Millet and Millet (No. 2)

[2018] FamCA 1048

FAMILY COURT OF AUSTRALIA

MILLET & MILLET (NO. 2) [2018] FamCA 1048

FAMILY LAW – SPOUSAL MAINTENANCE – Interim – Agreement – Where the parties agreed to a weekly payment during the period of adjournment – Where the agreement was considered by the wife to continue beyond the adjourned date without the need for formal orders – Where the husband considered the agreement ended on the adjourned date for the substantive application and ceased payments – The wife seeks that the payments be reinstated – Categorisation of payments – Duration of payments – Factors to consider.

Family Law Act 1975 (Cth) s 72(1)

Hall & Hall (2016) 257 CLR 490
McCrossen & McCrossen (2006) FLC 93-283

APPLICANT: Ms Millet

RESPONDENT: Mr Millet

FILE NUMBER: ADC 1788 of 2018

DATE DELIVERED: 11 December 2018

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 4 December 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Howe

SOLICITOR FOR THE APPLICANT: Howe Jenkin

COUNSEL FOR THE RESPONDENT: Mr Richards

SOLICITOR FOR THE RESPONDENT: Clelands Lawyers Adelaide Pty Ltd

Orders

1. That the husband do pay to the wife by way of spousal maintenance the sum of ONE THOUSAND DOLLARS ($1,000) per week backdated and effective as and from 23 November 2018 for a period of nine (9) calendar months.

2. That the costs of the wife are reserved to the final determination of the proceedings.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Millet & Millet (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 1788 of 2018

Ms Millet

Applicant

And

Mr Millet

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 19 June 2018 Judge Cole made orders by consent which dealt with the interim orders sought by the husband in his Initiating Application filed 9 May 2018.

2. In particular, the following orders are relevant to the application under consideration:-

   4.That during the period of the adjournment, the husband do take all such steps as shall be necessary to enable the wife to continue to draw the sum of $1,000 per week from [Millet] Pty Ltd as from 3 July 2018.

   5.That by way of departure from administrative assessment of child support and pursuant to Section 117 of the Child Support (Assessment) Act 1989 the husband do pay or cause to be paid with respect to the children, [X] born … 2004 and [Y] born … 2007 (collectively referred to as “the children”):-

   5.1All tuition fees and fixed charges at [AA School] and [BB School] with respect to the children;

   5.2All of the medical benefit premiums with respect to the children and any medical, dental, orthodontic or pharmaceutical expenses not covered by medical benefits; and

   5.3Such amount as is assessed by the Child Support Agency (the current assessment being in the sum of $2,441.67 per month).

3. It was further ordered that the wife file a Financial Statement within 42 days and that the husband file and serve a Reply to the wife’s Response and an answering Affidavit within 42 days.

4. The matter was then transferred to the Family Court of Australia on a date to be fixed.

5. The matter was listed before a Registrar on 21 June 2018 and an order was made in chambers listing the matter for a directions hearing on 7 August 2018.

6. On the adjourned date the outstanding interim issues were listed for hearing before me on 27 September 2018.

7. The Court was advised that the parties intended to explore a resolution of the dispute by recourse to mediation. Accordingly, Consent Orders were made on 27 September 2018 directed to the appointment of a real estate valuer and instructions to Mr V to update his earlier valuation report dated 23 June 2017.

8. Order 6 is in the following terms:-

   That the remaining interim issues outstanding requiring argument, namely paragraphs 4-9 (interim orders) of the wife’s Response filed on 15 June 2018 and paragraphs 8, 9 and 10 of the husband’s Reply filed 21 September 2018 be adjourned to 23 November 2018 at 3.30pm (2 hours allowed).

9. The wife was ordered to file and serve any affidavit material on which she intends to rely by 4pm on 26 October 2018.

10. The wife filed her Affidavit on 22 November 2018, 26 days later than ordered. No objection was taken to the late filing and accordingly I consider that the affidavit is properly before the Court nunc pro tunc.

11. At the hearing it appeared that there had been an agreement between the parties that the only matters for argument were confined to paragraphs 8, 9 and 10 of the husband’s Reply filed 21 September 2018. Those matters have been determined by judgment delivered contemporaneously.

12. It was understood that the wife did not seek to adjourn the balance of her Response filed 15 June 2018.

13. On 4 December 2018 the wife filed an Application in a Case seeking the following orders:-

    1.That paragraph 4 of the Order made by His Honour Judge Cole on 19 June 2018 be reinstated, effective as from 23 November 2018.

    2.That the husband do forthwith pay to the wife all arrears that have accrued pursuant to that Order.

    3.That the husband do pay the wife’s costs of and incidental to this application on an indemnity basis (certified for Counsel).

    4.That the application be listed as a matter of urgency….

    5.Such further or other Orders as this Honourable Court deems fit.

14. The husband did not seek to file a response or affidavit in support. His position is to resist the wife’s application.

BACKGROUND

1. Paragraphs 7 and 8 of the wife’s Response filed 15 June 2018 are in the following terms:-

   7.That the husband do take all such steps as shall be necessary to enable the wife to continue to draw the sum of $2,600 per week from [Millet] Pty Ltd.

   8.That, in the alternative to the order sought in paragraph 7, by way of interim spousal maintenance, the husband do pay to the wife the sum of $2,600 per week, or such other sum as shall be deemed just and equitable by this Honourable Court.

2. As discussed, the parties agreed that the husband would take all steps to enable the wife to continue to draw $1,000 per week as and from 3 July 2018 during the period of the adjournment.

3. There is some uncertainty as to what was intended by the parties to be the period of adjournment. If the hearing before the Registrar on 21 June 2018 or the later hearing on 7 August 2018 are to be considered as an “adjourned hearing” then pursuant to the order, the husband’s obligation would have expired.

4. Given the order refers to the first payment to occur on 3 July 2018, it is reasonable to find that at the very least the earliest “adjourned date” would have been the hearing before the Registrar on 7 August 2018. It would seem uncontroversial that the hearing before me on 27 September 2018 would properly constitute an adjourned hearing.

5. I suspect that the husband would argue that given the reference to the remaining issues to be the subject of argument, namely [4]-[9] of the interim orders sought by the wife’s response, then the adjourned date should properly be 23 November 2018.

6. What has transpired is that on 29 November 2018 the wife’s solicitors received a letter from the husband’s solicitors advising that he would not continue to pay the sum of $1,000 per week on the basis that “our client does not believe he is under any obligation to continue paying your client $1,000.00 per week.” The correspondence followed a request by the wife’s solicitors seeking that the husband’s solicitors confirm that the husband would continue to pay the sum of $1,000 per week following a text message exchange between the parties where the husband acknowledged that he had not transferred the sum of $1,000 to the wife’s account and considered that as the wife had abandoned her interim orders sought, he was under no obligation to do so.

7. The wife argues that she abandoned [4]-[9] of the orders sought on the basis that she considered [4]-[5] of the orders made on 19 June 2018 remain in place.

8. The husband’s counsel rejects that there is any proper basis for the wife’s belief.

THE HEARING ON 23 NOVEMBER 2018

1. The parties were each represented by counsel.

2. The transcript reveals the following exchange with Mr McGinn of counsel who appeared for the husband:-

   Mr McGinn:If your Honour pleases the matter comes back before you to deal with the outstanding interlocutory matters. There are – I’m pleased to inform, your Honour, that there is only three orders that are left outstanding … being paragraphs 8, 9 and 10 of the Reply of 21 of September.

   His Honour:   Just excuse me a moment. Sorry, Mr McGinn. I’m sorry. So we are dealing with 8, 9 and 10 of the Reply?

   Mr McGinn:Yes, if your Honour pleases. And they are orders which are seeking for the sale of property at [Suburb R] and the application of proceeds of the proceeds from that sale and from the sale of the property formerly held at [C Street], [Suburb D] into an account to be opened in the name of [B] Pty Ltd  - - -

   His Honour:   Yes.

   Mr McGinn:- - - to address the division 7A loan problem that presently confronts the parties.

   His Honour:   Yes. Okay. Thank you. So are they the only matters that I’m going to hear about today?

   Mr McGinn:Yes, if your Honour pleases.

   His Honour:   All right. Thank you.

   Mr McGinn:And the other matters have been resolved by agreement and arrangements between the parties. The application if your Honour  - - -

   His Honour:   So is there a separate minute in relation to those other matters, or I don’t have to worry about them at all?

   Mr McGinn:No, your Honour, I’m instructed there is no requirement for any formal orders in that regard.

3. The husband’s counsel did not have the advantage of transcript and submitted that it was unlikely to have been conceded that the wife was not pressing her application by reason of an informal agreement between the parties.

4. The husband’s counsel was incorrect in that submission.

5. Paragraphs 4 and 5 of the wife’s Affidavit filed 22 November 2018 provided appropriate notice to the husband that the wife did not seek to argue the balance of the orders sought by her on the basis that a financial arrangement had been reached between the parties consistent with [4] and [5] of the consent orders made 19 June 2018.

6. The submissions of Mr McGinn give substantial corroboration to the wife’s assertion that the parties had reached an informal agreement.

7. I propose to order that the husband do cause to be paid to the wife $1,000 per week backdated to 23 November 2018 subject to the discussion as follows.

SPOUSAL MAINTENANCE

1. In the recent case of Hall & Hall (2016) 257 CLR 490 the High Court set out the appropriate approach in considering an application for interim spousal maintenance as follows:-

   [3]…The gateway to the operation of Pt VIII in relation to spousal maintenance is in s 72(1). That sub-section provides that:- “[a]party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, the other party is unable to support herself or himself adequately … having regard to any relevant matter referred to in [s] 75(2)”.

   [4]The liability of a party to a marriage to maintain the other party that is imposed by s 72(1) is crystallised by the making of an order under s 74(1). That sub-section provides that “[i]n proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part”.

   [5]A court exercising the power conferred by s 74(1) is obliged by s 75(1) to take into account the matters referred to in s 75(2) and only those matters. Those matters are presented as a comprehensive checklist. They include what s 75(2)(b) refers to as “the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment”. They also include, by virtue of s 75(2)(o), “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.

2. As noted in Hall & Hall (supra), the High Court confirmed that an applicant seeking orders for spousal maintenance carries the evidentiary burden as set out in s 140 of the Evidence Act 1995 (Cth). This can be particularly challenging in the context of an application for interim spousal maintenance.

3. The following pathway is to be considered:-

   (1)  The extent to which the wife is unable to support herself.

   (2)  The extent to which the wife is unable to support herself as a result of having the care of children under the age of 18.

   (3)  The wife’s reasonable needs.

   (4)  What capacity does the husband have to meet a spousal maintenance order if such an order is made.

   (5)  If an order for spousal maintenance should be made what order is reasonable having regard to s 75(2) factors.

4. The parties separated in January 2015 following a period of 21 years cohabitation.

5. There are two children of the marriage aged 14 and 11.

6. The wife remains in the former matrimonial home. The husband lives in rented accommodation. The children live primarily with the wife and spend time with the husband.

7. Following separation in 2015 the parties continued working in the business. The husband accepts that the wife’s role was as the Administration Finance Manager and included the following tasks:-

   (a)Managing internal accounts role;

   (b)Updating new designs and pricing in the computer program;

   (c)Updating website with new designs; and

   (d)General IT management.

8. The parties had unlimited access to the business income and the wife remained responsible for important aspects of costing, website information and product pricelists.

9. It appears that for various reasons the wife considered that it was increasingly difficult for her to maintain her role in the business. The parties each have a different assessment of the factors relevant to the wife’s decision, but it appears that by March 2018 the wife no longer continued in her role and the husband was required to obtain the assistance of appropriate people to take over the duties previously undertaken by the wife.

10. Following separation, it appears that the wife continued to draw the sum of $2,600 per week from Millet Pty Ltd. It may be that there was disagreement between the parties, but it appears that it continued at least up until 21 May 2018.

11. The parties hold substantial assets. At this stage the pool is not yet crystallised but it is comprised of real property of considerable value held by each of the parties or entities over which they have control. In addition the parties have retained substantial cash reserves and have considerable superannuation entitlements.

12. The husband did not consider that the business was in a position to continue to pay the wife $2,600 per week.

13. There is some uncertainty as to whether the husband considered that the payments that either he made or caused to be made to the wife were paid by way of spousal maintenance, namely, from his income rather than by way of a drawing from the business.

14. By reference to his Affidavit filed 21 September 2018 the husband lists a payment of spousal maintenance to the wife in the sum of $1,000 and by reference to his income and expenses he has a deficit per week of $2,973 or $154,576 per annum.

15. The Financial Officer for the business filed an Affidavit of 21 September 2018 setting out a summary of the Millet Group income and forecast.

16. The short summary is that the forecast for 2019 is an income of $491,308 from all sources. Paragraph 9 of the affidavit sets out the husband’s personal position after capital payments:-

Group earnings  $491,308

Capital Payments

CC Street, Suburb D SA  90,000

Q Street, Suburb R SA  41,000

Personal Income Tax on Division 7A  32,580

Additional PAYG Salary to meet current

Expenditure in Table 1a          298,455

Additional Superannuation and Return to Work

Premium if additional salary required                   54,121                    

516,156   516,156

Deficiency in Funds   - 24,848

1. It is conceded that the capital payments in respect of the Suburb D property will cease in March 2019.

2. Accordingly, the husband seeks to demonstrate that there is some difficulty in his current ability to meet all of his outgoing which he concedes should include the payment of $1,000 per week to the wife.

3. The wife has not set out what efforts she has made to find employment, nor has she provided any evidence that would suggest there is an impediment to her doing so. Her position is made more complex by her reliance upon an agreement between the parties that following her effective retirement from the business she would continue to receive $1,000 per week. In circumstances where the payment was the subject of agreement and apparently without condition, it is reasonable to assume that there is an acceptance by the husband either that the wife has a present entitlement to the payments being made, that it reflects the fact that she has been out of the workforce for many years or is intended to recognise that for the near future her ability to maintain the family home, care for the financial needs of the children and to enjoy a standard of living reasonable commensurate with that which the parties considered appropriate whilst they were together, satisfies the wife’s obligation to establish that she is not able to adequately support herself at this time.

4. It is conceded that the wife’s Affidavit of 22 November 2018 did not address the wife’s capacity to support herself as considered necessary by reference to s 72(1) of the Family Law Act 1975 (Cth). The affidavit is also silent on the extent to which the wife’s ability to support herself may be compromised by the ongoing care arrangements with respect of the children.

5. Paragraph 4 to 8 of the affidavit deals with the financial circumstances of the parties based on the following assumptions:-

   ·That the orders made 19 June 2018 remain in place.

   ·That Child Support will continue to be paid.

   ·That there may be an Amended Assessment of Child Support.

   ·The wife’s understanding that the income of the Millet Group was being split between the parties.

QUANTUM OF SPOUSAL MAINTENANCE

1. There remains uncertainty as to how the payment of $1,000 per week received by the wife up to 22 November 2018 is to be categorized. The original order was made by consent and reflected the parties’ intention that the wife would draw the sum of $1,000 from Millet Pty Ltd. No evidence has been presented as to how those drawings have been dealt with.

2. As is apparent from the judgment delivered contemporaneously, the outstanding div 7A loans are a significant issue in the proceedings. I do not know whether the sum of $1,000 is accounted for as a debit to the loan account of either the husband or the wife, or whether it is treated as a wage or salary to her and therefore as a business liability.

3. The Affidavit of the husband filed 21 September 2018 refers to the sum payable to the wife as “spouse support”. The affidavit of the company accountant also brings it to account as a component of the husband’s expenditure totalling $5,598 per week against income of $2,625.

4. As considered, the husband’s expenditure is then included as a “notional capital payment” against the total group earnings.

5. It appears that the sum of $1,000 payable per week was considered to be a reasonable compromise. By reference to the wife’s financial statement her total weekly income is comprised entirely of the sum of $1,000 received by way of drawings and $561 received by way of Child Support. The total expenditure of the wife is $3,442.

1. I note that the husband takes issue with the following Part N amounts claimed by the wife:-

   (1)  House repairs  298

   (2)  Electricity  200

   (3)  Clothing and shoes  370

   (4)  Gardening/lawn mowing  154

   (5)  Cleaning house/pool chemicals  243

   (6)  Gifts and children’s birthdays   80

2. In McCrossen & McCrossen (2006) FLC 93-283 at 80,838 [32] the Full Court had regard as to whether or not a person is able to support themselves “adequately” as follows:-

   The question is not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances. (References omitted).

3. It is self-evident that the parties enjoyed a high standard of living which could be categorized as “affluent”.

4. There is no evidence as to the reasonableness or otherwise of the wife’s expenditure and even if the Court takes a generous view of the husband’s observations, it is obvious that without the sum of $1,000 and excluding Child Support which appears to be entirely consumed by the children’s expenses, the wife would have no income.

5. Accordingly, I consider the sum of $1,000 per week to be appropriate in all the circumstances.

CATEGORIZATION OF THE ORDER

1. I propose to order that the husband pay the wife $1,000 per week by way of spousal maintenance. The wife may consider that she has an entitlement to income from the business. If she does, then that claim cannot be easily dealt with by an order that enables the wife to draw money from the business without a determination as to the basis upon which those drawings are made.

2. In the current circumstances I consider that the order should reflect that the payment to the wife is received by way of spousal maintenance.

3. That determination raises the issue of the duration of the order.

4. The wife is not without considerable skills. She has a level of expertise in financial administration and appears proficient in the area of stock control, stock pricing, web and IT design and experience in the use of financial accounting programs.

5. The husband comments in [32(f)(ii)] that “the wife does not appear to be working at present.”

6. The wife does not make reference to her future employment plans.

7. The children are at school and it is likely that if employment was available the parenting arrangements in respect of the children would not be so onerous as to prevent her engaging in employment at some level.

8. Given the circumstances of the wife I do not consider that an interim order of spousal maintenance should be open-ended. It may be that the parties will reach agreement at mediation and following a settlement the wife’s circumstances will be such that an order of spousal maintenance will not be required.

9. The wife is required to explore her ability to adequately support herself.

10. I propose to limit the order that the husband pay the wife the sum of $1,000 per week by way of spousal maintenance for a period of nine calendar months. Thereafter, the order will expire subject to any application by either of the parties to suspend, vary or revive the order.

COSTS

1. The wife seeks costs on an indemnity basis.  Her application is resisted.

2. I consider it is premature to consider the costs application at this time.

3. Whilst the wife may argue she was successful in her application there is sufficient uncertainty as to the financial arrangements between the parties and the characterization of the periodic payment received by her to warrant the application being adjourned pending the evidence being heard.

4. I make orders as appear at the commencement of these reasons.

I certify that the preceding seventy four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 11 December 2018.

Associate:

Date: 11 December 2018