McBryde and McBryde
[2020] FCCA 620
•18 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| McBRYDE & McBRYDE | [2020] FCCA 620 |
| Catchwords: FAMILY LAW – Property settlement – wife’s interim application for periodic spousal maintenance – consideration of wife’s need for support and husband’s capacity to pay – orders made. |
| Legislation: Family Law Act 1975 (Cth) ss.72, 72(1), 74(1), 75(2) |
| Cases cited: Hall & Hall (2016) 257 CLR 490 Taguchi & Taguchi (1987) FLC 91-836 |
| Applicant: | MR MCBRYDE |
| Respondent: | MS MCBRYDE |
| File Number: | NCC 1401 of 2017 |
| Judgment of: | Judge Betts |
| Hearing date: | 7 June 2019 |
| Date of Last Submission: | 6 February 2020 |
| Delivered at: | Newcastle |
| Delivered on: | 18 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Duane |
| Solicitors for the Applicant: | Peninsula Law |
| Counsel for the Respondent: | N/A |
| Solicitors for the Respondent: | Nash Allen Williams & Wotton |
ORDERS
Until further order, the husband is to pay by way of spousal maintenance:
Property at B Street, Suburb C (Folio Identifier ...):
(a)the mortgage repayments;
(b)the Council rates and water rates;
(c)the electricity and gas accounts;
(d)the telephone, internet and Foxtel accounts;
(e)the household building and contents insurance;
Property at D Street, Suburb E (Folio Identifier ...):
(f)the mortgage repayments;
(g)the Council rates and water rates;
Wife’s Motor Vehicle 1 (registration number ...):
(h)the lease repayments and running costs including reasonable fuel and vehicle maintenance costs;
Health insurance:
(i)the wife’s current level of private health insurance (NOTING that the husband pays for a family policy which includes both parties and the children);
Periodic payments:
(j)The amount of $569 each week to a bank account as nominated by the wife, with the first such payment to be made within seven (7) days of the making of these orders and then each Monday thereafter.
If the wife obtains paid employment, she is to notify the husband in writing immediately and make full and frank disclosure of her income.
If the husband becomes aware that any shareholder loans to F are going to be repaid, he is to immediately notify the wife in writing and provide full and frank disclosure of the anticipated date/s and amount/s of such repayment/s.
The costs of each party are reserved.
The proceedings are adjourned to 10.00am on 26 June 2020 for directions.
Each party (and their legal representative) has leave to appear by telephone on the next occasion.
If either party alleges that there has been a material change in the parties’ financial circumstances, then that party has liberty to apply to re-list the proceedings on the giving of fourteen (14) days notice to the other party.
NOTATIONS:
A.The court expects that the husband will continue to receive the whole of the parties’ joint share of the rental income from the commercial properties. Order (1) is calculated on that basis.
B.A formal order has not been made for the husband to continue paying the children’s school fees because the court considers that such payments may more properly be described as child support rather than spousal maintenance. Nonetheless the court expects that the husband will continue to make such payments.
IT IS NOTED that publication of this judgment under the pseudonym McBryde & McBryde is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 1401 of 2017
| MR MCBRYDE |
Applicant
And
| MS MCBRYDE |
Respondent
REASONS FOR JUDGMENT
In these proceedings, Ms McBryde (“the wife”) seeks interim spousal maintenance from Mr McBryde (“the husband”) following the breakdown of their marriage.
The parties commenced cohabitation around 1997, married in 1999, separated in March 2017 and formally divorced on 7 August 2018.
They have two (2) children together, X aged sixteen (16) and Y aged fourteen (14).
During the marriage, the parties essentially adopted “traditional” roles. The husband was the primary breadwinner and the wife the primary homemaker and parent. Together the parties built up a successful business – “G Pty Ltd” - which consists of a number of entities and is discussed later.
Since separation the parties have been embroiled in property settlement proceedings. Relevantly:
(a)the husband moved out of the former matrimonial home at B Street, Suburb C and the wife has remained living there. This expansive waterfront property has five (5) bedrooms, three (3) bathrooms and is valued somewhere between $1.15M and $1.5M;
(b)both children originally stayed living with the wife at B Street, Suburb C but in more recent times X has moved in with the husband and his new partner at their rental property. He is not spending any meaningful time with the wife. Y continues to live with her and spends three (3) nights per fortnight with the husband;
(c)the wife resigned from her casual administrative role with G Pty Ltd as her continuing to work with the husband had become untenable. This effectively left her without an income;
but
(d)until around October 2018, the wife had the use of a joint Mastercard with a credit limit of $50,000. The husband ultimately cancelled this card when its balance had reached the mid-$40,000s;
and
(e)the husband has continued to meet the bulk of the parties’ joint expenses. This includes paying the mortgage, rates, electricity and insurances for B Street, Suburb C. He pays the lease and running costs for the wife’s motor vehicle. He also meets all of the outgoings for their two shops (although he solely pockets the joint rental income). He pays the wife and children’s health insurance and he pays the school fees and various other children’s expenses. Additionally he pays child support to the wife as assessed.
At present, the parties’ net assets (including superannuation) range somewhere between $2M - $3M, or perhaps higher depending on what the “G Pty Ltd” valuation ultimately comes in at.
The present application:
The wife seeks to formalise the husband’s ongoing payment of the fixed expenses he has been meeting. He consents to such an order being made.
But in addition, the wife also seeks that the husband pay her $1,400 in periodic maintenance per week - or such lesser amount that the court considers appropriate. It is this application that the husband seeks to have dismissed.
The hearing:
Mr Duane of counsel represented the wife and Mr Nash, solicitor, represented the husband.
The parties relied upon a substantial number of documents. Specifically, I have had regard to:
· the documents filed by both parties as listed in the wife’s Case Outline; [1]
· the wife’s additional “consolidated affidavit” filed 9 October 2019; and
· the various exhibits tendered in the course of the hearing.
[1] Exhibit “W1”.
The parties were each cross-examined and I have had regard to their oral evidence.
I have also had regard to the parties’ written submissions, the last of which was filed on 7 February 2020.
Spousal maintenance – the law to be applied:
Pursuant to s 74(1) of the Family Law Act (“the Act”), the court has power to make such order for spousal maintenance as it considers “proper”.
Section 72 of the Act is the gateway provision:
SECTION 72 RIGHT OF SPOUSE TO MAINTENANCE
72(1)A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
An applicant must prove on the balance of probabilities that he/she is unable to “adequately” support himself or herself by reason of the matters set out in s 72(1), including if necessary a consideration of the matters set out in s 75(2). This is described as the threshold test.
In Hall & Hall (2016) 257 CLR 490, the High Court held that at an interim hearing, while the threshold test must be satisfied “[t]he evidence need not be so extensive and the findings not so precise” as on an application for a final order. [2]
[2] Per French CJ, Gageler, Keane & Nettle JJ at paragraph 8 of their Honours’ reasons at p 497
Assuming an applicant meets the threshold test, the respondent is only liable to provide maintenance “to the extent that [he/she] is reasonably able to do so”.
Reasonableness would appear to be the touchstone in these types of applications.
Threshold test – is the wife unable to support herself adequately?
Wife’s expenses:
The wife asserts expenses of $981 per week over and above what the husband is already paying. [3]
[3] $970 as per Part N of wife’s Financial Statement + $11.50 per week in credit card repayments. I have ignored the 50c
Broadly, I consider such claim to be “reasonable” save for the production fees/vet fees of $200 per week. While I accept that the wife has to pay for animal vaccinations and miscellaneous vet bills, I consider $200 per week to be excessive. I accept that the family dog and cat require vaccination, flea and tick prevention and treatment, and that she has to cover food and various vet bills. However I consider that a reasonable claim would be $100 per week.
I also consider the wife’s claim for house repairs of $100 per week to be excessive. In my view $50 is a more appropriate figure. As for gifts, her claim of $50 per week is again excessive. I would allow $25.
Thus the wife’s “reasonable” expenditure comes down to $806 per week.
Wife’s income:
The wife is 51 years old, with the primary care of Y. Her financial circumstances are set out in her Financial Statement filed 6 June 2019, supplemented by her affidavits filed 29 July 2019 and 9 October 2019.
While the husband pays child support to the wife of $340 per week, her child–related expenses total $345 per week. [4] Child expenses are not properly claimable as spousal maintenance and, as the two figures essentially cancel each other out, I will disregard both.
[4] Part N of her Financial Statement filed 6/6/19.
The wife is engaged in “home duties”. She is not entitled to Centrelink benefits, which for present purposes would have to be disregarded in any event.
Her only outside income is derived from some casual work as a retail worker. In that role, she earns $26.76 per hour, equating to an average income of $80 per week.
Wife’s assets and financial resources:
In terms of liquid assets, the wife’s Financial Statement filed 6 June 2019 discloses bank accounts totalling just over $9,200 and HH shares valued at just over $7,800. While she could sell/deplete those assets if needs be to support herself, this would leave her with no liquid reserves. At this point it would not be reasonable to expect her to put herself in that position given the substantial asset holdings of the parties.
The husband’s arguments:
The husband mounted a number of separate arguments as to why the wife’s application lacked merit.
“The wife has not disclosed her income from sale of pets”:
The wife has several breeds of animal; she does breed and sometimes sell them; she is a member of the NSW Pet Club. It also emerged during cross-examination that she makes costumes which she sometimes sells. Clearly she is an avid fan of pets.
The wife claimed for the vet costs of the pets yet her material does not refer to her earning any income from their sale (or any income from sale of costumes).
The husband’s solicitor tried to mount an argument that the wife’s “non-disclosure” about her pet income was so serious that it warranted complete dismissal of her application. At paragraph 5 of his Amended Written Submissions filed 14 November 2019 he calculated the potential income the wife could generate from the pets:
· A number of pets, assume half (15) are female;
· gestational period = 9 to 10 weeks;
· thus each female can have up to 5 litters per year, at 5 pups per litter – thus 275 pups in total per year.
Based on the above, the husband then takes a more “conservative” position by ultimately asking the court to assume that the females only have 4 litters per year, and 4 pups per litter. This results in 240 pets “ready for sale on Gumtree. It is submitted that it could be more if the female quota [of the breeding pets] is more than 50%. The evidence is that the wife has the animals for sale for $50 each. A conservative figure is therefore $12,000 but it could quite easily be considerably more. The reality is that the court does not know because the wife failed to disclose it.”
In my view, the husband’s argument is grossly over-stated. Neither party asserts in their affidavits that the wife has ever had a history of earning any serious income from her long-term interest in pets.[5] At the close of the hearing, while his solicitor was pressing the argument about this potential income, even the husband looked awkward if not embarrassed sitting at the bar table. Indeed, I venture that until the present application was brought, both parties regarded this as a hobby only.
[5] The high water mark seems to be para 47 of the husband’s affidavit filed 19/10/19
In one sense the wife has only herself to blame that her pets nibbled up so much valuable court time. The fact is that she claimed for their upkeep but did not mention in her affidavits that she does sell them on occasions. I cannot blame the husband for wanting to set the record straight but equally I accept the wife’s evidence that post-separation she had sold only a small number of pets, with $50 being the highest sale price. When she sells costumes, they fetch less than $20 each.
In the end, the husband’s complaint that the wife did not make full and frank disclosure in relation to her pet income is strictly correct as a matter of law - but de minimis. On the husband’s income and with the parties holding assets that run into the millions, the pets are an unhelpful distraction.
“The wife has not disclosed her income from shares”:
The wife’s material disclosed that she holds 985 shares in HH – but she did not disclose the associated dividend income.
On the evidence before me, HH paid her $330 in dividends in the 2018 calendar year, being around $6 per week. [6]
[6] Exhibit “W2”
The husband’s complaint is again strictly correct - but de minimis.
“The wife has not disclosed her recent income tax returns”:
The husband complains that the wife has not disclosed her tax returns for FY 2017, FY 2018 and FY 2019. This is true, but it is clear on the evidence that she is unable to complete those returns without the husband providing her with further financial information. Her non-filling of those returns is thus explained; there is nothing sinister about it.
In closing, I observe that the wife’s recent sale of household items on Gumtree is incompatible with her having access to undisclosed income or financial resources of any note.
“The wife is unwilling to work to support herself - thus her claim should be dismissed”:
In the witness box the wife appeared resentful about having to leave her job with G Pty Ltd after separation. In her words, she “had a perfectly good job until the husband forced me out”.
Citing the authority of Taguchi & Taguchi (1987) FLC 91-836, the husband submits that the wife is not truly motivated to work and that her spousal maintenance application should be dismissed.
Taguchi (supra) is a somewhat unusual case in which the wife sought spousal maintenance from the husband while at the same time refusing to apply for jobs that would have provided her with a proper wage. Her rationale was that she was an artist and that she could not pursue her artistic interests if she obtained a regular job. The trial Judge dismissed her spousal maintenance application in those circumstances, a decision that was later upheld on appeal.
But despite the wife’s resentment at leaving G Pty Ltd, I am nonetheless satisfied that she has been seeking out appropriate gainful employment and study options. I have written evidence before me as to three (3) unsuccessful job applications she made in March 2019 – respectively as an administration officer, a customer service officer, and a retail assistant. This is an eclectic mix; the wife cast her net reasonably broadly. [7]
[7] Annexure “A” to wife’s affidavit filed 6 June 2019
While these were the only unsuccessful applications formally annexed to her material, I accept the wife’s oral evidence that she has made numerous other job applications. Clearly one was successful, resulting in her current casual role.
The wife also started a TAFE course in 2019, studying for a Certificate. But she later had to withdraw from the course as she could not afford to pay the TAFE fees.
In truth, I am unsure what more the wife is expected to have done to seek employment. Her administrative and office experience were acquired while working for G Pty Ltd during the marriage. Prior to working for G Pty Ltd, the wife’s last “external” employer was Employer J in 2003. She had also worked at and managed a café. But while the wife presently holds a Certificate she has not used it in any serious employment sense for the better part of twenty (20) years.
On the basis of her work history, the husband’s solicitor described the wife as having “an impressive resume.” But as with so many of his other submissions, this too was overreach. The wife is a 51 year old woman with a school-aged child to care for. She now finds herself competing on the open labour market with other applicants for what would appear to be relatively modest-paying hospitality or administrative-type employment roles.
It is an inescapable fact that throughout the relationship, the wife actively supported the husband’s career, engaged in the “traditional” homemaking role and both parties benefited from that. The result is that, going forward, the wife’s income has been curtailed over the short to medium term.
Conclusion – the wife has met the threshold test:
At this stage I consider that, on balance, the wife is unable to support herself “adequately” by reference to the relevant s 72(1) and s 75(2) considerations.
To what extent is the husband reasonably able to provide maintenance to the wife?
Overview of G Pty Ltd:
According to the husband’s affidavit filed 19 October 2018, the business structure is as follows:
G Pty Ltd Holdings (G Pty Ltd) is the corporate entity that owns and operates the G Pty Ltd business. Its head office is in City M. The husband and Mr N are directors of G Pty Ltd and the husband is employed as the G Pty Ltd CEO.
G Pty Ltd is an company that supplies products to primary industry and building industries globally. They have various large-scale contracts in Australia and in Country O.
Relevantly the husband and the wife’s interest in G Pty Ltd comes via the corporate entity F Pty Ltd. The husband and wife hold half of the shares in F Pty Ltd, with the husband’s business partner Mr P and his wife holding the other half. F Pty Ltd itself holds a 37.5% share in G Pty Ltd.[8]
[8] There are other family trust structures in place concerning F Pty Ltd but they are not relevant for present purposes
G Pty Ltd (Management) is owned by another one of the husband’s business partners, Mr N. Management owns 37.5% of the shares in G Pty Ltd.
K Inc and Mr L collectively own the other 25% of the shares in G Pty Ltd.
In summary, the husband has some control over the G Pty Ltd business operations – but there are a number of other interested parties and entities. No-one suggests that G Pty Ltd is simply the husband’s alter ego.
G Pty Ltd and G Pty Ltd Group are wholly owned subsidiaries of G Pty Ltd.
All of the G Pty Ltd group income is generated through manufacturing in Australia.
G Pty Ltd Group manages the Country O clients but it is effectively a “cost centre” only in that pays rent, pays the employees in Country Q but generates no invoices per se. All of G Pty Ltd Group revenue comes directly from G Pty Ltd.
Perhaps unsurprisingly, masses of documents have been produced by way of disclosure in this matter. As the wife’s counsel conceded:
“The reality is the husband’s finances need to be investigated forensically.” [9]
[9] Exhibit “C1”, page 8, lines 37-38
Notwithstanding this, the wife’s counsel spent some time cross-examining the husband as to his true income position - which is somewhat opaque and does vary from year to year.
What is the husband’s true income?
Mr Duane helpfully tendered as exhibit “W1” a table showing the husband’s taxable income (including fringe benefits and supplementary income) from FY 2012 to FY 2018.
This exhibit demonstrates that the husband’s Financial Statement of 19 October 2018 had significantly understated his true income position. At that time he had stated his income to be $3,075 per week. He did not for instance include his receipt of the parties’ joint share of the rental income from their commercial properties – although he did claim for the associated expenses. He also failed to include loan repayments from G Pty Ltd to F Pty Ltd (discussed later).
Just four (4) months later in his updated Financial Statement of 25 February 2019 the husband then conceded that the true income figure was $4,999 per week. The husband’s updated figure allows for his G Pty Ltd income (including novated lease arrangements), his receipt of the parties’ joint share of the rental income from the commercial properties, and the benefit of the husband’s mobile phone.
G Pty Ltd seems to be doing well:
The wife contends that G Pty Ltd is in a strong financial position, pointing to the fact that the husband’s base salary has increased over the years set out in exhibit “W1”. In the witness box, the husband accepted that such increases are consistent with the business success.
In December 2018, the husband replaced his Motor Vehicle 2 with a new model - by way of a novated lease and a salary sacrifice arrangement through G Pty Ltd. The husband accepted that he would not have done so if he thought that it was not affordable.
So there is objective evidence that the G Pty Ltd business is performing well, notwithstanding that it may in recent times have been recording losses “on the books” as it were.
While the husband did at one point make reference to G Pty Ltd having secured a significant contract with the Client R, there is insufficient evidence before me to put any sort of dollar figure on it in terms of the husband’s weekly income.
Husband’s discretionary expenditure as evidence of having a greater income:
The wife contends that the husband’s discretionary income is greater than he admits to. She points to various of his expenditures and/or of G Pty Ltd made for the husband’s benefit.
For instance, after terminating the wife’s Mastercard in October 2018, it is true that the very next month the husband then spent $600 on gambling, cigarettes and alcohol.
The husband also incurred travel expenses in late 2018/early 2019 and various other expenses such as restaurants, gambling and hotel expenses.
But costs of travel (and entertaining clients, including hotel and/or restaurant expenditure) are to some extent an unavoidable aspect of the husband’s role as CEO of a successful business. He is reimbursed by G Pty Ltd for such work-related expenses, some of which could fairly be described as “perks” – or enabling him to “live the high life”.
However, the reality is that business clients have to be kept happy; such expenditure may be integral to the G Pty Ltd business model. Moreover, the husband has to spend that money before being reimbursed. There is no evidence that G Pty Ltd should be seen as some sort of “blank cheque” in relation to his private expenses.
Certainly on no view could it possibly be said that the husband is living like he is “down to his last penny.” In the witness box the husband admitted he did not live this way. His solicitor’s submission to the effect that the husband had been doing so was another regrettable example of overreach.
Shareholder loans owing from G Pty Ltd to F Pty Ltd:
G Pty Ltd presently owes the husband some $115,882.50 in unpaid loans.[10] The wife contends that the husband’s income should include such loan repayments.
[10] This is by way of loan owed by G Pty Ltd to F Pty Ltd
Exhibit “W1” records the following history of loan repayments:
(a)in the 2014 calendar year, the amount of $50,000 was repaid;
(b)in the 2015 calendar year, the amount of $55,000 was repaid;
(c)in the 2016 calendar year, the amount of $67,500 was repaid;
(d)in the 2017 calendar year, the amount of $58,500 was repaid but with the last repayment being made on 31 July 2017;
but
(e)in the 2018 calendar year, there was a repayment of $1,900 in May 2018 and then $20,000 in December 2018. But this $20,000 was not a “normal” loan repayment; it was a specific loan from Mr P to the husband of which he in fact paid $15,000 to the wife.
In fact there is no evidence of any consistent loan repayments being made after July 2017. The repayments in May 2018 and December 2018 have been the only repayments in over two (2) years.
The husband’s evidence is that the business cannot presently afford to repay shareholder loans. In support of that contention, the husband relies upon an affidavit by Mr N who deposes that in 2017 G Pty Ltd needed further capital and that he had to personally sell his own home in order to raise that. Mr N’s evidence is that G Pty Ltd cannot reinstate the shareholder loan repayments that were made previously. He specifically deposes to the significant business losses in FY 2017 and FY 2018 and gives evidence that in FY 2019 G Pty Ltd is only projected to break even.
Of course part of the problem in these types of cases is that losses can be generated through book transactions, such as writing off of assets which is what the wife contends has occurred. At this time the court does not for instance have an independent forensic valuation of G Pty Ltd, or of the parties’ interest in it via F Pty Ltd.
If there was ready access to funds held in G Pty Ltd, then subject to procedural fairness issues the court could easily enough make an order for the husband to do all acts and things to cause loan repayments to be recommenced, a portion of which could be redirected to the wife. But there is no evidence of such funds being readily available. And there are also other entities and related parties to consider – especially if such payments may put pressure on G Pty Ltd as the husband contends.
And it should not be forgotten that, like the wife, the husband has also been selling off assets to meet expenses. In this case, he has recently sold off his S Shares ($7,100), his motorcycle ($5,525) and his Motor Vehicle 3 ($8,000) in order to fund the anticipated costs of the G Pty Ltd business valuation. Such conduct seems incompatible with him having access to other substantial funds or resources.
The wife complains that Mr N was not made available for cross-examination. But it seems to me that G Pty Ltd’s capacity to (in any timely way) repay the director’s loan owing to the husband is not one that I can determine at this hearing without significantly more evidence. The impending forensic valuation may potentially assist.
I reject the wife’s submission that I should simply “average out” the loan repayments from January 2014 to December 2018 as I consider such an outcome to be artificial and at odds with recent history.
The rental income from the shops:
The husband and wife are half owners of two (2) shops. The other half owners are Mr P and his wife.
Since separation the husband has been collecting the rental income from the shops. He also meets the associated property expenses. I also accept his evidence that there were periods where there was no rent coming in.
At the hearing a question arose as to whether the shops were cashflow positive or cashflow negative. In her affidavit filed 6 June 2019 the wife deposed that on a monthly basis:
· the net combined income was $6,725;
· the mortgage repayments were interest-only, in the amount of $200;
· strata fees are $513 and mortgage and bank fees are $216;
· leaving a surplus of $5,796. This has to be shared equally with Mr P and his wife – so that the husband and wife should have access to $2,898 per month. [11]
[11] Paras 26 & 27 of that affidavit
In the witness box, the husband’s evidence was that the mortgage repayments were not interest-only. He explained that the loan was by way of bank bill and that the repayments were principal and interest of $4,200 per month. He said with each monthly deduction of $4,200 the loan limit would drop by the same amount – so that the premises would be “owned in about 12 months.” [12]
[12] Exhibit “C1”, lines 4 – 12 (inclusive)
In a case with some complexity, the question of whether the shops generated a surplus or a shortfall seemed a relatively straightforward issue that could have been easily resolved by documents.
But even after standing down to enable that issue to be clarified, the answer remains elusive.
While the husband agreed with the basal proposition that he had access to the wife’s share of the “net rent” it is unclear what that net figure is. The bank statements annexed to the wife’s affidavit of 6 June 2019 run up to 1 May 2019 and show interest being debited – not principal and interest. This is consistent with the wife’s affidavit.
The figures set out in the husband’s Financial Statement filed 23 February 2019 are consistent with repayments of principal and interest. But at the time he swore that document in February 2019, the bank statements show that interest only was being charged.
But interestingly the account statement annexed by the wife also shows that, even with a relatively low balance of $37,986, the loan facility was still said to be “overdrawn” by $1,073.94. [13] This tends to corroborate the husband’s evidence that the credit limit is quite low and that the loan could be paid off quite quickly if principal and interest were in fact being paid.
[13] Affidavit filed 6/6/19, annexure “B”, pp. 11 – 14. Overdrawn reference is at top left of page 11
I do not have bank statements after 1 May 2019. Logically, they would have given me an unequivocal answer as to the amounts presently being repaid. But as neither party provided me with those documents I simply have to do the best I can on the evidence I do have.
The most reliable evidence before me is the wife’s evidence that there is (or should be) $2,898 available to the parties per month, which the husband accepted in the witness box and which is corroborated by the bank statements. If the husband has in fact “accelerated” the repayments as he said, then he did so without reference to the wife and in circumstances where she was a joint owner. He did not have that authority, particularly in circumstances where the wife was in need of maintenance. Such accelerated repayments are a luxury this family cannot presently afford. If this is in fact what he did, then the onus will be on him to revert back to the former arrangements. Given the very low debt levels I am satisfied on balance that this would be viable.
I therefore proceed on the basis that there is $2,898 available per month. But tax will at some point become payable on that income, which is required to be notionally split equally between the parties. The wife’s income tax rate will likely be lower than the husband’s. In the circumstances I consider that a reasonable allowance for tax would reduce the figure down to $2,000 per month or approximately $500 per week.
In closing I note that the husband also receives the rental income from a commercial property at B Street, Suburb C. However, on the evidence before me that property is cashflow negative. [14]
Conclusion as to the husband’s income:
[14] Husband’s Financial Statement filed 25/02/19
In the end, I am satisfied that:
(a)the husband’s disposable weekly income figure is $4,999 as set out in his Financial Statement;
(b)additionally, the husband has the benefit of overseas travel, restaurant meals, entertainment expenses and the like being reimbursed to him by G Pty Ltd. But this is limited to his work-related expenses only - essentially “perks” of his employment, which enable him to lead a relatively high life at times. He cannot require G Pty Ltd to meet similar expenses for the wife, nor can he reasonably be expected to be out of pocket by sharing any reimbursement with her;
(c)the husband has the potential to be repaid shareholder loans but at this time it is not possible to quantify that in an income sense;
(d)the husband has access to surplus rental income after tax of $500 per week.
The husband therefore has a disposable income of $5,499 per week, with the possibility of shareholder loan repayments of a presently unquantifiable amount.
What are the husband’s expenses?
According to the husband’s latest Financial Statement, his expenses total $5,087 per week. I am satisfied from the above income analysis that he in fact has a surplus of income over expenses in the range of $412 per week.
As a broad statement I do not consider that the husband’s expenditure generally is at a level that is unreasonable or otherwise wasteful.
His rental property is an expensive one at a golf course but not inappropriate and not unreasonable. I am also mindful of the fact that the wife enjoys the exclusive use of the seemingly palatial B Street, Suburb C property while the husband meets the overwhelming bulk of its expenses.
The husband deposes in his Financial Statement that he pays half of the rent for the property he shares with his partner Ms T ($475). [15] The wife suggests in submissions that the husband may in fact be paying the whole of the rent. Unhelpfully, the husband’s Financial Statement disavows any knowledge of what his partner even earns.[16] She is not on affidavit and I do not know her financial circumstances – including whether she in fact has the capacity to pay her half of the rent. Or perhaps more significantly, whether she is in fact paying the other half.
[15] Somewhat confusingly, the wife gives evidence that the property was advertised for rent at $900 per week. This difference does not much matter
[16] Part E
If the husband is in fact paying the whole of the rent then clearly he has access to undisclosed income or financial resources of another $475 or so. But at this stage I am unable to make such a finding on the evidence.
In relation to the novated lease for the husband’s Motor Vehicle 2, I accept the husband’s evidence that his former model had some 170,000 kilometres on the odometer and was in need of substantial out-of-warranty repairs. As the CEO of a successful business I do not consider his replacement of the vehicle to be unreasonable. Nor do I consider that it should now be sold to free up equity (if any).
The only aspect of the husband’s expenditure that I do consider somewhat extravagant appears in Part N of his Financial Statement, wherein he lists his entertainment and hobby expenses (including golf) of $338 each week.
In contrast, the wife claims a mere $25 per week for such expenses.
I consider that the parties should be in a position to spend equal amounts on account of such matters. They both worked hard during the marriage; they have enjoyed considerable financial success. On that basis I would therefore notionally reduce the husband’s expenditure to $181 per week, thereby freeing up $157 per week which is available for maintenance purposes.
I appreciate that the husband enjoys playing golf with his son. No doubt having such hobbies improves his standard of living especially at what must be a challenging time with this litigation afoot.
The husband’s reasonable expenses therefore come to $4,930 per week.
What additional support is the husband reasonably able to provide to the wife?
With a weekly income of $5,499 and reasonable expenses of $4,930 the husband has an available surplus of $569 per week.
Additionally, he stands to receive shareholder loan repayments that are presently unquantifiable.
The husband already provides substantial financial support to the wife and children each week.
This is made up of:
(a)mortgage repayments, rates, electricity, telephone, Foxtel and insurance costs for the B Street, Suburb C property;
(b)lease repayments for the wife’s Motor Vehicle 2, vehicle maintenance and fuel costs;
(c)children’s school fees;
(d)private health insurance for the wife and children;
(e)child support.
The husband does not have any substantial bank account balances and he has recently disposed of the “liquid” assets he had. [17]
Conclusion:
[17] Para 82 of these Reasons for Judgment
On the evidence before me, I find that the wife has a need for spousal maintenance and that the husband has a capacity to pay.
I consider that until further order it would be “proper” for the husband to pay periodic spousal maintenance to the wife in the amount of $569 per week. This still leaves her with a shortfall of $237 per week in terms of her reasonable expenses. The husband remains in a “break even” situation.
Of course it is open to the wife to sell off her shares if she wishes to. She is also expected to continue to make all reasonable attempts to find appropriate gainful employment and to notify the husband in the event she does obtain other work.
I do not consider it appropriate to backdate the spousal maintenance order in circumstances where the practical effect of any backdating would require payment of a lump sum. There is no evidence that the husband presently has access to any such lump sum.
The court makes the orders set out at the commencement of these Reasons.
I certify that the preceding one hundred and twenty (120) paragraphs are a true copy of the reasons for judgment of Judge Betts.
Associate:
Date: 18 March 2020
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