O and O

[2007] FCWA 132

JURISDICTION:

FAMILY COURT OF WESTERN AUSTRALIA

ACT:	FAMILY LAW ACT 1975
LOCATION:	PERTH
CITATION:	O and O [2007] FCWA 132
CORAM:	CRISFORD J
HEARD:	29 OCTOBER 2007
DELIVERED:	16 NOVEMBER 2007
FILE NO/S:	PT 6277 of 2005
BETWEEN:	O
Applicant/Wife

AND

O

Respondent/Husband

(Page 2)

Catchwords:

Interim applications - spousal maintenance - needs and capacity to pay - lump sum for legal fees - source of payment

Legislation:

Family Law Act1975 s 72, s 74, s 75, s 80

Category: Not Reportable

Representation:

Counsel:

Applicant:	Mr W Carr
Respondent:	Mr S Moncrieff

Solicitors:

Applicant:	Carr & Co
Respondent:	O'Sullivan Davies

Case(s) referred to in judgment(s):

Mitchell and Mitchell (1995) FLC 92-601
Redman and Redman (1987) FLC 91-805
Wilson and Wilson (1989) FLC 92-033
Zschokke & Zschokke (1996) FLC 92-693
(Page 3)

1 [Mrs O] wants money to fund her living expenses and her legal costs until a Court decides how to divide the property accumulated during her 33 year marriage to [Mr O].

2 She wants her husband to pay capitalized spousal maintenance of $101,400 calculated at the rate of $1,300 per week for a period of 78 weeks. She wants him to continue to pay her private health insurance and all rates, taxes and other apportionable outgoings relating to the property in which she lives. She also seeks that he pay a further $200,000 with the nature of that amount being characterised by the trial Judge.

3 The husband is willing to pay $150,000 on the basis he be at liberty to increase mortgage borrowings over a property at [a certain address] to $1.6 million. The existing borrowings over that property are $757,657.

Issues before the Court

4 Given the position of each party the Court needs to decide:

(i)	the quantum of any money to be advanced to the wife;
(ii)	the source of any money; and
(iii)	how any money advanced should be characterised.

Spousal maintenance

5 The Court has a discretionary power to make orders for spousal maintenance under s 74 of the Family Law Act 1975. There is no express reference to “interim” orders rather the Court has a general power to make such orders under s 80(1)(h). s 80(1)(a) gives power to order payment of a lump sum, whether in one amount or by instalments. In making interim spousal maintenance orders the Court has more flexibility than it does in applications for indefinite or final orders. (Redman and Redman (1987) FLC 91-805, Wilson and Wilson (1989) FLC 92-033).

6 The wife’s right to spousal maintenance is governed by a s 72 of the Act. She says she is unable to support herself adequately for a number of reasons. The term “adequately” is not determined by any fixed or absolute standard but rather by regard to the matters in sub- section 75(2) of the Act (Mitchell and Mitchell (1995) FLC 92-601 at 81,995).

(Page 4)
7	She is aged 57. She was in a long marriage during which she was primarily involved in caring for and raising the parties three children who are now independent adults. During the course of the marriage she did not undertake meaningful employment. She last worked in 1974. She says she has some health issues.
8	Apart from saying that the wife is capable of working as a shop assistant or in a supermarket the husband appears to accept she has a limited capacity at present to engage in work that will assist in her adequate support. He makes an existing contribution to her support and has done so since separation. The orders he proposes anticipate her receiving $150,000, albeit with its characterisation being left to a later stage. Historically, and up until Court orders of 5 October 2006 which saw her receiving $150,000, the wife debited his credit card at least $2000 a week.
9	By all accounts the assets of these parties range from between $11 and $12 million. The husband is in control of most of these. He is involved in business activities and at the age of 62 continues to generate income from these activities. I accept his health may be poor but it does not appear to impact on his business activities. Their assets include funds available to the husband in bank accounts [overseas] totalling $240,581.
10	He has substantial outgoings. He says his expenses have exceeded his income by $82,265 in the past three months. He says he will need to borrow funds to pay his expenses and legal fees.
11	Given his assets, financial resources and earning capacity I find that he is reasonably able to maintain the wife to some extent.
12	It is necessary to consider “reasonableness in all the circumstances” as the guiding principle as to how much should be awarded. The wife’s circumstances are set out in her financial statement sworn 31 August 2007. She does not currently earn any income. She does however have access to money.
13	On 9 March 2007 she secured a line of credit facility from [a company] to a maximum amount of $208,000. She has utilized some of these funds for living and legal expenses and at the time of arguing her interim matters still had approximately $75,000 available to her. This facility attracts interest on outstanding balances at the rate of 15.95% per annum.
(Page 5)
14	Since 5 October 2006 she has utilised amounts she had at separation, her borrowings and the $150,000 provided by Court orders to pay living and other expenses. The husband has provided additional funds. She has no further funds of her own. She holds $62,450 from her mother and has $75,000 remaining with [the company]. She has previously borrowed from her mother.
15	The wife deposes to having total personal weekly expenditure of $1,107. The husband makes criticisms of some of her expenses. He deposes to some of the wife’s provision for medical expenses (including [some] expenses) of $70 a week being capable of recovery by virtue of the private health insurance she has but which he pays. He says she has to feed only one dog and he has paid and will continue to pay all reasonable veterinary expenses for the dog. Some matters simply call for a difficult value judgment.
16	There is no other real challenge to her expenses however, on an interim basis she may need to live a little more frugally. In all the circumstances it is reasonable that he makes a contribution towards her weekly maintenance of $650. This takes into account what he already pays as reflected in her financial statement with some other reductions as outlined. She can access borrowings herself to assist in her living expenses.
17	I do not intend to order the husband pay the spousal maintenance by way of lump sum. There is considerable uncertainty about when this matter will be finally determined and the lump sum as calculated may necessitate a return to Court which is undesirable in all the circumstances. I accept that the husband has been financially responsible towards the wife so far and I do not consider he is likely to default in complying with the order. He has access to bank accounts - earmarked for “emergencies” - and if needs be then he may have to use some of those funds both for his support and the wife’s support. This can also be used for its other stated purpose – [a development project].

Lump sum payment

18 The wife deposes to having already spent approximately $300,000 in legal fees. She anticipates having to spend an estimated $200,000 in legal fees to the conclusion of the trial. On top of this the likely valuation costs are $25,000. The husband also says he requires $150,000 for his future legal costs.

(Page 6)
19	There was no argument in relation to the Court’s power to make such an order however the husband says he has no funds to meet such an order without being able to increase the borrowings he already has over the [development project] he is undertaking in [a regional centre].
20	The wife’s counsel referred the Court to the decision of Zschokke & Zschokke (1996) FLC 92-693 where the Court identified five criteria as being appropriate to consider when making an order for litigation funding. They were:

(i) complexity in the Respondent’s financial affairs;

(ii) the need for expert investigation into those affairs;

(iii) a position of financial strength on the part of the Respondent;

(iv) a capacity on the part of the Respondent to meet his own costs; and

(v) an inability on the part of the Applicant to meet her costs.

21 Without a doubt criteria (i), (ii) and (iii) have been met. Both parties have paid their own costs to date. The husband says he is now in a position of having to borrow to meet his ongoing costs.

22 The husband has $240,581 in savings accounts. He says that money is for emergencies or if he needs funds to finish the [development project]. The wife has already secured some funding and there is an amount available from that source to meet ongoing costs, albeit at a high rate of interest. I accept that the amount she has access to will be unlikely to cover all her anticipated costs especially if she needs to use some of those funds for reasonable living expenses. I accept the wife is not in a position to further borrow monies to any great extent.

23 In the past the wife has paid a premium for her legal advice but the matter does appear to be moving forward in terms of valuation evidence and it is appropriate she have the ability to continue to instruct her new solicitors. The husband should be in the same position. I view it as appropriate some of those funds come from borrowings.

Orders

1. The husband pay to the wife:

(Page 7)

(a)

spousal maintenance at the rate of $650 per week with the first payment being the Friday following the making of these orders;

(b)	private health insurance at the current rate; and
(c)	all rates and taxes and apportionable outgoings relating to the property occupied by the wife being the former matrimonial home of the parties situated at and known as [ the address].

2.

Within 60 days of the date of the orders the husband pay or cause to be paid to the wife the sum of $150,000.

3.

The husband be at liberty to increase his borrowings secured by mortgage registered over the property at [the development project] in an amount of $150,000.

4.

Until further order, the husband shall be responsible for and shall indemnify the wife in respect of all such borrowings.

5.

The characterisation of the payment shall be in the discretion of the Trial Judge.

6.

The application and the response be otherwise dismissed.

I certify that the preceding [23] paragraphs are a true copy of the reasons for

judgment delivered by this Honourable Court

Associate