Marsh and Marsh and Anor

[2013] FamCA 445

FAMILY COURT OF AUSTRALIA

MARSH & MARSH AND ANOR [2013] FamCA 445

FAMILY LAW – PROPERTY – Interim spouse maintenance – interim costs payment

Family Law Act 1975 (Cth) s 72(1); s 74; s 75(2); s 117

Bevan & Bevan (1995) FLC 92-600
Eastman v Director of Public Prosecutions (ACT) 2003 HCA 28
Mitchell & Mitchell (1995) FLC 92-601

APPLICANT: Ms Marsh

RESPONDENT: Mr Marsh

INTERVENER: The Commissioner for Taxation

FILE NUMBER: SYC 3464 of 2009

DATE DELIVERED: 14 June 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE:

10 May 2013

17 May 2013 written submissions received by the husband
24 May 2013 written submissions received by the wife in reply

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms O’Connor

SOLICITOR FOR THE APPLICANT: Uma Mahadeva Lawyers

COUNSEL FOR THE RESPONDENT: Mr Campton

SOLICITOR FOR THE RESPONDENT: Champion Legal

SOLICITOR FOR THE INTERVENER: ATO Legal Services Branch

Orders

1. That, pending further order, the husband shall pay the wife spousal maintenance in the sum of $1,132 per week until 15 August 2013 and thereafter $832.00 per week.

2. That, pending further order, the parties shall do all things as are necessary to cause the balance of the proceeds of sale of the property … LL Street, KK Town after payment of costs identified in Order 5 made 28 March 2013 to be applied as follows:

   (a)in payment to the solicitors for the wife in the sum of $250,000 to be used for the wife’s legal fees.

   (b)in payment to the solicitors for the husband in the sum of $100,000 to be used for the husband’s legal fees.

   (c)in payment of the balance in part payment of the debt of the husband to the Australian Taxation Office pursuant to the Deed made 8 April 2013.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3464 of 2009

Ms Marsh

Applicant

And

Mr Marsh

Respondent

REASONS FOR JUDGMENT

1. In these proceedings Ms Marsh (“the wife”) seeks orders for interim spousal maintenance and interim property orders or interim costs orders.

2. Mr Marsh (“the husband”) sought orders in relation to the disposition of the proceeds of sale property owned by the parties at LL Street, KK Town. 

3. The orders pressed by the wife in her Amended Application in a Case filed in court at the hearing were:

   1.That the husband pay the wife the sum of $3,523 per week by way of spousal maintenance to be paid on a weekly basis.

   …

   4.That if the child [B] is to travel overseas for the purpose of training or participating in sporting events the husband do pay the wife’s reasonable costs associated with such travel by agreement and, failing agreement, in the sum of $35,000 per week, initially, and to increase from 1 July 2013 and on 1 July in each year thereafter in accordance with the variations in the Consumer Price Index and/or consistent within fluctuations in the value of the Australian dollar with the wife agreeing to account for expenditure during such travel which is understood to include training, travel, accommodation, coaching, clothing and equipment.

   …

   6.That within 14 days of the date of this order the husband pay to the trust account of Uma Mahadeva Lawyer the sum of $1 438 000 to be applied to the Wife’s legal and associated costs of and incidental to these proceedings. (During the hearing the sum claimed was reduced to $500,000).

4. In submissions the wife modified the order sought for spousal maintenance to seek $2,000 per week.

5. The husband sought an order that the proceeds of sale of the KK Town property be applied as follows:

   a)In payment to the solicitors for the wife in the sum of $200,000 to be used for the wife’s legal fees. 

   b)In payment to the solicitors for the husband in the sum of $100,000 to be used for the husband’s legal fees.

   c)In payment of the balance in part payment of the debt of the husband to the ATO pursuant to the Deed made 8 April 2013.

6. The parties also sought a number of orders in relation to further disclosure and the parties’ assets.  Consent orders were made dealing with many of those issues. 

7. The Australian Taxation Office (“the ATO”) is a party to these proceedings. Pursuant to a Deed entered into earlier this year the husband’s indebtedness to the ATO for tax incurred up to 30 June 2011 is $2,632,231.38 plus shortfall interest of $58,528.52.  General interest charges apply to those sums from 18 October 2012.

8. Because the matter was not able to be concluded on the day allocated, I gave leave to the husband to conclude his submissions in writing and for the wife to reply in writing.  When the wife’s submissions were received by the Court attached to them was a bundle of documents as well and an affidavit sworn by the wife’s solicitor after the conclusion of the hearing purporting to give further evidence.

9. In Eastman v Director of Public Prosecutions (ACT) 2003 HCA 28; 214 CLR 318 McHugh J said at [28] – [31], speaking of submissions forwarded to the Court after the hearing without leave said:

   I have had no regard to these “submissions”.  They should not have been forwarded to the Court.  The Rules of the Court gave no authority for them to be forwarded. Nor did the Court give leave to the appellant to file them. If leave had been sought, I would have refused it.  If the Court gave leave, it would have to give leave to the other parties in the appeal to file replies - with consequent delay in the business of the Court.

   Parties to matters before the Court need to understand that, once a hearing in the Court has concluded, only in very exceptional circumstances, if at all, will the Court later give leave to a party to supplement submissions. Parties have a legal right to present their arguments at the hearing. If a new point arises at the hearing, the Court will usually give leave to the parties to file further written submissions within a short period of the hearing - ordinarily seven to fourteen days.  But a party has no legal right to continue to put submissions to the Court after the hearing.  In so far as the rules of natural justice require that a party be given an opportunity to put his or her case, that opportunity is given at the hearing.

   This is not the first time that this Court has had to emphasise that the hearing is the time and place to present arguments. In Carr v Finance Corporation of Australia Ltd [No 1] Mason J said:

   “The material was submitted without leave having been given by the Court. The impression, unfortunately abroad, that parties may file supplementary written material after the conclusion of oral argument, without leave having been given beforehand, is quite misconceived. We have to say once again, firmly and clearly, that the hearing is the time and place to present argument, whether it be wholly oral or oral argument supplemented by written submissions.”

   Once the hearing has concluded, the workload of the Court makes it impossible for the Court to give leave to file further submissions - with all the attendant delay in the Court's business by a fresh round of submissions. Efficiency requires that the despatch of the Court's business not be delayed by further submissions reflecting the afterthoughts of a party or - as perhaps is the case in this appeal - some dissatisfaction with the arguments of the party’s counsel.

10. Leave to rely on this further evidence was neither sought nor granted. I have not read it and will not take it into account.

11. At the commencement of the hearing I criticised the solicitors for the parties for communicating with the Court other than to provide it with documents as required by the Rules or directions of the Court.  I indicated then that it was not proper for litigation to be conducted by way of correspondence with the Court.

12. I do not see how anyone could think that, without leave, a party could adduce further evidence by simply forwarding it to the Court when all that remained outstanding was the completion of addresses.  It is impermissible and should not have occurred.

Background 

1. The husband was born in 1961 and is 52 years of age.

2. The wife was born in 1962 and is 51 years of age.

3. The parties married in May 1997.  In October 1999, their one child B, (“the child”) was born.  He is now 14 years of age.

4. The parties separated on 1 June 2009. 

5. The son is an elite Sport 1 participant and the parties have devoted much time and money to enable him to follow that interest both in Australia and overseas. 

6. The husband asserts that the sole property of the parties is the real estate owned by them as set out below:

Name of Property	Owners	Value
MM Street, K Town	Husband and the Wife	$3,000,000
LL Street, KK Town	Husband	$1,200,000
PP Street, G Town	Husband and the Wife	$585,000
NN Street, CC Town, New Zealand	Wife (as sole owner of OO NZ Limited Company)

1. The only property with an encumbrance is NN Street, CC Town, New Zealand (“the CC Town property”) on which there is a mortgage of approximately NZ$323,731. It was purchased in 2010 for NZ$430,000. There is no expert evidence as to the value of this property.  The husband estimates its value to be NZ$530,000.  The wife says in her Financial Statement of 25 March 2013 that, after taking into account the mortgage and a loan from OO NZ Limited Company (“OO Company”) to her of $AUS 93,272 it has a negative value of $AUS8,403. The CC Town property is the only asset of OO Company. The wife thus asserts an interest in it of approximately $AUS85,000.

2. Although the property is owned by OO Company, the wife is the sole shareholder.  I shall refer to it as her property.

3. The wife’s position is that the husband has an interest in a group known as PP Group from which he received distributions of $6,066,682.50 between 5 June 2009 and 27 June 2012.  The wife’s position is described by her counsel in the wife’s case outline thus:

   On the wife’s case the husband’s interest in the [PP Group] is a valuable asset solely within the husband’s control.  On the wife’s case there is a cash float in the range of $20 million - $120 million plus intellectual property and the physical assets needed to conduct a business turning over $2.5 billion per annum.  On the wife’s case the husband has sought to conceal the asset and, by inference, to prevent it from ever becoming part of the property pool. 

4. The husband accepts that he has a 1.9% interest in PP Group but says that he has no control over the operation of the PP Group, does not know the legal structure of the PP Group and is dependent on others to determine the amount and pay whatever sums he receives.  This will no doubt be a significant issue for hearing.

5. The property hearing is fixed for hearing for six days commencing on Monday 10 February 2014.

Spousal Maintenance

1. Section 72(1) of the Family Law Act provides:

   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 s 75(2)

2. A court can only make an order for spousal maintenance pursuant to s 74 if the party claiming the maintenance is unable to support herself or himself adequately.  Adequately is a relative concept which varies from case to case and in relation to which the standard of living which the parties enjoyed prior to separation is relevant (Bevan & Bevan (1995) FLC 92-600; Mitchell & Mitchell (1995) FLC 92-601).

3. In her affidavit sworn and filed 24 April 2013 the wife asserts that her weekly expenses are $2,772.  Of these expenses, pursuant to orders made by this Court, the husband pays the following expenses:

   Electricity $461

   Telephone $230

   Gardening/Lawn mowing   $230

   Cleaning (house/pool)   $300

   G Town Utilities   $100

   Total$1321

The shortfall is thus $1451. 

1. In her Financial Statement sworn 24 March 2013 the wife said she had personal expenditure of $817.84 (consisting largely of repayments of the mortgage on the CC Town property, car registration and a master card) plus expenses of $533 (as disclosed in Part N of her Financial Statement).  She disclosed an income of $218.70 as rent from the CC Town property.  The Part N expenses in this Financial Statement do not include the expenses which are paid by the Husband.

2. It is not easy to reconcile the expenses set out in the wife’s affidavit with those set out in her Financial Statement.  There are many discrepancies notwithstanding that they were prepared within a short time of each other.  For example the wife’s affidavit refers to a weekly food and entertainment expense of $250 whereas the wife’s Financial Statement includes food of $39 and entertainment $22 per week.  Holidays are included in her affidavit at $250 but at $149 in the wife’s Financial Statement.  In Part N of the wife’s Financial Statement the wife’s weekly food expenses are said to be merely $39.  She does spend significantly more on her son but those expenses cannot be taken into account on the wife’s application for spousal maintenance.

3. Whilst the wife’s affidavit and the Financial Statement each set out expenses of the wife they do so in different amounts.  Which then is the one to be relied upon? Counsel for the wife sought to explain the discrepancy between the two by submitting that the affidavit sets out the requirements of the wife and Part N of her Financial Statement sets out her current expenditure (which is submitted to be less than her requirements).  There was no evidence to support that submission.

4. When one combines the weekly expenditure of $817.84 referred to in the wife’s Financial Statement with the Part N expenses of $533 a total of $1,350.84 for the wife’s expenses is obtained.  These figures exclude the items which the husband pays directly.  This sum, although comprising different items, is not significantly different from the net sum derived from the affidavit after the payments made by the husband are deducted.  The first gives expenses at $1,350.84 and the second $1451.

5. The wife’s Financial Statement discloses an income of some $218 being rent from the CC Town property.  Thus, according to that document there is a shortfall of $1132.84.

6. The wife’s affidavit does not expressly refer to any expenses for CC Town.  It does not refer to the rent.

7. The evidence is unsatisfactory.  The wife must establish her case.  I will proceed on the figures given in Part N of the Financial Statement because they include the expenses and income for CC Town and because, given the discrepancy in the figures and the burden of proof is upon the wife, it is appropriate to use the fuller, and thus more reliable, total.

8. Having regard to the lifestyle of the parties prior to separation the claimed expenses are reasonable.

9. The wife does not work.  She has not worked since the marriage.  The wife has the care of her son every second week.  It was not submitted by the husband that the wife had any particular capacity for employment or that, subject to the matters raised by him, it was inappropriate for him to pay spousal maintenance to the wife. 

10. The husband argued hat it would be an “abuse” to take into account the net expenses of CC Town as a reasonable expense of the wife because of the circumstances in which it was acquired.  The property was, it was submitted, purchased using funds paid to the wife for legal expenses.  The wife’s ownership was then improperly not disclosed to the husband until it emerged in the parenting proceedings.

11. That property was acquired in August 2010.  According to the wife the cost was $NZ430,000.  There is presently a mortgage in the sum of $NZ 323,731.  In July 2011 the wife sought and obtained an order that the husband pay to the wife’s solicitors the sum of $571,953 for her legal fees.  At no time up to the making of the order had she disclosed her interest in the CC Town property.  When the matter was before the Court on 31 January 2012 the wife conceded it was only disclosed by her in the course of her cross examination on that day. 

12. Notwithstanding the above, the mortgage remains an expense of the wife.  In dealing with the issue of the payment of legal fees from the KK Town property, with which I shall deal shortly, I will be taking into account the CC Town property as an asset available for the wife to meet her legal expenses, if necessary.  Having regard to the wife’s proposed expenditure on the balance of this case she will need to sell the CC Town property to meet them.  Accordingly, the mortgage expenses are likely to cease in the short term.

13. The husband submits the wife’s credit card repayments disclosed in her Financial Statement of $38.37 per week ought not be included as an expense because this would be double counting because that credit card had been used to pay for expenses that were also being claimed.  The evidence does not enable me to say that this is so.

14. The husband submits that the expenses of the CC Town property should not be allowed as a reasonable expense because it was acquired “by the wife secreting away, and then applying, periodic spouse maintenance monies paid by the husband”.  Fowler J, on 27 July 2011, ordered the husband to pay to the wife spousal maintenance in the capitalised sum of $117,464.  It was further submitted that to order further spousal maintenance “would occasion a double jeopardy and a penalty.  It would occasion a perversion of the prior exercise of discretion and contaminates any current exercise”.

15. As to the first; the evidence does not disclose how that lump sum was spent.  There is no evidence that it was not spent as intended.  At the time of the order of Fowler J, the wife had owned the CC Town property for nearly a year.  The fact remains that there is a debt required to be paid.  The property is an asset that will be available to the parties in these proceedings.  For these three reasons this submission is not accepted.

16. As to the second, in His Honour’s judgment, the categorisation of the payment was left to be determined at the trial.  It was an aggregation of “about 6 months of the payments formerly made by the husband pursuant to Order 12 of the Orders made on 4 November 2009”.

17. Having regard to those statements of His Honour, that Order does not preclude spousal maintenance now being ordered.

18. The wife’s reasonable unmet expenses are presently $1,132 per week reducing to $832 per week when the CC Town property is sold.  A reasonable time to allow for its sale is four months.

19. It is now necessary to consider the matters raised in s 74 and, in particular, s 75(2) of the Family Law Act.  Each of the parties is in good health.  Neither works – the Husband relies simply upon his distributions from the PP Group.  Each of the parties has the care of the son every second week.  Neither party referred to any commitment that was necessary to enable them to support themselves or the son.  Neither party was cohabiting with another person. 

20. Prior to and since separation the parties have enjoyed a very high standard of living. 

21. The husband argues his income, property and financial resources do not enable him to meet the shortfall in the wife’s expenses such that he should pay her maintenance.  In doing so he submits that the only assets available to the parties are the real estate properties.  He says “I do not have any other assets which can be liquidated to meet the debt due to the ATO”. 

1. In the husband’s Financial Statement sworn 21 March 2013, he describes his weekly income as $900 being interest earned on monies he has on deposit in a number of bank accounts.  He describes his personal expenditure as $11,665 per week.  The husband does not say how he manages to support himself given this shortfall. 

2. In an affidavit sworn by the husband on 25 March 2013 he says “I have received payments of $6,066,682.50 between separation in June 2009 and the date of this affidavit”.  Schedule 1 to the husband’s affidavit sets out the distributions received from the PP Group.  The last payment is said to have been made on 27 June 2012 in the sum of $50,000. 

3. However, the bank records show which were made Exhibit “G” that the husband received the following payments, not disclosed in his affidavit:

Date	Amount Deposited	Statement Notes
19 Jun 2012	$50,000.00	Cheque deposit branch …
5 Jul 2012	$50,000.00	Direct credit … [Mr QQ] transfer
24 Jul 2012	$49,962.42	[RR] Co ref …: [SS] Pass: …
30 Jul 2012	$10,000.00	Cheque deposit branch …
1 Aug 2012	$50,000.00	Direct credit … [Mr Marsh]
3 Aug 2012	$299,980.00	[UU] Limited Ref: …
9 Aug 2012	$165,589.41	[VV] Trust MGNT as trustee ISN … SSN … Ref … Fee $10.00000 USD179990.00000 Rate:1.0869
19 Nov 2012	$150,000.00	Direct credit … [Mr WW] … Nov 2012
18 Dec 2012	$50,000.00	Cash deposit branch … TRF from …
24 Dec 2012	$5,974.99	[Mr Marsh] BNY CUST. … DEUSTCHE NY Reference … Fee 10.00000 USD6466.07000 Rate: 1.0804
14 Jan 2013	$73,281.19	The [XX] Trust ISN … OSN … SSN … Ref … Fee $10.00000 USD 79990.00000 Rate 1.094
8 Mar 2013	$50,000.00	Direct Credit … Running Count … transfer
Total	$1,004,788

1. Whilst not all of these entries might, of themselves, obviously fit the description of distributions from the PP Group all could do so.  None was disclosed by the husband save by provision of his bank statements. 

2. It was submitted on behalf of the husband that these payments could be explained by the transfer of funds from other bank accounts of the husband and thus represented a movement of existing funds rather than the arrival of new funds.  However, I was not later taken to any bank statements that demonstrated this to be the position.

3. The wife tendered the husband’s statement in relation to the husband’s Mastercard transactions which was made Exhibit “E”.  Included in that bundle were statements up to 14 March 2013.  Entries for 12 December 2012 show expenditure at what appears to be a travel agent (Company YY, Sydney) of two sums of $17,366.60 and $22,393.79.  On 6 March 2013 he spent $7,342.56 at that travel agent. 

4. Entries show expenditure at Restaurant ZZ, Sydney for the following dates and amounts: 

   12 December 2012              $2,214.00

   9 January 2013  $2,275.00

5. There was expenditure at Hotel AAA, Sydney (noting the Husband resides in Sydney) on the following dates and amounts:

   12 December 2012              $5,920.85

   10 January 2013                  $1,500.00

   15 January 2013                  $2,229.24

   5 February 2013                  $1,843.60

6. The deposits set out above and this expenditure indicate, at least on an interim basis, that the husband has the income, assets or financial resources available to him to meet an order for spousal maintenance of $1132 per week.

7. Pursuant to orders made on 10 May 2013 the wife is entitled to the sole occupation and use of the G Town property and to retain any net rent.

8. In relation to using G Town as a base for Sport 1 for the child in Australia the wife said:

   I would therefore want to keep [G Town] accommodation for this purpose. [The child] and I would want to use [G Town] on the weekends or weeks in school holidays that he is with me, in winter.  At other times, I would want to rent the premises out.  I have made some preliminary inquiries about the amount I might get in rent and it is in the order of about $400 per week in high season.

9. It is speculation as to what periods the property will be let having regard to the proposed use  of them by the wife, what the net rent might be, if any, and when it might be received.  It is impossible to take them into account.

10. The husband submitted that the wife could maintain herself by selling the property at CC Town or the property at K Town. A party is not obliged to have recourse to their capital for the purpose of their support and this submission is rejected.

11. Taking all these matters into account it is proper to make an order for spousal maintenance in the sum of $1,132 per week until 15 August 2013 and thereafter $832 per week. 

12. The wife submitted that the husband had, as shown by his expenditure, a lavish lifestyle and that, as she submits, the husband has not properly disclosed his income or assets, she is entitled to maintenance in a greater sum.  I reject this.  A spouse is entitled to seek maintenance for their reasonable unmet living expenses having regard to the lifestyle of the parties.  The Act refers to the extent a person is unable to support herself or himself.  The unmet expenses I have found to be reasonable are those asserted by the wife in her evidence.  There is no proper basis for making an order in a greater sum.

13. The wife sought an order for the payment of spousal maintenance in the sum of $35,000 per week whilst she was travelling with her son for the purpose of training or participating in sporting events.  There was no evidence as to why this was necessary, let alone reasonable, and that order will not be made.

Proceeds of Sale of the KK Town Property

1. The property at KK Town is in the process of being sold. The husband seeks orders that each party be entitled to a sum from the proceeds of the KK Town property to enable them to pay their lawyers for the final hearing in this matter.  The parties, including the ATO, are agreed upon the form of orders to be made but not the amounts.  The provisions of s 117 enable that order to be made.

2. The husband seeks a payment of $200,000 to the wife, $100,000 to his lawyers and the balance to the ATO.  The wife seeks an order that there be a payment to her solicitors of $500,000 and none to the husband with the balance going to the ATO.

3. The ATO did not oppose the making of the orders sought by the Husband but did oppose the sum sought by the wife. 

4. The evidence as to the wife’s proposed legal expenditure is not satisfactory.  It consists merely of a Fees Disclosure Letter referring to legal fees totalling in excess of $1.5 million.  That disclosure was predicated on the property hearing lasting for in excess of four weeks.  It is now set down for six days. 

5. I accept that because the husband’s stance on any interest of his in and knowledge of the PP Group the wife is likely to spend significant sums on further investigative procedures and evidence.  I accept therefore she will have legal costs which may be higher than the husband’s. 

6. The evidence does not enable me to be precise about what is an appropriate sum to allow for the parties’ costs.  I propose to allow the wife $250,000 from the sale of the KK Town property.  She will also have available to her the equity in the CC Town property and any rent received from G Town.  I bear in mind that there is a substantial liability outstanding to the ATO which is incurring interest.

7. The next issue as to whether the husband should receive the sum $100,000 he seeks.  The wife opposes this because the husband seems to have available to him substantial funds and seems to have a substantial expenditure.  She submits that, as she might ultimately only be able to obtain orders against the property in Australia notwithstanding the husband’s non-disclosure, any such payment to him will inevitably diminish the property available to her.

8. This may well be so but that is a matter for a final hearing.  To preclude the husband from receiving that payment would be, in effect, to determine that issue in advance. 

Release from the Orders for Payment of the Wife’s Outgoings

1. Pursuant to orders made in November 2009 the husband was ordered to pay the regular outgoings on the K Town property.  The evidence does not disclose a change in circumstances that would justify varying that order.

2. The orders I make are set out at the beginning of these Reasons for Judgment.

I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 14 June 2013.

Associate: 

Date:  12 June 2013