Lane and Lane

[2009] FamCA 704

FAMILY COURT OF AUSTRALIA

LANE & LANE [2009] FamCA 704

FAMILY LAW – SPOUSAL MAINTENANCE
FAMILY LAW – CHILD SUPPORT – Application for departure
FAMILY LAW – COSTS – Preliminary

Family Law Act 1975 (Cth) ss72(1), 75(2), 117(2)

Child Support (Assessment) Act 1989 (Cth) ss 116(1)(b), 117(2), 117(2)(c)
Child Support (Assessment) Regulations 1989 (Cth)

In the Marriage of Gyselman [1991] 15 Fam LR 219; (1992) FLC 92-279
Zschokke and Zschokke (1996) FLC 92-693

APPLICANT: Ms Lane

RESPONDENT: Mr Lane

FILE NUMBER: SYC 6487 of 2008

DATE DELIVERED: 5 August 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston JR

HEARING DATE: 29 May 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lethbridge, SC

SOLICITOR FOR THE APPLICANT: Barkus Doolan Kelly, Solicitors

COUNSEL FOR THE RESPONDENT: Mr Richardson, SC

SOLICITOR FOR THE RESPONDENT: Pearson Family Lawyers

Orders

1. That the interim spouse maintenance order made on 29 May 2009 be discharged.

2. That pending further order the husband pay to the wife the sum of $1350 per week by way of spouse maintenance first payment within 7 days.

3. That the child support assessment issued on 31 October 2008 in respect of the child … born … November 2006 (“the child”) be departed from so that for the child support period from 1 June 2009 until 31 December 2010 the husband shall pay child support for the child at the rate of $1000 per week which is an annual amount of $52 000.

4. That the husband pay or cause to be paid in the first instance, as and when they fall due and payable, all costs and disbursements:

   -rendered by single expert accountants engaged by the husband and the wife to report on the value of the husband and/or wife in any business, trust, company or other relevant investment;

   -rendered by any other single expert valuer(s) engaged by the husband and the wife to report on the value of any other real and personal property (including but not limited to real property, stock, plant and equipment, jewellery, memorabilia and household contents) of the husband and or the wife and of any business/company/trust in which they have an interest.

5. The wife shall reimburse to the husband 50 percent of any costs of the said experts (pursuant to the preceding paragraph) from the property settlement she receives upon final orders being made.

6. That within 30 days of the date of these order, the husband pay or cause to be paid to the trust account of the solicitors for the wife the sum of $80 000, said sum to be applied in payment of the costs and disbursements incurred to date and or to be incurred by the wife in the conduct of these proceedings including, but not limited to:

   -costs and disbursements rendered by the solicitors for the wife;

   -costs and disbursements rendered by any barrister engaged for the wife.

7. That the husband’s application for an order to appoint him as the wife’s attorney to exercise the rights conferred upon her by the Deed of Mortgage entered into by her and Mr S be adjourned to the hearing of the substantive property proceedings.

IT IS NOTED that publication of this judgment under the pseudonym Lane & Lane is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6487 of 2008

MS LANE

Applicant

And

MR LANE

Respondent

REASONS FOR JUDGMENT

Introduction and applications

1. The parties in these proceedings are Ms Lane and Mr Lane.  For convenience I shall refer to them as “the wife” and “the husband” respectively. 

2. The husband and the wife have been unable to resolve numerous financial matters in issue between them.  They are parties to substantive proceedings seeking orders in relation to property and other matters.

3. The immediate proceedings involve the issues of interim spouse maintenance, departure from child support assessment and preliminary costs. 

4. The wife seeks orders to the following effect:

   ·That pending further order the husband pay to her by way of spouse maintenance the sum of $1527 per week;

   ·That by way of departure from the administrative assessment of child support for the child born in November 2006 in respect of the child support period from the date of issue of the administrative assessment until 30 June 2009 and thereafter continuing for each child support year pending final determination of the proceedings, the husband pay by way of periodic child support for the child the sum of $1595 per week and that the amount of child support payable be varied on 1 July in each year in accordance with movements in the inflation factor as prescribed by the Child Support (Assessment) Regulations;

   ·That the husband pay in the first instance all costs and disbursements rendered by single expert accountants and costs and disbursements of any other single expert required to report on the value of real and personal property and that the wife shall reimburse to the husband 50% of such costs from her property settlement

   ·That the husband pay to the trust account of the wife’s solicitors the amount of $80 000 in effect by way of preliminary costs.

5. On the other hand the husband seeks an order to the effect that the wife forthwith sign all documents necessary to appoint the husband as her attorney to exercise the rights conferred upon the wife by the Deed of Mortgage entered into by her and Mr S in respect of the property known as H property, New South Wales dated 16 June 2008.  The husband also seeks an order to the effect that upon the husband paying to the wife the monies loaned to Mr S the current interim spousal maintenance order would cease.  This would be on the basis that the wife would then have access to substantial funds from which not only could she pay her legal costs and disbursements, and experts’ fees, but also the living costs of herself and the parties’ child.

Background

1. The brief background matters are that the husband was born in 1976.  The wife was born in 1980.  They commenced cohabiting in February or March 2005.  They married in 2006 and separated in August 2008.  There is one child of the marriage namely a son born in November 2006. 

2. Following their separation the husband remained living in the former matrimonial home and the wife lived initially at her mother’s home with the child.  Then the wife rented a three bedroom home in inner Sydney.  More recently she has been renting premises at E.  Shortly after separation the wife withdrew a total of $45 000 from the parties’ joint account.  She has used those funds to finance living costs and her legal costs. 

3. The husband is a sportsman contracted to an Australian organisation and an overseas organisation.  In addition, he earns substantial income from numerous commercial sponsorships.  It was conceded on his behalf that he has the capacity to pay the wife in accordance with the requirements of any proper order of this Court.

4. On 3 December 2008 I made orders to the effect that the husband pay to the wife by way of urgent spouse maintenance the sum of $1850 per week the first payment to be not later than 5 December 2008 and to continue until the return date of the interim spouse maintenance application.  On 3 March 2009 I continued that order until the hearing date which was 29 May 2009.  On 29 May 2009 again I extended that order. 

Interim spousal maintenance

1. Sub-section 72(1) of the Family Law Act 1975 provides to the effect that 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 himself or herself adequately whether by reason of having the care and control of a child of the marriage who has not attained the age of 18 years or for some other reason expressed in the sub-section, having regard to any relevant matter referred to under s 75(2) of the Act. It is submitted on behalf of the wife that she satisfies this threshold requirement particularly on the basis of being the child’s primary parent and especially in circumstances where the husband’s work commitments require him to be absent from Australia for substantial parts of each year.

2. On the other hand it is submitted on behalf of the husband that the wife worked prior to the birth of the child and it would not be unreasonable for her to undertake at least some part time work and therefore be able to contribute to her own needs and those of the child.

3. It is the case that the wife has a university degree and that she worked in her field from November 2003 to February 2006.  She said that she has been experiencing episodes of pain from a back injury diagnosed in 2007.  Otherwise, she is unable to stand upright, cannot sit for long periods and struggles with bending.  In any event it is submitted on her behalf that the needs of the child are such, especially given the young age of the child, that it would be unreasonable to expect the wife to undertake the requirements of employment which would remove her from her primary responsibility as the major parent of the child. 

4. I accept the submissions on behalf of the wife in this regard and have the view that it would be unreasonable, at least at this interim stage, given the young age of the child and the other circumstances referred to above, to expect that the wife would remove herself from being available to parent the child even for the limited periods suggested on behalf of the husband.  In my view the wife clearly fulfils the requirements of the threshold matter under s 72 of the Act.

5. In these circumstances the issue becomes one of the reasonableness of her claim.  As indicated above, the wife is seeking an order that she be paid the weekly amount of $1527. 

6. In her financial statement the wife estimated her personal financial requirements to be $1512 per week average weekly expenses as well as contents insurance and motor vehicle registration of a further $15 per week being a total of $1527.

7. I took the unusual course of permitting learned senior counsel for the husband to cross-examine the wife in respect of these matters.  This was in circumstances where I took the view that the application for departure from administrative assessment of child support was really in substance a final order rather than an interim order.  Accordingly, in my view it seemed to be appropriate to accede to the application on behalf of the husband to cross-examine the wife.  During the course of this cross-examination there were challenges to the wife’s estimates in respect of food, household supplies, house repairs, fares / car parking / tolls, clothing and shoes, entertainment / hobbies, holidays, cleaning, repairs – furnishings and appliances, rent, restaurants / cafes, gym and car payments. 

8. It was submitted on behalf of the husband that the wife has exaggerated her requirements and over-estimated these specific items of expenditure.  In her affidavit the wife explained her estimates of some of this expenditure.  For example, in relation to her estimate of $50 per week for holidays she said that the husband and she had travelled extensively both domestically and internationally when they were married and that what her estimate would provide would be substantially less than the travel that they had previously enjoyed.  She made similar comments in respect of her estimate of $40 per week for her own entertainment and $80 per week in relation to restaurants / cafes. 

9. There was an objection to the level of rent the wife is paying.  This is $875 per week.  I shall refer to this again below.  I do not regard it to be too high in all the circumstances but I have attributed $100 more of this per week to the wife and $100 less per week to the child than was contained in the estimates.  I think this is more realistic than simply to divide the rent equally between them.  In relation to the wife’s estimate of $128 per week, being half the sum required for car payments on her BMW motor vehicle, it was submitted that the wife had previously had the enjoyment of a motor vehicle provided to her as part of a sponsorship arrangement with the husband.  It has been submitted that recently that motor vehicle was removed from the wife’s use.  I accept the submission that it is not unreasonable for the wife to require the provision of a motor vehicle at the level which she is currently enjoying.

10. Having said this, in my view there is some merit in many of the criticisms which learned senior counsel made concerning the wife’s estimated expenditure.  It is unnecessary in an application of this nature to go item by item and make adjustments.  Suffice it to say that in my view there has been some exaggeration.  But it has to be kept in mind that during the course of their cohabitation and marriage the parties enjoyed a standard of living well above that enjoyed by most members of the community and consistent with the remuneration enjoyed by the husband.  In my view, the appropriate weekly amount of the wife’s living expenses is $1350.  In my view, such an amount would provide the wife with a standard of living which, taking account of the standard of living the parties enjoyed previously, would be reasonable in all the circumstances. 

11. As I have said, it is conceded that the husband has the capacity to pay at this level.  I propose to make an order to this effect.

Child support departure

1. The wife applied for an administrative assessment of child support to be payable by the husband for the child.  An assessment issued on 31 October 2008 to the effect that the husband was liable to pay child support for the child in the annual amount of $16 700 for the assessment period from 25 September 2008 to 24 December 2009.  This was expressed as being a weekly rate of $320.05. 

2. I am satisfied that there is jurisdiction for the Court to make an order for departure from the administrative assessment of child support pursuant to s 116(1)(b) of the Child Support (Assessment) Act 1989 (“the Assessment Act”). This provides, in effect, that a carer entitled to child support may, in respect of an administrative assessment of child support, apply to the Court if the carer is a party to an application pending in the Court and the Court is satisfied that it would be in the interests of the liable parent and the carer for the Court to consider whether an order should be made in the special circumstances of the case. In my view, it is clearly in the interests of both parents for the application for a child support departure order to be considered at the same time as the Court is considering the wife’s application for interim spousal maintenance. Otherwise there would have to be a separate determination of this in some form which would certainly involve the parties in inconvenience and probably additional expense.

The process

1. In determining an application for departure from a child support assessment the Court is to undertake the three-step process set out in the decision of the Full Court of this Court in In the Marriage of Gyselman [1991] 15 Fam LR 219; [1992] FLC 92-279. This process requires the Court to consider:

   (1)Whether one or more of the grounds for departure in s 117(2) of the Assessment Act is established.

   If so:

   (2)Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order and

   (3)Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.

Is there a ground for departure?

1. It is submitted on behalf of the wife that the ground in s 117(2)(c) is available.

2. Sub-section 117(2)(c) of the Assessment Act in effect provides that the grounds for departure include that, in the special circumstances of the case, application in relation to the child of the provisions of the Assessment Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, earning capacity, property and financial resources of either parent or the child.

3. The meaning of the expression “in the special circumstances of the case” was considered by the Full Court of this Court in Gyselman (above).  The Full Court said (at Fam LR 225; FLC 79,065):

   … Whilst it is not possible to define with precision the meaning of that term (in the special circumstances of the case), as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary.  That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases.  In Savery’s case (at Fam LR 815; FLC 77,897), Kay J, adopting the view in In the Marriage of Philippe (1977) 4 Fam LR 153 at 155; (1978) FLC 90-433 at 77,202 in a different context, said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.

4. Subsection 4(1) of the Assessment Act provides that the principal object of the Act is to ensure that children receive a proper level of financial support from their parents.

5. In my view, the present case is very different from the ordinary run of cases as referred to in Gyselman (above).  This is because of the high standard of living enjoyed by the husband, wife and child and the very considerable capacity of the husband to continue to provide a high standard of living for the child.  Such a standard of living would not be able to be funded by the $320.05 provided by the husband pursuant to the current child support assessment.

6. Accordingly, in my view, the ground for departure pursuant to s 117(2)(c) of the Assessment Act is available.

Just and equitable

1. It is then a matter to consider whether it is just and equitable within the meaning of s 117(4) to make an order for departure from the assessment. This requires consideration of the matters set out in s 117(4) of the Assessment Act.

2. In her financial statement the wife estimated the weekly needs of the child to require expenditure of $1595. It was submitted on behalf of the husband that in preparing her estimates of the costs of the child the wife had exaggerated the actual costs. During the course of cross-examination the wife was challenged in relation to her estimates for the following items. Food, household supplies, fares / car parking / tolls, clothing and shoes, children’s activities, child minding, cleaning, rent, restaurants / cafes and car payments. In my view there is some force in this submission, at least in relation to many of the estimates. But as indicated above, I do not accept that it is unreasonable in the circumstances of this case for the wife and child to be living in a home at the rental which the wife is paying, namely $875 per week. The parties and the child had been living in their home in Sydney which was obviously very comfortably appointed. It would be unreasonable in my view, and inconsistent with the requirements of s 75(2) of the Family Law Act 1975 and s 117(4) of the Assessment Act, to require them to live in accommodation at a substantially lower level. But as indicated above, I shall apportion $337 per week of this rent to the costs of the child rather than the $437 estimated by the wife in her financial statement.

3. I have referred above to my view about the wife entering into a financial arrangement for the provision of the BMW motor vehicle for the use of herself and the parties’ child.  Clearly the wife requires a motor vehicle for the use of herself and the child.

4. On this basis, including my opinion that some estimates were too high in all the circumstances, in my view, the proper costs of the child are $1000 per week.

1. The child has no income, earning capacity, property or financial resources from which to meet any of his costs.  So obviously it will be his parents who will have to pay the costs.  In my view, the wife does not have capacity at this point in time to pay any of these costs.  After all, I propose to make the spouse maintenance order referred to above.  Moreover, I do not accept the submission by learned senior counsel for the husband that the wife should be expected to pay some part of the child’s costs by taking action to call in her liability from Mr S.  I shall refer to this again below.

2. Accordingly, in my view, the child’s proper costs will have to be paid by the husband.

3. The Court is to consider any hardship that would be caused (s 117(4)(g)) to the child or to the wife as the child’s carer if a departure order was not made.  If such an order was not made then the wife would not have sufficient funds to pay the child’s needs.  Either she would have to endeavour to borrow money from whatever source she could, the most likely source being members of her family, or the wife would be forced to reduce the standard of living of herself and the child.  In my view, this would be quite unreasonable.

Otherwise proper

1. The next matter to consider is whether it would be “otherwise proper” within the meaning of the Assessment Act for an order to be made. As neither party is in receipt of an income-tested benefit I am satisfied that it would be “otherwise proper” to make an order.

2. The wife has sought a child support departure order which would in effect continue into the future without any limitation in time on the basis that the amount would be reviewed on 1 July each year in accordance with the inflation factor prescribed by the Child Support (Assessment) Regulations. I do not propose to do this, particularly in circumstances where the parties are still at issue in relation to substantive property matters. Clearly the wife’s financial circumstances will change once property orders are made and this would be expected to be likely to have an impact on the child’s ongoing requirements in the longer term. For these reasons I propose to make the departure order operate until 31 December 2010. Hopefully the parties will be able to agree on a longer term child support order before that time.

3. The wife also seeks to have the departure order operate retrospectively and this is opposed by the husband.  The wife’s application was filed on 4 November 2008, almost seven months ago.  As I have said, I made the first spouse maintenance order on 3 December 2008 in the amount of $1850 per week.  The aggregate of this and the assessed child support liability of $320.05 per week is $2170.05 per week.  This is not vastly dissimilar to the aggregate of the interim spouse maintenance and child support liability I now propose.  In these circumstances and bearing in mind that the wife has had the benefit of $45 000, I propose to give the order operation from 1 June 2009.  To the extent that either party might feel dissatisfied about this course they will be at liberty to ask the Court to take account of this in the context of the substantive hearing.

Preliminary costs

1. The wife seeks orders to the effect that the husband pay to the trust account of her solicitors the sum of $80 000 to be applied in payment of the wife’s legal costs and disbursements in these proceedings.  The wife also seeks orders to the effect that the husband pay in the first instance costs and disbursements of single expert accountants and any other single expert engaged by the parties to value property.

2. On the other hand, as indicated above, the husband seeks that this matter be dealt with by orders appointing him as the wife’s attorney for the purpose of taking action to restore to the wife the funds loaned to Mr S on mortgage in respect of the H property.  It is submitted that the husband would provide the funds recovered to the wife and this would enable her ample funds from which to pay her legal costs and other expenditure.

3. There is an issue between the parties about the circumstances in which the wife became mortgagor to Mr S and in which approximately $520 000 was advanced by the wife to Mr S, the source of the money being the company A Pty Limited which is owned by the husband’s mother as trustee for the B and N Lane Family Trust.

4. It was submitted on behalf of the wife that the wife should not be forced to take action to recover the loan.  It was submitted that the loan represents the only asset of significant value over which the wife has any opportunity for control.  In any event it was submitted that the husband has ample capacity to be able to fund the provision of costs for the wife in what is submitted is not an unreasonable amount.

5. It was submitted on behalf of the wife that the order would be made pursuant to s 117(2) of the Act and that upon a consideration of the relevant matters pursuant to s 117(2A) of the Act the Court would make the order sought.  It was submitted that the decision of the Full Court of this Court in the case of Zschokke and Zschokke (1996) FLC 92-693 is authority for such an order being able to be made pursuant to s 117(2) of the Act.

6. On the other hand it was submitted on behalf of the husband that the fact that the wife suggests she ought to be permitted to retain the asset in the form of the liability of Mr S under the mortgage would not be a sufficient basis for not making the order sought by the husband.  In support of this learned senior counsel for the husband submitted that all that is involved is this asset.  So that it is really just like money in an account not something like real estate which might have some intrinsic value.  It was submitted that this asset should be viewed simply as approximately $520 000 available to the wife from which, once realised, she could readily fund her legal costs and disbursements.

7. It was also submitted on behalf of the husband that if the Court proposed to make the order sought by the wife pursuant to s 79 and s 80 of the Act that a judicial registrar would not have jurisdiction to do so.  I agree with this submission.  But it is clear from the Full Court decision in the case of Zschokke (above) that such an order as that sought by the wife can be made pursuant to s 117(2) of the Act I shall refer to this again below.  A judicial registrar has jurisdiction to make such an order.  .

8. I must say I am not persuaded that it is appropriate to deal with this part of the proceedings in the manner sought by the husband.  The issues raised by the loan to Mr S would be better explored and determined in the context of the substantive proceedings.  Clearly, the continuing availability to Mr S of the approximately $520 000 of funds made available from the family trust is a source of some frustration to the husband.  But the extent to which it might have been unreasonable for the wife to have acted in a particular way or otherwise ought to be considered in the substantive proceedings rather than at this time.  In the event that the Court might ultimately form a view that the wife might not have acted in the parties’ interest in respect of this loan, this can be considered in the overall exercise of determining what is a just and equitable order as required by s 79(2) of the Act.  It is clear that the husband has considerable assets at his disposal from which an appropriate costs order could be met without the necessity of forcing upon the wife a course of action which she does not want to have to take at this point.  In all the circumstances, in my view, the Court should not require the husband to be appointed the wife’s attorney to exercise her rights under the mortgage at this stage.

9. This leaves for consideration the wife’s application for an order for preliminary costs pursuant to s 117(2) of the Act.

10. It is clear from Zschokke (above) that an order such as that sought by the wife could be made by the Court.  At p.83,215 the Full Court said as follows:

    … it can be asserted with some confidence in light of Brennan J’s comments in Breen (1990) 65 ALJR 195 that there is at least power under s 117(2) (the costs power) for the Court to make an order which seeks to ensure that one party should be able to prosecute pending matrimonial proceedings and that the other party should provide the first mentioned party with the funds required to do so.

11. Sub-section 117(2) of the Act provides as follows:

    If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), … and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

12. Sub-section 117(2A) of the Act provides as follows:

    In considering what order (if any) should be made under sub-section (2), the court shall have regard to:

    (a)      the financial circumstances of each of the parties to the proceedings;

    (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

    (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

    (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

    (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

    (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

    (g)      such other matters as the court considers relevant.

13. There is a huge disparity between the financial circumstances of the parties.  The wife has no assets of significance.  But the husband owns directly or indirectly substantial property and is in receipt of substantial income.

14. In addition he is well able to pay for his own legal costs.

15. Whatever funds might be made available from the husband’s means will be able to be taken into account in the substantive proceedings between the parties.  In relation to this matter in Zschokke the Full Court said as follows at page 83,216:

    … it seems to us that where the Court makes an order of the type in question pursuant to the provisions of s 117(2), that provided such an order was either one by way of security or an interlocutory (i.e. interim) order, it must be open to the Court to make an order or direction, as Bulley J did in Hogan ((1986) FLC 91-704), to the effect that the sums paid pursuant to the order could be taken into account, or at least had regard to, in the determination of the property proceedings between the parties.  Indeed such an order would seem desirable in most cases in the interests of according justice to each party.

16. In my view, it is just, within the meaning of s 117(2) of the Act, that an order such as that sought by the wife in relation to preliminary costs be made.  The husband’s financial circumstances have a level of complexity and the quantum sought by the wife is reasonable, bearing in mind what the Court sees regularly as the level of costs involved in appropriate legal representation.

I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Judicial Registrar W P Johnston.

Associate:     

Date:              5 August 2009