Kouros and Kouros (No.2) - [2009] FMCAfam 893

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KOUROS & KOUROS (No.2)

[2009] FMCAfam 893

FAMILY LAW – Spousal maintenance.

Family Law Act 1975, ss.72, 74 & 75(2)

Applicant:

MS KOUROS

Respondent:

MR KOUROS

File Number:

ADC 4691 of 2008

Judgment of:

Simpson FM

Hearing date:

15 July 2009

Date of Last Submission:

15 July 2009

Delivered at:

Adelaide

Delivered on:

17 July 2009

REPRESENTATION

Counsel for the Applicant:

Ms VA. West

Solicitors for the Applicant:

D'Angelo Kavanagh

Counsel for the Respondent:

Ms A. Du Barry

Solicitors for the Respondent:

Howe Martin & Associates

ORDERS

Until further order the husband do pay the wife a sum of $150 per week by way of spousal maintenance backdated to 12 May 2009.

IT IS NOTED that publication of this judgment under the pseudonym Kouros & Kouros (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

ADC 4691 of 2008

MS KOUROS

Applicant

And

MR KOUROS

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

Introduction

I have before me an application for spousal maintenance brought by the wife, in which she seeks an order that the husband pay her $150 per week until further order. The husband resists the making of the order.
The wife relies upon her affidavits filed on 12 May 2009 and 13 July 2009, together with her financial statement filed on 12 May 2009. The husband relies upon his affidavits filed on 15 June and 1 July 2009, together with his financial statement filed on 1 July 2009.
The application is brought pursuant to s.72 of the Family Law Act 1975 (Cth) (“the Act”), which states as follows:
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 or 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).
The primary purpose of an order for spousal maintenance is to make appropriate adjustments for any disparity between the incomes or earning capacities of spouses based on their respective needs. The test of the ability of a spouse to support themselves, contained in s.72(1), is not whether the spouse is in need, but whether the spouse is in a position to finance themselves from their own resources. Put somewhat differently, the question is whether the spouse, by reason of their earning capacity, capital or other sources of income, can look after themselves. If the applicant spouse does not overcome the threshold issue and show a need for spousal maintenance, the application of course should be dismissed rather than adjourned.
The process for assessing a spousal maintenance claim is:
a)a threshold finding, under s.72(1);
b)consideration of ss.74 and 75(2);
c)the no fettering principle that the pre-separation standard of living must automatically be awarded where the respondent’s means permit; and
d)a discretion exercised in accordance with s.74.
The recipient of maintenance is entitled to be maintained, “adequately”. The word “adequately” imports a standard of living which is reasonable in the circumstances. The income of the applicant is very important in assessing whether or not an applicant is unable to support themselves adequately. The applicant must have a present inability to support themselves adequately.
The respondent’s capacity to pay is not assessed merely on income, but also on property, finance resources and earning capacity. Capacity to pay is assessed by determining the respondent’s surplus after paying their reasonable commitments.

Oral evidence

In these reasons, statements of fact are findings of fact made on the balance of probabilities and based on my evidence and my assessment of the witnesses.
Both parties subjected themselves to cross-examination after first giving additional evidence-in-chief to supplement their affidavit material. I have therefore had the opportunity to observe their demeanour while answering questions and to assess, together with the substance of their evidence (both affidavit and oral) whether it should be believed.
I was impressed with the wife as a witness. She gave the impression that she was being completely frank and honest with her answers and was doing all that she could to assist the Court in relation to the factual background. She appeared both intelligent and articulate.
Although the husband too impressed me as an intelligent and articulate witness I was not as impressed with him as a witness of truth. He seemed on occasions to feign misunderstanding a question under cross-examination when he did not wish to answer because the answer would not assist his case. There were occasions under cross-examination when there were lengthy pauses without response from the husband, giving me the impression that he was trying to come up with an answer that would be consistent with his case rather than simply and spontaneously answering the question as a witness of truth generally would. I was left with the impression that the husband was not always being honest and frank with the Court in relation to some of the crucial issues.
I prefer the wife’s evidence wherever there is conflict between it and the husband’s.

Background

The basic background facts of this matter are that the parties commenced cohabitation in November 2004 and married [in] 2006. The only child of the marriage, [X], was born [in] 2006. The parties separated on 3 November 2008.
At the time of separation and for some time before then the parties had been living at a property at Property V owned by the paternal grandparents. They had been paying rent.
The husband had at all relevant times worked as a self-employed [omitted]. He ran the business from the former matrimonial home. The business was substantially a cash business. He had been operating it since 1989. According to documents prepared by an accountant on the instructions of the husband and tendered in evidence, the profit before tax of the business for the financial years ending 2005, 2006, 2007 and 2008 were $7,848, $20,332, $26,525 and $9,769 respectively. The husband says that the business was not at all profitable and the documents that I have referred to correspond with what the husband says. Notwithstanding this the husband says that he continued to run the business from 1 January 1989 to the present time. He has made no effort to date to find any more profitable work. I find that the reason that the husband has persisted with his business is because it is much more profitable than the documents prepared by his accountants earlier referred to would suggest.
The husband bought a residential property at Property K about 14 years ago. The property is still registered in his name only. The property has been tenanted and the rental income used to reduce the mortgage on the property that has now been reduced to $47,000. The property has an estimated value of about $400,000.
In 2002 the husband bought a property at Property W. He says that he bought the property with the assistance of a $30,000 loan from his father. The property has never been tenanted as it has a housing improvement order on it. The property has an estimated value of about $100,000 and is unencumbered.
In 2008 the parties bought a property at Property H with the intention that it would be renovated and then used as the matrimonial home. That never happened as the parties separated before the property had been improved. The property was bought by the parties for I think about $370,000 and is presently encumbered with a mortgage securing a debt of about the same amount. There is therefore no, or very little, equity in the property. The husband has indicated that he intends to move into this property in the near future at which time he will vacate his parent’s property at Property V. The Property H property is registered in the joint names of the parties.
When the parties applied to Westpac Bank for a loan for the Property H property they completed various forms providing their personal and other details so that the bank could assess their application. For reasons that are not immediately apparent to me the application for a loan was for $450,000. I do not place any great importance on that information that is to be obtained from the documents but note that it is significantly more than the property is worth. Annexed to the wife’s affidavit of 13 July 2009 is a Westpac document titled “Introducer Application Pack” which has been completed by the parties and signed by them on 6 March 2008. The Introducer Application Pack indicates that the husband stated that his gross annual income (ie. before tax) was $93,600.
Also annexed to the wife’s affidavit is a further Westpac document titled “Personal Finance Application” which has been completed and signed by the parties on 16 April 2008. The personal finance application also states that the husband’s annual gross income (before tax) was $93,600 and that this produced a net, that presumably means after tax, monthly income of $5,638. The application indicated that the parties had assets of $875,409 and liabilities of $49,073. I find that the husband made a realistic assessment of his income for the purpose of completing the application for a loan to Westpac Bank.
This level of income is confirmed also by the numerous cash payments that the husband has been making into his bank and Visa accounts. On this basis, I find that in the financial year ending June 2008, the husband had an annual gross income from his business of no less than $93,600. I see no reason on the evidence that is before me why that level of income would not have continued into the last financial year and will not be continuing for the current financial year that has just started.
The wife, in her affidavit of 12 May 2009, says that on the basis of numerous discussions on the topic that she has had with her husband, the husband’s [omitted] business had an estimated value of $200,000. She says that since she has known the husband the husband’s business has provided a significant cash income to the marriage in addition to the disclosed income. The business income has provided the husband, the child and the wife with a comfortable lifestyle whilst they were living together. She says that the husband would spend lavish amounts on dining out and on drinks when dining out with friends or family and that she estimated that the husband would spend anywhere between $150 to $400 at a time.
She says the husband would also spend significant amounts of money when they went out simply for drinks. On these occasions the husband would, spend sums that she estimated to be $400 to $500 shouting drinks for friends and even strangers. The wife says that the husband would also go out on occasions by himself and might go out all night. She says that on these occasions he would spend extravagant amounts of money which he would put on their Visa card.
The wife says that the husband usually declared annual income from the business of about $22,000 but she recalls that the amount required to be paid for mortgage repayments for the combined Property K and Property H properties amounted to an estimated $19,000 per annum when the Bank was at that stage charging 9% per annum for interest.
She says that the husband also used the Visa credit card for the purchase of [stock] in his business operations and for his daily expenses. She says that the credit card was paid out in full each month. The husband said in his evidence that he wanted to ensure that the bank never charged him interest for the use of his credit card so he arranged for an automatic transfer of sufficient funds to clear any credit card debt each month at the appropriate time so as to avoid incurring interest.
The wife says that the husband has a Holden Rodeo motor vehicle worth an estimated $20,000 and that the she drives a Suzuki Grand Vitara worth an estimated $10,000. She says that the Suzuki vehicle is in the husband’s name. She says that the husband also has a Camaro motor vehicle which is in pristine condition and that it is worth an estimated $40,000-50,000.
The wife says that she ceased employment before the child [X] was born and then assisted the husband in his business. She says that her role was to organise [events], clean [stock] (for sale and installation) and design signage for the various [stock]. She also designed her husband’s business cards and monitored all of his sales on eBay and [omitted]. She says that she paid all the accounts in relation to the business and later set up a database and entered all the business expenses on that database for taxation purposes as the husband had failed to complete his taxation return for a number of years.
The wife is 30 years of age. Since the birth of their child the wife has been diagnosed with a gynaecological condition that might require surgery. She has been fast-tracked in the public hospital system and obtained an appointment to see a gynaecologist in mid July 2009. I believe that that appointment was to take place shortly prior to this hearing. There has not been an opportunity for the wife to file an affidavit with the results of her gynaecological appointment if it occurred. The wife is concerned about the financial consequences of surgery for the gynaecological condition.
The wife also has an appointment with a specialist in relation to suspicious skin lesions. She says that she may need to cancel this appointment if she does not receive spousal maintenance as she would not be able to afford to pay. The cost of attending the appointment is $100.
The wife is keen to undertake a course which might restore her confidence. She also wishes to update her work skills so that she might, once her health improves, be in a position to take up paid employment. She would only wish to have paid employment at times that she is not caring for the child.
She is considering undertaking a certificate course in financial services through the [omitted] TAFE. The fees are likely to be $300 - $400 including textbooks and she estimates that she may be entitled to a 30 per cent discount in relation to those costs. She says that she may be required to pay $50 per fortnight towards the course when it commences.
The wife says that the husband has a lucrative cash income from the [omitted] business and would only bank cash moneys to pay the mortgages and Visa card when due, keeping his remaining cash earnings in a safe at the Property V property. She says, and I accept what she says, that she observed the husband place large amounts of cash in the safe in a bank deposit bag and that on occasions, the bag was opened in her presence. As well as the cash, both coins and notes, the bag contained notepads and a calculator.
The wife’s needs, it seems to me, are not really disputed in this case. In any event, on the material before me, it is clear that the wife is unable to support herself adequately by reason of having the care and control of the child. She has an income from government benefits, parenting payments and family tax benefits A and B and rent assistance totalling $456 a week. She receives an additional $7.50 per week in relation to child support. She has total expenditure of $572 per week. She needs the spousal maintenance order to attempt to bridge the gap between her present inadequate financial position and the financial position necessary to achieve an adequate standard of living.
I have considered what the husband says his commitments are as contained in his financial statement filed on 1 July 2009 and as deposed to in his affidavits and as detailed by him in his oral evidence. After that careful consideration and for the reasons that I have mentioned previously, I believe that the husband has significant extra income to that disclosed by him and that he has the capacity to pay the spousal maintenance sought. I therefore propose to make the order as sought by the applicant wife.
There will therefore be an order in these terms.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Simpson FM

Associate: J Semler

Date: 24 August 2009