawyers put before her, without checking them first. The only business fact the wife professed to know, with any degree of certainty, about C Pty Ltd, was that it was now making no money.
Given the acrimonious circumstances of the parties, I believe I must approach the wife’s professed ignorance of her business affairs with some caution, on the basis it is potentially self serving rather than genuine. The wife has considerable animus for the husband. As such, she is likely to want to “get one over him”, particularly in financial matters.
The husband is an [omitted] by profession. He seemed to understand figures. Certainly, he seemed to me to have a much more realistic attitude towards the parties’ finances, certainly in the period prior to their separation than the wife did.
He presented as emotionally weary but determined to make a concerted stand against what he regarded as the emotional manipulation and lies of the wife. He was emotionally quiet rather than strident. I found him to be determinedly honest.
Accordingly, of the two parties, I found the husband was the one who was more likely to be reliable about what had occurred between the parties in the past. This was true not only in respect of their financial circumstances but also in respect of the nature of their relationship with one another.
I do not wish to cause the wife any embarrassment, but she seemed to me to have something of a histrionic personality. She also has a love for the finer things in life. The husband seemed to me to be more phlegmatic by temperament and less concerned about the niceties of life. Although, no doubt, he is capable of choler, when roused.
Accordingly, my apprehension is that the parties’ temperaments are quite different. No doubt these attributes became more pronounced as the marriage between them fell into difficulties. Accordingly, I suspect that the parties’ marriage, in the period prior to their separation was deeply unhappy. The husband feeling the wife’s extravagance was difficult to cope with, whilst the wife felt that the husband did not provide for her proper needs.
In these unhappy circumstances, no doubt both of them did and said things, which were unfortunate and which should not have been said or done. No doubt both thought the other was being provocative or insensitive to the other’s needs and he or she was entitled to complain.
One incident will suffice as a demonstration. The wife complains that the husband threw a block of chocolate at her. The husband’s position was that the incident occurred on the occasion of his birthday. There had been a celebration. In the light of the wife’s personal extravagance, he felt humiliated and scorned that his birthday present, from his wife, had been a mere, as he saw it, block of chocolate. Feeling hurt, he threw the block of chocolate on the kitchen bench. The wife characterises the incident as one of violence. The husband as him making a necessary statement as to how he felt to the wife.
In her affidavit material, the wife claims that the husband broke her ribs. The implication being that this occurred deliberately and
as a result of the application of considerable force to her body.
In cross-examination, she conceded that the injury had occurred accidentally, whilst the parties had been engaging in consensual sexual intercourse. Thus it was a disingenuous but potentially highly prejudicial statement to the husband.
My perception is that much of the wife’s evidence, particularly regarding claims of ill treatment at the husband’s hands, is categorised by hyperbole and exaggeration. This may be as a result of her personality or because she is striving for both personal and financial advantage over her husband. I suspect that it is as a result of a combination of both factors.
The wife asserts that the husband was charged with assaulting her “on seven occasions”. This is not true. On 14 January 2002, the husband entered a bail agreement in respect of a charge of assaulting police.[13] This incident does not appear on the husband’s South Australian Police history.[14] A charge of common assault on a family member does appear. The date of the offence is 11 March 2004. The charge was dismissed for want of prosecution.
[13] See exhibit W6
[14] See exhibit W5
It is the wife’s position that the latter charge relates to her and she prevailed upon the police to withdraw it because her husband told her he would lose his job, at X, if convicted of the offence. The husband acknowledges that the wife did ask the police to withdraw the charges concerned and confirms that he was also referred to an anger management course, which he completed, largely at the direction of police. He asserts that he attended this course in order to save his marriage. He also indicated that the earlier charge was withdrawn, when he apologised, of his own volition, to the police officer concerned.
The wife has provided a number of photographs, which she assert establish that the husband has damaged a number of items of property around the parties’ household. The items include a dented pedal bin; a broken sugar bowl lid; a cup and jug with their handles missing; and some holes drilled into a wall. She also claims the photographs demonstrate that the husband has acted in a provocative and insensitive manner, in the garden, by excessive pruning of trees and shrubs and the removal of garden vegetation.
I did not find the photographs particularly compelling. It seems to me likely that, at best, the wife has a hyper-sensitivity to issues such as the pruning of trees or the accidental breakage of crockery or at worst she has consciously exaggerated these incidents to serve her own ends.
The husband says the gardening complained of was routine and the items concerned accidentally damaged. He has an explanation relating to salt damp for the holes he drilled and denies these various matters related to a concerted campaign, on his part, of emotional abuse against the wife.
There is evidence to show that the wife has delayed making a compliant to police of alleged misconduct, on the husband’s part, for many months. This undercuts the seriousness of her complaints against the husband. Rather, it seems to me, she raised the issue of this misconduct with police, at a much later stage, in the hope of securing some tactical advantage over the husband in these proceedings.
The wife also has particular concerns about the husband’s teenage son, from an earlier relationship. In the past he lived in the Property U property. The wife finds him to be a clumsy and uncouth youth. However, he is no longer sharing the parties’ residence. As such, these concerns seem overblown.
Overall, my impression is that the wife is a person of hyper-sensibilities. This is a consequence of her unusual temperament but has become more pronounced as a result of the extremely vitriolic nature of these proceedings. The husband, as much as a matter of principle as anything else, is unwilling to give in to what he sees as being the wife’s histrionics, which he regards as being tantamount to emotional abuse of him by her, rather than vice-versa.
The husband categorically denies ever having been physically violent towards the wife or of consciously or deliberately breaking any items of her property. He concedes that he accidentally broke a sugar bowl lid. In the past, he claims to have been deeply depressed, to the extent of having contemplated suicide, because of what he regards as the wife’s insensitive and provocative behaviour towards him.
I did not disbelieve the husband’s denials of being a physically and emotionally abusive spouse. I did not find the wife’s descriptions of the husband thus as being particularly compelling. There is no independent corroboration of any of the wife’s claims. In these circumstances, given my impressions of the wife, I believe it would be imprudent of me to accept her evidence. I prefer the husband’s evidence in this regard.
As previously indicated, the wife was not a particularly good financial historian, largely proclaiming ignorance of her financial affairs because, as she asserted, such matters were the exclusive provenance of her accountants and other professional advisors.
The husband, through his counsel Mr McQuade and his solicitor Mr Burrell, has consistently claimed that the wife has failed to make a full and frank disclosure of her financial affairs. In such circumstances, it is the husband’s position that the court should not be slow to draw the conclusion that the wife’s financial affairs are not as dire and her business not as moribund as she would have the court believe.
In particular, it is the husband’s position that it is demonstratively false that C Pty Ltd was producing no income whatsoever in December of 2007, when the wife swore her statement of financial circumstances.
In his submission, in such circumstances, the court should not allow itself to be gulled by the wife’s self-proclaimed financial ignorance, when she is self-evidently liable to making sweeping but false statements about her financial affairs.
It is my impression and finding of the husband that he is a reliable historian, so far as his personal financial affairs are concerned. He is largely a PAYG tax payer, although he also operates a proprietary limited company, D Pty Ltd, in conjunction with a family trust.
As such, the husband’s recurrent income is readily ascertainable, as are his essential and unavoidable current expenses.
The same cannot be said of the wife. An air of uncertainty surrounds the operation of C Pty Ltd. The documents provided by the wife were uncertain in nature and her financial records were incomplete. She is either unwilling or unable to elaborate upon these documents.
On balance, I am satisfied that she has a vested interest in ensuring that her income is as low as possible.
In all these circumstances, the following issues arise for the court’s resolution:
·What is the wife’s business income from C Pty Ltd, both at present and what is it likely to be in the next few months, until the final hearing?
·Does the wife have a physical capacity to earn income from the business and does the business itself have the potential to generate such income?
·In this regard what is the relevance of the wife’s current state of health?
·What are the wife’s business expenses? How do they relate to her potential income?
·What are the wife’s reasonable financial needs? How are those needs to be met? What is a reasonable level of expenditure for the wife?
·What is the husband’s financial capacity to pay maintenance? What are his reasonable recurrent expenses?
·Given the parties’ present circumstances, is it reasonable, sensible and practicable to expect one of them to leave the Property U property? If so, who should it be?
a) C Pty Ltd
The wife’s position in respect of the business can be easily stated.
It currently produces no income, only liabilities. In the past, it was highly successful and employed up to twenty-two staff and its services were widely advertised.[15]
[15] See wife’s affidavit filed 21 December 2007 at paragraph 13
The wife’s statement, in her financial statement, that the business is inoperative and produces no income cannot be reconciled with bank statements, which were produced during the hearing. However, these records are far from complete.
C Pty Ltd continues to advertise in the “Yellow Pages” and in “Woman’s Day”. Callers to the number of the business are charged $5.45 per minute in respect of their consultation with the wife or $6.60 per paragraph, if they send an SMS message.
It is the wife’s case that she does a [session] every four days or so and an average [session], if conducted by telephone, takes about twenty minutes. The wife deposed that currently she is making nine [sessions] per month.
It is the wife’s case that she is currently “terribly worried and stressed out” and this, in turn, has affected her business as her [sessions] have been “very negative” of late. The necessary implication being that her [sessions] are less attractive to her customers than they once were.
It is my apprehension that the wife has been markedly reluctant to produce the raw data relating to the business, particularly its bank statements and receipts from the relevant Telco and credit card providers. Some financial statements have been provided but these are difficult to reconcile with one another.
In cross examination, the wife conceded that it was misleading to state that she was unemployed. In addition, as her advertisements continued to run and members of the public continued to ring her from time to time, it could not be said that the business was defunct.
Rather, it became her case that whilst she was still in business, in the sense her phone kept ringing with customers who wanted a consultation, the expenses related to the business were now greater than its receipts and there had been a steady decline in the number of callers to the business. As previously indicated, it was her position that she received eight or nine calls per month, whereas in the past she had received many more.
One of the wife’s major sources of income is from a company known as S Pty Ltd, which forwards moneys received by Telcos, in billings from phone subscribers in respect of calls made to 1800 business numbers to the businesses concerned. The wife has provided a copy of one of the business’ bank accounts for the period from 20 February 2008 to 19 April 2008. This shows two receipts, from S Pty Ltd, of $1,956.71 and $1,971.69 respectively. It also shows advertising expenses of $1,488.98 to Sensis, the operator of the Yellow Pages and $916.00 to Woman’s Day.[16]
[16] See exhibit H1
The wife’s business has three major sources of income: S Pty Ltd; her credit card merchant bank (in her case Bank SA); and American Express. No comprehensive records of receipts from these three sources were provided. In addition it was unclear into which of the wife’s accounts these sums were paid. The records produced by the wife were piecemeal.
Mr McQuade, counsel for the husband, draws particular attention to documents which relate to the business for the period November/December 2007, when the wife swore the business was inoperative. In December of 2007, the business received two sums of $1,844.39 and $238.75 respectively from S Pty Ltd and $1,850.46 from Bank of South Australia. In November, the business received $1,658.57 from S Pty Ltd and $193.20 from American Express.[17]
[17] See exhibit H5
The husband concedes that the wife would have had to pay some advertising costs in respect of these various sums but asks the court to draw an adverse inference against the wife based on the fact that it is demonstrably false that the business produced no income at all. Rather, the husband asserts that clearly the business was producing income because regular calls were being made to it because its advertisements continued to attract interest.
A not dissimilar picture presents itself for March/April of 2008. In March, the business received $1,341.08 from Bank of SA, which is the businesses merchant credit card provider. In addition, it received two payments of $1,590.39 and $374.30 from S Pty Ltd.
I acknowledge that these are gross amounts, which makes no allowance for the business’ expenses, particularly advertising.
The major advertising expense, for C Pty Ltd is for Sensis which periodically bills the business on eight occasions each year, which occasions fall predominantly in the first half of the financial year.
Once a contract to place an advertisement in the Yellow Pages has been placed, the business concerned is not in a position to cancel the advertisement concerned until the year in question has been completed. Sensis charges the business just under $1,000.00 per month in advertising.
Accordingly, it seems to me to be likely that the business was operating at a profit in the first quarter of 2008. I reach this conclusion because it seems to me that the wife has not provided all the necessary information in respect of the business, yet the receipts which she has revealed seem to be greater than the businesses expenses.
It is not my role to be a forensic accountant. Rather, the onus is on the wife to provide a full and frank disclosure of her financial circumstances. It seems to me to be disingenuous of the wife to state firstly that the business has no receipts, and when this is shown to be untrue, assert that it produces little income, particularly in circumstances where her disclosure of relevant financial information appears to me to be incomplete. It is not enough for the wife to blithely state that her advertising costs are “horrendous” and calls to her home dropped off because of internet [competitors].
In these circumstances, it appears to be the wife’s case that the more reliable way to gauge her financial position is to examine the financial statements of the company concerned. Again, these are somewhat contradictory and the wife herself is unable to provide any commentary upon them other than that she trusts her accountant to be correct in his compilation of the documents concerned. In all the circumstances of this case, I believe that they must be approached cautiously, particularly as the accountant concerned has not given any evidence as to how he compiled the documents in question.
For the financial year ending 30 June 2007, C Pty Ltd incurred a nominal loss of $140.00. Its gross receipts were just under $70,000.00. Its major expenses were advertising $33,965.00; telephone $5,151.00; and accounting fees of $4,859.00.
The business was allowed depreciation fees of $1,996.00; motor vehicle expenses of $3,904.00; and wages of 412,671.00.[18] It seems to me likely that the wife benefited from these various allowances. Certainly, she was not dissuaded by what occurred in 2007 from continuing the business on in the 2007/2008 financial year, particularly in keeping on with her advertising in the Yellow Pages.
[18] See exhibit W4
The wife has provided a profit and loss statement, for the business, up to 31 March 2008.[19] It gives a gross profit of $40,816.00 or around $1,046.56 per week. Again, the major expenses claimed are advertising $16,663.00; accounting fees of $4,070.00; and telephone expenses of $3,359.00. The business is said to be running at a loss of $5,387.00.
[19] See exhibit W2
Allowances are made for depreciation $1,237.00; motor vehicle expenses of $2,443.00; and wages of $1,840.00. The major difference between the accounts for the current financial year and the previous one are that the wife has claimed legal expenses, against the business, of $13,244.00. In cross examination, she conceded that this legal expense related to the current matrimonial proceedings she is conducting with the husband.
Accordingly, it seems likely to me that the business is in not as dire a position as the wife contends. Certainly it is still receiving regular receipts of income, albeit that the advertising expenses are great. However, it seems likely that the wife gains some benefits, from the business, in the form of motor vehicle and telephone expenses and that the depreciation expense is largely an artificial one. It also seems to be the case that the wife is the only person receiving a wage from the business.
The wife acknowledges that she received a taxation refund of $8,421.00, on 2 April 2008. She says that she utilised this sum in payment of her legal fees. From the accounting documents alone, it is difficult to ascertain precisely what income the wife is receiving.
Mr McGinn, counsel for the wife submits, in his written submissions, that the wife has an income of around $355.00 per week.[20] This is after weekly business expenses of $540.00 per week have been deducted. Certainly, this is a far cry from the wife’s initial position that the business produced no income whatsoever.
[20] See wife’s written submissions at paragraph 35
On his analysis of the figures available, Mr McQuade calculates a profit of around $1,462.00 per month.[21] He submits that legal fees have been inappropriately included as an expense of the business. He also points to a significant drop in earnings from the previous year. He is questioning of the amounts claimed for telephone and depreciation, as am I.
[21] See husband’s written submissions at page 3
The parties to property proceedings, brought under the Family Law Act 1975, in this court, are under a duty to make a “full and frank disclosure” of their financial circumstances.[22] This duty has been described as being “fundamental to the whole operation of the Family Law Act in financial cases…”.[23] In Weir & Weir the Full Court of the Family Court said as follows:
“…the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contributions, or to properly assess section 75(2) factors.”[24]
[22] See Federal Magistrates Court Rules at Rule 24.03
[23] Per Smither J in Briese & Briese (1986) FLC 91-713 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
[24] Weir & Weir (1993) FLC 92-338
Accordingly, the duty to make a full and frank disclosure, in financial matters brought under the Family Law Act 1975, does not arise merely by virtue of the rules or practice of the court but rather is a fundamental rule of law, which arises because of the necessity for the court in each property proceeding to consider all aspects of the financial circumstances of the parties concerned.[25]
[25] See Luciano & Luciano (unreported) Family Court (O’Ryan J delivered 8 May 2000) at paragraph 373
In appropriate cases, there may be adverse consequences for a party, if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact. Such a non-disclosure may result in the court drawing an adverse inference against the party, who has not made a proper disclosure. In Weir & Weir[26] the Full Court said as follows:
“It seems to us that once it has been established that there has been a deliberate non-disclosure…then the court should not be unduly cautious about making findings in the favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…We should have thought that the courts jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.”
[26] See Weir & Weir (supra) at 79,593
I do not believe that the wife has been completely frank about her financial position. I accept that she is no financial mogul but, in my view, there must be some consequences flowing from her incomplete financial disclosure and the discrepancies in her evidence, particularly her initial assertion that she received no income from the business whatsoever. That is patently not the case. It is not my role to be a forensic accountant. Overall, I do not believe the business is in as dire straits as she contends. I am concerned that she may have underestimated the number of callers to the business. After all, she continues to advertise in Woman’s Day.
b) The wife’s expenses
The wife’s evidence, in respect of her necessary recurrent weekly expenditure, was contradictory and unsatisfactory. Initially, she calculated her weekly expenditure at $585.00 per week. This included a sum for legal fees of $80.00 per week.[27]
[27] See wife’s statement of financial circumstances filed 21 December 2007
By the date of hearing, this expenditure had increased to $840.00 per week but no longer included legal fees. The major expenses each week included pharmaceutical expenses of $139.00; gifts of $113.00; and clothing and shoes of $115.00.[28]
[28] See exhibit W1
Dr C gave evidence that she had prescribed the wife actinol, libital, valtrex and vagifin. The wife had also been prescribed panadieine forte in respect of a hip operation in March 2008 and a hydrosol cream in respect of a skin condition. Dr C deposed, as I recall it, that these medications are available on the Pharmaceutical Benefits Scheme.
It is also the wife’s evidence that she regularly takes sliming tablets. Although as counsel for the husband points out, in another aspect of her evidence, she deposed that her appetite has been detrimentally affected as a consequence of her current living arrangements.
Regardless of the truth or otherwise of this situation, the wife’s pharmaceutical expenses do not appear to me to be reasonable. Certainly, I do not believe that the wife has satisfactorily established that she spends $139.00 per week at the pharmacy.
Mr McGinn, counsel for the wife, has also abandoned any claim for spousal maintenance based on the wife’s alleged expenditure on gifts. In her evidence, the wife herself maintained that this was a reasonable expense because she was a very generous person by nature and had a large family. Although, in a formal sense, the wife has abandoned this aspect of her case, it suggests to me that I must adopt a cautious approach to her evidence regarding her necessary and recurrent expenditure.
I am also concerned that there is an aspect of double dipping in the wife claiming her telephone and car running expenses as part of her recurrent weekly expenditure, for the purposes of these proceedings and also writing these expenditures off against her recurrent weekly income in her profit and loss statements, no doubt for the sake of tax.
The wife’s estimated expenditure for clothes and shoes each week also seems to exhibit indications of being an ambit claim. If the figure is correct, it would mean that the wife is spending just under $6,000.00 per annum on shoes and clothes. In the parties’ current situation, this does not seem to me to be a reasonable expense.
It is the husband’s position that he is paying all the necessary outgoings in respect of the Property U property, including electricity, gas and rates. I accept this is so. Accordingly, it seems to me that the following expenses, which the wife claims, are reasonable ones:
Item of Expenditure
$
Food
117.00
Household supplies
27.00
Medical expenses
11.00
Entertainment
17.00
Repairs
5.00
Drycleaning
4.00
Books and magazines
1.00
Hairdressing
7.00
Total
189.00
I accept that this is a somewhat artificial exercise and the wife no doubt has some other expenses from time to time particularly for pharmaceuticals. However, in my view, the wife’s reasonable recurrent weekly expenditure is nowhere near the vicinity of $840.00 per week. The husband’s counsel, Mr McQuade submits that the wife’s weekly expenditure is around $287.00.[29] This does not appear unreasonable to me.
[29] See husband’s submissions at page 5
c) The wife’s medical condition
Dr C’s evidence was not particularly helpful. She deposed that she had seen the wife infrequently. She provided information regarding the medication, which had been prescribed for the wife in the past. Largely this related to osteoporosis and elevated cholesterol levels. All of the medication prescribed was available on the pharmaceutical benefits scheme.
Dr G conceded that his diagnosis of the wife, particularly that she had a chronic adjustment disorder related to a violent marital situation, relied on the wife being an accurate historian. He had not prescribed any particular course of medication or therapy for her.
The husband vigorously refuted the suggestion the wife had recently undergone a hip replacement operation. He conceded she suffered from osteoporosis. It seems that the wife did have some sort of surgery earlier this year but I have not been provided with any specific expert evidence in regards to it.
The wife is in her early sixties. I accept that she is not in perfect health. It would not be reasonable to expect her to be actively seeking work. However, it does not necessarily follow that she does not have some capacity to earn an income for herself, notwithstanding her age and level of physical incapacity.
The wife gives her occupation as [omitted]. She has earned an income, as a [omitted] over very many years. She continues to advertise her services in this capacity, including fairly recently making the decision to advertise in the Woman’s Day magazine.
Although there is likely to be considerable controversy, in the general community, whether such [omitted] abilities exist, the wife does not assert that her particular [omitted] abilities have left her as a result of any physical infirmity she now suffers. It seems to me there is likely to be a demand for the wife’s particular services within sections of the public.
The wife remains content to give [sessions], to members of the public, when called upon. She continues to operate a web page, which announces that she is available for [omitted]. The website provides her 1800 number within Australia and provides a number for international callers.
The wife deposes that she has overlooked taking down this web page, which has not proved to be of great assistance to her business. This may be so but it, along with the wife’s other advertising, announces to the world that she is available for [omitted] consultations.
It is the wife’s case that other [competitors], particularly in the United States, are more adept than she in using the internet, particularly in providing free services, which lead customers to purchase other products online. Again, this may be so. However, it does not necessarily follow that the wife has lost her capacity to earn income, as a [omitted], notwithstanding that the market place has become more competitive.
The wife’s skills are highly specialised. On balance, it seems to me likely that there will continue to be a demand for her to give [omitted] [sessions], via the telephone and quite possibly face to face, in future. I do not think that her capacity to earn income, in this way, is affected by either her age or state of health.
d) The husband’s financial circumstances
The husband is in full-time employment. He has provided a pay slip for the fortnight ending 27 May 2008.[30] I have no reason to believe that this represents, in any way, an atypical pay period. The husband is paid $33.00 per hour for a 76 hour fortnight. He received a weekly shift allowance of $455.90 and two other more modest allowances. Overall, this reveals a fortnightly salary of $3,457.66, which equates to a salary of around $90,000.00 per annum.
[30] See exhibit H10
On this sum, the husband pays $530.00 tax; voluntarily sacrifices $1,029.58 into his superannuation; and pays a further $171.60 into superannuation. It leaves him with a net income of $1,623.82 per fortnight or around $812.00 per week.
From time to time, the husband receives other allowances, particularly if he works interstate. I also accept that he could revisit the salary sacrifice decision, which is one personal to himself and this would leave him with more income potentially to dispose in other ways.
Putting aside the issues of superannuation and tax, from this weekly sum of $812.00, the husband pays the following expenses:
Council rates
$36.00
Household contents insurance
$24.00
Vehicle insurance
$13.00
Health insurance
$42.00
Motor vehicle registration
$16.00
Child support
[31]$140.00
Other expenses
[32]$479.00
Total
$750.00
[31] See exhibit W10
[32] See part N of the husband’s financial statement
The husband’s additional weekly expenses include food of $100.00; motor vehicle running expenses of $80.00; and entertainment and hobbies of $40.00. The expenses also include utilities and household repairs, from which the wife benefits from time to time.
I accept Mr McGinn’s submission that, if the husband redirected his salary sacrifice ($514.00 per week), the husband would have a surplus of income over expenditure. I accept that this is true. Otherwise, I do not think that his expenses can be categorised as unreasonable and extravagant.
e) Other issues
The husband does not wish to move out of the Property U property. Although he acknowledges that the parties’ circumstances are far from ideal, he points to the fact that the property concerned is a large one, with an upper level; six bedrooms; and two bathrooms. It also has two separate and distinct living areas. In such circumstances, the husband contends that it is viable for the parties to maintain separate living areas within the property but utilising the same kitchen.[33]
[33] See exhibit H3
The husband also deposes as to suffering some health concerns. These include high blood pressure; high cholesterol; and back problems.
He was not directly cross-examined by any other alternative accommodation, which was available to him. In such circumstances, I presume that the wife anticipates that he will rent accommodation for himself, if she is successful in her application.
It was suggested to the wife that she could move in with her mother, on a temporary basis. I accept the wife’s evidence that the lady concerned is elderly and in poor health. As such, I also accept that for Ms Meys to move in with her mother would not be a realistic proposal at this stage.
Accordingly, it seems to me that it would not be easy for either party to move out of the Property U home. Neither has an obvious alternative place of lodging. Nor is one in an overwhelmingly superior financial position to the other and so clearly able to afford such an option.
The wife asserts that the husband has his own business, which gives him significant control over his finances. She alleges that he has an income of up to $150,000.00 per annum.[34] The husband does do some consulting work from time to time and lectures students at TAFE. However, I do not accept that the business provides income to the extent alleged by the wife. I am satisfied that the husband’s major source of income is from his employment by X.
[34] See wife’s affidavit at paragraph 57
As previously indicated, both parties wish to retain the Property U property. From the wife’s point of view, she believes she can utilise it to take in borders and as a venue for art lessons. In my view, the first aspect of her proposal supports the husband’s position that the premises concerned are commodious.
The wife asserts that her contributions towards the acquisition of the property are substantially greater than those of the husband. On the other hand, it is the husband’s position that his financial contributions were greater. Both parties assert that he or she has added substantially to the value of the property by renovations and other home improvements.
At this stage, I am not able to resolve these contribution issues. However, I am troubled by the mechanics of how each party proposes that he or she will acquire the other’s financial interest in the property. The wife is vague regarding any sum she proposes to pay the husband. It is clearly her current position that she has no capacity to borrow any such sum. Similarly, although the husband proposes a specific sum, he provides no evidence as to how he will achieve this sum.
Conclusions
a) Sole occupancy
The parties have been living, separated under the one roof, at the Property U premises, since May of 2007. A period of now approximately 14 months. I accept that, although this is not a perfect situation, the parties are not living cheek by jowl, as the property concerned is large. I reject the suggestion that the husband has waged a vendetta of psychological abuse against the wife, in the period following separation.
It was in December 2007, in response to the husband’s application for a settlement of property, that the wife raised the issue of sole occupation. This suggests to me that conditions at the property are not as intolerable as she would have me believe. As such, I am satisfied that the parties can largely lead separate lives at the property in Property U.
Although I am not able to determine precisely what contributions each has made to the acquisition, improvement and conservation of the property, it seems both have made significant contributions. After all, both disposed of other pieces of property, prior to its acquisition, and directed those proceeds into the property. In addition, both were employed during the period of the marriage.
In addition, both seek to retain the property as part of the ultimate outcome of these proceedings. Who of them will be successful in this regard is difficult to say at this juncture. Indeed, it is not beyond the bounds of possibility that the property will have to be sold so that both may achieve their proper entitlements.
A date in February 2009 has been allocated for the final hearing of the matter. In all these circumstances, in my view, it is a significant matter for the court to evict a person from a piece of property, which he would otherwise be entitled to occupy.
Although the husband has a regular source of income, he cannot be regarded as a wealthy person and I am satisfied that he has no obvious sources of alternative accommodation for himself. For him to be compelled to leave the property would be a source of considerable hardship for him.
Having heard the evidence of each of the parties, regarding the situation which prevails at the Property U property, I am satisfied that the husband is not guilty of any level of misconduct, which should justify his expulsion from the property. Indeed, it is my view that the wife’s allegations against him are vague and uncertain in nature.
I accept that it is inconvenient, for both parties, for them to live in the same premises. However, it seems to me that it is practicable, given the size of the house concerned and the length of the time which both have occupied it, for them to continue to remain in the home together. Having considered all the factors in this case, I have come to the conclusion that it would not be proper for me to make the sole occupancy order, which the wife seeks.
b) Spousal maintenance
In assessing any application for spousal maintenance, I must be guided by considerations of what is reasonable in all the circumstances of the case concerned. For the reasons already provided, I am troubled that the wife has not been forthright about her financial circumstances, particularly the level of income she currently derives from C Pty Ltd.
At the present time, I am satisfied that she derives some level of income from the business. She continues to run her advertisements and to receive calls from clients who wish to have a [omitted][session]. I do not believe that the wife’s age or level of physical or any psychological disability preclude her from pursuing this occupation. I am also concerned that the wife has underestimated the number of calls from customers which she receives each month.
In all these circumstances, I believe I must treat Dr G’s diagnosis of the wife with some caution, particularly as it is largely reliant on the wife’s own history of her marital relations with the husband. She, in my view, is likely to embellish her claims in this regard. In addition, I note that Dr G has not prescribed any particular medication or course of therapy for the wife.
The wife has been self employed, as a [omitted], for many years. She concedes that, in the past, it has provided her with a comfortable income. In all the circumstances of this case, I do not think that it can be said that she is unable to support herself, through her employment as a [omitted], by reason of her age or level of infirmity. On balance, I am satisfied that C Pty Ltd continues to provide the wife with a reasonable level of income.
Inevitably, the end of the marriage between the parties must usher in a period of financial austerity for them both. After all, two individuals cannot live as cheaply as a couple. However, as a result of the decision I have made regarding the sole occupancy application, the husband will continue to provide to the wife some level of financial support, by reason of his payment of the outgoings in respect of the property and the parties’ joint health insurance. The wife has no other direct accommodation expenses.
In all the circumstances of this case, I do not think it would be proper to make an award for spousal maintenance in the wife’s favour. Accordingly, it must follow from these reasons for judgment that the wife’s interim application for spousal maintenance and the sole occupancy of the Property U property should be dismissed.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and fifty-one (151) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 31 July 2008
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