O'SHANNESSY & FOSTER

FAMILY COURT OF AUSTRALIA

O'SHANNESSY & FOSTER

[2014] FamCA 780

FAMILY LAW – SPOUSAL MAINTENANCE – Interim – Respondent’s capacity to pay spouse maintenance – where evidence of the Respondent’s income was inconsistent

Family Law Act 1975 (Cth)

APPLICANT:

Ms O’Shannessy

RESPONDENT:

Mr Foster

FILE NUMBER:

CAC

706

2014

DATE DELIVERED:

17 September 2014

PLACE DELIVERED:

Canberra

PLACE HEARD:

Canberra

JUDGMENT OF:

Faulks DCJ

HEARING DATE:

12 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Millar

SOLICITOR FOR THE APPLICANT:

Farrar Gesini Dunn

COUNSEL FOR THE RESPONDENT:

Mr Howard

SOLICITOR FOR THE RESPONDENT:

Dobinson Davey Clifford Simpson

Orders

Until further order the Respondent pay spouse maintenance to the Applicant in the sum of $1,384 per week, dating from the day of this order.

IT IS NOTED that publication of this judgment by this Court under the pseudonym O’Shannessy & Foster 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 CANBERRA

FILE NUMBER: CAC 706 of 2014

Ms O’Shannessy

Applicant

And

Mr Foster

Respondent

REASONS FOR JUDGMENT

The proceedings before the Court commenced with an initiating application filed by Ms O’Shannessy on 26 May 2014. That application sought both final and interim orders. She filed an amended initiating application (again seeking both final and interim orders) on 11 August 2014. The respondent Mr Foster filed a response to the initiating application on 13 June 2014 and his counsel advised me that the orders sought by him, at least in relation to interim matters, had not substantially changed. In particular, it was said that he did not have the capacity to meet the wife’s claim for interim spouse maintenance.
The interim procedural orders sought included a number of interlocutory matters but centred, for the purposes of the hearing before this Court (after the matter was transferred from the Federal Circuit Court on 21 August 2014), on the issue of spouse maintenance. The other orders sought were refined somewhat at the beginning of the hearing and those I believe to remain for disposition are as follows:
1.Within 48 hours, the Respondent pass all necessary resolutions as appointer of [Foster Family Trust] to remove [N] Pty Ltd as Trustee and re-appoint [P] Pty Ltd as Trustee of [Foster Family Trust].
2.Thereafter the Husband is restrained from doing any act or thing to remove [P] Pty Ltd as Trustee of the [Foster Family Trust] and from doing any act or thing to change the terms of the trusts pertaining to the [Foster Family Trust].
3.Within 48 hours the Respondent transfer all funds standing to the credit of the following ANZ accounts to be returned to the Westpac Tax Management Account no. …80 requiring the signatures of both of the parties and/or joint authorisation for all transactions.
(a)ANZ Bank – [Mr Foster] Account No. …43
(b)ANZ Bank – [N Pty Ltd] [Foster Family Trust] Account No. …11
(c)ANZ Bank – [Company L] Account No. …88
(d)ANZ Bank – [P] Pty Ltd Account No. …99.
6.Thereafter, by way of interim property settlement, the parties cause the payment of $137,762 to the Wife from the Tax Management Account
7.Thereafter neither party shall cause any amount to be withdrawn from the Tax Management Account without the co-signature of the other party or an authorising order of the Court.
8.Within 48 hours the respondent Husband pay the sum of $266,000 to the Tax Management Account.
9.Upon that payment the Parties each be restrained from removing any sum from the Tax Management Account without the co-signature of the other party.
10.The Respondent Husband do all acts and things necessary to cause the payment of all monthly premiums as and when they fall due in relation to the AIA Life Insurance Policy number …67 owned by [B] Superannuation Fund.
11.That the Respondent do all things to pay all monthly premiums in relation to his AIA Life Insurance Policy No. …67 owned by [B] Superannuation Fund, being a Term Life Benefit for the sum assured of approximately $363,825 and to maintain the Applicant as the beneficiary of that insurance policy pending further order of the Court.
15.Within seven days the Respondent pay to the Applicant, by way of lump sum spouse maintenance, the sum of $26,000.
16.Pursuant to section 124 of the Child Support Assessment Act 1989 the Respondent Husband pay for the costs of the following items, such payments to be in addition to any other monies [sic] payable by way of child support for the child [K] born … 2002:
(a)All [K’s] school fees
(b)Her school uniforms and school shoes
(c)Her school excursions
(d)Her school camps
(e)Her other school activities for which fees are charged
(f)Her violin lessons
(g)Her string orchestra fees
(h)Her Chinese lesson
(i)Her voice and guitar lessons fees
IT IS NOTED THAT
1.A child support assessment has been issued which requires the Respondent to pay $401.85 to the Applicant by way of child support.
2.The Respondent has commenced to pay Child Support at the rate of $412 per week.
17.The payments referred to in Order 16(e) – 16(i) will not be credited towards the Respondent’s Child Support liability under Section 71C of the Child Support (Registration and Collection) Act 1988 (Cth).
Return of Documents and possessions
19.That within 48 hours the Respondent make available to the Applicant the following documents and things:
(d)The Green folder containing the Applicant’s personal documents;
(i)All video footage of the parties’ child, [K] removed from the [Suburb C] home by the Respondent at or about the time of separation;
(k)The Lace external computer hard drive which contains, amongst other things, photographs of the Applicant and the parties’ child, [K].
20.That within 14 days the Respondent provide full financial discovery to the Applicant including, but not limited to, the following documents:
(k)All statements relating to any other account in respect of which the Respondent is a signatory or in any entity in which he has an interest covering the period 1 July 2014 to the current date;
(l)All records relating to the value of the Respondent’s interest in [Practice D] including the following documents as applicable
(v)The [Practice D] Draft Financial Report 30 June 2014.
(m)All records relating to any interest held by [P] Pty Ltd or [B] Superannuation Fund (or any other entity in which the Respondent has an interest) in any “green field” development at [Suburb E], ACT, including any unit holders agreement;
In addition, the original application sought spouse maintenance in the sum of $1,532 per week. During the course of the hearing that figure was refined by counsel for the wife[1] and amended to the sum of $1,384.
[1] The parties were not married but it is sometimes convenient to refer to them that way. No perjorativeness or disrespect is included in the designation.
The amendment arose as a consequence of some adjustments conceded in light of comments made by the respondent and also the relatively short time in which it was expected that an order might operate.
The respondent did not file an amended response but his counsel indicated that so far as the spouse maintenance issue was concerned the respondent would agree to pay the sum of $500 per week.
I propose to deal first with the main contentious issue between the parties before me - that of interim spouse maintenance. I indicated to the parties at the beginning of the proceedings that I hoped at the end to give directions in relation to a final hearing which could occur in February 2015. It will be necessary during the course of those proceedings to deal with the issue of spouse maintenance on a permanent basis after the distribution of property between the parties has been finalised.
Section 72(1) of the Family Law Act 1975 provides as follows:
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).
In this matter the applicant’s need for maintenance, at least on an interim basis, was not in dispute. As mentioned above, the respondent agreed that he would pay some spouse maintenance, although not in the amount sought by the applicant.
Counsel for the husband took issue with some of the expenses claimed by the applicant and these included the repairs that the wife had asserted to be necessary for the house, the car maintenance which he said should be reduced by some $40 a week, fares and car parking which should be reduced to $6 a week and clothing (claimed $83) should be reduced to $40 per week.[2]
[2] This later complaint was somewhat odd given that in Exhibit R1 the respondent maintained his clothing expenses were $90 a week.
The various disputed items on behalf of the respondent meant that her expenses should be determined, he submitted, at the figure of $1,150 a week. This figure, it was asserted, in any event, the respondent did not have the capacity to pay.
I shall dispose of this issue before I turn to the major source of contention between the parties.
This was an interim hearing and while I expressed some surprise to the parties about this, neither party sought to cross-examine the other. No additional oral evidence was presented.
Accepting that this was a position taken by counsel in accordance with the normal practices of this Court[3], it is probably unreasonable to say that Mr Howard’s submissions about these reductions, while they may have formed a basis for cross-examination, were not evidence nor were they based upon any evidence. Some criticism had been made of her expenses during the course of the husband’s somewhat extensive affidavit and were the subject of response.[4]
[3] Although not necessarily mine.
[4] ¶6.36 of the wife’s affidavit filed on 11 August 2014.
In relation to the items referred to above and criticised by Mr Howard I accept the wife’s evidence and find that her expenses as, and for this hearing only, can properly be quantified in the sum claimed of $1,384.
It should be noted that the respondent pays child support in the sum of $412 per week and has paid and agrees to pay school fees and some expenses in relation thereto for the child of the relationship, K (“the child”), who was born in 2002.
The wife is currently waiting to have a further back operation in addition to an operation she had during 2013. She claims in her affidavit that she could not have this operation carried out on a private basis without having provision for some $15,000 which she asserted was the cost of her last back operation. There is no satisfactory evidence to confirm that figure. The medical evidence supplied was deficient. The husband agreed that the parties would pay for her back operation from their joint funds.
This deals with some of the other interlocutory and interim matters and I will return to it in due course.
The reference to the wife’s health is to say that the wife is unable at this point to work. It was obvious when she was in Court that she could not sit down for any length of time and appeared to only be comfortable if she was able to move or stand up. I accept that she does not have the capacity to work at the moment.
The husband for his part is engaged in a professional practice in Canberra. His income (whatever that term may mean) was the major point of contention between the parties. Each of the parties retained an accountant to provide an analysis of certain matters relating to that income and I will consider those matters in due course.
At the commencement of the proceedings Mr Howard, on behalf of the respondent, handed up a document which became Exhibit R1 which analysed and compared different adjustments made by the two accountants retained by the parties and made other adjustments as well. It was agreed by all that this was not evidence in itself but in the nature of an aide memoire.
During the course of the proceedings the applicant called for, and in due course was supplied from the respondent’s office with, further documents which became Exhibits A1 and A2. Again I will return to these items in due course.
It is now settled law that the provisions of s 72(1) are such that, irrespective of the need of a spouse, the other party is only obliged to pay maintenance “if that party is reasonably able to do so”. That has been interpreted to mean that after a reasonable amount has been allowed for living expenses, the respondent must still have a sufficient surplus to meet the claim of the applicant. It was the respondent’s claim in this matter that he did not have that capacity.
“Income” does not mean as it does in child support matters the taxable income of the respondent. What it does mean in the context of a professional’s practice proved to be a complicated issue. In the course of the evidence it became clear that there were a number of different sources from which the primary income of the respondent might be ascertained. Logically, the income under consideration would be the respondent’s income for the forthcoming year (or at least for the forthcoming few months). As the respondent was engaged in a professional practice, this was not a figure that was subject to a written contract or some other enterprise agreement but rather the function of the earnings of the practice in prospect and the nature of the practice agreement. The practice agreement was not in evidence.
Mr Howard for the husband urged that they had done all they reasonably could to provide relevant information. The last completed accounts of the husband’s practice were for the year ended 30 June 2013. Exhibit A1 was a document entitled “Tax Planning 2013/14 - Estimated Accounting Position” and Exhibit A2 was a spreadsheet setting out tax planning calculations. These were, however, in relation to the year ended 30 June 2014. There was no direct evidence (other than, arguably, that of the respondent) about what his income was at present. In this regard the respondent, in his Financial Statement filed on 13 June 2014 (a little before the end of the last financial year), indicated in Item 11 in Part D that his income from the practice and from its associated unit trust was $6,256 per week. He also recorded at Item 15 further income paid by P Pty Ltd of $3,427 per week. That this might have been a mistake was perhaps indicated by Item 16 which purported to be the total of his average weekly income at $6,322. If accurate, Items 11 and 15 of his Financial Statement would aggregate to $9,683. (A conclusion announced with some satisfaction by Mr Millar on behalf of the applicant.) However it appears that at least in one respect this is wrong, although there is no satisfactory evidence to explain the discrepancy. The husband in his affidavit[5] asserts as follows:
[5] Filed on 13 June 2014 ¶41.
For the reasons set out above, the income derived from [P Pty Ltd] as disclosed in my 2013 tax return does not represent future likely income from that source. A figure of $2,400 is an estimate. I agree that the [an abbreviation of the Foster Family Trust][6] represents a source of income. Adopting the income figures for the [Foster Family Trust] and [an abbreviation of Practice D][7] as disclosed in the 2013 return the gross income going forward would be:
Income
[Practice D]   $250,429
[P Pty Ltd] Dividends   $2,400
Franking credits   $1,027
Income from [Foster Family Trust]          $73,914
[6] Foster Family Trust.
[7] Practice D.
Total   $328,770 or $6,322 per week
This would seem to be the mathematical source at least, of the figure of $6,322 appearing in Item 16 in the Financial Statement and in Item 2A in the same document. The addition of the other items produces a weekly figure of $6,267 which is similar to but not the same as the figure appearing in Item 11 in the respondent’s Financial Statement.[8] That might be partially explained by the fact that the heading ‘Franking credits’ in paragraph 41 quoted above is not income but rather a credit against tax otherwise payable.
[8] $6,256.
What those figures may mean for the financial year 2014 - 2015 (which for practical purposes is the relevant year for determining whether the husband has the ability to support the wife as required by s 72(1)) is however somewhat doubtful. That is, unless the figures might be interpreted to say that “the gross income going forward”[9] could properly be taken to be a concession that for the financial year 2014 - 2015 income would be $6,322 per week.
[9] ¶41.
However, it is clear from the wording used by the husband in paragraph 41 of his affidavit that this calculation was based on taxable income rather than the actual income he received from the practice or what appears to have been referred to by his practice, and to some extent by the accountants retained in the matter, as “accounting profit”.
To the extent that the figures referred to above (totally $6,322 per week) might be said to be the taxable position for the year ended 30 June 2014, it is difficult to comprehend without the practice agreement what the meaning of Exhibit A1 - a document produced from the respondent’s practice, is. That document, includes a figure for an increase in the work-in-progress, as contributing to the “estimated net profit”.
On that basis the estimated practice share of the estimated practice equity profit of $2,715,186 was $339,398.32 for the year. To this must be added, as appears from Exhibit A1, $40,958.03 from the Practice D Unit Trust.
In her affidavit filed on 11 August 2014 the applicant included a report from Ms F, a chartered accountant, who had been asked a series of questions relating to the respondent’s income. In the course of her report, Ms F (her firm is known as G Accountants) comments[10]
In my experience, it is not uncommon for the distribution of income entitlements to be delayed until the finalisation of accounts.
[10] P 3 of her report, p 43 of the affidavit of the applicant.
This small sentence effectively illustrates three aspects of the income of the respondent which remain somewhat ambiguous for the relevant year. It would appear, although no copy of the practice agreement was provided, that for reasons not entirely clear, Practice D adds into its profit for the purposes of “accounting” and it appears for determining the share of profit of the professionals the amount by which the work-in-progress increased during the relevant year. Assuming for the moment that that particular adjustment is not one required for tax purposes it would follow that the taxable profit of the practice for the same period would be less than the accounting profit. In addition, as Ms F points out, what the final profit for distribution among the professionals might be, may not be known for some time after the end of the financial year when the books have been completed.
What Ms F points out in other parts of her report is that there are some matters which are legitimate deductions from practice profits (strictly so called – “accounting” within the terms used above) which are not allowable as tax deductions. For example, entertaining of clients may be a legitimate expense inter se the professionals but would not be ordinarily claimable as an expense for taxation purposes. These sorts of things however would have the effect of reducing the amount of money which the professionals finally receive. In short, they would be taxed on the higher amount and the non-deductible but nevertheless legitimate deductions among the professionals, would reduce the final share of the professionals. These figures may not be known for some time after the end of the financial year. However, Ms F added a comment[11] (which was the subject of intense criticism both from the husband’s accountant (H Accountants) and from Mr Howard):
…taxation laws require specific treatment of items such as the change in the balance of Work in Progress between the beginning and end of the year, the employee superannuation expense claimed and depreciation expense. Ordinarily, these adjustments affect the timing of when an amount is deductable; …
[11] P 3 of her report, p 43 of the applicant’s affidavit.

As Mr Howard pointed out with some vigour in the course of his submissions, and as the husband’s accountants also assert, work-in–progress, until it is rendered, is not ordinarily regarded as income. Once a bill is rendered of course, it forms part of the taxable income of a professional even if the money in payment of the bill is not received within that tax year. I find it difficult to understand why there is an adjustment in the work-in-progress apparently for the purposes of determining practice profits if this is not required for tax purposes. Whatever may be the reason that appears to be the way in which the accounts are produced and I have not been enlightened by any additional evidence explaining the accounts.
The respondent denies that he understands what taxation laws require as set out above and does not agree that they do. He then goes on to say[12]
under the accounting principles applied by [Practice D], accounting profit brings to account Work in Progress (WIP). WIP is an assessment of value work not billed but likely to be billed. Accounting profit dictates money received or likely to be received in the future but is subject to adjustment from time to time. Where accounting profit is less than taxable income, a cash shortage may arise, the consequence being that expenditure may have to be funded out of savings or borrowings.
[12] ¶ 10b.
What I believe the respondent is trying to explain is that he receives drawings on a regular basis of about one half of what his projected profit will be. I imagine, although it is not made clear, that the balance is retained by the practice until it is necessary for taxation to be paid and the amount is then applied for that purpose. Exhibit A2 which is a document produced for “tax planning” seems to bear this out and appears to be a document given to the professionals to enable them to plan for any short-fall that may occur in the future if the tax imposed is greater than that which was predicted.
On the other hand, these are matters which are either actually or constructively within the knowledge of the respondent and it fell to him to explain what he meant by his affidavit. It fell to him to explain what money he actually received from the practice and it fell to him to cause to be explained and disclosed what “income” he would likely receive for the year 2014 to 2015. I reiterate that, as Mr Howard so forcefully submitted, it is impossible to predict precisely what the income for the current financial year will be. That, however, does not preclude (and one would have thought, would have mandated) some evidence either from the respondent himself or from his accountant about whether it was likely that this year would be a better year than last year (or for that matter 2013) and if so what the suggested increase was likely to be or whether circumstances were such that for whatever reason the amount would be less than last year (or 2013).
It also fell to him to explain when, if at all, adjustments were made or would be made to pay the balance of his drawings (which I interpret as being money paid out in anticipation of the crystallisation of his practice share).
No doubt in the final hearing of the matter some of these issues will be explored in more detail. However and moreover, given that the respondent had a duty of disclosure, given that the information was peculiarly within his knowledge and given further that the documents Exhibit A1 and A2 did not emerge except when a call occurred during the hearing of this matter, it is not for me to try to piece together the disparate and possibly contradictory elements of the respondents case to arrive at a figure.
I digress briefly to say that I accept (at this point at least failing any additional evidence being produced in the final hearing) that the P Pty Ltd investment in the development of Location J is unlikely to produce income and certainly unlikely to produce the income referred to in Item 15 in the respondent’s Financial Statement.
I note that Mr Howard properly, and in my opinion, correctly indicated during the course of the hearing that it was unnecessary for the wife to actually accept that may be so and that his client was content to accept an order that if there were to be any profit paid that she would be entitled to receive fifty per cent of that amount. That was qualified by reference to any tax that might happen to be imposed in a differential way upon the husband in relation to his share. This offer/concession precludes my having to make any conclusive determination about whether or not the evidence of the husband in relation to the Suburb E development was right. I shall make an order accordingly after consulting with the parties about the form of the order.
For completeness I should indicate that the husband also filed, as an annexure to his affidavit, a commentary on the G Accountants report from his accountants H Accountants. This commences at page 23 of the husband’s affidavit filed on 10 September 2014. Mr H makes the point that[13]
In [practices] that bring work in progress to account, this creates a timing difference between accounting profit and taxable income relating to the periods from which the work-in-progress is created until it is either converted into a recoverable debt or written off in the books of the [practice] as non-recoverable.
[13] P 3 Annexure A to respondent’s affidavit filed 10 September 2014.
With respect I agree it is obvious that until work in progress is converted into a bill or an account then it would not in the ordinary course of events generate a taxation liability.
He goes on to say on that page as follows:
[Practices] that adopt a policy of not bringing to account work-in-progress generally (including the writer’s [practice]),[14] operate from the basis that time costs charged to client files are essentially “air” and of little firm realisable value until such time as they are able to be converted to a recoverable debt by way of invoice.
[14] I think he means his own practice.
From the point of view of determining funds available for spouse maintenance, in my opinion, that view of work-in-progress is likely to be more appropriate.[15] There is often both significant uncertainty and significant delay (potentially for many years in some matters) from the creation of a time-sheet entry for work done in the practice and the ultimate receipt of funds from the client.
[15] There seems to be more relevance in knowing what money the respondent will have in his hand (at some point) rather than what might become ‘taxable’ or even ‘accounting income’.
I can only assume from that statement that Mr H does not share the view of Ms F that there are taxation laws which require work-in-progress in some way to be brought into account. I am inclined to agree.
However, that does not significantly assist me, as the obligation to provide the relevant information and the explanation for the various accounting figures rested fairly and squarely with the respondent and the explanation supplied, although many words have been expended in the process, is not adequate for my purposes. Mr H goes on to say[16]
In relation to income for the purposes of the Family Court statement, again I consider the accounting profit excluding work-in-progress movements to be the most appropriate reflection of the share of net income of Mr [Foster] which should be recorded as income in the Family Court Financial Statement.
[16] P 5 Annexure A to respondent’s affidavit filed 10 September 2014.
Again, I might comment that this appears to make sense but it does not enlighten me as to the income that the respondent is likely to receive in the current financial year.

In summary

Although under the terms of s 72(1) the onus of proving that the respondent has a sufficient capacity to pay the relevant spouse maintenance is on the applicant, that onus, in my opinion, was satisfactorily discharged to the prima facie level by the Financial Statement of the respondent. He is a man of learning. He swore an affidavit which was that he received weekly income of $6,256. His practice produced, at his request, on a call from the applicant a tax planning 2013/14 – estimated accounting position which shows that for the year ended 30 June 2014 the likely income on those figures would be of the order of $7,314 per week. This figure was derived from Exhibit A1 being the total of the estimated practice equity profit and the unit trust estimated profit, totalling $380,356.34. While I place little credence on the husband’s reported comment in the wife’s affidavit that the practice was doing really well, the figures themselves seem to support that proposition including the increase in the work in progress.
An increase in work-in-progress in a year may mean that the professionals choose not to render accounts which might have been rendered towards the end of the year (thus converting the WIP into earnings) to hold taxation liabilities to a lower level. At some point of course for the WIP to become income accounts must be rendered thereby eliminating some portion of the WIP.
I do not know what the husband’s practice does, one would hope that the husband knows what the husband’s practice does. If the husband does not know what the husband’s practice does then the husband should have arranged evidence from someone who does know what the husband’s practice does, to give evidence or to supply an affidavit to indicate in some reasonably predictable and objective way what the husband’s income is likely to be for the relevant period that is under consideration.

Husband’s expenses

Mr Howard urged on me certain matters relating to expenses. First he said the tax provided for by G Accountants (Ms F) was inadequate and failed to take account of the additional tax that might properly be payable on additional profit that might be derived. The “mights” in the last sentence would indicate the uncertainty of the situation. Accordingly, choosing what amounts to a relatively arbitrary figure of $2,500 rather than $1,701 per week as a tax provision does not significantly assist me towards knowing what the true position might be. It is to be noted the figures on the aide memoire (Exhibit R1) relate to the 2013 year, although the expenses are asserted to be current. Whatever the income may have been in 2014 and whatever the income may be in 2015, $5,305 is unlikely to be that figure on the evidence as set out above. If it is, it would have been easy enough for some person who had knowledge of the accounts to say so. However, all that having been said if one looks at the expenses claimed by or on behalf of the husband, which he sets out in his affidavit (and explains in my opinion in a quite logical way), there are some adjustments that do need to be made.
Mr H points out that some expenses claimed by the husband are in fact tax-deductible and on that basis the full amount would not be claimable by him. However, one assumes that in relation to such expenses (as for example income protection premiums at $109 claimed) (column e of Exhibit R1) approximately one half of that amount would remain as an expense because the full amount would have to be paid even if one half of it were to be available as a tax deduction.
The Bendigo Bank repayments are likely to expire relatively soon though it would not appear during this relevant period for these purposes.
If as has been adjusted in relation to the wife’s expenses, holidays are not something that ought to occur at this point, they should be removed from his expenses as well. I assume that the education expenses of $376 per week relate to the school fees for the child. As such they should remain. In any event, even if all of the expenses claimed by the husband were allowed at full value, and I doubt that they ought properly so to be, they amount to some $5,529. If the husband’s income is, as he claimed it to be, $6,256, that would produce a surplus of $727.
If however, the income is, as his accounts suggest, for the last financial year, $7,314.54 the surplus would be $1,785.
Given the uncertainty in relation to his expenditure set out above (for example the tax deductibility of some expenses) and given the uncertainty about what tax might be payable; given that there is no account taken of any adjustment that might occur in relation to the devolution of some of that income through a family trust) there should be a sum sufficient to pay the amount claimed by the wife of $1,384.
In the end what it amounts to is this. While the wife has discharged her primary onus as to the establishment of the husband’s ability to pay the amount that she claimed, the husband has failed to satisfy the evidentiary onus which shifted to him to demonstrate that the amounts produced by him in relation to income for the relevant period were not right.
In reaching that conclusion, I note that it was within the power of the husband to obtain whatever information was necessary to discharge the evidentiary onus (only) resting on him and in the circumstances, particularly on an interim basis where evidence has not been tested by cross-examination, the wife has done enough to satisfy me as to the husband’s capacity.

The other matters

Many of these matters are properly to be left for finalisation in the forthcoming hearing on matters between the parties. The first three orders sought (orders 1, 2 and 3) were described by Mr Millar on behalf of the wife as “protective orders”. They were designed to ensure that the husband who had unilaterally changed the trusteeship of various trusts from a situation of joint control to his individual control could not appropriate the fund to himself. While the fiduciary duty remains unaltered, whichever trustee may be in place, there seems no logical reason why the parties should not revert to the arrangement that existed before the husband’s action.
I will accordingly make orders 1, 2 and 3 at the expiration of 48 hours from the delivery of this my judgment. Forty-eight hours is to enable the husband to put on an urgent application (which need not be accompanied by an affidavit) to argue a contrary position if this is likely to severely affect his ability to operate.
It is to be noted that the husband and the wife should both have access to sufficient funds to enable them to deal with their day to day expenses. I would be happy to receive a form of order which both parties agreed upon - if they are able to do so.
My understanding is that order 6 was in the end no longer sought because that involved a number of matters including the reimbursement of certain money which appears no longer to exist. I accept further that although the husband’s outstanding liability for tax was not proved in any way, it is asserted to be in the order of $142,000 and there seems little utility in transferring the money from the account it is in at present to some other account. I accept the husband may, but is unlikely to dissipate the money other than in payment of tax. In the end that becomes his problem in any event.
In relation to paragraph 10 I accept the submissions on behalf of the husband that it is likely that the policy is owned by the superannuation fund. In any event the order should not be made until the ownership of the policy and the source of payment of premiums so far has been ascertained. I am prepared to relist the matter for the purpose of making such an order if both parties are unable to agree that the current situation is sufficient to preserve the amounts involved. I propose to order that the respondent pay the applicant by way of periodic spouse maintenance the sum of $1,384 per week until further order. I note in this regard that the amount and even the obligation may need to be revised upon completion of the property settlement in due course.
I decline to make order 15 at this point. I note the agreement by the respondent that the payment for the wife’s operation should come from joint family funds. I note further that it would be sensible for the wife to provide appropriate information both as to the cost of the operation and when it is likely to occur to the husband.
I remain uncertain as to the capacity of the husband to pay additional money to that which he is paying both in school fees and in his assessed sum. Again these are matters which to some extent need to be looked at in the context of the final settlement between the parties. I do however note that the husband has agreed that he will consider and, if he is able to do so, will fund the expenses set out in order 16 provided he is given some advance notice of what the expenses might be and some say in whether they should be expended. This is entirely reasonable.
In relation to order 19 the husband agrees that he will return the green folder containing the applicant’s personal documents if he is able to find it and has agreed further that the video footage of the child and the external hard drive, or copies thereof, will be returned to the applicant within the next few weeks. I would not propose to impose any order as to time in relation to those things.
I note that as part of the discovery process various statements and information about the conduct of Practice D are required. This seems to be the effect of 20(l) and may be the effect also of 20(k).
It would be in the interests of both of the parties for the husband to provide information about the greenfield development at Suburb E. I note that it was asserted by Mr Howard (and I accept), that the wife could probably go in and demand that information herself. However, given that this is something easily within the power of the husband it is appropriate that an order should be made that he provide that information. If for some reason that is unduly onerous he is at liberty to apply.

Further directions for hearing

The current affidavits of the parties provide but limited information about the important matters that I need to take into account under s 79 and s 75(2). Set out below are some directions which I propose to make in this matter but will give the parties an opportunity to be heard about.
(i)Each of the parties will file on or before 4pm on 1 December 2014 one further affidavit setting out matters relevant to contribution and to the financial situation of each of the parties for the purposes of the Court’s determination of the division of property between them. No party may rely upon any affidavit filed after that date without leave of the Court.
(ii)Each of the parties will file on or before 4pm on 1 December 2014 such further affidavit(s) as they may reasonably be required to file relating to the income of the husband and thereafter may not file any further affidavit without leave of the Court.
(iii)The parties will endeavour to reach agreement about the value of the former family home and also the value of the husband’s share in Practice D and the Practice D Unit Trust. If they are unable to reach agreement about this on or before 4pm on 30 September 2014 they will endeavour to reach agreement about a Single Expert for the purposes of valuing each of those assets and will try to do so on or before 4pm on 15 October 2014. If they are unable to do so, they may list the matter for further determination by this Court.
(iv)This is a matter in which the Court will operate through an electronic trial book and each of the parties will file on or before 4pm on 7 December 2014: a list of all of the documents upon which they seek to rely; and all of the documents which they propose to tender during the course of the proceedings. Such documents need not include those which are intended to be relied upon tactically during the course of cross-examination but any document which does not fall into that category may not afterwards be tendered during the course of the proceedings without my being satisfied that their omission was unavoidable.
(v)By 4pm on 7 December 2014 the parties will file a minute of the orders they are seeking in the proceedings.
(vi)By 4pm on 7 December 2014 the parties will file a list of the assets and liabilities and the values that either are agreed or in dispute in relation to those items. The parties need not file a joint list (unless they are able to do so) but they must indicate where differences exist between items of property to be divided or values of items or property to be divided.
(vii)Any subpoena to be issued by either party may only be issued with my leave.
(viii)Each of the parties will serve upon the other an offer of settlement in writing. Each party will review the offer of settlement from time to time and will, if necessary, put a further offer of settlement to the other party. A failure to provide an offer of settlement will be a factor to be taken into account in the determination of costs.

I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks delivered on 17 September 2014.

Associate:

Date: 17 September 2014

[2014] FamCA 780

17 September 2014

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Jurisdiction