Koyroyshs and Koyroyshs - [2018] FamCA 840

FAMILY COURT OF AUSTRALIA

KOYROYSHS & KOYROYSHS

[2018] FamCA 840

FAMILY LAW – PROPERTY – Interim application – Where the wife seeks orders for lump sum spousal maintenance – Where, in the alternative, the wife seeks orders for periodic spousal maintenance – Where the wife has received considerable funds by way of partial distributions of property to date – Where the wife has primary care of the parties’ three year old child – Where the child spends time with the husband two days per week – Where the wife contends she is unable to work as a result of her parental responsibilities with regard to the parties’ child – Where the wife contends that the husband is not exercising his full income earning capacity – Where the husband contends that the wife is able to work on the days that the child is in his care – Court finds that the wife is unable to adequately support herself – Court finds that the husband has capacity to pay spousal maintenance – Order for periodic spousal maintenance made.

Family Law Act 1975 (Cth) ss. 72, 75, 80

Brown and Brown [2005] FamCA 1165
Budding & Budding [2009] FamCAFC 165
Edgar & Strofield [2016] FamCAFC 93
Hall v Hall (2016) 257 CLR 490
Hyman v Hyman [1929] All ER 245 at 258
Maroney & Maroney [2009] FamCAFC 45
McCrossen & McCrossen (2006) FLC 93-283
Mitchell & Mitchell (1995) FLC 92-601
Saxena and Saxena (2006) FLC 93-268
Stein v Stein (2000) FLC 93-004
Vautin & Vautin (1998) FLC 92-827

APPLICANT:

Ms Koyroyshs

RESPONDENT:

Mr Koyroyshs

FILE NUMBER:

SYC 2276 of 2016

DATE DELIVERED:

18 October 2018

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

McClelland J

HEARING DATE:

6 August 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Messner

SOLICITOR FOR THE APPLICANT:

Consort Family Law

COUNSEL FOR THE RESPONDENT:

Mr Othen

SOLICITOR FOR THE RESPONDENT:

First Choice Family Lawyers

Orders

THE COURT ORDERS, PENDING FURTHER ORDER, THAT:

Pursuant to section 74 of the Family Law Act 1975 (Cth), within seven (7) days, the husband commence paying to the wife, the amount of $1,041 per week by way of periodic spousal maintenance.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2276 of 2016

Ms Koyroyshs

Applicant

And

Mr Koyroyshs

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application for lump sum spousal maintenance brought by the wife following the breakdown of the parties’ relationship of approximately two years. During the course of that relationship, the parties had a child who is now three and a half years old. The child lives with the wife and spends time with the husband during working hours on Tuesday and Thursdays.
The husband opposes the wife’s application for lump sum spousal maintenance and contends that it is, in actual fact, an application for a partial distribution of property in circumstances where orders have previously been made for a partial property distribution in favour of the wife. The husband contends that, in circumstances where the wife has chosen to use monies previously received to purchase an investment property, rather than to meet her living expenses, it is inappropriate for the wife to ask for a further distribution to support herself.
The parties are to be commended for resolving some of the issue that were, at the time of the interim hearing, in dispute between them. A minute of consent orders provided to the Court set out the following interim property orders:
1. That paragraphs 3 and 4 of the Amended Application in a case filed 3 August 2018 are withdrawn and dismissed.
2. That paragraph 2 of the Response to an Application in a case filed 1 August 2018 is withdrawn and dismissed.
3. That the remaining sum of $20,000 held in an interest-bearing trust account by the wife’s solicitors on behalf of the wife pursuant to orders made 9 August 2017 shall be paid to the wife by way of partial property settlement.

Background

Making findings in respect to disputed facts can be difficult in interim proceedings. As the Full Court said in Edgar & Strofield [2016] FamCAFC 93 at [15]:
…the limits to an interim hearing are well known. Disputed issues of fact cannot be resolved at an interim hearing...
Accordingly, I will set out those facts that are agreed and, where there is disagreement, note the respective contentions of the parties.
There is one child of the parties’ relationship, B, born in 2015 (“the child”). The child lives with the wife and spends time with the husband each Tuesday and Thursday, for effectively the entire day.
The parties separated in late-March 2016. The duration of the parties’ relationship was approximately two years.
The husband contends that he brought a property into the relationship, being C Street, Suburb D NSW (“the Suburb D property”) to which the wife made no financial or non-financial contributions. Comparatively, the wife contends that she has made significant non-financial contributions to the parties’ property, mainly in her capacity as a homemaker and primary carer of the child.
The husband purchased the Suburb D property in May 2003 and sold it in August 2014, for net proceeds of approximately $760,000. From that sum, the husband contends that he transferred $485,000 into a Citibank term deposit held in the wife’s name. Upon maturity of that account, which occurred following separation, the parties agreed to transfer the relevant funds into a joint ANZ account (account no. #78) (“the ANZ joint account”).
In his Affidavit filed on 1 August 2018, the husband contends that the current balance of the ANZ joint account is $450,731. As will be discussed, the wife seeks that orders be made for a lump sum of spousal maintenance to be paid to her from that account. The wife contends that those funds can be accessed with the consent of both parties.
The wife contends that she brought a property into the relationship, being E Street, Suburb F NSW (“the Suburb F property”) and that the husband did not contribute to its purchase or mortgage repayments. The wife contends that the husband lived at the Suburb F property, rent-free, for two years during their relationship. The husband contends that, following the wife’s purchase of the Suburb F property, he made contributions to that property by way of extensive renovations.
The wife sold the Suburb F property in April 2016. The wife contends that, on 22 April 2016, being five days prior to the settlement of the Suburb F property, the husband lodged a caveat on the title to that property. The wife contends that, in those circumstances, she was forced to accept the husband’s terms for removing that caveat, namely that the sale proceeds, which came to $249,287, be deposited into a controlled monies account in the name of the husband’s solicitors (“G Lawyers”).
On 11 July 2016, the following interim property orders were made by Loughnan J, with the consent of the parties:
1. The parties within 14 days do all things necessary to withdraw the sum of $100,000 [being $50,000 from the ANZ joint account and as to $50,000 held on trust with [H Lawyers]] to pay such sum to the wife.
2. The sum of $50,000 of such payment be categorised as partial property settlement and the other $50,000 be categorised on the date of hearing.
…
8. That, within fourteen (14) days of the date of these orders, the parties do all acts and things and sign all documents necessary to cause the balance of the monies held in the Trust Account of [H Lawyers], being part of/or the balance of the proceeds of sale of the [Suburb F] property, to be transferred to [G Lawyers].
In this way, the wife received $50,000 from the proceeds of sale of the Suburb D property, as well as $50,000 from the proceeds of sale of the Suburb F property.
On 9 August 2017, the following interim property orders and notations were made by Loughnan J, with the consent of the parties:
1. The parties shall do all things necessary for J Lawyers to release to the wife’s solicitor the whole sum held in [G Lawyers] of approximately $209,000.00 held on behalf of the wife.
2. The wife shall:-
a. Provide to her solicitor authority to receive the sum.
b. Cause the sum of $100,000.00 to be paid to an interest bearing account to be held in that account pending further Order.
3. The balance of the monies shall be released to the wife.
4. The Court notes the parties agree, the said balance shall at the discretion of the Trial Judge be categorised at the final hearing as to whether such sum is spousal maintenance or interim property settlement.
5. The Court notes that the husband will not unreasonably withhold his consent to the wife using the funds referred to in 2.2 for the purchase of a property.
The wife contends that, of that $109,000 released to her pursuant to those orders, she expended $71,660 on living expenses for herself and the child and loan repayments and $30,000 on legal fees.
The husband contends that, on 30 May 2018, his solicitors received an email from the wife’s solicitors stating that the wife had successfully bid on a property at K Street, Suburb L, TAS (“the Tasmania property”). The contract for sale of that property required that the wife apply the sum of $10,000 as a deposit, within three days. That correspondence requested that the husband consent to the release of $100,186.50 from the monies held in the interest bearing account in the name of the wife’s solicitors, pursuant to the orders made on 9 August 2017. The wife contended that the release of those funds was necessary for her to complete the purchase of the Tasmania property.
The husband contends that he consented to the release of those funds on the basis that $22,000 from the total figure be transferred into an account held in trust on behalf of the child. The husband contends that he made this request as the wife had previously withdrawn the sum of $22,000 from the parties’ joint savings to reduce the mortgage on the Suburb F property. As a result of the husband’s counterproposal the sum of $78,977 was released to the wife.
The husband contends that, at that time, he had no notice that the wife would bring an application for spousal maintenance and that he would not have provided his consent for the release of those monies, had he been made aware of her intention to make such a claim.
On 9 July 2018, the sale of the Tasmania property settled. The wife purchased that property for a total cost of $392,000. The wife contends that this was funded by monies held in her Westpac term deposit (account no. 304291) of $264,680.41, monies released to her from the matrimonial pool of $78,977 and a loan from her parents of $50,000.
The wife contends that she purchased the Tasmania property for the following reasons:
a)To enable her to pay off her debts more quickly (the wife contends that the rental return from that property covers the $300 per week mortgage repayment that she was previously servicing as an out of pocket expense);
b)To reduce her tax obligations (the income received from the Westpac term deposit, which was later fully invested in the Tasmania property, could not be accessed by the wife under the terms of the “flawed asset arrangement”, though she incurred a tax liability in relation to it); and
c)To increase the value of the asset pool.
The wife contends that she did extensive research on the property market in Tasmania and determined that the purchase of the Tasmania property would be a sound investment. The wife contends that the husband approved of that investment.
Further, the Tasmania property now serves as security for a mortgage of $238,000, which was previously secured against the term deposit funds.
As previously noted, approximately $450,000 is currently held in the ANZ joint account, being part of the proceeds of sale of the Suburb D property. Counsel for the wife submitted that the proceeds of that sale were reduced to the current figure after the husband expended approximately $276,000 of the total figure. The wife contends that the husband has not properly accounted for the expenditure of that sum.
The wife and the child currently live in rented accommodation.
The husband lives with his parents. The husband does not pay rent to his parents, but does contribute to the costs of that household at $278 per week, plus the cost of council rates. The husband contends that his parents are elderly and each have an income of approximately $250 per week.

Applications

At the hearing, the wife pressed the following orders contained in her Amended Application in a Case filed on 2 August 2018:
2. That the parties within 7 days do all things necessary to withdraw the sum of $94,584 from the ANZ joint account to pay such sum to the wife as lump sum spouse maintenance.
Comparatively, the husband pressed the following orders contained in his Response filed on 1 August 2018:
1. That the Wife's Application in a Case filed on 9 July 2018 seeking the sum of $94,584 be paid from the parties' ANZ joint account by way of lump sum spousal maintenance be dismissed.
3. The Wife is to pay the Husband's costs incidental to her Application.

Evidence

At the hearing, the wife relied upon the following documents:
a)Financial Statement filed 3 August 2018
b)Her Affidavit filed on 3 August 2018 (paragraphs 3 to 6); and
c)Her Affidavit filed on 5 July 2018.
At the hearing, the husband relied upon the following documents:
a)Financial Statement filed on 1 August 2018; and
b)His Affidavit filed on 1 August 2018.

Consideration

Section 72 of the Act provides:
Right of spouse to maintenance
(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).
In Saxena and Saxena (2006) FLC 93-268, Coleman J explained that, in determining whether to make an order for spousal maintenance, the Court should follow a four step process, as follows:
a)Can the applicant support themselves adequately?
b)If not, what are the applicant’s reasonable needs?
c)What capacity does the respondent have to meet those needs?
d)What order is reasonable, having regard to s 75(2)?
I will now address each of those issues.

The wife’s capacity to support herself

In Hall v Hall (2016) 257 CLR 490 at [8], the High Court confirmed that first step and explained that:
A court determining an application for an interim order under s 74(1) cannot make such an order without finding, on the balance of probabilities on the evidence before it, that the threshold requirement in s 72(1) is met having regard to any relevant matter referred to in s 75(2).
The High Court went on, at [52], to say:
The wording of s 72(1), it has been noted, seems to imply that each party should attempt to support himself or herself where that is reasonable having regard to the matters referred to in s 75(2).
In this matter, the husband contends that, rather than attempt to support herself, the wife has applied funds that she has previously received by way of partial property distribution for the purpose of purchasing the Tasmania property. The wife, on the other hand, contends that her application of funds to purchase the Tasmania property does not disentitle her from seeking an order for spousal maintenance. In that respect, in the matter of Mitchell & Mitchell (1995) FLC 92-601 at 81,995, the Full Court said:
… The days are long gone when it is necessary for an applicant for maintenance to use up all of her assets and capital in order to satisfy the requirement that she is unable to support herself “adequately”. Where the line is to be drawn will depend upon the circumstances of individual cases.
Counsel for the husband summarised his argument in respect to the application of s 72 of the Act by asking the rhetorical question:
… how can somebody say they have any reason that’s adequate for not being able to support themselves, when the very means they had themselves to support themselves has been expended in this way?
The question as to whether the wife satisfies the threshold requirement of s 72 of the Act is an issue to be determined as at the date of the application for spousal maintenance. If, at that date, a party lacks the capacity to adequately support themselves, even though that lack of capacity may have resulted from poor decision making, then, providing that one of the reasons referred to in s 72(1) is established, it may nonetheless be determined that the person satisfies the gateway requirement referred to by the High Court in Hall v Hall.
The reason for the applicant’s incapacity to meet their needs may, however, be a very relevant consideration in terms of the exercise of discretion to make an order for spousal maintenance having regard to the matters set out in s 75(2) of the Act.
The wife contends that she is unable to adequately support herself because she is the child’s primary carer and, as a result, cannot work. The wife further contends that it has been necessary for her to take on that responsibility, as a result of the husband’s parental failings. Specifically, the wife contended that, for approximately two months prior to the parties’ separation, the husband cared for the child two days per week while she was at work. The wife contends that she “was deeply dissatisfied with the substandard level of care [the husband] provided” and decided to take a “career break” from her employment in May 2016 in order to care for the child on a full time basis. The wife subsequently resigned from that employment. In these interim proceedings, I am unable to adjudicate in respect to the parties’ respective contributions regarding each other’s parenting capacity.
The wife stated that, in June 2017, she attempted to have the child attend daycare, but subsequently abandoned the idea when the child exhibited high levels of separation anxiety. The wife intended to have the child recommence daycare in January 2018, when she was to turn three years of age, but states that, since that time, the child has developed “a severe anxiety” and that it is not appropriate for her to attend daycare prior to commencing school. The wife’s has not, however, produced evidence that enables me to determine whether the child suffers anxiety and if so, the extent or nature of that anxiety.
While the wife conceded that the husband continues to care for the child two days per week, she stated that changeover on those days occurs at 10:00am and 5:00pm and that it is very difficult for her to find employment that would accommodate that arrangement.
While the wife has not produced evidence relating to the child’s purported anxiety, I am satisfied that her responsibilities as the child’s primary carer impacts upon her ability to adequately support herself and accordingly, she has satisfied the threshold requirement of s 72 of the Act.
In making that finding, I note that the husband contends that the wife is not fully exploiting her earning capacity, including by working when he has the care of the child. I accept that the wife has a theoretical capacity to work on those days, however, as noted by the Full Court in Mitchell & Mitchell (supra) at 81,997, “there is a significant gap between theory and reality for employment”. I accept the wife’s contentions that her parental responsibilities impact upon her ability to obtain the type of employment that would earn her an income sufficient to adequately meet her needs.

In that context, in McCrossen & McCrossen (2006) FLC 93-283 at 80,838, the Full Court, after referring to a number of earlier authorities, said that the question of whether or not a person is able to support themselves “adequately” is:
… not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances. [References omitted].
I find that the income that the wife would be likely to receive by working two days per week would not be sufficient to enable her to adequately support herself. In those circumstances, it is now necessary to determine the wife’s needs.

The wife’s needs

The wife’s reasonable needs are to be assessed according to the amount that the wife requires for her own support, as opposed to what she requires in order to support her child: Stein v Stein (2000) FLC 93-004.
According to the wife’s Financial Statement, she receives a rental income from the Tasmania property of $320 per week. The wife is also in receipt of government benefits of $611 per week. Pursuant to s 75(3) of the Act, I am required to disregard that entitlement in exercising my jurisdiction under s 74 of the Act.
This provision reflects the historical recognition of public interest considerations involved in spousal maintenance. For instance, in Hyman v Hyman [1929] All ER 245 at 258 Lord Atkin, said:
…When the marriage is dissolved the duty to maintain arising out of the marriage tie disappears. In the absence of any statutory enactment the former wife would be left without any provision for her maintenance other than recourse to the poor law authorities. In my opinion, the statutory powers of the court to which I have referred were granted partly in the public interest to provide a substitute for this husband’s duty of maintenance and to prevent the wife from being thrown upon the public for support….
Reference to the respective roles of husband and wife are of historical interest only. However, the public interest continues to be reflected in s 75(3) of the Act, which requires the Court, in determining a party’s responsibility to pay maintenance, to “disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit”.
In terms of Part G of the wife’s Financial Statement, her weekly expenditure is, as follows:
a)Income tax at $62;
b)Rent at $500;
c)Mortgage on the Tasmania property at $300;
d)Rates, land tax and agents fees at $63;
e)Comprehensive third party insurance at $9;
f)Private health insurance at $22;
g)Repayments in respect to a loan from her mother at $257; and
h)Credit card repayments at $49.
Further, Parts N and O of the wife’s Financial Statement list her “other” weekly expenditure, as follows:

a)Food at $220;
b)Household supplies at $40;
c)House repairs at $5;
d)Electricity at $21;
e)Telephone/Internet/television at $15;
f)Petrol at $5;
g)Motor vehicle maintenance at $6;
h)Fares/car parking at $9;
i)Clothing and shoes at $40;
j)Medical, dental and optical (not including health insurance premiums) at $50;
k)Entertainment/hobbies at $18;
l)Holidays at $32;
m)Education at $1;
n)Chemist/pharmaceutical at $4;
o)Gardening/lawn mowing at $8;
p)Cleaning at $5;
q)Books and magazines at $5;
r)Gifts at $10;
s)Hairdressing/toiletries at $20;
t)Legal fees of $2,000;
u)Appliances, furniture and fixtures at $40;
v)Sundries at $30; and
w)Pet at $8.

At the hearing, I stated that I would not consider the parties’ legal fees as ordinary weekly expenditure incurred in supporting themselves. This did not appear to be disputed by Counsel for either party.
In Hall v Hall (supra), the plurality referred to the relevant extract from Redman & Redman (1987) FLC 91-805 and said:
No doubt, on an application for an interim order "[t]he evidence need not be so extensive and the findings not so precise" as on an application for a final order. But there is nothing to displace the applicability to an exercise of the power conferred by s 74(1) of the ordinary standard of proof in a civil proceeding now set out in s 140 of the Evidence Act 1995 (Cth).
In that context, while the wife’s Financial Statement is evidence of her expenditure, in circumstances where certain items of expenditure have been challenged by the husband and no documentary evidence has been produced to substantiate that expenditure, it is appropriate to consider the reasonableness of the wife’s claims.
In terms of the wife’s expenditure in relation to the item “Medical, dental and optical”, the wife contends that, in 2017, she was diagnosed with major dental issues which have required her to undergo several surgeries. The total cost of that treatment to date is $5,000. The wife contends that the estimated total cost of that treatment is $30,000 and that if there is any delay in her receiving that treatment, her condition will worsen. The husband contends that the wife maintains private health insurance and that she has not established the evidentiary basis for those expenses. There is, with respect, substance to the husband’s contentions. However, it is reasonable to expect that the wife will incur medical and dental expenses above that which she may claim through her private health insurance. In these interim proceedings, I am satisfied that an amount of $20 per week, being the amount claimed by the husband for his own expenses in respect to that item, is appropriate.
Counsel for the husband further submitted that the wife has not established the basis for claiming $32 for holidays or $40 for appliances, furniture and fixtures. I am satisfied that an amount of $20 per week in respect to holidays is not unreasonable. I respectfully agree that the wife has not established the basis upon which she claims an amount of $40 per week in respect to appliances, furniture and fixtures and that item will be removed.
Counsel for the wife acknowledged that there was no evidence to support the wife’s claimed weekly expenses in relation to income tax, loan repayments to her mother or credit card payments. I will, therefore, remove those items of expenditure.
I, therefore, find that the wife’s weekly expenses are to be assessed, as follows:
a)Rent at $500;
b)Mortgage on the Tasmania property at $300;
c)Rates, land tax and agents fees at $63;
d)Comprehensive third party insurance at $9;
e)Private health insurance at $22;

f)Food at $220;
g)Household supplies at $40;
h)House repairs at $5;
i)Electricity at $21;
j)Telephone/Internet/television at $15;
k)Petrol at $5;
l)Motor vehicle maintenance at $6;
m)Fares/car parking at $9;
n)Clothing and shoes at $40;
o)Medical, dental and optical (not including health insurance premiums) at $20;
p)Entertainment/hobbies at $18;
q)Holidays at $20;
r)Education at $1;
s)Chemist/pharmaceutical at $4;
t)Gardening/lawn mowing at $8;
u)Cleaning at $5;
v)Books and magazines at $5;
w)Gifts at $10;
x)Hairdressing/toiletries at $20;
y)Sundries at $30; and
z)Pet at $8.

Those figures total $1,404. From that amount it is necessary to deduct the rental income that the wife receives from the Tasmania property of $320. As a result, the wife’s weekly need totals $1,084.

The husband’s capacity to pay

The husband’s Financial Statement lists his average estimated weekly income as being $999. That figure is derived from rental income of $627, interest payments of $173, income from his business M Pty Ltd of $192 and dividends of $7.
In Part G of his Financial Statement, the husband lists the following weekly expenses:
a)Rates, unit levies at $41;
b)Other rates, unit levies at $352;
c)Home and contents insurance at $18; and
d)Child support payments at $80.
The husband’s other weekly expenditure, set out in Part N of that document are, as follows:

a)Food at $150;
b)Household supplies at $5;
c)Electricity at $10;
d)Telephone/Internet/Foxtel at $38;
e)Petrol at $80;
f)Motor vehicle maintenance at $21;
g)Fares/car parking at $20;
h)Clothing and shoes at $30;
i)Medical, dental and optical at $20;
j)Entertainment/hobbies at $50;
k)Holidays at $40;
l)Chemist/pharmaceutical at $2;
m)Gardening/lawn mowing at $1;
n)Gifts at $40;
o)Hairdressing, toiletries at $5; and
p)Legal fees at $1,756.

Counsel for the husband stated that, while the wife has chosen to utilise her capital to purchase the Tasmania property, the husband is utilising his capital to support himself. This is in circumstances where his income is insufficient to meet his needs.
Excluding legal fees, I accept that the husband’s weekly expenditure is $1,003. I have included in that amount the expenses associated with his rental properties on the basis that I have also factored in the income received from those properties.
Accordingly, based on his income alone, the husband does not have the capacity to pay spousal maintenance to the wife. However, as noted by Counsel for the wife, even if the husband’s income is as stated in his Financial Statement, that document also sets out capital which may be accessed in order to meet the wife’s application. In that regard, in determining the “reasonable ability” of a party to satisfy an order for interim spousal maintenance, the Court is not confined to consideration of that party’s income only. As stated in Maroney & Maroney [2009] FamCAFC 45 at [56]:
Once a party, …establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse’s reasonable needs, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or borrowings against capital assets.
In her Affidavit filed on 5 July 2018, the wife contends that the husband owns two properties in Suburb N, from which he receives an income of about $17,000. The husband contends that he owned those properties prior to the parties’ relationship.
The wife also notes that the husband has access to the following funds:
a)$250,000 in his ANZ Advance Notice Term Deposit;
b)A credit line of $170,000 linked to his ANZ Home Loan account, of which $166,000 not being currently used; and
c)$71,000 in his ANZ account (account no. 405386204).
The wife contends that the husband also has shares that can be converted into cash, the total value of which are $120,000.
The wife further contends that it is relevant that the husband has dissipated the matrimonial property pool by the following:
a)On 13 April 2016, the husband transferred $490,176 from his Citibank account (account no. #11) to his ANZ account (account no. #25); and
b)On 14 April 2016, the husband transferred $485,000 to his ANZ account (account no. #04).
In relation to that second transaction, the husband’s Financial Statements filed in these proceedings list the balance of ANZ account (account no. #04) as being $345,296 as at 28 July 2017 and $32 as at 1 August 2018.
The husband contends that his financial disclosure documents evidence that he has transferred the sum of $145,000 in various amounts to his ANZ account (account no. #25) and that those funds were expended on legal fees ($60,000), capital gains tax in respect to the Suburb D property ($38,000) and daily living expenses.
It is not possible, in these interim proceedings, to determine the validity of each of the parties’ contentions in respect to their property interests. However, having regard to items 36, 37, 38 and 41, of the husband’s Financial Statement, I am satisfied that he has property valued at approximately $958,500 that he is able to either access or borrow against in order to meet an order for spousal maintenance.

What order is reasonable having regard to section 75(2) of the Act?

Section 75(2) of the Act provides that, in so far as they are relevant, the matters to be taken into account in considering whether to make an order for spousal maintenance are:
(a) the age and state of health of each of the parties; and
(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; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(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; and
(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; and
(l) the need to protect a party who wishes to continue that party’s role as a parent; and
(m) if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
I will now address those facts relevant to this application.
In terms of s 75(2)(a), both parties are of working age and no evidence was provided that either of them are other than in good health.
In terms of s 75(2)(b), both parties disclose limited income. The husband earns $192 per week from his information technology consultancy business M Pty Ltd. The husband also receives weekly rental returns between $173 and $627.
Counsel for the husband submitted that there is a lack of evidence in terms of the wife’s earning capacity and any attempts she has made to find part-time employment. As stated, the mother’s evidence is that she does not intend to return to employment prior to the child commencing school.
I accept that the wife has unexploited earning capacity, however, recognition must also be given to the fact that she is the primary carer of the child, who is under school age. In that context, in his second reading speech, introducing the Family Law Bill to the Senate on 11 December 1973, the then Attorney General, the Honourable Lionel Murphy QC, said:
As for maintenance, where there are children of the marriage, especially very young children, there is no doubt that a woman who is divorced or separated from her father needs some financial assistance. On the other hand, where the children are older or where there are no children and the mother is still comparatively young, it is surely in the mother’s own interest that she should become economically self-sufficient by working. She may, however, need some financial assistance to undertake a period of training for the purpose of obtaining employment or establishing herself in a business.
Ultimately, it is in the wife’s own interests for her to become economically self-sufficient by working. However, in circumstances where she is the primary carer of a three year old child, it is appropriate that she receives financial assistance by way of spousal maintenance to meet her weekly expenses. If she does not receive such assistance, she will be subsidised by the public purse. In circumstances where the parties own a substantial amount of property between them, that outcome would be inappropriate.
Counsel for the husband further submitted that the wife’s parents are a financial resource to her. While there is little evidence in that regard, the wife contends that her parents have loaned her funds which she has expended on the purchase of the Tasmania property and living expenses. The evidence is, however, insufficient for me to determine that the wife’s parents are a financial resource for her.
In terms of s 75(2)(c), as previously noted, the wife is the child’s primary carer. The child spends time with the husband two days per week.
In terms of s 75(2)(d), the husband is currently assessed as being liable for child support of $321.33 per month. The wife is otherwise responsible for the financial support of the child.
In terms of s 75(2)(f), the wife declares that she has a superannuation entitlement of $30,888, while the husband declares that he has a superannuation entitlement of $284,550. While that disparity is a matter that may well become relevant at final hearing, it does not impact upon the orders I make in these interim proceedings.
In terms of s 75(2)(g), it was not suggested that either party is maintaining a standard of living that is otherwise than modest.
In terms of s 75(2)(j), Counsel for the husband submitted that neither party had made a contribution to the property of the other. In reply, Counsel for the wife contested that it was remiss to submit that the wife has not contributed to the property of the husband in circumstances where she could be considered to have made a homemaker and parenting contribution and where, on the uncontested evidence of the wife, the husband lived at the Suburb F property rent-free for two years. The significance of the parties’ financial and non-financial contributions to the matrimonial asset pool is a matter that will require consideration at final hearing and has not impacted upon my decision to make an order for spousal maintenance in these proceedings.

In terms of s 75(2)(k), Counsel for the husband submitted that there is no evidence to show that the length of the parties’ relationship has in any way affected their relative earning capacities and that both parties have been affected by their responsibilities regarding the care of the child. It was also contended that the parties’ capacity for work has been impacted by their engagement in these proceedings. Comparatively, Counsel for the wife submitted that the parties’ relationship had affected the wife’s earning capacity to the extent that she has been, and continues to be, the primary carer for the child. As noted, I accept that the wife’s responsibilities as the primary carer of the child have impacted upon her earnings and earning capacity.
In terms of s 75(2)(l), I note that the wife wishes to continue in her role as the primary carer for the child. Given the age of the child, that is entirely appropriate.
In terms of s 75(2)(n), it is relevant that the wife has previously received, pursuant to orders made on 11 July 2016, the amount of $100,000, with half of that sum being categorised as a partial property settlement and the other half to be categorised at final hearing. Further, on 9 August 2017, an additional $209,000 was released to the wife with $100,000 to be held in an interest-bearing account. Subsequently, the husband has agreed to the release of $78,977 from that interest-bearing account to be utilised by the wife to purchase the Tasmania property.
The husband contends that it was inappropriate for the wife to utilise the $78,977 withdrawn from the interest-bearing account for the purchase of the Tasmania property, rather than to support herself. While the husband was put on notice of the wife’s intention to purchase to the Tasmania property, it was submitted that he would not have provided his consent to that withdrawal occurring if he had been informed of the wife’s intention to commence proceedings for spousal maintenance.
In these interim proceedings, it is not possible to fully explore the parties’ intentions in entering into the previous agreements for interim distributions of property to the wife and in particular, whether those distributions were intended to provide a means for the wife to meet her weekly expenses, rather than to be used for investment purposes. That issue needs to be determined when the parties’ evidence can be tested during the course of final hearing.
In terms of s 75(2)(o), Counsel for the husband submitted that the fact that the wife has expended funds on the purchase of the Tasmania property is relevant. In that regard, it was submitted that:
It sits very poorly, indeed … that somebody would deal with their property in that way without notice that that’s going to rob them of the ability to support themselves.
For reasons set out above, I find that that issue is one that should more appropriately be addressed at final hearing.
Finally, Counsel for the husband submitted that the shortfall between the rental income and expenses attributable to the Tasmania property should not be “brought to account in a maintenance application against [the husband]”. I accept that, insofar as the wife’s decision to purchase the Tasmania property has increased her weekly expenditure by $43 per week, it is appropriate for the order that would otherwise have been made for weekly spousal maintenance to be reduced by that figure. Accordingly, I will make an order for the husband to pay spousal maintenance to the wife in the sum of $1,041.

Lump sum amount

The wife has sought that the spousal maintenance payable to her by the husband be paid in a lump sum, rather than through a periodic arrangement.
Section 80(1) of the Act relevantly provides:
(1) The court, in exercising its powers under this Part, may do any or all of the following:
(a) order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
…
In Vautin & Vautin (1998) FLC 92-827, the Full Court said at 85,423-4:
...in the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future. However, it is a power, the exercise of which may be appropriate in particular cases. It may be ordered, amongst other reasons, to meet non-periodic expenditure for the maintenance of that person where there is an established need and a capacity to pay. It is not confined to cases of the capitalisation of periodic maintenance and/or where periodic maintenance is unlikely to be paid because of concerns about the capacity or willingness of the liable parent to pay...
Further, in Budding & Budding [2009] FamCAFC 165, O’Ryan J referred to his earlier decision in the matter of Brown and Brown [2005] FamCA 1165, where he stated:
293. A number of cases suggested that the maintenance power is available to make a lump sum order only in circumstances where there is a recalcitrant payer who is unlikely to meet a periodic obligation, or, substantial doubt about the payer’s continuing capacity to pay.
294. In Clauson the Full Court said at 81,908:
The other aspect which it is important to identify in this case is that the power to make a maintenance order is to be found in s 74. As s 80(1) makes clear, the Court, in exercising that power, can do so in a number of ways, including by a periodic order or a lump sum order. Periodic maintenance should be considered before lump sum maintenance. The central power is to order maintenance; that power may be exercised in different ways. A claim for lump sum maintenance is not a claim to the exercise of a separate head of power; it is a claim for maintenance which may be satisfied by a periodic order or by a lump sum order.
This type of lump sum maintenance is not a separate entity. It is the capitalizing over a period of time of what is considered to be appropriate periodic maintenance for that period, usually with a discount because of immediate payment. The power to capitalize periodic spousal maintenance is a power to be exercised cautiously for reasons referred to by his Honour in the passage cited above. … In particular, uncertainty about future events explains this approach, and capitalization of maintenance would rarely be justified where there was no genuine concern about the capacity and preparedness of the payer to comply regularly with a periodic order. …
298. The broader view of the role of lump sum maintenance expressed since Clauson by the Full Court in Vautin is that it may be ordered:
-To meet non-periodic expenditure.
-Where an order for periodic maintenance is unlikely to be complied with.
-Where it is possible to assess a financial need for a particular period.
-Where it is desirable that the financial relationship be ended. [References omitted].
Counsel for the husband submitted that, if an order for spousal maintenance were to be made, the wife had identified no basis for it to be made in the form of a lump sum payment. It was further submitted that the Court could not be sure how the wife would expend a large lump sum provision, particularly in the circumstances of her ongoing commitment to pay legal fees and where there is no evidence as to how the wife has expended large amounts of money released to her pursuant to Court orders.
In support of the wife’s application for lump sum spousal maintenance, Counsel for the wife submitted that such an order was appropriate because:
…the amount of legal fees that have been expended by the parties, which has eaten into any capital reserves that my client had. And we say that the last three occasions that this matter was before the court were all bought about by actions of the husband. That that’s sufficient reason that the wife has denuded herself of any ability to support herself. There are funds there. And this is an unusual enough case that your Honour would order that a lump sum amount should be paid. And as I understand it, the calculation would be $62,000 – just under, if that were capitalised over 12 months.
Insofar as the wife contends that she has unnecessarily incurred legal expenses as a result of the manner in which the husband has conducted the litigation against her, the wife’s remedy is, with respect, one that should appropriately be pursued in an application for costs against the husband pursuant to s 117 of the Act.
Secondly, I do not consider that Counsel for the wife’s contention that the wife’s expenditure on legal fees has denuded her ability to support herself establishes a basis for the making of an order for lump sum maintenance, as opposed to an order for periodic maintenance paid on a weekly basis.
Thirdly, the argument that a lump sum order should be made for spousal maintenance because there are funds available from which such an order can be satisfied places the outcome before its justification. Specifically, it ignores the need to establish a valid reason for the making of such an order.
In those circumstances, having regard to those authorities to which I have referred, I am not satisfied that an order for lump sum spousal maintenance should be made.

Conclusion

For all of the above reasons, I make the order as set out at the commencement of these Reasons for Judgment.

I certify that the preceding one-hundred and five (105) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 18 October 2018.

Associate:

Date: 18 October 2018