KILGOWE & BRICKETT

[2014] FamCA 291

FAMILY COURT OF AUSTRALIA

KILGOWE & BRICKETT [2014] FamCA 291

FAMILY LAW – PROPERTY – Interim – Where the wife sought orders for interim spouse maintenance, costs and that the husband pay a lump sum into the account set up to service the mortgage secured over the former matrimonial home – Where the husband sought orders that the former matrimonial home be sold, that the parenting orders be varied and valuation of his commercial interests by a single expert – Where the court was satisfied that the wife is unable to support herself adequately for the purposes of s 90SF – Where the court determined that the husband has the capacity to pay spouse maintenance – Where the court made an order for spouse maintenance pending further order – Where the court is not prepared to make a ‘dollar for dollar order’ to fund the wife’s legal costs in the future – Where the court is not prepared to order a sale of the former matrimonial home at this point in the proceedings as the court determined it would be premature to do so.

FAMILY LAW – CHILDREN - Interim - Where the husband sought an order that the parenting orders be varied – Where the court dismissed the husband’s application to vary the interim parenting orders.

Family Law Act 1975 (Cth) s 90SF

APPLICANT: Ms Kilgowe

RESPONDENT: Mr Brickett

FILE NUMBER: SYC 1655 of 2013

DATE DELIVERED: 21 March 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 3 March 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr S T White SC

SOLICITOR FOR THE APPLICANT: Michael Conley Lawyers

COUNSEL FOR THE RESPONDENT: Mr R. Schonell SC

SOLICITOR FOR THE RESPONDENT: Karras Partners

Orders

Pending Further Order:

1. That the respondent pay to the applicant interim spouse maintenance of $450 per week.

2. That the respondent cause payment of the sum of $50,000 from his St George Bank account no:  BSB …, Account Number …355 (“the respondent’s St George Bank account”) to St George Bank account no:  …611 so as to continue the operation of orders made on 8 July 2013.

3. That the respondent cause payment of the balance of his St George Bank account, after compliance with order 2 hereof, to the trust account of the applicant’s solicitor by way of interim costs.

4. That, otherwise, all outstanding applications and responses by which interim orders are sought are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kilgowe & Brickett 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 1655 of 2013

Ms Kilgowe

Applicant

And

Mr Brickett

Respondent

REASONS FOR JUDGMENT

THE PROCEEDINGS

1. Ms Kilgowe and Mr Brickett were parties to a de facto relationship which subsisted between 2003 and February 2012.  They have two children:

   S Kilgowe Brickett born in 2005 (eight) and

   M Kilgowe Brickett born in 2008 (six).

2. On 28 February 2014 the applicant, Ms Kilgowe, filed an Amended Application in a Case which sought interim orders which may be summarised as follows:

   ·that the respondent pay interim spousal maintenance of $950 per week;

   ·that the respondent cause payment from a St George Bank account in his name of a sum of $45,000 to her solicitor by way of interim costs;

   ·that the respondent cause payment from the same St George Bank account of a sum of $50,000 to a St George Bank account created to service the mortgage in respect of property, D Street, Suburb R, (“the R property”);

   ·pursuant to s 117(2) and following exhaustion of the above sum of $45,000, the respondent to provide to the applicant amounts equivalent to all of those sums which he pays to his legal representative (“a dollar for dollar order”).

3. On 3 March 2014, the respondent filed an Amended Response to an Application in a Case.  He sought orders which may be summarised as follows:

   ·variation of parenting orders made by consent on 8 July 2013, such that the parties’ children live with him from the conclusion of school each alternate Wednesday until the commencement of school on the following Monday;

   ·sale of the R property and investment of the net proceeds in a controlled monies account, after discharge of the mortgage, certain debts to the respondent’s father and payment of expenses of sale;

   ·valuation of the respondent’s commercial interests by a single expert.

   In his submissions, senior counsel for the respondent indicated that he proposed that a sum of $40,000 rather than $50,000 should be transferred to the account created to service the mortgage and the balance of approximately $39,000 be applied to meet the fees of necessary single experts in the proceedings.

Background

1. The respondent was born in 1972 and is 41 years of age.  The applicant was born in 1977 and is presently aged 36 years.  They began to cohabit in February 2003 or July 2003, according to the applicant and respondent respectively.

2. The final separation took place on approximately 13 February 2012, when the respondent left the family home at Suburb R.  The applicant and the two children remained in the property and have lived there for the past two years.

3. Until July 2013, the respondent paid the mortgage instalments of $623 per week in respect of the R property.  Thereafter, the mortgage has been serviced from monies drawn down on the parties’ joint loan account.

4. In March 2000, the respondent purchased an apartment at N Street, Suburb D, for $400,000.  He borrowed $250,000 from the St George Bank and $150,000 from his father, Mr B.  He sold this property for $541,000 in January 2003.

5. In April 2003 the respondent purchased a property at J Street, Suburb L, for $1,725,000, which came from the sale proceeds of the D property and a loan of $330,000 from his father.  This property was renovated at a total cost of $790,000, of which $244,142 was borrowed from the respondent’s father.

6. The respondent maintained that the balance of the money used to meet the cost of these renovations came from an account which he held jointly with his brother, Mr S B.  The L property was sold for $3,185,000 in June 2008 and part of the proceeds were paid to the respondent’s father and brother.

7. A sum of approximately $1,720,000 from these sale proceeds was applied to the purchase of the R property.  The purchase price of this property was $2,020,000, which otherwise came from a St George Bank mortgage advance of $500,000. 

8. The respondent holds a one-third interest as tenant in common in a property at Town F, together with his father and brother.  This property was purchased in 2004 for $800,000, all of which was provided by the respondent’s father.

9. The respondent is one of three directors and shareholders of a company known as V Pty Limited, together with his father and brother.  Mr B Snr holds a “J” Class share, which affords him “greater rights” than the respondent and his brother.  The principal asset of this company is 33.3 per cent of issued units in the Z Unit Trust.  This entity owns the Z business at Town Z.

10. The 30 June 2012 financial statements of V Pty Limited recorded that the company owed the respondent and his brother each a sum of $603,666.  They both borrowed funds from the St George Bank and advanced this money to the company.

11. The respondent is also a director and shareholder of a company known as V No 2 Pty Limited, together with his father and brother.  V No 2 Pty Limited is the trustee of the V Unit Trust and the V Settlement.  The respondent’s father is the protector of these trusts and holds power of appointment of the trustee.  The respondent is a discretionary beneficiary of both of these trusts.  The primary asset of the V Unit Trust is 1,624,998 units in the V Settlement.

12. The V Unit Trust owned a one-third interest in the W business at Town Y.  This business was sold in 2012 for $4,550,000, yielding net proceeds of $1,614,660 after payment of St George Bank loans and selling costs.  The respondent received approximately $5,000 from the sale proceeds, after payment of various loans, and used this money for living expenses.

13. The respondent, his father and brother are also directors and shareholders of a company known as V No 3 Pty Limited.  This company is the trustee of the SS Unit Trust, which owns a half interest in the SS business at Suburb E.  The remaining half interest is held by an unrelated entity.  The respondent is a discretionary beneficiary of this trust, of which his father is the protector.  The units in the SS Unit Trust are owned entirely by the V Settlement Trust.

14. The respondent, his father and brother are directors and shareholders of a company known as B Holdings Pty Limited.  This company is the trustee of the B Discretionary Trust, which owns all issued units in the B Unit Trust.  In turn, this trust holds a 50 per cent interest in the A business.  The respondent is a discretionary beneficiary and his father is the protector of this trust.

15. The company B Holdings Pty Limited is also the trustee of the B Family Trust, which is a half owner of the K business.  The respondent is a discretionary beneficiary and his father is the protector and holder of a power of appointment of the trustee of this entity.  The financial statements for this trust record that it owes to the respondent a sum of $1,297. 

16. The respondent, his father and brother are also directors and shareholders of the company B Pty Limited, which is the trustee of the B Trust.  The respondent is a discretionary beneficiary and his father is the appointor of this trust, which owns a 25 per cent interest in the AA business and the entirety of the B Management Group.

17. Following separation, the respondent paid the mortgage instalments and rates in respect of the R property.  He paid the children’s school fees and maintenance costs for a Nissan motor vehicle used by the applicant, together with her mobile phone bill.  He stopped paying these motor vehicle expenses in January 2013 and the mobile phone bill in March 2013.

18. Between separation and 27 April 2012, the respondent paid the sum of $1,400 per month into a joint account for the applicant’s use.   In April 2012, he reduced this amount to $750 per week and paid $260 per week from February 2013.  He had received a child support assessment in a total amount of $258 per week for the period 18 September 2012 to 17 December 2013.

19. Since September 2012, the applicant has received social security benefits in the total amount of $921 per fortnight.  Her only other source of income is child support.

20. In March 2013, the respondent entered into a de facto relationship with Ms H.  They have a child, I, who was born in 2013 and is presently aged nine months.  Ms H has a two and a half year old daughter from a previous relationship.

21. On 8 July 2013, the parties consented to orders which permitted the drawdown of a sum of $190,000 from the mortgage account secured against the R property.  They each received $80,000 and an amount of $30,000 was deposited into an account created for the purpose of paying interest on the mortgage.  As at 13 February 2014 a sum of $7,393 remained in this account, from which $4,400 is debited each month.

22. On 5 December 2013 the applicant withdrew $100,000 from the joint St George Bank loan account, without the knowledge or consent of the respondent.   On 11 December 2013 the respondent withdrew an amount of $113,000, being the whole of the balance then available from this account.

23. As at 28 February 2014 the respondent held approximately $96,000 from these funds in his St George Bank account.  The submissions on his behalf at the interim hearing on 3 March 2014 suggested that the balance of the account, as at that date, was approximately $79,000.

24. The applicant paid the sum of $110,000, which she withdrew from the St George Bank loan account on 5 December 2013, to her then solicitors.  She had already spent the sum of $80,000, which she obtained pursuant to the consent orders of 8 July 2013, on legal costs and accounting fees.  As at December 2013 the applicant’s current solicitor held approximately $48,430 in his trust account. 

The Evidence

1. The applicant de facto wife relied on the following affidavits:

   a)affidavits of Ms Kilgowe (“the de facto wife”) sworn on 1 May 2013 and 28 February 2014;

   b)affidavit of Michael Conley (“the de facto wife’s solicitor”) sworn on 27 February 2014; and

   c)Financial Statement of the de facto wife sworn on 27 February 2014.

2. The respondent de facto husband relied on the following affidavits:

   a)affidavits of Mr Brickett (“the de facto husband”) sworn on 28 June 2013 and 24 February 2014;

   b)affidavit of Mr T (“the accountant for the de facto husband) sworn on 2 August 2013; and

   c)Financial Statement of the de facto husband sworn on 28 February 2014.

   As the proceedings were interim in nature, the hearing on 3 March 2014 proceeded by way only of submissions.

Interim Spouse Maintenance

1. It is first necessary that the applicant establish that she is unable to support herself adequately for the purposes of s 90SF of the Family Law Act 1975 (Cth) (“the Act”). That inability must be due to care and control of a child who is under the age of 18 years; age or physical or mental incapacity to engage in appropriate gainful employment or any other adequate reason.

2. According to her Financial Statement of 27 February 2014 the applicant’s weekly income, leaving aside Social Security benefits, consists of approximately $3 by way of interest on money in a bank account and $238 child support paid by the respondent.  In my view, however, there is a real issue as to whether the applicant currently is exercising her capacity to engage in gainful employment.

3. In her affidavit of 1 May 2013, the applicant set out her employment history since 2002.  Until 2006, she worked in various businesses operated by the B Management Group.  At various times she was the operator of businesses owned and operated by this entity.  She fulfilled management roles and worked as an administrator in the Group’s head office between February 2005 and August 2005 and for approximately six weeks in 2006.  The applicant gave no evidence of her employment prior to 2002.

4. The applicant now wishes to work as an alternative health practitioner during school hours.  It appears she is embroiled in a dispute with the administrator of a college where she undertook her training, in relation to the issue of the relevant certificate.  It seems to me to be unlikely that she would generate income from this source for a substantial period.  She needs first to resolve this dispute and obtain her certificate of qualification, then find employment or establish a practice.

5. The applicant undertook unpaid work experience in the fashion industry between September 2012 and August 2013 for approximately three hours per week.  She has not found gainful employment in this sector.

6. It seems to me that the applicant could make greater efforts to engage in gainful employment. She has skills and experience which were evident during the period of her employment with the B Group. It appears that her efforts to find employment since the parties’ separation have been selective, at best. Nevertheless, her only income at present, apart from Social Security benefits, is child support. I accept that the care of the parties’ children necessarily places some limitation on her capacity to engage in gainful employment. I am thus satisfied that the applicant is unable to support herself adequately for the purposes of s 90SF of the Act.

7. The applicant sought an order that the respondent pay to her interim spouse maintenance of $950 per week.  In her affidavit of 27 February 2014, the applicant deposed that this figure is calculated as follows:

   46.In my previous Financial Statement sworn and filed on 13 May 2013 I marked with an asterisk those expenses which I was unable to afford but were previously paid during the relationship.  Given my deteriorating financial position I have had to stop paying for the following expenses as I have been unable to afford them:

   46.1House repairs (previously $10.00 per week);

   46.2Motor vehicle maintenance (previously $20.00);

   46.3Clothing and shoes (previously $150.00 per week);

   46.4Children’s activities (previously $139.00 per week);

   46.5Child Minding (previously $30.00 per week);

   46.6Books and Magazines (previously $20.00 per week);

   46.7Gifts (previously $50.00 per week);

   46.8Pest control (previously $10.00 per week);

   46.9Further education (previously $50.00 per week);

   46.10Chiropractor (previously $75.00 per week);

   46.11Counselling (previously $120.00 per week).

   Total: $695.00

   47.Additionally because of my current financial position I’ve had to reduce monies previously spent in relation to various other expenditure items as follows:

   47.1Food and household supplies (previously $400.00 per week now $300.00 per week);

   47.2Fares and car parking (previously $21.00 per week now $5.00 per week);

   47.3Entertainment and hobbies (previously $150.00 per week now $50.00 per week);

   47.4Hairdressing and toiletries (previously $40.00 per week now $5.00 per week).

   Total:$251.00

8. I consider that certain of these allegedly necessary expenses should not be taken into account in assessing the quantum of the applicant’s need for spouse maintenance.  It seems to me that some of these costs are discretionary, being those now set out:

   ·House repairs                   $10

   ·Child minding                   $30

   ·Further education            $50

   ·Chiropractor  $75

   ·Counselling  $120

   ·Pest control  $10

   ·Gifts  $50

   ·Car parking   $16

   Total     $361

   I would note that the total of $695 set out in paragraph 46 should, in fact, be an amount of $674.

9. In round figures, I am thus satisfied that the applicant’s income apart from Social Security benefits, falls short of her reasonable expenses by an amount of approximately $560 per week.  In view of my finding that she is not currently exercising to the full her capacity to engage in gainful employment, however, I assess her need at approximately $450 per week.

10. As noted, the respondent paid the sum of $1,400 per week to the applicant for the benefit of herself and the children for about two months after separation in February 2012.  He then provided a sum of $750 per week between April 2012 and February 2013.  The respondent gave no explanation as to why he was able to pay that amount for some 10 months but is now able to provide only a sum of $260 per week for the benefit of the applicant and children.

11. In his Financial Statement of 28 February 2014 the respondent deposed to a gross weekly income of $4,030, which consisted of salary of $2,211 and $1,679 from “The [B] Trust (from funds borrowed from the [Z business] and [the SS business])”.  His partner has a weekly income of $700.

12. The respondent’s expenses, as set out in his Financial Statement, included loan repayments totalling $3,030 per week.  Very little information was available as to these loans but the amounts appear to relate to activities undertaken by the commercial entities operated by the respondent, his father and brother.  On the evidence presently available, I cannot tell whether these loan repayments are actually made on a regular basis or are accounting entries between the web of entities within the B Group.

13. In circumstances where the respondent paid $750 per week for the support of the applicant and children for 10 months, apparently without difficulty, and the absence of evidence as to the actual financial arrangements in relation to distributions and loan repayments within the B commercial enterprises, I conclude that he has a capacity to pay interim spouse maintenance.  In the exercise of my discretion, I will order that he pay a sum of $450 per week pending further order. 

Interim Costs

1. The applicant sought an order that a sum of $45,000 be paid into the trust account of her solicitor to fund her ongoing litigation.  This money would come from funds remaining of the sum of $113,000, which the respondent withdrew from their joint loan account in December 2013.

2. In my view it is necessary to have regard to the amounts which the applicant has already expended in legal costs, which substantially came from funds drawn down on the joint loan account.  The trust account statements annexed to the affidavit of the applicant’s solicitor, Mr Conley, indicate that she has paid a total of almost $225,000 to her lawyers and that he presently holds approximately $48,000 (annexures page 26).

3. The applicant has thus expended so far approximately $177,000 on legal costs and accounting fees.  She did not explain why it was necessary for her to expend that large amount of money, nor what services she obtained for that outlay. 

4. The respondent gave evidence in his affidavit of the applicant’s unsuccessful opposition to his application for an order that he be permitted to immunise the parties’ children.  Those proceedings were determined only after a defended hearing.  It seems reasonable to infer that a relatively substantial part of that sum of $177,000 consisted of the applicant’s costs of these proceedings. 

5. It appears that the applicant has paid some $30,000 to CN Firm, a firm of forensic accountants.  As yet, there is no sign of any report or other evidence from a member of that firm.  The applicant gave no evidence of her reasons for engaging a forensic accountant, nor what services she received in exchange for her payment of $30,000.

6. In these circumstances, I am prepared to do no more than make orders for the applicant to receive the balance remaining in the respondent’s St George Bank account after payment is made to the account created to service the mortgage.  The applicant will then have available an amount of approximately $87,430 for future legal costs.  It is a matter for the applicant and those who advise her to decide upon the application of these funds. 

7. I am not prepared to make a “dollar for dollar order” to fund the applicant’s legal costs in the future.  She has already spent some $177,000 and these orders will provide her with an additional sum of $87,430.  In my view, with access to approximately $264,000, the applicant should have been able to conclude her litigation with the respondent in a timely and expeditious manner.

Mortgage Repayments

1. The applicant sought orders which would cause the respondent to lodge a sum of $50,000 into the account created to service the mortgage in respect of the R property.  The respondent was prepared to dedicate some $40,000 for that purpose. 

2. It seems to me that a sum of $50,000 should be made available to service the mortgage for two main reasons.  Firstly, the children live in the R property and secondly, payment of the mortgage pending a final settlement would have the effect of preservation of an asset of the parties.

The Respondent’s Application for an order for the sale of the R property

1. I am not prepared to order a sale of the R property at this point in the proceedings, although I have some doubts about the bona fides of the applicant’s Amended Response to an Initiating Application filed on 3 March 2014.  For the first time, she resiled in that document from her previous position whereby she sought orders for the sale of the R property.

2. Superficially, it is difficult to envisage an outcome to the proceedings which would not see the sale of the R property.  Nonetheless, at this point I cannot exclude the possibility that the applicant may obtain financial assistance from a non-commercial source to enable her to retain that property.  Additionally, at this point, the value of the respondent’s commercial interests is unknown and will remain so until an expert undertakes that exercise.  It seems to me to be premature to make orders to effect a sale of this property at this stage in the proceedings, in circumstances where a reversal of such orders would be an impossibility.

Interim Parenting Orders

1. As noted, interim parenting orders were made by consent on 8 July 2013.  These orders provided, inter alia, as follows:

   7.That the children [S] and [M] live with the father during the school term from after school each alternate Thursday to before school the following Monday and for one half of each school holiday period.  That the father’s term time contact shall commence on 18 July 2013.

   8.That the children otherwise live with the mother.

   8A.That for the purposes of school holiday time, the father shall have time with the  children for the first half in even numbered years and the second half in odd numbered years and subject to further agreement in the odd years the children shall be with the mother by noon on the second last day.

   8B.Notation that the parties are attended (sic) before a Family Consultant on 31 July 2013 and intend to address with the Family Consultant further issues in relation to the children.

2. The parties and children met with a Family Consultant, Ms FR, on 12 August 2013.  According to her Child Responsive Program Memorandum dated 16 August 2013:

   [The children] each stated that they want to spend more time with their father and would also like to have extra time with him on their own.  They appear to have a warm relationship with him.  Due to their young ages and understanding, further assessment via a family report may assist in determining the weight to be given to their views.

3. It was submitted on behalf of the father that no Rice & Asplund issue arises with his current application, because the orders made on 8 July 2013 were expressed to operate only until the parties had the benefit of a Child Responsive Program Memorandum.  I disagree with this submission, having regard to the provision for alternating halves of school holidays in even numbered and odd numbered years in Order 8A.  That order, on its face, contemplates a continuation of those orders for at least 18 months after 8 July 2013.  I will thus dismiss the respondent’s application for a variation of the interim parenting orders made on 8 July 2013.

Appointment of a Single Expert

1. I have not acceded to the proposal of the respondent, whereby the balance of funds lodged in his St George Bank account would be used to meet the fees of a single expert.  In the absence of any alternative suggestion as to payment of these costs, I will not make such an order.  Additionally, the wording of the proposed order leaves unclear which entities are to be valued and prevents any input from the applicant.

I certify that the preceding fifty seven (57) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 21 March 2014.

Associate:       

Date:              21 March 2014