MULLIGAN & MULLIGAN

[2016] FamCA 489

FAMILY COURT OF AUSTRALIA

MULLIGAN & MULLIGAN [2016] FamCA 489

FAMILY LAW – PROPERTY – Interim Spouse Maintenance – Whether income from jointly owned property should be directed to the wife – Where there are untested claims as to contributions – Where there are untested claims as to wastage – Where there is dispute as to the wife’s earning capacity

Family Law Act 1975 (Cth)

APPLICANT: Ms Mulligan

RESPONDENT: Mr Mulligan

FILE NUMBER: SYC 3977 of 2015

DATE DELIVERED: 16 June 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Le Poer Trench J

HEARING DATE: 7 June 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Stubbs

SOLICITOR FOR THE APPLICANT: Christopher Adams & Associates

COUNSEL FOR THE RESPONDENT: In person

Orders Pending Further Order

1. Both parties, in their capacities as directors of Q Pty Ltd, will forthwith and within 7 days of the date of these Orders do all such acts and things and sign all necessary documents and give all authorities required to direct and cause 70 per cent of the net rental income received for and from the properties situate and known as 1 and 2 C Street, Suburb D, being the properties described in Folio Identifier … (“the C Street properties”), including any rental income received for and from the parking facilities/spaces at the C Street properties, to be paid to the wife as she may direct. This order is an interim spouse maintenance order.

2. The balance of the wife’s application filed 12 January 2016 and the orders sought in the minute of order marked exhibit W1 are refused.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Mulligan & Mulligan 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 3977/2015

Ms Mulligan

Applicant

And

Mr Mulligan

Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the court is an application filed by the wife (represented by a solicitor agent) on 21 January 2016. That sought interim spouse maintenance and enforcement orders. The wife moved on an Amended Minute of Order which was contained in the Case Outline document. That document sought the following:

   AMENDED MINUTE OF PROPOSED ORDERS
    
   PENDING FURTHER ORDERS:
    
   1.             That both parties in their capacities as directors of [Q Pty Ltd] forthwith and within 7 days of the date of these Orders, do all such acts and things and sign all necessary documents and give all authorities required to direct and cause 70 per cent of the net rental income received for and from the properties situation and known as [1 and 2 C Street, Suburb D] being the properties described in Folio Identifier … (“the [C Street] properties”), including any rental income received for and from the parking facilities/spaces at the [C Street] properties, to be paid to the wife as she may direct.
   2          That the wife be appointed the trustee for the husband for the purposes of complying with Orders 3 and 4 of the Orders made by the Family Court of Australia on 17 February 2015.
   3          That the wife be appointed the trustee for the husband for the purposes of complying with Orders 5 and 6 of the Orders made by the Family Court of Australia on 17 February 2015.
   4          That both parties forthwith and within 7 days of the date of these Orders do all acts and things and sign all necessary documents and give all authorities required to direct and transfer to the wife as she may direct, the funds held in Commonwealth Bank of Australia Account No …, in the name of “[Q Pty Ltd]”.
   5          That both parties forthwith and within 7 days of the date of these Orders, do all such acts and things and sign all necessary documents and give all authorities required to direct and cause the funds held in the Controlled Monies Account with Broun Abraham Burreket pursuant to Order 2(d) of the Orders made by the Family Court of Australia on 17 February 2015, to be paid to the wife as she may direct.
   6          That both parties forthwith and within 7 days of the date of these Orders, do all such acts and things and sign all necessary documents and give all authorities required to direct and cause the Commonwealth Bank of Australia Net Saver Account No … in the joint names of the parties, to be closed and the net proceeds thereof to be paid to the wife as she may direct.

   7 That in the event that the husband fails or refuses or neglects to comply with Orders 1, 4, 5 and/or 6 within 7 days of the date of these Orders, a registrar of the Family Law Courts at Sydney be appointed pursuant to s1016A of the Family Law Act 1975 to do all such things and sign all necessary documents and give all authorisations required to cause compliance with the said Order/s.
   8          That the wife have leave to relist these proceedings on 7 days’ notice to the Court and the husband, for enforcement of these Orders.

2. The husband (self represented), who is the respondent in the proceeding seeking Final Orders (pursuant to his Further Amended Response to Initiating Application filed 15 October 2014), filed a Response to the wife’s Application in a Case on 26 April 2016. He opposes the orders sought by the wife.

3. The Response to the Initiating Application of the wife is an important document in this case as it sets out the orders he will seek as Final Orders. Of particular interest in this hearing are the orders which set out what assets he is asking remain in his ownership.

4. The order sought by the wife as order 1 in the minute of order moved on by the wife (exhibit W1) is said by her to be an interim spouse maintenance order.  The orders sought in paragraphs 2, 3, 4 and 6 are said to be enforcement applications. Paragraph 5 was not pressed.   

Background Facts

1. The facts necessary to determine this application are not seriously in dispute and can be stated concisely as follows:

2. The husband is 49 years of age and the wife is 46 years of age. The husband is in employment and the wife is not. The husband asserts the wife does have the capacity for employment.

3. The cohabitation commenced in 1993, on the date of the parties’ marriage. They separated in December 2011.

4. In 1994 the wife’s father died. The wife inherited $5.026 million which vested on her 35^th birthday. The wife turned 35 in 2005.

5. The parties have three children: E aged 19, F aged 16 and G aged 14. The two boys live mainly with the wife.

6. In 2007 the parties purchased the former matrimonial home for $1.2 million.

7. In February 2012 the wife left the former matrimonial home and commenced residing with her mother. The children (the two boys) reside with her and spend time with the husband.

8. The boys attend school at H School, Suburb I. The husband pays all the costs associated with the schooling.

9. The wife is unemployed. The husband is self-employed and operates a business  through the vehicle J Pty. Ltd.

The Issues

1. The parties identified the issues at the commencement of the hearing as follows:

• The wife’s ability to support herself.

• The extent of the wife’s financial need for support.

Evidence

1. The wife relied upon her Amended Initiating Application filed 5 September 2014; her affidavit sworn 16 December 2015 and her Financial Statement sworn 7 June 2016 (as at 27 April 2016).

2. When the Financial Statement was filed it had not been sworn. There had been some changes to the wife’s financial circumstances post 27 April 2016 which her solicitor informed the court about.

3. The husband relied upon his Further Amended Response to Initiating Application filed 15 October 2014; his affidavit sworn 26 April 2016 and his Financial Statement sworn 17 July 2014. He also relied upon a Financial Statement which he filed in Court and on his oath told me was true and correct.

The Interim Spouse Maintenance Application

1. The wife’s case is that she has a need for support arising from the fact that she is unable to support herself given her inability to obtain employment and her need to care for the children. Looking at the wife’s Financial Statement her need has been quantified at $3,858. It is not clear how she arrived at that figure. The total for expenses shown from paragraph 19 to 31 is $385. The total of $2,186.72 is claimed in Part N under the heading “For You”. That total is $2,572 per week. There are expenses claimed which may not be reasonable. Nevertheless, embracing the wife’s figure I will consider the husband’s ability to pay.

2. Although the wife said her address was that of her mother’s at Suburb K in her Financial Statement, it transpired that she was in fact now living at her (the wife’s) property at Suburb L and had done so since February 2016. Consequently she did not have income from the rental of that property anymore.

3. The wife has identified the property at 1 and 2 C Street, Suburb D as a source of revenue to be directed to her support. The properties are owned by B Pty. Ltd.

4. The husband conceded his income was $175,000 per annum. His Financial Statement which he filed in Court stated his income to be E$3,500 per week. That figure came he said from his last tax return. He pays the children’s school fees of $9,000 per child per term (now two boys at H School). In addition, Exhibit W5 shows a Child Support Assessment, as at 9 March 2015 of $35,000 per annum to be paid by the husband. Thus the husband is paying about $100,000 towards the children’s expenses from after tax income.

5. The evidence about the payments which the husband is making for child support is unsatisfactory. In the wife’s Financial Statement she said at item 13 the husband was required to pay $2,569,92 per week as child support. That would total $133,588 per annum. That figure is quite different to the figure set out in exhibit W5. No explanation was provided to assist the court in understanding how the figure of $2,569.92 was calculated. The husband annexed to his affidavit a “Child Support Account Statement”. That showed the child support payment required between 1 and 30 April 2016 as $2,569.92 for the month. Clearly the wife’s Financial Statement has been incorrectly compiled.  To the extent it is necessary I prefer the evidence of the husband on that matter.

6. The income available to the company from the net rental of the C Street properties is shown in exhibit W8.  The husband concedes the deposits which appear in the bank statements for the company’s account with the Commonwealth Bank set out the net rental received from the C Street property. Those deposits show total deposits of $71,602 for a 275 day period. That would give an estimated annual income of $95,035. The company has a requirement to pay tax and so 30 per cent of all receipts should be retained by the company to meet tax liabilities. The company currently has savings which can be used to meet other expenses. The husband does not draw any funds from the company account. 70 per cent of the annual rental should produce an income for the wife (if her application is successful) of $66,525 or a weekly income of $1,279.32 per week.

7. An application for spouse maintenance requires the Court to consider ss 72, 74 and 75 of the Act. Section 72 requires the applicant to meet a threshold.

FAMILY LAW ACT 1975 - SECT 72

Right of spouse to maintenance

(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).

(2)  The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.

1. Section 75(2) sets out the matters which the court must consider when making an order for spouse maintenance.

2. I am satisfied the wife has passed the threshold at this time sufficient to warrant the court making an interim spouse maintenance order. I find the wife does not presently have an income earning capacity and is not able to support herself adequately by reason of her having the care of the two boys of the parties.

3. The husband says there is no reason why 70 per cent of the net income of the company should not be paid to the wife at this time as a temporary order pending the determination of the property proceeding. He candidly said that he was opposing a payment in order to try and bring the proceeding to an end. He said the proceeding had been in the court since 2012 and he was frustrated by its continuation.

4. As the amount available to the wife from the source of funds arising from the rental of the C Street property is considerably less than the claimed need of the wife there is no further necessity to examine the expenditure claimed by the wife. I propose to make order 1 in the Amended Minute of Order (part exhibit W1) as sought by the wife.

5. In reaching this determination I have considered the matters set out in s 75(2). Those matters are specified above.

Enforcement of orders 3, 4, 5 and 6 of 17 February 2015.

1. Part of the wife’s case sought the enforcement of the above orders. The orders required the husband and wife to sell shares held in M Ltd. The order further required the husband to sell his shares in N Ltd. The sale proceeds from each was to be paid first to meet any shortfall in the repayment of the CBA loans which might be left after the sale of the former matrimonial home at O Street, Suburb P, a property which was required to be sold by orders 1 and 2 of 17 February 2015. Any surplus from the sale of the shares was to be paid to the bank account of Q Pty Ltd. (“the Q bank account).

2. The husband opposes the enforcement of these orders. He says, and there is no issue about this, that the Suburb P property has been sold and the liability to CBA paid out. He says the only reason he consented to the orders 3 to 6 on 17 February 2015 was because there was a concern there would not be sufficient funds to pay out the mortgage on the Suburb P property when it was sold. He further says that in order to sell the Company R shares it was necessary for the wife as a director of Q to sign a minute evidencing the directors intention and authorisation to sell. He says a copy of the minute was sent to the wife who declined to sign the form. Consequently compliance was not possible and the default lay with the wife. (See appendix G to the husband’s affidavit)

3. Additionally the husband relied upon a letter he received from the wife’s solicitor, at the time the orders were made on 17 September 2015 advising that there was no necessity to sell the shares if the CBA debt was discharged by the sale proceeds of the Suburb P property (see appendix E to the husband’s affidavit).

4. The husband says he is seeking as final orders that the company Q be his property. A view of his Response to the wife’s Initiating Application confirms that to be the case. He further says that the orders should not be enforced at this time because there is no pressing need which would justify the sale. Further he says there are aspects of each share holding which make it disadvantageous for the parties to sell the shares at this time.

5. The wife’s case is that the vast majority of the parties assets have arisen from the cash injection she provided from her inheritance. She says the court will determine that her contributions have been overwhelming in the circumstances of this marriage and it will find a preponderance of the contributions should be attributed to her. Additionally the wife says that there should be an adjustment of significance in her favour under s 75(2) because of the significant disparity in the parties’ earning capacity.

6. The orders sought to be enforced, if executed would result in no additional payment to the wife. The result will be for the payment of sale funds to the bank account of Q. Thus if the wife seeks those funds, or part thereof then a further application would need to be made.

7. This case has languished in the system for far too long. I have now made directions which will, if complied with, ready the case for hearing. Part of the preparation will require the valuation of Q and possibly other entities associated with the husband and such valuations will probably be costly. Neither party appears to have cash available to meet those costs and so the preservation of a fund of cash in Q may be important.

8. In relation to the case put by the husband at this time, I propose to accede to as reasonable in the circumstances. Part of his case is that the wife has wasted vast amounts of her inheritance by spending in a lavish and unrestrained manner. If he can prove that then the quantum of the contributions claimed by the wife, or the weight to be given to same, may be in doubt. The parties have been separated now for four and a half years and during that time the husband has made significant contributions towards the cost of the children’s schooling. No doubt the wife will claim significant contributions since separation also. The court will also have to consider each parties contribution over 18 years of cohabitation. The wife’s inheritance was not the only contribution made.

9. Having regard to those matters I decline at this time to enforce the orders of 17 February 2015 as sought by the wife.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench delivered on 16 June 2016.

Associate: 

Date:  16 June 2016