Manning and Manning
[2010] FMCAfam 1073
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MANNING & MANNING | [2010] FMCAfam 1073 |
| FAMILY LAW – Spousal maintenance – interim orders – inclusion by wife of notional rent to her mother as an expense – high estimates for household and food expenses – inability to substantiate other expenses – inclusion of all income being received including family payments and child support – treatment of the baby bonus – anticipated child care and after school fees – where no evidence provided – where wife has capacity to earn income but chooses not to – inclusion of rental in the husband’s income when never utilised by the husband for his benefit – salary sacrifice by husband – Barro order – taking monies from account established by the children or as a draw down from the mortgage to meet the Barro orders. |
| Family Law Act 1975 (Cth), ss.74(1), 72, 72(1), 75(2) |
| Applicant: | MS MANNING |
| Respondent: | MR MANNING |
| File Number: | DNC 353 of 2010 |
| Judgment of: | Turner FM |
| Hearing date: | 17 September 2010 |
| Date of Last Submission: | 17 September 2010 |
| Delivered at: | Darwin |
| Delivered on: | 20 September 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Farmer |
| Solicitors for the Applicant: | Withnalls Lawyers |
| Counsel for the Respondent: | Ms Holtham |
| Solicitors for the Respondent: | Holtham & Associates |
ORDERS
That as from today’s date the husband pay to the wife by way of direct deposit into her Bank A account the sum of $50.00 per week for spousal maintenance such sum to cease upon orders being made for a final property settlement.
That as from today the wife receive by way of direct deposit into her Bank A account the sum of $100.00 per week by way of spousal maintenance from the rental account such payment to cease upon orders being made for a final property settlement.
In the event that the Darwin rental property sells prior to the orders being made for a final property settlement, then upon the sale being completed the sum of $100.00 per week referred to in order 2 is to be reduced to $50.00 per week such payment to cease upon orders being made for a final property settlement.
That the sum of $4,000.00 be withdrawn from the rental account today, with $2,000.00 to be paid directly to the wife’s solicitors and $2,000.00 to be paid directly to the husband’s solicitors with such monies to be utilised by way of legal costs.
IT IS NOTED:
That the distribution of $2,000.00 each to the parties pursuant to order 4 is by way of partial property settlement and must be taken into account in the final property orders.
IT IS NOTED that publication of this judgment under the pseudonym Manning & Manning is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNC 353 of 2010
| MS MANNING |
Applicant
And
| MR MANNING |
Respondent
REASONS FOR JUDGMENT
(Ex Tempore; Revised from Transcript)
Application
I have before me interim applications to determine. The applications fall within two categories.
Firstly, an application by the wife for interim spousal maintenance which the husband is seeking to be dismissed.
And secondly, an application by the wife for payment of $5000.00 for litigation costs, often referred to as a Barro order to which the husband, to an extent, is agreeable.
There was also reference to a third application, which appears merged in the first application, that is that the wife receive payment of any excess in the rental account, that being the account which operates exclusively in respect to the two rental properties in Darwin suburbs which are both the subject of the property application which is also before the court.
Whilst the wife in her initiating application, filed on 29 July, 2010, was seeking orders for spousal maintenance on an interim basis at the rate of $320.00 per week from 11 June 2010 to 30 July, 2010 and then the sum of $500.00 per week from 20 July, 2010, the wife’s solicitors submitted at the outset of the proceedings, that the wife was seeking $850.00 per week spousal maintenance.
The amount sought for the Barro order remained at $5,000.00.
Background
The applicant wife is aged 35 and has recently commenced employment for three days a week on a casual basis in a professional capacity .
The respondent husband is aged nearly 35 and is employed permanently as an [occupation omitted].
The parties commenced the relationship in the early 1990s, married in 1999, and separated on in 2009.
Both parties agree that there was a short period of reconciliation for approximately six weeks when the youngest child, [Z], born 2010.
There were also two other children of the marriage, [X] born 2002 (now nearly aged 8) and [Y], born 2005, aged 5.
Since separation the husband has met his child support commitments as per the CSA assessment, together with paying one half of the private health cover fees.
The wife has, apart from around the time of the birth of the children, maintained employment during the course of the relationship.
After completing her education at a Darwin Secondary College, the wife was employed as a [omitted] and then obtained employment in a professional capacity until the birth of [X].
After six months, the wife returned to work in a professional capacity part-time until [Y] was born.
During her 12 month maternity leave with [Y], the wife commenced her own business, known as [omitted], which still exists today.
Since the birth of [Z], the wife has been employed casually in a non-professional capacity doing a small number of [shifts] a week. The wife throughout the whole of her employment has maintained this work and this was the only work being performed by the wife at the time of her filing the initiating application on 29 July 2010.
On 26 August, 2010, the wife commenced employment in a professional capacity on a casual basis with a company, working three days a week at $30.00 per hour. The wife states that her take home pay is $320.00 per week. No indication was made to the court that this employment would cease.
The wife has chosen not to work in her own business, although she may choose to return to it in the future.
The wife has not conducted classes since around July/August 2010 and states that she is unable to continue due to [omitted].
As to the husband, upon completing his education at a Darwin Secondary College, he was employed [in the hospitality industry] and then worked for seven years in a professional capacity, working his way up to a more senior position.
In August, 2001, he commenced full-time permanent employment as a [omitted] worker, and is now employed as a leading [omitted] worker.
From 2002 to 2007 the husband also held two other part-time jobs, both in a professional capacity.
Since 2009 the husband has not had any additional employment and states that he his not able to work in such employment again due to his ongoing commitments with the children.
As to the arrangements with the children, the husband has had the two older children three nights a week and [Z] one night a week at present. Until November the husband is on leave and these arrangements are continuing.
Evidence
Both the wife and husband are represented in these proceedings.
Because of the nature of the application, in addition to the affidavit material, both the wife and husband gave oral evidence and were cross-examined with such oral evidence restricted to the issues to be determined on an interim basis.
In respect of the wife’s application, I have had regard to the initiating application:
a)filed 29 July, 2010;
b)her affidavit filed 29 July, 2010;
c)financial statement filed 29 July, 2010;
d)the documents tendered at the interim hearing; and
e)her oral evidence.
I find the wife to be a credible witness.
In respect to the husband, I have had regard to:
a)the response filed 31 August, 2010;
b)his affidavit filed 31 August, 2010;
c)his further affidavit, filed 15 September, 2010;
d)his amended financial statement filed 15 September, 2010;
e)the tendered evidence and his oral evidence.
I find also the husband to be a credible witness.
The Law
I will now deal with the issue of spousal maintenance.
First, the law. Section 74(1) of Family Law Act 1975 (Cth) (“the Act”) allows the Court to make such order as it considers proper for the provision of maintenance to a party for marriage.
The right of a spouse to maintenance is provided for in s.72. Section 72(1) states that a party to a marriage is liable to maintain the other party to the extent that the party is reasonably able to do so, only if the other party is unable to adequately support themselves.
The criteria therefore for spousal maintenance is as follows.
The parties seeking the maintenance (in this case the wife) must be able to establish that she is unable to adequately support herself. To do this, the Court must consider the relevant factors of s.75(2) in addition to those set out specifically in s.72(1) namely the care and control of a child of the marriage who has not obtained the age of 18 years and further, whether the wife has capacity to appropriately gain employment.
Once the need is established, then the husband must be capable of reasonably maintaining the wife. Only once these criteria have been met can a spousal maintenance order be made.
The application of the law to this case
The wife sets out in her financial statement, and her affidavit material, details as to her financial situation which is submitted to establish her needs for support.
Her largest expense is the rental for the unit where she is residing, which is a unit owned by her mother. Her affidavit material is misleading. At paragraph 21, the wife states:
On 11 June, 2010, I moved into a block of units owned by mother. My mother utilises the income from the rent of six units and I pay $320 per week for the children and I to reside in that unit. My father is lending me the money each week currently as my mother needs money.
In cross-examination, however, the wife explained that the father was paying the rent of $320.00 directly to the mother pursuant to a written agreement, which was in the form of a statutory declaration.
Whilst time was given for the production of the document, the statutory declaration was not provided to the Court.
Further, the wife admitted that she had not reimbursed the father for any of the rent and acknowledged that while she had no legal obligation to do so, morally she felt obliged and as to the timing of the payment, admitted that payment could be made at the conclusion of the property settlement.
I am not satisfied from the evidence provided that the wife is paying any form of rental. Nor am I convinced as to any obligation in the future to pay any substantial amount of rental to the mother and therefore I do not make provision of this amount in calculating the wife’s weekly commitments.
I now turn to the issue of the costs of food and household supplies.
In part (n), item 60 of the financial statement, the wife has established her food bill to be $300.00 per week and household supplies to be $40.00 per week, making a total of $340.00 per week.
I appreciate that the provision of average weekly expenses must be a guesstimate only, but it must be a reasonable guesstimate and for a family of four (one adult, two children and a baby where two of the children are not present three nights a week). I find the guesstimate of $340.00 a week is high.
The wife states that the payment of grocery bills comes from payment through swiping the card at the cash registry and also through cash purchases.
The husband submits that through the analysis of the tendered bank statements of the mother, of the only operating account in the wife’s name, then on average the wife has spent around $222.00 per week.
I find that this is a more realistic amount for food and household supplies and on that basis I allow $250.00 per week for food and household supplies.
Further, the wife submits that her electricity commitments are $83.00 per week. This seems incredibly high and is not supported by any independent evidence. I therefore reduce the amount to $50.00 per week.
Further, the wife could not substantiate medical, dental and optical expenses of $80.00 the week. The parties have private health cover which, until recent times, covered all parties, although now it has been reduced by the husband to cover the wife and children only.
Apart from recent times where the wife had three trips to the doctor due to an injury, it is not borne out in evidence that the medical expenses are $80.00 per week and I therefore reduce the amount to $30.00 per week.
Lastly, the wife admits that $50.00 per week is not being utilised for holidays.
As to incoming income, the wife, in addition to her earnings of $520.00 per week is in receipt of Family Tax Benefit, both A and B, which appears to average out at $157.00 per week. In addition, the wife receives a fortnightly baby bonus of $398.85 which adds another $199.00 per week to the income pool. The wife states that the payment is going to run out shortly, although again no evidence was given as to when.
Further, the wife states that she has received approximately 10 payments. On my calculation, there would only be two or so more payments to be received. Therefore, in fairness to the wife, I will not include this amount in my calculations.
There was one other outstanding point and sticking point, and that is the anticipated after school fees and child care fees. Whilst the mother provided some guesstimates of $40.00 per day child care fees and $10.00 per day after school fees, no evidence was provided as to the real cost that would be incurred.
At present no fees are being paid due to the assistance of families and friends, and also at this point in time the husband is on leave and spending time with the children. The husband is on leave until November and I am not convinced that any fees will be incurred until after that date.
Further, with the husband having three nights a week with the older children and one night per week with [Z] and not knowing enough about the external assistance available to the wife from family and friends, I do not find that the wife’s need for child care costs is as high as indicated. I have allowed, however, $50.00 per week for child care.
Lastly, the wife receives child support in the sum of $200.00 per week. I therefore find that in total the wife receives on a weekly basis as follows:
a) income
$520.00
b) family benefits
$157.00
c) child support
$200.00
TOTAL
$877.00
The weekly amount needed by the wife to maintain herself is as follows:
a) food and household supplies
$250.00
b) private health
$28.00
c) car insurance
$12.00
d) car registration
$10.00
e) household repairs
$10.00
f) electricity
$50.00
g) telephone
$25.00
h) petrol
$50.00
i) car maintenance
$25.00
j) clothing and shoes
$50.00
k) children’s activities
$20.00
l) medical, dental and optical
$30.00
m) entertainment and hobbies
$25.00
n) chemist
$20.00
o) repairs, furnishings and appliances
$25.00
p) books and magazines
$20.00
q) gifts
$20.00
r) hairdressing, toiletries
$30.00
s) child care
$50.00
TOTAL
$750.00
This therefore leaves a small surplus of $127.00 per week. I am satisfied, therefore, that there is a need, if capable, being met by the husband of a very small amount of spousal maintenance per week to the wife, pending a property settlement. The need, however, is no where near the $850.00 per week being sought by the wife.
At this point in time, there are a couple of observations I wish to make before turning to the capacity of the husband to pay. Whilst the wife maintains that she is doing it tough, this is not borne out in her evidence. The wife has capacity, albeit now limited due to the commencement of the wet season, to make a contribution to her income for her own business but has chosen not to do so.
Further, the wife has spent money on renovating the unit with a view to staying in the long-term, money that in the normal course of events a landlady would pay if it was a normal landlady-tenant relationship.
Lastly, her bank statements support that the mother has been able to maintain a fairly comfortable standard of living, with purchases of clothing, cosmetics, together with dinners out.
I acknowledge that her standard of living may not be as high as that of when the couple were together but it is not reflective of someone watching their pennies to make ends meet.
I now turn to the capacity of the husband to contribute to the maintenance of the wife. Throughout the whole of the proceedings, the wife refers to the income and outgoings pertaining to the rental properties as being as income and outgoings of the husband.
Put simply, this is not true.
The rental account for the two rental properties has always operated separately and is being used exclusively for the receipt of rentals and for the payment of the mortgage and outgoings.
Further, it is acknowledged by the wife that the husband has not utilised this account for his own use. I therefore leave out of the calculations any reference to the rental account.
As to the income received by the husband from his employment, the amount reflected in the amended financial statement differs from that of his latest affidavits and from the tendered bank statements.
I therefore find the total weekly income received by the husband as follows:
a) income
$1,120.00
b) family benefit A and B
$55.00
TOTAL
$1,175.00
As to the outgoing, the wife submits that as the husband only spends approximately two nights at the property he is renting from his parents that the payment of $300 per week is being paid to assist the parents only and not a reflection of the true rent that should be paid.
Further, the wife hinted that the payment of rent was a fiction to defeat the spousal maintenance claim. I dismiss this proposal outright as it is clear from the evidence that the agreement to pay rent was entered into prior to the filing of the initiating application by the wife in July 2010.
I also dismiss the notion that the rental is not required. The husband gave evidence that the amount of $300.00 is below fair market rental for such a property.
Further, although the husband may be living only a few nights at the rental property, spending other nights at work or with his girlfriend, in reality, especially with respect to the ongoing share care arrangements with the children, the husband needs a base he can call home.
Further, there was no evidence given that the husband would benefit directly from the rent being paid to the parents, and as evidence has been given as to a direct debit to his parents for $300.00 a week, I accept that this is a valid expense for rent.
The next area of contention was the electricity account of $45.00 per week. The husband admits to date that he has not paid electricity and that it is being paid for the whole of the property by the parents.
The payment of the electric bill is something which has only been negotiated recently and the husband indicated he may have to rethink the offer in light of his financial situation. I therefore find that an amount for electricity is not to be included in the outgoings.
The next issue is the food amount of $250.00 per week. The husband, like the wife, pays for food from swiping his ATM card at the cash register as well as paying for items with cash. As explained earlier, I have allowed $250.00 per week for the wife. As the husband has the two older children three nights a week, and as the evidence does not provide to the contrary, I allow $220.00 per week for food.
It was also argued that the husband should not claim $90.00 per week for holidays. Evidence was given that the husband is paying for and planning a holiday to Brisbane with the children in the near future. His girlfriend and her child will also be attending and, on the husband’s evidence, will be contributing to the trip. On this basis, I include the amount for holidays.
It is further submitted as the property is rented and $10.00 a week as well as $2.00 a week should not be included for cleaning of the pool or the house or for gardening and lawn mowing. I therefore do not allow these amounts.
Lastly is the issue of the salary sacrifice for the purchase of a 4WD which will decrease the amount of available income to the husband. The husband gave evidence that the purchase of the car was for three reasons:
i)to provide tax relief;
ii)as he needs a six-seater to accommodate himself, his girlfriend and the four children; and
iii)the need for two cars as his accommodation can only be reached either by a 15 minute journey or a trip of over 120 km by car.
Further, the provision of a second car would avoid the necessity for children to walk to the residence after leaving the transport. The husband at present has a 2005 4WD worth $15,000.00 but this does not seat six people. The wife maintains that the purchase of a second vehicle was unnecessary and a luxury. I find that the husband has been more than reasonable in his explanation as to the purchase.
Further, the inclusion of both motor vehicles in the property pool is not in dispute.
But in fairness to the wife I do not intend today to include the salary sacrificed car in the equation, and will calculate the weekly expenses as of today’s date. I appreciate that it is an expense for the future for the husband, but I also anticipate that the property settlement will be reached promptly in this matter.
The weekly amount therefore needed to maintain the husband is as follows:
a) food
$220.00
b) private health
$28.00
c) car insurance
$15.00
d) car registration
$10.00
e) credit card payments
$25.00
f) child support
$200.00
g) [occupation omitted] Union Fees
$11.75
h) telephone
$30.00
i) petrol
$70.00
j) clothing and shoes
$50.00
k) children’s activities
$20.00
l) medical, dental and optical
$20.00
m) entertainment
$30.00
n) holidays
$90.00
o) education levies
$15.00
p) chemist
$10.00
q) repairs
$2.00
r) books and magazines
$20.00
s) gifts
$15.00
t) hairdressing, toiletries
$20.00
u) monies which are being paid into the children’s account
$30.00
v) life insurance
$8.00
TOTAL
$939.75
This leaves a surplus of $235.25.
I therefore find that the husband has the capacity to the wife the sum of $50.00 per week. This will place the parties in an equal position as to the amount of disposable income available to each of them, which will be approximately $180.00 per week.
I now turn to the rental account, and whether there was capacity for payment of any additional monies to the wife from this account. Whilst the account is currently in surplus of $9,000.00, this figure does not adequately reflect the true capacity of the account to be used to fund either party, either on a weekly basis or by way of a lump sum payment.
The reason is that as the account is a constantly evolving and changing account with money being paid in by way of rental at differing times, and money going out at differing times to pay for mortgage and outgoings, it will always need a float so as not to fall into arrears and interest be paid.
Leaving aside a lump sum withdrawal for a moment, it appears to be agreed that whilst the rental account operates for the two properties, there is capacity to pay out of it a regular amount of $100.00 per week.
On this basis I find that until the property settlement is reached and to assist the wife in re-establishing herself, that an amount of $100.00 per week be paid to the wife from the rental account, with such amount to be reduced to $50.00 per week upon the sale of the one property A. Altogether then I propose for the payment of $150.00 per week to the wife by way of spousal maintenance to be reduced to $100.00 per week upon the sale of the property A, with full spousal maintenance to cease upon conclusion of the property settlement.
This now brings me to the second issue, which is the Barro order being sought by the wife for legal expenses for the interim hearing. I am somewhat perplexed as to why such an order is being sought where the property pool is small, the amount of the disposable assets is small, and on the admission of the wife, the prospects of settlement are very, very high.
Further, it is common practice for legal practitioners to conduct property proceedings with an expectation of payment being completed at the conclusion of proceedings.
In the wife’s initial application the proposal was for the sum of $5,000.00 to be paid out of the rental account. I am satisfied from the evidence given that the rental account does not have the capacity to make a payment of that amount, and it would be detrimental to place that account in a position where it could be in arrears.
The husband maintains that only two to three thousand dollars can be released as monies may be needed conduct repairs on the property to have it listed for sale.
I do not accept this evidence and believe that up to $4,000.00 may be available from that account.
It was then proposed that the money may be taken out of the children’s account, which was established upon the birth of the first child, and is continually contributed into by the husband to the sum of $10.00 per week per child ever since. Whilst the husband used the account, of which he is a trustee, as a stopgap to pay $2,000.00 to his solicitors when first instructed, the monies were immediately reimbursed with a loan from his parents and monies from his own pay.
I find that it would not be appropriate to deplete this account by ordering a lump sum payment to the wife by way of costs.
A further proposal was then put forward by the husband that monies could be drawn down on the mortgage in the sum of $10,000.00 that is a payment of $5,000.00 each to assist the parties with the payment of legal fees.
Whilst an option, it is an expensive and time consuming option, which in light of a possible early settlement of this matter, would be counterproductive.
It was not put to me in any way by the wife as to whether she had any capacity to borrow money for legal costs from her parents or from friends.
The husband has borrowed monies, is currently indebted to his parents in the sum of around $9,000.00.
Therefore whilst not strictly a Barro order, I propose that by way of a partial property settlement, that the sum of $4,000.00 be released from the rental account, with $2,000.00 to be paid to the wife’s solicitor and $2,000.00 to be paid to the husband’s solicitor, such monies to be utilised for legal costs. These monies are to be taken into account, however, when determining the final property settlement.
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of Turner FM
Associate:
Date: 29 September 2010
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