Maroney & Maroney
[2009] FamCAFC 45
•26 March 2009
FAMILY COURT OF AUSTRALIA
| MARONEY & MARONEY | [2009] FamCAFC 45 |
| FAMILY LAW – APPEAL – Appeal against orders made by a Federal Magistrate providing for interim spousal maintenance – Where husband required to satisfy the wife’s entitlements to spousal maintenance out of property over which he had control – Minor factual errors made by the learned Federal Magistrate could not have vitiated the exercise of his discretion – Not established that the Federal Magistrate failed at law to properly assess the capacity of the wife to support herself or the capacity of the husband to pay spousal maintenance – Not established that the Federal Magistrate erred in giving inadequate or excessive weight to particular facts or in failing to consider relevant facts – Not established that the Federal Magistrate’s order was manifestly excessive and unjust – No proposed ground of appeal having merit, the husband’s application dismissed – Husband ordered to pay the wife’s costs of the appeal |
| Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 De Winter & De Winter (1979) FLC 90-605 Rutherford and Rutherford (1991) FLC 92-255 |
| APPELLANT: | MR MARONEY |
| RESPONDENT: | MRS MARONEY |
| FILE NUMBER: | PAC | 5008 | of | 2008 |
| APPEAL NUMBER: | EA | 146 | of | 2008 |
| DATE DELIVERED: | 26 March 2009 |
| PLACE DELIVERED: | Parramatta |
| JUDGMENT OF: | Coleman J |
| HEARING DATE: | 5 March 2009 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 17 December 2008 |
| LOWER COURT MNC: | FMCAfam 1451 |
REPRESENTATION
| ADVOCATE FOR THE APPELLANT: | Mr Brown |
| SOLICITOR FOR THE APPELLANT: | Browns the Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Kenny |
| SOLICITOR FOR THE RESPONDENT: | Shepherds Family Law |
Orders
That the husband’s application for leave to appeal filed 22 December 2008 be dismissed.
That the husband pay the wife’s costs of and incidental to the husband’s application in the sum of $4 000.
That the husband have 60 days within which to pay the wife’s costs.
IT IS NOTED that publication of this judgment under the pseudonym Maroney & Maroney is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
Appeal Number: EA 146 of 2008
File Number: PAC 5008 of 2008
| MR MARONEY |
Appellant
And
| MRS MARONEY |
Respondent
REASONS FOR JUDGMENT
Introduction
By application filed 22 December 2008 Mr Maroney (“the husband”) sought leave to appeal against orders made by Federal Magistrate Donald on 17 December 2008 in proceedings between the husband and Mrs Maroney (“the wife”).
The orders of the Federal Magistrate provided, in essence, that the husband pay the wife $905 per week by way of interim spousal maintenance. The orders provided that the husband facilitate the payment of such monies in part by directing that rental income from two properties, one jointly owned by the parties, one owned solely by the husband, be paid to the wife. The husband was ordered to pay the difference between such rentals and the wife’s entitlement of $905 per week.
The husband sought that if his application for leave to appeal was granted and his appeal successful, the orders made by the learned Federal Magistrate be discharged and there be no order for interim spousal maintenance.
The wife opposed the husband’s application and sought to maintain the orders of the learned Federal Magistrate.
Material Facts
The reasons for Judgment of the Federal Magistrate
As is not in doubt, the proceedings which give rise to the present application were interlocutory. The learned Federal Magistrate’s Reasons for Judgment are understandably concise.
From those Reasons for Judgment a number of uncontroversial background facts emerge.
Having identified, correctly there is no doubt, the nature and quantum of the wife’s claim and the bases of the husband’s opposition to it, the learned Federal Magistrate recorded that the proceedings were interlocutory.
The parties had filed affidavits and financial statements to which the learned Federal Magistrate had regard. His Honour also recorded, accurately there is no doubt, that the parties agreed that “the proceedings” should be decided on the basis of the documents produced to the Court and on the submissions made by the parties”. The parties were not cross-examined or sought to be cross-examined.
The background to the proceedings was briefly summarised by the learned Federal Magistrate in the following terms:
4.The parties were married on […] March 1979 and separated on […] August 2008. There are two adult children of the marriage. These two children continue to live with the mother in rental premises occupied by her and, apparently, are employed. I note that the wife has not been in employment for 26 years and that the husband continues to operate the business previously jointly operated by both parties, and that the husband continues to receive the benefits attaching to investment properties. The husband continues to occupy the former matrimonial home. [AB par 4, page 28].
“Issues” arising in the proceedings were identified by the learned Federal Magistrate. He recorded, uncontroversially then and now, that the wife did not have any capacity for appropriate gainful employment, for reasons which his Honour stated. As was thus open to him, the learned Federal Magistrate found that the wife was “unable to support herself adequately and satisfies the requirement of s.72B of the Family Law Act” (“the Act”). [AB par 6, page 28].
The issues requiring examination were then identified. They were “the amount that is required to enable her [the wife] to live at an appropriate standard” and whether, and to what extent, “the husband is able to support her”. [AB par 7, page 28].
Before this Court, the only issue which assumes significance is the latter of those to which the learned Federal Magistrate referred.
The learned Federal Magistrate briefly outlined the legal principles which governed the proceedings before him. There is no challenge to the accuracy of anything said by his Honour in that context. As will be seen, ultimately, the application/appeal turn upon whether the learned Federal Magistrate erred on the evidence before him in making the interlocutory order which he made.
Turning to the evidence before him, the learned Federal Magistrate observed that the income and expenses asserted by the husband in his financial statement sworn one month prior to the hearing revealed that, excluding from his “personal expenditure” items which could be regarded as “discretionary”, the husband was left with only $70 per week from the weekly income which he had asserted.
His Honour explained that, in so concluding, he accepted “the submission of the husband that given the fact that the husband is self-employed, the safest means of ascertaining a probable income for the husband is to average his income and that of the wife when she was employed by the company for the preceding three years”. [AB par 13, page 30]. It was accepted that because the income was not presently “split as between the husband and the wife, that there would be a greater income tax requirement”.
His Honour also accepted that there was “some doubt as to the husband’s accurate financial position” which was “unable to be ascertained or tested in the interim proceedings”. [AB par 14, page 30].
His Honour thus concluded that “On the face of it, therefore, if only looking at the income of the husband is isolation, it would be difficult to conclude that the husband has the reasonable ability or capacity to support the wife”. [AB par 15, page 30].
The learned Federal Magistrate recorded that such a conclusion was not decisive of the issue before him given the “considerable assets of the parties and the complete control of those assets by the husband to the exclusion of the wife”. [AB par 15, page 30].
His Honour thus concluded that:
16.…having regard to those assets, that the husband does have the capacity and reasonable ability through these resources to support the wife. How he chooses to do this is a matter for him. It may be that his true financial position enables him to pay from his income; it may be that through the borrowings secured over the properties can occur, or it may be that assets will need to be sold. [AB par 16, page 30].
Thus satisfied, the learned Federal Magistrate turned his attention to the quantum of the order appropriate to be made.
He referred to the wife’s occupation of rental premises with the two children of the marriage. Uncontroversially, the learned Federal Magistrate apportioned a number of the expenses claimed by the wife as to two thirds to the children, which he disregarded, and as to one third to the wife to which he had regard. That exercise excites no challenges in this Court.
His Honour also excluded a number of “discretionary expenditures” of the wife, which he detailed. Without conceding his Honour could or should have been more ruthless in that regard, Counsel for the husband sensibly did not seek to advance any challenge in this Court by reference to that topic.
A matter which is controversial in this Court is the learned Federal Magistrate’s refusal to apportion the $380 per week rental paid by the wife, either in the way he did with other expenses of the wife, or at all.
His Honour’s reasons for doing what he did were twofold. As his Honour recorded, there was “no information” before the Court from which he could “conclude that there could be cheaper premises available if the wife was to live alone”. The other matter was that there was no “evidence from which I could conclude that the adult children were able to contribute to that rent”. It was fairly conceded by Counsel for the husband that the learned Federal Magistrate was not in error in so regarding the evidence, or its absence. [AB par 19, page 31]
The learned Federal Magistrate thus accepted that the wife reasonably required the sum of $1034 per week, a figure somewhat higher than the $905 per week claimed by her which his Honour regarded as “reasonable, and would result in the standard of living that in all the circumstances would be reasonable”.
His Honour then proceeded to deal with a matter which is not relevant for present purposes relating to a bank account containing approximately $2 000 which the wife was entitled to receive in satisfaction of her entitlement to interim spousal maintenance.
In relation to the wife’s ongoing spousal maintenance entitlement, the learned Federal Magistrate concluded that the wife should receive rental income from properties earlier identified by him in the sum of $465 per week, and that the husband pay the balance of her total entitlement of $905 per week.
His Honour concluded his reasons by observing that:
23.In making this decision, I acknowledge that the husband will need to either find funds from elsewhere or pay the mortgage secured over the parties’ three properties, or arrange a sale in consultation with the wife. If this is the case, so be it, but it is important that the wife have sufficient funds to live in the meantime. [AB par 23, page 32].
Relevant legal principles
The principles which govern the husband’s application are not in doubt, and do not require more than the briefest mention for the purposes of the application.
Counsel for both parties sensibly agree that leave to appeal should be granted if the Court is satisfied that the learned Federal Magistrate’s decision was based on an error of principle or that his orders visited a substantial injustice upon the husband (see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, and Rutherford and Rutherford (1991) FLC 92-255).
For practical purposes, both Counsel agreed that demonstrating merit in any of the Grounds of Appeal would be a sufficient basis for allowing the husband’s application and granting his appeal.
The Grounds of Appeal
The husband’s draft Amended Notice of Appeal contained a number of grounds which, commendably, his Counsel grouped under four headings by reference to their subject matter. Albeit not argued in quite that sequence, it is convenient to address the Grounds of Appeal in the order in which they find expression in the husband’s draft Amended Notice of Appeal.
Ground 1
Ground 1 of the husband’s Amended Notice of Appeal provided:
(1)His Honour erred in that he made the following mistakes of fact:
(a)That the husband has complete control of the assets of the parties.
(b)That the husband is in receipt of the total income formerly divided between the parties.
(c)That it is more probable that [sic] not the wife has $1749 in her bank account.
In support of these challenges it was submitted that (Ground 1(a)) that the husband did not have “complete control” of the assets of the parties given that two of the three real property assets of the parties were held in joint ownership. [AB pages 64-5].
It was submitted that “the only items in the complete control of the husband were [R property] and (in effect, though not in law) [HH Limited]”, the corporate structure through which the husband operated a business under contract to H Limited. [AB page 65].
Whilst, technically, the learned Federal Magistrate somewhat overstated the position, the factual error made by him could not have vitiated the exercise of his discretion and thus provide a basis for appellate intervention (See De Winter & De Winter (1979) FLC 90-605).
As was fairly conceded by his Counsel, the husband had complete and unfettered control of the R property in which there was substantial equity. As the learned Federal Magistrate’s Reasons for Judgment revealed, his Honour’s conclusion that the husband had the capacity to satisfy the wife’s entitlement to interim spousal maintenance was significantly dependent upon finding that the husband could, if he wished to, liquidate the R property or borrow against it in order to satisfy his obligations to the wife. Thus, notwithstanding that factual error has been demonstrated, that error cannot advance the husband’s case.
It was also submitted in this context (Ground 1(b)) that “the only evidence before the Court was that the husband was not in receipt of income derived from [F property]”.
Read in context, the learned Federal Magistrate’s finding was that such income as was able to be received from the sources to which he referred was received in its totality by the husband. His Honour was clearly aware of the reality that rental from the property to which Counsel for the husband referred was held in a trust account. Even if, which has not been established, his Honour erred in fact, such error could not have vitiated the exercise of his discretion.
It was further submitted on behalf of the husband (Ground 1(c)) that the learned Federal Magistrate had erroneously found the wife to have had $1 749 in her bank account when evidence sworn by her on 16 October 2008 revealed that she had $10 192 in her bank account.
It was submitted that, whilst the wife’s Counsel tendered a bank statement in an endeavour to corroborate the assertion that, at the time of the hearing, the wife only had $1 749 in her bank account, the statement tendered was “for an account with a different number than the account referred to in the financial statement of the wife”. Thus, whilst the wife’s legal representative asserted that it was the same account, there was submitted to have been “no evidence to support that assertion”.
As the transcript to the proceedings before the learned Federal Magistrate confirms, there was a Bank Statement tendered on behalf of the wife which revealed a figure of $1 749. The Court has not been directed to evidence of the wife having had other than one bank account.
Objectively, on the material before him, as that has emerged before this Court, the learned Federal Magistrate might have found that the wife had the higher sum asserted on behalf of the husband. That however is not the test for present purposes. Nothing to which this Court has been referred establishes that his Honour erred in making the finding of fact which he did.
Ground 2
Ground 2 of the husband’s Amended Notice of Appeal provided:
2. That His Honour failed to take into account relevant facts including:
(a)That the wife had the benefit of sums of over $8,000 withdrawn from the personal and business accounts of the parties by her, or payments made from those accounts for her benefit after the time of separation.
(b)That the wife had the benefit of sharing expenses, including rental, with the 2 adult children.
Counsel for the husband, at least inferentially, acknowledged that, whilst potentially significant in the final property settlement proceedings, in proceedings focussing upon “the prospective situation of the parties”, the receipt by the wife of $8 000 in the post separation period did not necessarily assume significance.
To the extent that it was submitted that the learned Federal Magistrate had erred in not having regard to the $8 000 as a “possible source of the sum of $10 092 asserted to be in the wife’s bank account per her financial statement”, the Court’s conclusion with respect to the challenge to his Honour’s findings with respect to that account precludes this claim from succeeding.
A more vexed issue related to the learned Federal Magistrate’s refusal to apportion the rental paid by the wife with respect to premises occupied by her and the adult children of the marriage. Those children were aged 18 and 19 years.
As noted earlier, his Honour’s observation that there was no evidence before him as to the capacity of the adult children to contribute to the wife’s rental was accurate. Perhaps disingenuously the wife asserted in her financial statement that she did not know what the adult children were earning. The husband however did not assert in his affidavit that the children were earning. Had he done so, the onus would clearly have been on the wife to be more forthcoming than she appears to have been in her financial statement.
Whilst Counsel for the husband raised this in submissions before the learned Federal Magistrate, that could not change the status of the evidence, or the absence of evidence in relation to this topic.
Whilst it may well be that it will emerge in the property settlement proceedings that the parties’ adult children had the capacity to contribute to the wife’s rental, no basis for criticising the learned Federal Magistrate’s conclusions with respect to the topic has been demonstrated before this Court.
Ground 3
Ground 3 of the Amended Notice of Appeal provided:
3.That his honour erred in law in that:
(a)His Honour failed to properly assess the capacity of the wife to support herself in that he failed to take into account property in the possession of the wife (bank account) and property of which she was a joint owner (real estate at [F property]).
(b)That His Honour failed to properly assess the capacity of the husband to pay spousal maintenance in that His Honour:
(i)Having assessed that the husband had no capacity to pay spousal maintenance from his periodic income, then concluded that he had a capacity to pay owing to his control of the assets of the parties.
(ii)His Honour failed to take into account that one of the assets said to be controlled by the husband was the matrimonial home in which the husband resides, and therefore not available for sale.
(iii)His Honour gave no reason for concluding that the husband had a capacity to pay owing to his control of the assets of the parties, beyond merely referring to the existence of such assets.
(iv)If the decision of His Honour, by implication, found that the husband had the capacity to pay the spouse ordered by depletion of capital assets available to him, His Honour applied an incorrect approach in that His Honour should have had regard to the income derivable from those capital assets.
(v)His Honour failed to make any assessment of the capacity of the husband to pay the spousal maintenance as assessed.
The complaint that the learned Federal Magistrate failed to have regard to the wife’s bank account is demonstrably unsustainable. His Honour referred to the bank account and its significance.
His Honour was also aware that the wife was a joint owner of the property at F property, the rental with respect to which was held in an account by an estate agent.
As other submissions of Counsel for the husband demonstrate, howsoever viewed, there were only three sources of income available to the parties. They were the rental income from the jointly owned F property, which the wife was not able to access without either a Court order or the husband’s agreement, the rental from the property registered in the husband’s sole name at R property, and the income from H Limited which was payable with respect to activities undertaken, the evidence suggests, solely by the husband, or solely by him vis-a-vis the corporation with whom the parties’ corporation contracted, H Limited.
Thus, save to the extent that the learned Federal Magistrate made an order so providing, the wife had no capacity to support herself. His Honour thus did not err in the way complained of by the husband in Ground 5.3.1.
To the extent that it might be asserted on behalf of the husband that the learned Federal Magistrate was precluded from making an order which, on the evidence before him, could only be satisfied by borrowing money or realising capital, such challenge cannot succeed. The “capacity” to meet an order for interim spousal maintenance is not confined to income. Once a party, such as the wife in this case, 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.
Given that, as was conceded on his behalf, the husband had the capacity, however potentially commercially desirable or otherwise, to, at worst, sell real estate solely owned by him in order to meet his obligations, the learned Federal Magistrate’s order cannot be seen as falling beyond the ambit of a reasonable exercise of his discretion.
As the learned Federal Magistrate was undoubtedly aware, in circumstances where the parties’ entitlements to their property had not been determined in accordance with Part VIII of the Act, the ultimate implications of the order for interim spousal maintenance remained to be determined, and the wife’s entitlement to spousal maintenance itself remained able to be litigated and determined.
It is significant for present purposes that the orders of the learned Federal Magistrate did not oblige the husband to liquidate any property which it was within his capacity to do.
As was submitted on behalf of the husband, the husband understandably sought to avoid liquidating the R property and raising a borrowing in order to avert that course.
The learned Federal Magistrate’s reasons for concluding that, albeit in ways the husband himself shows, the wife’s entitlement could be satisfied by the husband in reliance upon an asset which he undoubtedly controlled, was transparently apparent. An analysis of his Honour’s reasons revealed why that was so.
To the extent that Counsel for the husband referred to the impact of assets which were not being utilised to generate income in the hands of an applicant for spousal maintenance, the logic of which decisions is unassailable, those cases are not relevant for present purposes. Because the capacity of a party seeking an order for spousal maintenance can encompass capacity which is unexercised, or under-exercised, as it logically can be, does not mean that the converse would apply.
Objectively, as the learned Federal Magistrate concluded in this case, whether the husband borrowed against the R property, as his Counsel indicated he might seek to, or liquidated it, no error on the part of the learned Federal Magistrate in relying upon that property in the context of the husband’s capacity to meet an order for interim spousal maintenance has been demonstrated.
The Court is not persuaded that the failure to have regard to the income earning capacity of the R property in specie constituted error on the part of the learned Federal Magistrate. His Honour was obliged to make findings with respect to the husband’s capacity. That capacity could be assessed in reliance upon the utilisation of the R property. How the husband chose to utilise that property for the purpose of meeting his obligation was entirely a matter for him.
As noted earlier, the complaint arising from the learned Federal Magistrate’s erroneous finding that the husband controlled the three real properties owned by the parties, when in fact he controlled only one, has earlier been dealt with.
The learned Federal Magistrate’s orders did not contemplate the sale of the former matrimonial home of the parties. To fail to consider in the context of the husband’s capacity the sale of the former matrimonial home when its possible sale was not considered as any possible part of the husband’s capacity involved no error by the learned Federal Magistrate.
To the extent that the complaint articulated by Ground 3.5 has not otherwise been addressed, the fact that the husband might, by sale or borrowing, generate a lump sum to meet a periodic order, does not render the periodic order erroneous.
It was submitted on behalf of the husband that the learned Federal Magistrate’s order would not and could not achieve its objective. It was submitted that, whether it be by borrowing against or selling the R property, there would necessarily be a significant time lapse between the making of the order for interim spousal maintenance and the receipt by the wife for any benefit pursuant to that order.
With respect to the ingenuity of this argument, it overlooks the reality that, if anyone could complain about that state of affairs, it would be the wife who, on the scenario advanced by Counsel for the husband, might have to wait several months before receiving any payments pursuant to his Honour’s order.
It could not seriously be suggested that the learned Federal Magistrate imagined that, whether by borrowing or selling the R property, the wife will receive monies within an immediate time frame. Whilst the learned Federal Magistrate underpinned his conclusion with respect to the husband’s capacity by reference to his ability to satisfy the order out of capital, he recorded, accurately, that there was “some doubt as to the husband’s accurate financial position” albeit, correctly in circumstances where there had been no testing of the husband’s assertions in that regard, no findings of that nature were reasonably open to the learned Federal Magistrate.
So far as the complaint that his Honour’s order was “in effect, not a periodic provision of spousal maintenance” is concerned, with respect to Counsel for the husband, there is a logical hurdle to acceptance of his proposition. Simply because capital may be utilised to meet it, a periodic entitlement does not thereby cease to be a periodic entitlement, or become a lump sum entitlement.
Ground 4
Ground 4 of the Amended Notice of Appeal provided:
4.His Honour failed to properly exercise his discretion in that:
(a)His Honour gave excessive weight to the value of property said to be in the control of the husband.
(b)His Honour failed to take into account the limited income derived form such property.
(c)The order of His honour was manifestly excessive and unjust.
These challenges have largely been addressed earlier. One matter however (Ground 4.3) requires some consideration.
The figure of $1 254 per week relied upon by Counsel for the husband accords with the husband’s sworn evidence of the taxable earnings of the parties and their corporation for the 2005, 2006 and 2007 financial years after allowance for taxation is made.
The figures are consistent with the averaging approach which the learned Federal Magistrate considered, for reasons which he advanced, to be the preferable approach to the husband’s income.
The crux of the submission in support of this challenge was that, out of the sum of $1 254 per week, the learned Federal Magistrate’s order required the husband to pay to the wife $905 per week. It was submitted that this represented a manifestly unreasonable outcome.
The difficulty with this complaint is that, as has previously been discussed, the learned Federal Magistrate did not assess the husband’s contribution to satisfy the wife’s entitlement to interim spousal maintenance solely in reliance upon the income available for that purpose.
Whilst, as Counsel for the wife demonstrated, there were more recent figures available, which, if accepted, would have resulted in a significantly greater finding of available income, no notice of contention having been filed, the Court does not have regard to that evidence, or need to have regard to that evidence.
The learned Federal Magistrate was in no doubt that complete reliance upon the income available to the husband to satisfy the wife’s entitlements would impose an unfair burden upon him. It was for that reason that his Honour turned his attention to the husband’s capacity to satisfy the wife’s entitlement out of property over which he had total control.
Conclusion
No proposed ground of appeal having merit, the husband’s application will be dismissed.
Costs
Counsel for the wife sought an order for costs in the sum of $4 000 in the event of the husband’s application being unsuccessful.
Counsel for the husband sought that the costs of the application to this Court be reserved to the court finally determining the parties’ entitlements to settlement of property and spousal maintenance.
Counsel for the wife advised the Court that his client had borrowed money to successfully resist the husband’s application to this Court.
The potential for the husband to revisit the issue of spousal maintenance and the significance of any orders for interim spousal maintenance at the final hearing of financial proceedings before the parties is well known. In the context of those proceedings a number of issues which have assumed significance in the present proceedings could be revisited. The evidence having not been tested, the only issue being interim spousal maintenance, the Court perceives there to be no question of res judicata issue estoppel precluding such a course being pursued.
The obstacles to success with an application such as that brought by the husband are well known. Whilst the husband had arguable grounds, the fact remains that he has been wholly unsuccessful and that the wife has been wholly successful.
To the extent that any order made in these proceedings impacts upon the financial circumstances of the husband, as clearly such an order would, that is a matter that could be taken into account in the final determination of the parties’ financial proceedings in the light of the findings of fact made by the Court which determines those matters.
In all the circumstances, the Court is of the opinion that an order for costs of the application to this Court is warranted. It was, sensibly, not disputed that $4 000 was a reasonable assessment of the wife’s costs.
I certify that the preceding eighty seven (87) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman
Associate:
Date: 26 March 2009
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