OCHOA & OCHOA
[2014] FCCA 3131
•27 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| OCHOA & OCHOA | [2014] FCCA 3131 |
| Catchwords: FAMILY LAW – Interim spousal maintenance. |
| Legislation: Fair Work Act 2009 (Cth), ss.117, 123 |
| Nelson & Nelson [1995] HCA 25 Zanda & Zanda [2014] FamCAFC 173 Bell & Bell [2013] FMCAfam 6 Plany & Geller [2014] FamCA 114 M & M (2007) 36 Fam LR 97 Bevan & Bevan (1995) FLC 92-600 |
| Applicant: | MS OCHOA |
| Respondent: | MR OCHOA |
| File Number: | PAC 3857 of 2014 |
| Judgment of: | Judge Harman |
| Hearing date: | 27 November 2014 |
| Date of Last Submission: | 27 November 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 27 November 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Ms McMahon of Turner Freeman Lawyers |
| Solicitors for the Respondent: | Mr Connop of Connop Barristers & Solicitors |
ORDERS
Pending further order, the Respondent, Mr Ochoa shall pay by way of spousal maintenance to the Applicant the sum of $750.00 per week, the first payment within seven (7) days to be made by bank transfer to the account nominated by the Applicant.
By consent, within 14 days, the Respondent in his capacity as director of [F] Pty Ltd ABN [omitted] (“the company”), shall cause the company to pay to the Applicant or as she directs all entitlements due to her arising from her employment with the company including but not limited to outstanding wages, accrued long service leave, annual leave, payment in lieu of notice (equivalent of 5 weeks salary) and any other entitlements due to the Applicant pursuant to Fair Work Act 2009 (Cth) or any other instrument.
The husband shall attend to all payments of principal and interest with respect to the mortgage relating to the acquisition of the [L] property in which he resides, pending further order.
The parties shall attend Mediation with an accredited Family Dispute Resolution Practitioner as agreed between the parties.
The parties shall be responsible for ensuring that a copy of their documents as filed are provided to the Mediator not less than seven (7) days prior to the Mediation.
Forthwith upon a Family Dispute Resolution Practitioner being agreed or appointed then each party shall:
(a)Do all things, sign all documents and give all consents, authorities and instructions necessary to instruct and retain that practitioner;
(b)The husband shall at first instance pay all fees charged by the practitioner;
(c)Attend at such times, dates and places necessary to complete mediation.
Pursuant to Rules 14.06 and 24.04 of the Federal Circuit Court Rules 2001 and within 21 days, the parties and each of them are to ensure that copies of the following documents are provided to all other parties, namely:
(a)Copies of income tax returns, assessment notices and BASs for the last 3 completed financial years for that party personally and for any entity in which that party has an interest (such as a private company, trust or partnership);
(b)An up to date statement with respect to any superannuation interest of that party together with a valuation of the fund if not an accumulation interest;
(c)Copies of bank statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has an interest such as a private company, trust or partnership;
(d)Copies of credit card statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has an interest;
(e)Market appraisals with respect to any parcel of real estate in which any party has an interest;
(f)Any document proving or tending to prove any allegation contained in that party’s Financial Statement or Affidavit;
(g)Copies of market appraisals or computer site print outs as to value of:
(i)Any motor vehicle or boat the value of which is not agreed.
The Applicant shall within seven (7) days of today’s date serve upon the Respondent a draft balance sheet to include all assets, liabilities, superannuation interests, financial resources and property suggested to be relevant and to include values as alleged by each party and:
(a)The Respondent shall then within seven (7) days of receipt of the draft balance sheet make any additions to the balance sheet as required to reflect contra allegations by the Respondent and any values that are agreed (if applicable); and,
(b)Wheresoever controversy exists as to the inclusion of an item or the value of an item a footnote shall be appended to explain the controversy; and,
(c)Upon completion of any single expert valuation the balance sheet shall be amended to reflect determined/agreed values;
(d)The balance sheet reflecting current agreements and controversies shall be provided to the Mediator not less than seven (7) days prior to the Mediation and a final, settled version shall be filed prior to trial with the Case Outline filed by each person.
In the event that that there then remains dispute as to the value of any parcel of real estate upon exchange of appraisals (within 35 days of this order) then the parties are to seek, within a further fourteen (14) days, to negotiate an agreed figure and, if no agreement is reached, to obtain, file and serve single expert valuations of such parcels within a further 14 days and the cost of the report shall be met by the parties equally and the valuation report shall be filed with the Court prior to the Mediation.
Any party seeking to retain any asset and/or to pay monies to another person shall ensure that they have made all relevant enquiries as to their borrowing capacity and so that they are able to negotiate and make a real and genuine attempt to resolve the matter at the Mediation.
The husband shall use his best endeavours and shall provide all necessary, cooperation, assistance and instructions to his accountant to have financial returns and income tax returns for himself and the business [F] Pty Ltd to be prepared in draft (although not submitted unless that is the advice provided to the husband by his accountants) within 21 days.
The matter is adjourned for further mention and directions to 4 March 2015 at 2.15pm.
In addition, strike out paragraph 2 of the relief sought by the husband in interim or procedural orders sought by his Response.
Reserve the costs of both parties with respect to today’s appearance and the interim/interlocutory proceedings generally.
IT IS NOTED that publication of this judgment under the pseudonym Ochoa & Ochoa is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT AT PARRMATTA |
PAC 3857 of 2014
| MS OCHOA |
Applicant
And
| MR OCHOA |
Respondent
REASONS FOR JUDGMENT
These proceedings are listed before the Court today to determine an application for interim spouse maintenance and related relief.
The application before the Court on a final and substantive basis seeks orders with respect to property adjustment.
The parties to the proceedings are a husband and wife, Ms Ochoa, the wife and Applicant and Mr Ochoa, the husband and Respondent.
Material Considered
In the case of the wife, I have read and considered the following:
a)The Amended Initiating Application of the wife filed 26 November 2014;
b)The Affidavit of the wife sworn or affirmed 12 August 2014, filed 15 August 2014;
c)The Financial Statement of the wife sworn or affirmed 12 August 2014, filed 15 August 2014.
In the case of the husband, I have read and considered the following:
a)His Response yet to be filed but a copy of which has been handed up in Court today. It may well be that the Response has been filed electronically but copies have not yet physically arrived with the Court;
b)An Affidavit of the husband sworn or affirmed 26 November 2014; and
c)The husband’s Financial Statement also sworn or affirmed 26 September 2014.
In addition to the spouse maintenance issue the wife also includes within her Imitating Application a claim for relief pursuant to the Fair Work Act 2009 (Cth). At the conclusion of submissions it was indicated that the husband submits to the order that is sought by the wife within that jurisdiction and accordingly I will, in due course, make that order by consent.
Legislative pathway
In dealing with the interim spouse maintenance claim I must first have regard to section 72 of the Family Law Act 1975 which provides the jurisdictional basis for an order. The section is headed “Right of spouse to maintenance”.
Section 72(1) provides:
(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).
The section makes clear that the husband is liable to support the wife to the extent he is able to do so, if and only if the wife demonstrates that she is unable to support herself by reason of:
a)Having the care or control of a child under the age of 18 years;
b)By reason of physical or mental incapacity or age precluding her from appropriate gainful employment; or
c)Any other adequate reason.
If jurisdiction is enlivened by section 72, I must then (secondly) consider section 74(1) which provides:
(1) In 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.
The section bestows upon the Court a broad jurisdiction to make such order as it considers proper for the provision of maintenance.
Thirdly, the Court must consider each of the factors set out in section 75(2) and I would propose shortly to deal with each of those factors individually. Prior to doing so, however, it is instructive to have some brief regard to the evidence of the parties.
Evidence
There is no dispute that the parties commenced cohabiting in 1994 and were married on [omitted] 1996.
The parties separated sometime during the earlier part of 2014. There is some controversy between the parties as to when that may or may not have been, however, it is clear from the wife’s material that certainly as of the latter part of May 2014 she considered the relationship at an end. The husband’s evidence would suggest that he may have been of the belief that the relationship subsisted for some short time thereafter.
The wife, commencing at paragraph 18 of her Affidavit material, sets out the circumstances by which she suggests that separation occurred. The husband, in responding to that material, raises a number of issues, most of which do not directly touch upon separation or the circumstances thereof but he also refers to separation in May 2014. Certainly, on the basis of the husband’s evidence, in combination with the wife’s, separation would appear to have occurred no later than 20 May 2014.
At the commencement of the relationship the husband owned a number of assets. Those assets included a company now known as, if not at that time known as, [F] Pty Ltd. The wife asserts that the husband owned the enterprise in its entirety prior to the relationship. The husband provides a more detailed aetiology of his acquisition of that company but certainly it would seem common ground that by the commencement of the relationship the company was wholly owned by the husband.
For a significant period of the relationship both the husband and the wife are recorded for employment law and tax purposes as employees of the company. That has some particular relevance as the husband throughout his evidence is clear in suggesting that:
a)He was the “sole breadwinner” throughout the relationship. One assumes that the husband would ultimately ask the Court to make an appropriate adjustment in his favour as regards contribution if that is so notwithstanding that the husband concedes broadly and generally in his material that the wife primarily attended to the care of the child of the relationship, [X], born [omitted] 1999 and accordingly now 15 years of age;
b)The wife performed little if any work on behalf of the company and at best some hours per week; and
c)The arrangement was put in place following “advice and guidelines” provided by the husband’s accountant and financial planners so as to minimise tax.
A significant difficulty arises for the husband in making that assertion as a consequence of the High Court’s decision in Nelson & Nelson [1995] HCA 25. The rule of law created by Nelson & Nelson can be paraphrased as a party not being permitted by the Court to lead evidence that is contrary to a prior assertion to an agency or service, government or otherwise, which has led to that party obtaining benefit and advantage. On that basis there would be some real issue as to the husband’s assertion that the wife was essentially a “passenger” financially throughout the relationship and did little or nothing for the business.
What is clear is that the wife was, for quite some years, certainly the last five financial years and up to and including 30 June 2014, a registered employee of the company for the purpose of all relevant entitlements such as payment of taxation, payment or accrual of long service leave, superannuation and the like. That has some particular relevance in light of the additional plea for relief made by the wife under the Fair Work Act. The order that is sought by the wife is the subject of consent by the husband.
The parties have accumulated a number of assets during the relationship. As a consequence the parties are now in a relatively healthy financial position compared with the vast majority of litigants and most assuredly the vast majority of the population of both Australia and the world.
The husband at paragraph 63 of his Affidavit enumerates that which he believes comprises the asset pool of the parties. It consists of:
a)A property at [R] in New South Wales in which the wife is presently living. The husband asserts that the property has a value of $1.2 million. It is unclear whether there is agreement as to its value although the wife would appear to suggest a slightly lower figure of approximately $1 million. In any event there is no valuation evidence before the Court, simply the assertion of value made by each party. The property is unencumbered;
b)A property at [L] in the Northern Territory. That home is presently occupied by the husband and the child, [X]. The home is suggested by the husband to have a value of $500,000. It is encumbered by a mortgage. The balance outstanding would appear, by reference to the husband’s Financial Statement, to be in the order of $474,000;
c)A Mercedes Benz motor vehicle which the wife presently has in her possession and uses, suggested by the husband to have a value of $15,000;
d)A one quarter interest held by the husband in the property at [M], New South Wales, suggested to have a value of $95,000;
e)A 4.8 metre half-cabin boat cruiser with a value of $15,000; and
f)Miscellaneous shares with IAG Limited with a nominal value of approximately $1000.
In addition there is of course the business [F] Pty Ltd. The shareholding is not discussed in the evidence of the parties but the parties appear to agree that it is the husband’s company and thus one can assume he owns 100 per cent of the shareholding.
Other than the above assets the parties also have a self-managed superannuation fund, [Mr & Ms Ochoa] Superannuation. The trustee or trustees are not clear but from the wife’s material it could be inferred that the trustee is the husband. Nothing turns upon that issue. The superannuation fund owns two factory units in the Northern Territory, one suggested by the husband to have a value of $190,000 and the other suggested by the husband to have a value of $900,000. Those properties would appear to be unencumbered.
What is clear between the parties is that until their separation the enterprise, [F] Pty Ltd, had operated from one of the factory units owned by the parties, presumably on the basis that that company paid rent to the superannuation fund and thus it was an additional means by which the parties were able to accumulate wealth. That is not to suggest for one moment that there is anything improper about that arrangement.
Post separation, as the husband discloses in his affidavit material, the company under the direction of the husband has vacated the premises that were owned by the superannuation fund and has signed a lease for other premises from which premises the business now operates. Why that is so is not set out in the husband’s evidence. Presumably, it was not on the basis that the superannuation fund had given notice. Again, nothing much if anything turns upon that issue.
The wife asserts that she has a number of health problems at this point including difficulties with depression or anxiety. That causes her to consult upon her general medical practitioner and a psychologist. The wife also alleges difficulties with rheumatoid arthritis.
The wife has annexed to her material, and no objection is raised with respect to it, either as to its form or contents, a report from the [omitted] Family Medical Practice itemising medications that the wife is prescribed and taking, and confirming that the wife does, indeed, suffer rheumatoid arthritis. She is described to be prone to “frequent exacerbation, she is restricted with physical activities”.
A medical certificate is also annexed to the wife’s material, being the appropriate form for submittal to Centrelink. That form suggests that the wife is unfit for work from 23 July to 23 October 2014 inclusive. The wife asserts that this remains the case.
The wife is not presently in paid employment although it would appear that she is now in receipt of some form of Centrelink benefit. It is asserted by the husband to be a disability support pension. The wife concedes that she receives a benefit but in the nature of an emergency benefit.
The wife sets out in her affidavit material the income that she has been paid as an employee of [F] Pty Ltd for each of the financial years ending 30 June 2010, '11 and '12, they being incomes of:
a)$83,740;
b)$95,423; and
c)$95,450.
The wife asserts that the husband’s income for each of those financial years was respectively:
a)$101,462;
b)$126,769; and
c)$149,617.
There is no issue that until the end of the current year, if not continuing, that the child of these parties will continue to live with the husband in Darwin. The wife asserts that the intention has always been that at the end of the year he would move to Sydney to live with her and take up an apprenticeship. The husband acknowledges that this had been a plan but it is put by him in the past tense and on the basis the child will now continue with school for at least another year.
The wife has also tendered in her case a number of financial documents for the financial year ending 30 June 2013 and comprising:
a)A return for the company [F] Pty Ltd;
b)An individual return for the husband; and
c)A return for the [Mr & Ms Ochoa] Superannuation Fund for the same financial year.
The fund return makes clear that the company [F] Pty Ltd was paying rent for its occupation of premises owned by the fund. The rental is set out in the document. Additional contributions to that fund were made by the company on behalf of each of the parties as employees.
The husband’s taxable income for the June 2013 financial year is suggested by his return to be an increase in that which had been earned, on the wife’s evidence, for the 2012 financial year. The gross income from all sources is shown as $172,457 and after deduction of relevant expenses the income reduces a little to $166,791.
The company tax return for 2013, the most recent document before the Court regarding that enterprise, suggests that the gross receipts of the company had increased from 2012 to 2013. It also suggests that for the 2013 financial year the company made a total profit of $96,084. That is profit after payment of all expenses including salary and wages, superannuation contributions and the like that were paid to the parties and each of them.
That is in somewhat stark contradiction to the assertion by the husband that the company is “going backwards” as regards its receipts. There is no evidence before the Court that suggests that it is so. I do, however, take note of the reality that these parties have separated. Accordingly, and but for the husband’s suggestion, against his own interests to a large extent, that the wife did not actually perform work for the business, one might infer that it would be natural, indeed entirely explicable, that the business would now have a much greater expense base.
The husband asserts that the wife never really performed any work in return for the salary she received of approximately $100,000 per annum. Whether that is purely pejorative or accurate I am satisfied that I should not make any discount in relation to the company’s affairs by increase of expenses. On the basis that the husband asserts that the wife’s leaving would make no difference whatsoever I do not propose to infer new or increased expenses.
The husband asserts that the wife’s “employment” was purely a sham or rort upon the Tax Office, jiggery-pokery if you will. The husband is clear that the wife’s “employment” was a device to minimise tax upon income generated by the husband’s exertions and not a genuine reward for effort on the wife’s part. The husband asserts it was purely the division of income between the parties to minimise tax and a falsehood was held out to the Tax Office.
I do not propose to take any action with respect to that apparent wrongdoing. It is of no great significance as regards the parties in the determination of this matter and in light of the Full Court’s comments regarding the caution that should be exercised in such referrals in authorities such as Zanda & Zanda [2014] FamCAFC 173, I will not take that step.
It is curious that the husband would assert, on the one hand, that his expense base has increased substantially as a consequence of separation and the conduct of the business. The greatest expense one could have conceived was replacing the wife, a nearly $100,000 a year employee. But for the husband’s assertion that it was not a genuine employment arrangement I would be inclined to accept that such a circumstance must be accepted. I simply cannot on the husband’s own evidence.
Additionally, the husband asserts that the business now incurs greater expense because it has moved premises and is now paying rent, presumably at a commercial rate, to an independent landlord. Why the move was necessary is entirely unclear. The husband presents no evidence.
The husband’s own evidence, which I take into account, is not supportive of the proposition he raises that the business is not doing as well as it was or could.
The evidence in relation to the business as it stands, being that of the wife, would suggest that from 2010 to 2011, to 2012, and to 2013, the business has increased its gross receipts each year and has done better each year. The wife asserts that for the last financial year, that ending 30 June 2014, the business had produced receipts of even greater quantum than 2013. The husband agrees that this is so although he asserts that the business overall made a net loss approaching $100,000 and “the wife is aware of that”. However, no source document which would corroborate that allegation is produced and I am not in a position to find that it is so.
The wife is not presently working and is receiving a modest payment by way of Centrelink benefit. The husband continues to operate the business. I accept that his caring responsibilities with respect to the child of the relationship may impact upon his capacity to travel and may, for the present financial year, have some impact upon the extent of his engagement in work away from Darwin and thus the work that can be performed by him. I cannot quantify what that impact might be. The best and most up to date figures I have of a concrete nature are the figures for the financial year ending 30 June 2013 which suggest that the business, after payment of significant income to each of these parties, had a net profit approaching $100,000.
That is further borne out by the structure of the husband’s present income. It is to be remembered that in the 2013 financial year the husband’s gross income was an amount of $172,457. That arose from payment of salary and wages of $122,334 or, on a gross basis, $2352.58 per week together with additional payments by way of franked dividends received for a small amount from IAG Limited, $6.19, and a large amount, $35,046.15, from [F] Pty Ltd. The husband deposes in his Financial Statement to receiving an income from the company now of $1671, that being a reduction of about $750 per week, the very amount the wife seeks by way of interim spouse maintenance.
That is not to suggest a causal connection between the two but simply to observe the basic maths. The husband continues to receive a dividend from the company disclosed as $1077 per week or a much greater amount than was received in the 2013 financial year. It does beg the question; if the company’s gross receipts and overall financial position is deteriorating and the company’s receipts are now poor how can the company afford to pay, on an ongoing basis, dividends of more than $50,000 per year?
The husband also discloses a loan arrangement between he as a shareholder and the company. That loan agreement dated 1 July 2008 is annexed to the husband’s Affidavit and Financial Statement. It suggests that the amount that is borrowed is to be repaid and a schedule of interest to be applied thereto is attached.
It is to be noted that what is to be repaid by the husband to the company in the 2013 financial year roughly corresponds with that which the husband is suggested to have received from the company by way of franked dividend. Those arrangements clearly are put into place, as the husband has been clear in his evidence, on the basis of prudent advice from his accountant. I accept it is perfectly appropriate and sensible advice that enables a minimisation of tax payment by both the husband the company. However, it calls into serious question the husband’s assertions as to his parlous financial state.
The arrangements also involve the movement of money between the two entities, the husband (as the director and 100 per cent shareholder of the company) and the company in a fashion that allows tax to be minimised legally and appropriately but does not necessarily represent, as I am urged to accept, a debt owed by the husband which he is liable to meet from his income. It would seem that the dividends and the loan repayments have some degree of correspondence if not total correspondence.
Jurisdiction
In dealing with the basis of the wife’s claim under section 72 of the Act, I am satisfied that one could found jurisdiction in one or other or both of the wife’s physical incapacity for participating in gainful employment or “any other adequate reason”.
The wife’s evidence makes clear that she presently has health issues that preclude her participation in paid employment. In light of the wife’s “employment” within the husband’s business until recently it might be open to the husband to suggest that it could not be and the wife could not be heard to allege that it is so. The wife asserts that her incapacity has, for some little time, been as a consequence of rheumatoid arthritis in particular and more recently the psychological issues with which she is troubled.
The husband, perhaps against his own interests and unintentionally so, lends some support to the wife’s position by his evidence that the wife has not worked, in any real sense, in the company or otherwise, for quite some years. That is no doubt intended by the husband as “a cheap shot” intended to support his position as the asserted “primary breadwinner” and thus primary financial contributor. However, the husband’s evidence has the effect of lending some tacit support to the wife’s position.
In relation to any other adequate reason, I am satisfied that in light of the wife’s present unemployment and the circumstances of it, the wife’s income and financial support has, until at least 30 June 2014, been derived from her “employment” with the company. Her subsequent “termination”, whenever that may have occurred, has had the consequence that she is now unemployed, has no adequate income, no employment skills she can utilise and health difficulties impeding if not precluding her participation in work.
This husband and wife were engaged in the conduct of an enterprise. They were both employed within that enterprise whether the employment involved the performance of work or, as the husband suggests, merely an income-splitting arrangement. It does not change the end result. The wife does not presently have paid employment, has not had paid employment for some little time, does not have any readily demonstrable employment skill, (which I do not raise to be critical of her but simply to reflect her own evidence), and thus no income or ready means of supporting herself.
The wife does not have ready access to any liquid funds or any income-generating asset. True it is that the wife resides in the property at [R] owned by the parties in their joint names and which is of considerable value. However, in accordance with the wisdom of the Cree it is apparent that the wife cannot eat money and in this circumstance she cannot extract money from that property to buy food. There is no mortgage over the home against which she might be able to redraw if there were advanced payments or a line of credit. She simply has the benefit of a roof over her head. It is a benefit of some value. It is also a benefit that the husband asserts that the wife enjoys “rent free” but the wife’s occupation of the home does not cost the husband anything. The husband, similarly, has the benefit of a roof over his head although he is paying a mortgage.
The property has not been occupied by the parties for some time or at least not on a full-time basis. The property is not encumbered by a mortgage. The expenses relating to it have, until recent past, been payment for cleaning, although that arrangement has come to an end as the wife complains and the husband confirms, and payment of council and water rates, utilities and general upkeep and maintenance of that property.
The benefit the wife receives certainly provides some assistance to her. It means she is housed and she does not have housing cost. As I have remarked to the parties during the hearing if the property were not available to her and she were paying rent, as the company now is for premises which it occupies separate from the premises previously occupied and owned by the superannuation fund of the parties then, no doubt, her claim would increase. Whether she would be successful or not is another matter but she would have an additional expense to add to that which she asserts.
In those circumstances, noting:
a)The wife’s medical evidence that confirms that she is not capable of employment;
b)The husband’s assertion that the wife has not been participating in paid employment, (although that evidence is entirely at odds with that which has been represented to the Australian Tax Office); and
c)The termination of the wife’s employment in circumstances which would appear to be other than compliant with the provisions of the Fair Work Act and as to which the wife is still to receive a termination certificate, and where also there would appear to be no basis for the husband’s assertion that the wife had “abandoned” the job;
I am satisfied that the wife has established a sufficient ground to enliven the Court’s jurisdiction and which would entitle her to make a claim for maintenance.
That is not the end of the issue. I must be satisfied that the wife has not only an inability to support herself but expenses which she cannot presently meet and could not reasonably meet from available income, assets and resources and, further, that the husband has a capacity to meet any such shortfall or need as the wife establishes. Thus I propose to now turn to section 75(2) of the Act and deal with each factor therein individually.
The age and state of health of the parties
The wife is clearly not able to participate in paid employment at present based upon her evidence and as supported by the husband’s evidence.
The husband asserts that he is also seeing a psychologist and annexes to his material an email from a psychologist confirming that he has undertaken ten appointments. I accept that this is so. However, whether the husband is attending upon the psychologist or not, it has not impacted upon his employment as demonstrated by his own evidence.
Whilst the husband asserts his need to attend upon the psychologist, it would appear to be asserted, as it were, in a tit-for-tat exercise to suggest that the wife is a malingerer. The husband seems to be asserting that if he is able to have difficulties, emotional and otherwise, following the breakdown of the relationship (which require him to attend upon the psychologist) but continue to attend to his employment and meet the expenses of the assets of the parties confined to the mortgage encumbering the home in which he lives, then the wife should also be able to do so.
The husband has 30 continuous years of employment in the enterprise which he owns. The wife does not and the husband asserts that she has never actually worked for the company. The wife’s employment was with that enterprise but it was terminated in circumstances which would appear other than compliant with section 117 of the Fair Work Act. That is not an issue I need be troubled by but it is a reality for these parties.
The age of the parties is not dissimilar and it is not a factor which precludes their participation in paid work. The relevance is the wife’s health difficulties.
Income, property and financial resources of the parties and the physical and mental capacity of each for gainful employment
It would be clear from the above that I accept on the available evidence the husband has the physical and mental capacity for employment and that the wife does not, whether on the basis of physical incapacity, mental incapacity or both.
The wife has no income, save the recent commencement of the emergency benefit which she advises. The husband has income from the business. Whilst he complains that the wife has the use and rent-free use of the parties’ jointly-owned home in [R], the husband has the use of all other assets of the relationship save the Mercedes motor vehicle.
The husband has the use of the business and all of its income. The husband has also made determinations with respect to the conduct of that business including removing it from the premises owned by the superannuation fund which the parties both receive benefit from and will receive benefit from when their interests are split in the future. That decision, unexplained as it is in the husband’s evidence, is curious. It may well relate to that which the wife asserts in her material that the husband has indicated to her that if she leaves she will receive nothing and will have to fight hard even for that, but I need not make any finding in that regard.
It is curious though, why the husband would cause the business to leave the previously occupied accommodation. The business paid rent to the superannuation fund, both entities controlled by the husband. Why the husband would cease a commercial arrangement whereby money changes between the two entities to the mutual benefit of all concerned and move to entirely separate premises over which he does not have control and pay rent to strangers is bewildering. The husband has made those decisions without recourse to the wife, demonstrating that he is fully aware of that control.
The husband has capacity for employment and there is nothing in the evidence to suggest that it will be otherwise in the foreseeable future.
Whether either party has the care and control of a child of the marriage under the age of 18 years
The 15 year old child of the parties lives with the husband and will continue to do so at least until the end of the year, if not indefinitely. It is submitted in the wife’s case that I should disregard the expenses that are alleged by the husband with respect to his care of that child or the expenses which are suggested in part N of the husband’s Financial Statement as incurred by or on behalf of that child. Those expenses total $330 and comprise:
a)Food, $200;
b)Children’s activities, $30;
c)Entertainment and hobbies, $50; and
d)Education expenses, $50.
I am satisfied they do not represent the totality of the child’s expenses. There is a mortgage encumbering the home in which the child lives. The payment made with respect to that mortgage is also something which the child receives benefit from. He has to be accommodated, and is, and accordingly the mortgage expenses that are incurred would be a legitimate contribution towards the child’s welfare.
The totality of those expenses the wife alleges should be disregarded and I am taken specifically to the decisions of Chief Federal Magistrate Pascoe (as he then was) in Bell & Bell [2013] FMCAfam 6 and of Thornton J in Plany & Geller [2014] FamCA 114.
Whilst their Honours in each of those cases talked about the inclusion of expenses for children and, specifically in the case of Bell & Bell [2013] FMCAfam 6, their exclusion from consideration with regards to an interim spouse maintenance determination, I am not satisfied that I can or should disregard the amounts the husband alleges. It would be artificial to do so. There is no issue that the child lives with his father in the home in Darwin. There is no issue that the wife does not presently pay child support. Again, that is not a criticism of her or intended to castigate her. She has no income and no funds from which she could make a contribution at the present.
The reality is that whatever expenses are incurred by this 15 year old lad are met by his father. The child does not have employment. The child does not have an income stream. He does have a need to be housed, clothed, fed and educated, and those expenses are met by the father. I am thus satisfied that they can and must be taken into account in an assessment of capacity to pay.
The wife does not have the care of a child under the age of 18 years at this point in time although her evidence suggests that the arrangements for the child of this relationship may change.
Commitments of each of the parties to support themselves and any other child or any other person
I am satisfied that the above conclusion by me to include the child’s expenses as part of the husband’s expenses in running his household is all the more appropriate and valid in light of this consideration. Both of these parties have a legal and moral obligation to maintain their child and that is an obligation that should not be disregarded.
The responsibilities of either parent to support any other person
Neither person has such responsibilities.
The eligibility of a person to receive a pension, allowance or benefit under any law of the Commonwealth or any superannuation fund
The parties have a self-managed superannuation fund of significant value but neither party would appear eligible to receive payments from it at this time. Indeed, because the company has left the premises which were owned by the superannuation fund and to which the company paid rent there is no income stream from which that could occur. Whether that is a motivation for the husband moving his business elsewhere or not is unclear but it does create the circumstances whereby an alternate income stream is now precluded.
The wife has an eligibility to receive a non-disclosed amount by way of emergency benefit. It would not be significant, one would assume, even though it is not disclosed.
Where the parties have separated or divorced the standard of living that in all the circumstances is reasonable
I have been taken by counsel for the wife to M & M (2007) 36 Fam LR 97. Similarly, one could consider Bevan & Bevan (1995) FLC 92-600. Both cases provide support for the same proposition. One should not view the standard of living to be maintained by parties post separation as a subsistence level and should, instead, view it by comparison to that which was mutually enjoyed by them prior to separation, particularly when there is disparity.
The parties previously enjoyed a perfectly happy and comfortable lifestyle when together. The husband confirms this in his evidence. The husband claims, proudly and in all probability with some real justification, that the entirely comfortable middle-class lifestyle the parties enjoyed and the accumulation of the assets undertaken by them was because of his hard work.
The wife does not presently enjoy a good standard of living. She enjoys a good standard of accommodation, having returned to the [R] home which clearly is an expensive property although, in the context of the Sydney real estate market, that does not mean much. Hovels which require demolition can, in parts of Sydney, have a value the same as this home in Sydney’s West. Clearly, it is a perfectly nice home.
However, lifestyle is more than one’s physical surrounds. It is the ability to be able to feed oneself, clothe oneself, put petrol in the car, meet bills as they arise, and that is what the wife cannot maintain at even a subsistence level with no money at all.
The tap has been well and truly turned off by the husband through the above actions, the company moving and thus the superannuation fund not having income generated, the wife’s employment benefits being ceased and/or terminated and the wife having no access to any liquid funds purely the ability to move into accommodation which is jointly owned and which she is perfectly entitled to occupy. The home was otherwise empty or substantially empty. It was not rented out. It did not generate an income stream. The wife’s occupation of this home has not disadvantaged the parties one iota and the husband’s zealous assertion that the wife lives rent free and that that should be enough is disingenuous.
The husband maintains his standard of living. Certainly he does so without the wife and the substantial contribution he acknowledges she made as the primary and predominant provider of care to the child of the parties and the undertaker of housework and household running. However, his standard of living and the circumstances of his life are little affected other than by the wife’s absence. Accordingly, that factor would support an order to provide an income stream to the wife from the assets to which she has contributed, including the business.
The extent to which payment of maintenance would enable a party to undertake a course of education or training
The wife does not lead any evidence in that regard although it may assist her but absent evidence I do not take it further.
The effect of orders on creditors
There will be no effect. Whilst the husband asserts that the company is not doing as well as it could do there is no evidence to support that submission.
The extent to which a party whose maintenance is under consideration has contributed to the income-earning capacity, property and financial resources of the husband
This is a significant issue in this case. These parties have been together for a very long time. It is not a circumstance, even though the husband on either version of events owned the business and operated it prior to the relationship, where the wife has come along recently and after a brief and fleeting relationship seeks maintenance. These parties enjoyed a 20-year relationship with each other. The business which the husband now operates may be the same business in name but it is not the same business in nature.
On any version of events the business has grown and gone from strength to strength. The wife has made a contribution, directly or indirectly, to that business. The extent of the contribution cannot be assessed at the moment, nor need it, but she has contributed. Similarly, the wife has contributed to the acquisition of the remaining assets of the parties, particularly those of the superannuation fund and the [R] property together with the property in Darwin. Whilst the Darwin property has little equity it is asserted at this time it now provides a home for the husband the child.
Thus the wife has clearly made significant contribution to the income, earning capacity, property and financial resources of the parties, plural, including contribution to the husband’s present income which the wife had shared, either as a genuine employee or as an income-splitting vehicle, with the chicanery involved in the misrepresentations to the Australian Tax Office that this involved on the husband’s allegation. The wife has contributed significantly to the business and even if only by allowing significant reduction in assessed tax liability such that these parties have received tens of thousands of dollars per year which would not have been available to them otherwise, as the income, if paid entirely to the husband, would have been taxed at a far higher rate.
Duration of the marriage and the extent to which it has affected the earning capacity of the parties
The wife’s evidence is clear that she has not worked in the relationship in any substantial sense other than in the business and subject to the controversy generated by the husband as to the extent to which that was genuine work. Accordingly, I can readily accept that after 20 years absent the paid workforce that the wife would have some real difficulty simply “walking into a job”. The difficulties that she would face at this time in her life, with the medical conditions that she is receiving assistance with, and at her age, are manifest. Accordingly, I am satisfied this factor significantly supports the wife.
The need to protect a party who wishes to continue their role as a parent
Both of these parties wish to continue their role as a parent. The husband presently fills that role as the child lives with him. It has not impacted his ability to earn income and participate in employment.
If either party is cohabiting
Neither is.
The terms of any order and its impact upon the property of the parties or bankruptcy
Any order that is made, irrespective of its quantum, will not impact upon the property of the parties. That would arise if the order that was made was of such magnitude as to render the company incapable of meeting its expenses as and when they fell due. However, the wife was, until quite recently, receiving an amount substantially greater than that which she seeks by way of spouse maintenance. In addition, she was receiving additional payments comprising superannuation of $25,000 a year, leave and long service leave entitlements and the like as well as payment of relevant state or federal taxes in relation to payroll and matters of such nature, all of which are now saved.
The terms of any order to be made and its impact upon a party to the marriage or other persons
The impact on the wife of an order will be highly beneficial. She will return to receiving an income stream that will enable her to maintain a reasonable standard of living in the circumstances. It will be a far lower standard of living than she has previously enjoyed.
$750 per week is far from a significant amount of money. $750 a week, although thankfully the wife will not have a housing cost because the home in which she resides is unencumbered, is $39,000 per year. That is significantly less than average weekly income. It is roughly double the poverty line[1]. In those circumstances clearly the wife’s claim will place her barely above subsistence and nowhere towards that which she had previously enjoyed.
[1] $342.91 per week as at June 2014 without housing cost.
The husband on the other hand, absent any evidence led which supports his proposition that the business has had a significant downturn on any basis – and as I have discussed above, it is simply not open to the husband to suggest that the wife’s absence as an employee could have impacted the company’s bottom line as he asserts that she never really did anything for the business anyway – will continue to maintain the same standard of living simply absent his wife.
Child support paid
The wife does not presently pay child support as she does not have an income that would lead her to be assessed. If an assessment were issued at present, based upon her income for the last financial year, it would require a significant payment as her income was approaching $100,000 per annum. However, that income is clearly inaccurate and irrelevant as regards present circumstances and, accordingly, as soon as such an assessment was issued the wife would be entitled to lodge an income estimate or make a change of assessment application and for that matter provide a copy of these orders and Reasons to demonstrate the veracity of her allegation that her income is in fact $39,000 comprising spouse maintenance payments. None of that changes the reality that the husband now has the support of the one child of the relationship who lives in his care and absent payment of child support at present.
Other facts and circumstances
I am satisfied the evidence is sufficiently canvassed.
As would be apparent from the above discussion I am satisfied that:
a)The wife meets the criteria in sections 72(b) and (c) which would establish her entitlement and her inability to support herself;
b)I am satisfied that the wife does not have income or resources available to meet her expenses at this point;
c)I am satisfied that the husband has a capacity to provide spouse support to the wife and at the rate which the wife seeks, namely, $750 per week. Accordingly, I propose shortly to make an order in that quantum.
That leaves the issue of the order to be made by consent and the balance of case management orders.
The husband has indicated his consent to the order which the wife now seeks under the Fair Work Act. I have had regard to section 117 of the Fair Work Act. It requires that an employer must not terminate an employee’s employment unless they have given the employee written notice of the day of termination which cannot be before the date notice is given. Notice has never been given to the wife that her employment is to be terminated.
The husband asserts that this is on the basis that the wife “abandoned” her job. That does not obviate against the obligations under section 117. The husband must still give notice of his intention to terminate employment. The wife has not resigned and the section does not recognise “abandonment” as a valid basis of termination of the employee-employer relationship. The wife does not fall within any of the prescribed categories of persons to whom section 117 does not apply, they being set out in section 123, and on the basis of the husband’s concession that no notice is given clearly the wife is entitled to now receive payment in lieu of notice as set out in section 117(3).
As the wife has been employed by the company for more than five years her entitlement of payment in lieu of notice is four weeks and increased (subsection (b)) by a further one week payment as she is an employee over the age of 45 years and has completed more than two years of continuous employment. Thus the order that is sought is entirely appropriate.
The wife is also entitled, in addition to payment in lieu of notice, to receive the amounts that are sought in the order as proposed for accrued long service leave, annual leave and the like. They are obligations separate and distinct from the determination of issues between these parties under the Family Law Act. They are legal rights rather than the discretionary determination of entitlements.
That is a point particularly made as the wife had sought assistance through the Fair Work Ombudsman. On 29 July 2014 the wife received correspondence from the Fair Work Ombudsman which indicated the following:
The Fair Work Ombudsman has advised your employer and husband...[conflating the two, as the wife's employer was not her husband but a company controlled by the husband, a separate legal entity and with separate legal standing]...of your request for assistance and has sought a voluntary outcome. Your employer and husband have advised the Fair Work Ombudsman that your entitlements will be dealt with through your divorce settlement which is currently in the hands of the lawyers.
The two regimes, the creation of workplace entitlements under the Fair Work Act and the discretionary adjustment of interests in property or determination of other rights and entitlements under the Family Law Act, are separate and distinct. That they have been conflated by the Ombudsman is unfortunate. That they have been further conflated by the Ombudsman such as to treat the wife’s employer, being the company, with the husband, its director and shareholder is highly regrettable.
The husband consents to the order and that will, if nothing else, avoid the need for further application by the wife either to the Fair Work Commission or this Court in its general federal law jurisdiction. I am content and satisfied that the order can and should be made and, as this Court exercises jurisdiction under the Fair Work Act, I am content that I have jurisdiction and can make the order appropriately and with the consent of the parties.
As regards case management I am conscious that proceedings conducted in this Court do not require attendance at a Conciliation Conference. Section 79(9) of the Family Law Act makes that much clear. I am satisfied however that it would be beneficial and appropriate for these parties to attend some form of dispute resolution, particularly as the parties have indicated that they have negotiated and expressed a mutual intent to do so and by the husband travelling to Sydney for the purpose of participating in private mediation funded by him, at least at first instance, so that the parties can seek to discuss and resolve, and one would hope reach resolution on a final basis with respect to all controversies between them, both financial and with respect to parenting.
I will shortly make orders pursuant to section 13C requiring that the parties attend mediation with an accredited family dispute resolution practitioner and certain further orders to facilitate that mediation as effectively as possible.
The final issue to be dealt with is a plea for relief as regards parenting orders. That plea is introduced by the husband within his Response. There are two difficulties with that. Firstly, the husband and wife have not attended Family Dispute Resolution nor have they attempted to do. Nor have they sought an exemption from attending.
Section 60I of the legislation requires that the Court “…must not hear an application in relation to a child unless there is filed with the Court a certificate issued by a family dispute resolution practitioner” or unless an exemption is granted. As neither circumstance exists I am not satisfied that the Court has jurisdiction to entertain the application and I will strike it out.
The second difficulty arises as the application made by the husband in his Response seeks only interim relief. The Federal Circuit Court Rules 2001 make clear in part 4 that interim relief can only be sought when there is also before the Court a plea for final relief. In those circumstances I am, again, not satisfied that it would be appropriate to allow the application to be maintained and will thus strike out that portion of the Response.
That is not to be pedantic, pernickety or niggardly as regards the desire of the husband to resolve those issues. It is simply to acknowledge, as Parliament has through the passage of section 60I, that it is desirable and preferable for the parties to seek to negotiate arrangements and to receive assistance in doing so before invoking the Court’s jurisdiction.
I certify that the preceding one hundred and fifteen (115) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 24 February 2015
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Consent
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Costs
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Remedies
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Procedural Fairness
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Discovery
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