Parentino and Parentino (No. 2)

FAMILY COURT OF AUSTRALIA

PARENTINO & PARENTINO (NO. 2)

[2016] FamCA 1107

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife seeks periodic and lump sum spousal maintenance – Where the Court finds the wife is unable to support herself adequately for the purposes of section 72 of the Family Law Act 1975 (Cth) – Extent of the capacity of the husband to meet such an order – Where the husband is able to draw down on capital – Order made for the wife to receive periodic spousal maintenance – Where it is inappropriate for the wife to seek funding of her legal representation through an application for spousal maintenance – Order made for the wife to receive lump sum spousal maintenance for the purpose of a rental bond.

Family Law Act 1975 (Cth) ss 72, 74, 75, 80
Family Law Rules 2004 (Cth) rr 4.15

Brown & Brown (2007) FLC 93-316
Drysdale & Drysdale [2011] FamCAFC 85
Edgar & Strofield [2016] FamCAFC 93
Hall v Hall (2016) 332 ALR 1
Maroney & Maroney [2009] FamCAFC 45
Simpkin & Simpkin [2016] FamCA 766
Stein & Stein (2000) FLC 93-004
Vautin & Vautin (1998) FLC 92-827

APPLICANT:

Ms Parentino

RESPONDENT:

Mr Parentino

FILE NUMBER:

PAC

906

2016

DATE DELIVERED:

21 December 2016

PLACE DELIVERED:

Sydney

PLACE HEARD:

Parramatta

JUDGMENT OF:

McClelland J

HEARING DATE:

21 November 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Gardener

SOLICITOR FOR THE APPLICANT:

Slater & Gordon Lawyers

COUNSEL FOR THE RESPONDENT:

Ms Judge

SOLICITOR FOR THE RESPONDENT:

Collins Legal

Orders pending further order

The husband is to pay to the wife, by way of periodic spousal maintenance, the sum of $1020 per week with the first payment to be made seven (7) days from the date of these Orders and weekly thereafter.
Within seven (7) days of the wife providing the husband with details of a bond that she is required to pay for rental accommodation that she intends to secure for herself and the children, the husband is to pay to the wife a lump sum payment of not more than $2080 in respect to that bond.
The balance of the wife’s Application in a Case filed 16 September 2016 is stood over to a date to be fixed by the List Clerk NOTING THAT the matter may be listed on forty-eight (48) hours’ notice to the parties.

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

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

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: PAC 906 of 2016

Ms Parentino

Applicant

And

Mr Parentino

Respondent

REASONS FOR JUDGMENT

Introduction

This matter involves an application by the applicant wife, Ms Parentino (“the wife”), for lump sum spousal maintenance, or in the alternative, an order for periodic spousal maintenance. The application for lump sum spousal maintenance was also expressed to be in the alternative as a “partial property settlement”.
At the hearing, on behalf of the respondent husband Mr Parentino (“the husband”), it was indicated that his understanding was that the Court was considering only the wife’s application for spousal maintenance and not a partial property settlement. In the absence of a transcript of the earlier proceedings, I decided to proceed on that basis and therefore I have considered only the wife’s application for spousal maintenance.
I have determined that, pending final hearing, the wife is entitled to periodic spousal maintenance together with a small lump sum in respect to a bond that she will be required to pay in the event of securing rental accommodation for herself and the parties’ two children. The wife has not, however, satisfied me that it is appropriate for a lump sum payment to be made to her by the husband and to be categorised as either as spousal maintenance or as an interim property distribution.

Background

The wife is 43 years of age and the husband is 45 years of age. They were married in 2006 and separated on a final basis on 27 November 2015.
There are two children of the marriage; B who is currently aged 9 and C who is currently aged 5 years. The children are both enrolled at G School.
On 11 April 2016 Hannam J made interim parenting orders which were as follows:
1.      The children [B] born … 2007 and [C] born … 2011 live with the Mother.
2.      The children spend time with the Father as follows:
a.From 10.00am until 1.00pm on 17, 24 April and 1 May 2016;
b.From 10.00am until 1.00m on 7 May 2016;
c.From 10.00am until 4.00pm commencing from 15 May 2016 and continuing each Sunday thereafter.
3.      The time which the children are to spend with the father in Order 2 shall at all times be supervised by the father’s sister, [Ms D] and in the event that the said supervisor should be unable or unwilling to act as supervisor on any occasion then the father’s time shall be suspended on such occasions.
4.      All changeovers are to occur at the mother’s residence and the supervisor is to be present at changeover.
5.      The father is restrained from consuming alcohol or taking any illicit drugs and other substances at all time whilst the children are in his care and for at least 48 hours prior to the commencement of such times.
6.      The father have exclusive use and occupation of the property at [E Street, Suburb F] commencing 2 May 2016 and noting that the property is in the father’s sole name and unoccupied and that it may be inconsistent with an interim and/or provisional AVO.
7.      An appointment with a Family Consultant for the purposes of a children and parents issues assessment as part of the Child Responsive Program has been arranged for 18 July 2016 and the usual listing and time frame will follow that event.
8.      Written reasons to be delivered on a date to be advised.
During the marriage the parties resided at E Street, Suburb F (“the Suburb F property”). The husband was granted exclusive occupation of the Suburb F property pursuant to the orders of her Honour. The husband has since relocated to the parties’ property at H Street, Suburb I (“the Suburb I property”). The wife and the children meanwhile currently live with the wife’s parents.
The husband acknowledges that during the parties’ marriage the wife was the children’s primary carer, although he spent time with the children while he was at home in the evening and on weekends as well as holidays.
The husband further acknowledges that the wife ceased working shortly before the birth of B and has not returned to full time employment. However, from time to time, the wife has undertaken work of an administrative nature associated with the parties’ business.
When the parties met the husband was operating a business as a sole trader. During the marriage the husband ceased operating as a sole trader and the husband and wife established a partnership to run the business which became known as “Company J”.
At paragraphs 95 of his affidavit filed 7 April 2016, the husband says that as at the date of separation the parties had the following assets and liabilities:
Assets
(b)[The Suburb F property];
(c)[The Suburb I property], which was subject to a mortgage with Citibank;
(d)An interest in the off the plan property at [Suburb K];
(e)The partnership and the business [Company J];
(f)Funds in the Joint Bank Account;
(g)Funds in the Business Transaction Account;
(h)Savings including approximately $240,000 in cash in a safe at home;
(i)Superannuation;
Liabilities
(j)Mortgage over [The Suburb I property], Citibank;
(k)Credit card liabilities including my Mastercard, [the wife]’s Myer card and [the wife]’s Visa card;
(l)Unpaid invoices/creditors invoices for Company J
The husband asserts that, shortly after 27 November 2015, he attempted to access the parties’ joint account, the business account for the partnership and his net banking account and discovered that his access to those accounts had been blocked.
The husband says that this resulted in him being unable to meet the liabilities of the partnership and accordingly, he established a business known as L Pty Ltd. It did not appear to be contested that L Pty Ltd took on all of the existing Company J work and outstanding invoices.
The husband stated that the income he earns from L Pty Ltd is paid into a business transaction account described as the “L Pty Ltd account”.
The husband alleges that, since separation, the wife has had access to the parties’ joint account which, as at 7 March 2016, he asserts held funds totalling $75 666.17.
Further, the husband asserts that the parties will share in the return of a deposit of $100 000 which the parties had paid in respect to the proposed purchase of a property at Suburb K. The parties no longer intend to proceed with that purchase.

The wife’s application

In her Application in a Case filed on 16 September 2016 the wife sought the following orders:
1. That the Respondent pay to the Applicant the sum of $100,000 within 42 days of the date of these Orders, such sum to be deemed as lump sum maintenance, or in the alternative, a partial property settlement.
2. In the alternative to Order 1, the Respondent shall pay to the Applicant the following amount:
(a) A sum of $20,000 payable within 14 days of the date of these Orders; and
(b) Periodic sums of $1,000 per week into an account nominated by the Applicant, with the first payment to be made 7days [sic] from the date of these Orders and continuing each week thereafter pending further orders.
3. That pending further order, the Respondent is to:
(a) pay all costs associated with maintaining private health insurance for the Applicant and the children at or above the current level and shall be liable for any gap payments that are incurred in respect of any medical treatment concerning the children within 7 days of being provided with a evidence [sic] of such payments; and
(b) pay any current and future fees charged by [G School] in respect to the children’s school enrolment, as and when such fees fall due.
4. That both the Applicant and Respondent do all such acts and sign all such necessary documents to complete the purchase of [M Street, Suburb K] in the state of New South Wales (the [Suburb K] property) as and when required under the terms of the contracted entered by the parties.
5. That both the Applicant and Respondent do all such acts and sign all such necessary documents to obtain finance in joint names sufficient to meet the balance of the purchase price for the [Suburb K] property, stamp duty and all other costs associated with the purchase of the [Suburb K] property.
6. Upon completion of the purchase of the [Suburb K] property, the Respondent shall pay all mortgage repayments, council and water rates, insurances (at or above the current level), maintenance costs and other outgoings associated with the property as and when such expenses fall due.
7. That pending further order, an Order be made restraining the Respondent from selling, assigning, transferring, disposing, or otherwise dealing with the interest he holds in the properties at:
(a) [E Street, Suburb F] in the State of New South Wales and more particularly described in Certificate of Title Folio Identifier … (“the [Suburb F] property”); and/or
(b) [H Street, Suburb I] in the State of New South Wales more particularly described in Certificate of Title Folio Identifier … (“the [Suburb I] property”)
without the prior consent of the Applicant in writing.
8. That pending further order, the Respondent shall pay all Council and Water rates and ensure that all obligations under any loan secured by mortgage over either of the [Suburb F] or [Suburb I] properties including payment of any instalment of principal and interest are met within the terms of the loan agreement and the Respondent shall be otherwise restrained from further encumbering or drawing down funds in relation to loan facility secured over either property.
9. That pending further order, the Respondent shall at all times ensure that each of the [Suburb F] and [Suburb I] properties have a current Certificate of Insurance providing cover at the current level in respect of loss and damage against the land and building and the Respondent shall provide Applicant [sic] with evidence of current policy and all such renewals.
10. That the Respondent provide to the Applicant’s solicitor within 14 days from the date of these Orders:
(a) a list of all bank accounts and credit cards held in his sole name, or jointly with any other person and including any business accounts or business credit cards;
(b) all documents in his possession relating to any previous family law proceedings which the Respondent was a party to and the full details of the other party;
(c) Full particulars together with supporting documentation in respect of any money placed into or removed from the [Suburb F] property from the 12 months prior to and in the period following separation;
(d) Full particulars together with supporting documentation of all income collected and received by the Respondent for or on behalf of [Company J] from 27 November 2015 to present;
(e) Complete copies of the Respondent’s work diaries held for 2014, 2015 and 2016 together with all job sheets and any other documents or materials showing the daily attendances by the Respondent and any employee of [Company J] or [L Pty Ltd] at jobs which either of the said entities was engaged to perform with particulars to include the job name, address and time spent at the job;
(f) Full particulars in relation to the interest he holds and/or has held since 1 July 2013 in any business, partnership, company or trust by providing the following:
i. copies of the financial statements, the balance sheets, profit and loss accounts 3 most [sic] recent financial years;
ii. depreciation schedules;
iii. taxation returns and assessments for the 3 most financial [sic] years;
iv. the corporation’s most recent annual return that lists the directors and shareholders and any business activity statements for the past 12 months; and
v. Management accounts showing monthly reporting on all income and expenditure for the past 12 months and on an ongoing basis within such reports to be made available to the Applicant on the 14^th of each month.
(g) Full particulars of all income that he has derived or received since 1 July 203, including but not limited to, employment, dividends, profits, investments and gifts with such particulars to show the amount of income received, the source and the manner by which such income was received.
11. That within 14 days from these Orders, the Respondent is to advise in writing whether he accepts the values being contended by the Applicant in correspondence sent to the Respondent’s solicitor on 15 September 2016 concerning the [Suburb F] and [Suburb I] properties and in the event he is not prepared to accepts [sic] either or both values then:
(a) The Applicant shall nominate three valuers for each property where the value is in dispute within a further 14 days;
(b) The Respondent shall select one of the nominated valuers within a further 7 days;
(c) The Solicitor for the Applicant shall prepare the draft letter of instruction to be forwarded to the valuer; and
(d) The parties shall be equally responsible for the costs of the valuation.
12. The Respondent to pay the Applicant’s costs of and incidental to this Application.
As noted above, I intend only to consider with the wife’s application for interim spousal maintenance.

The Law

In the recent case of Hall v Hall (2016) 332 ALR 1 (“Hall v Hall”), the High Court set out the relevant legislative requirements to apply in considering an application for interim spousal maintenance as follows:
3. … The gateway to the operation of Pt VIII in relation to spousal maintenance is in s 72(1). That sub-section provides that "[a] party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately … having regard to any relevant matter referred to in [s] 75(2)".
4. The liability of a party to a marriage to maintain the other party that is imposed by s 72(1) is crystallised by the making of an order under s 74(1). That sub-section provides that, "[i]n proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part".
5. A court exercising the power conferred by s 74(1) is obliged by s 75(1) to take into account the matters referred to in s 75(2) and only those matters. Those matters are presented as a comprehensive checklist. They include what s 75(2)(b) refers to as "the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment". They also include, by virtue of s 75(2)(o), "any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account".
…
8. Unlike a court exercising the power to make an urgent order conferred by s 77, a court exercising the power to make an interim order under s 74(1) must be satisfied of the threshold requirement in s 72(1) and must have regard to any matter referred to in s 75(2) that is relevant. No doubt, on an application for an interim order "[t]he evidence need not be so extensive and the findings not so precise" as on an application for a final order. But there is nothing to displace the applicability to an exercise of the power conferred by s 74(1) of the ordinary standard of proof in a civil proceeding now set out in s 140 of the Evidence Act 1995 (Cth). A court determining an application for an interim order under s 74(1) cannot make such an order without finding, on the balance of probabilities on the evidence before it, that the threshold requirement in s 72(1) is met having regard to any relevant matter referred to in s 75(2).
(Footnotes omitted)

Issues

The issues for determination therefore are:
i.Is the wife unable to support herself adequately as contemplated by s 72(1) of the Family Law Act 1975 (Cth) (“the Act”) and if so, to what extent (i.e. the gateway requirement)?
ii.What are the wife’s reasonable needs?
iii.What capacity does the husband have to meet a spousal maintenance order, if such an order were to be made?
iv.If (i) to (iii) favour an order for spousal maintenance being made, what order is reasonable having regard to s 75(2) of the Act?

Evidentiary challenges in interim proceedings

Making findings in respect to these issues can be difficult in interim proceedings. As the Full Court recently said in Edgar & Strofield [2016] FamCAFC 93 at [15]:
…the limits to an interim hearing are well known. Disputed issues of fact cannot be resolved at an interim hearing...
Nevertheless, despite these limits, as noted, in Hall v Hall, the High Court confirmed that an applicant seeking interim orders for spousal maintenance nonetheless carries the evidentiary burden as set out in s 140 of the Evidence Act 1995 (Cth).

Consideration

Is the gateway requirement of section 72(1) satisfied?

In this matter it is not in dispute that the wife has the care and control of the two children of the marriage who are under the age of 18 years.
The husband, however, disputes that this results in an inability of the wife to support herself adequately because:
a)the wife has had, and continues to have, access to funds that were previously joint funds of the parties; and
b)the wife has not attempted to exercise her income earning capacity.

In Brown & Brown (2007) FLC 93-316 at 81,455-56 the Full Court summarised the principles to be applied in determining whether a party has the capacity to support themselves adequately as follows:
·The word “adequately” is not to be determined according to any fixed or absolute standard.
·The idea that “adequate” means a subsistence level has been firmly rejected.
·Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.
·In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.
·It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.
·However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
As noted, it is not in dispute that the wife is the primary carer of the parties’ two daughters. As will be discussed in considering the factors set out in s 75(2) of the Act, it is reasonable to assume that having the responsibility for the primary care of the children impacts upon the wife’s ability to engage in full time employment, which in turn impacts on the wife’s income earning capacity.
Further, in terms of s 72(1)(c), it is noted that the wife has been out of the paid workforce for approximately nine years, save as to the extent that she has undertaken some administrative duties in respect to the parties’ business. It is reasonable to assume that returning to full time employment after a period of nine years would require a period of adjustment and quite possibly supplementary training.
Accordingly, while I am satisfied that the wife has an income earning capacity, that capacity is limited by her responsibilities as the primary carer of the parties’ two children and by the fact that it is reasonable to assume that she would face some challenges in re-entering the workforce full time. Insofar as those factors impact upon the wife’s income earning capacity, they necessarily impact upon her ability to support herself adequately and I am therefore satisfied that the gateway requirement set out in s 72(1) of the Act has been met.

What are the wife’s reasonable needs?

In her Financial Statement filed on 16 September 2016 the wife sets out that her only income consists of the single parent pension totalling $378 per week. This is consistent with Annexure N to the wife’s affidavit filed on 18 November 2016, which shows fortnightly deposits from Centrelink into the wife’s bank account. The most recent deposit by Centrelink was on 10 November 2016 in the sum of $756.70.
In considering an application for spousal maintenance, it is noted, however, that s 75(3) provides that the Court is required to “disregard any entitlement of the party… to an income tested pension, allowance or benefit”.
Further, s 75(2)(na) requires the Court to have regard to “any child support received under the Child Support (Assessment) Act 1989 (Cth)”. In that context, the wife acknowledges receiving child support from the husband in the sum of $281.35 per week.
The wife’s weekly expenses, as set out in Part N of her Financial Statement filed 19 September 2016, are as follows:
a)Food – $150;
b)Household supplies – $50;
c)Gas – $50;
d)Electricity – $100;
e)Heating fuel – $20;
f)Telephone – $100;
g)Motor vehicle (petrol) – $50;
h)Motor vehicle (maintenance) – $50;
i)Clothing and shoes – $20;
j)Medical, dental and optical (not including health insurance premiums) – $50;
k)Chemist/pharmaceutical – $10;
l)Repairs – furnishings and appliances – $50;
m)Gifts – $20;
n)Hairdressing and toiletries – $20; and
o)Storage – $185.
Total: $925
At Part G of her Financial Statement filed 19 September 2016, the wife also lists the following weekly expenses:
a)Comprehensive car insurance – $22;
b)Private health insurance – $83;
c)Motor vehicle registration – $50;
d)Visa card repayments – $30; and
e)Myer store card repayments – $15.
Total: $200
Therefore, the wife asserts that her weekly expenses total approximately $1125 per week.
In addition, the wife asserts that she incurs expenses in relation to the children which total $770 per week. However, in the context of an application for spousal maintenance, it is necessary to distinguish between the expenses of the applicant spouse and the expenses of the children of the marriage.[1]
[1] Stein & Stein (2000) FLC 93-004.
It is to be noted that the husband asserts that the wife has not established “the basis for what [she] alleges would be her average living expenses”.[2]
[2] Husband’s affidavit filed 10 November 2016 at paragraph 58.
As discussed, in Hall v Hall, the High Court noted that even in interim proceedings there nonetheless needs to be an evidentiary basis justifying the orders which are sought by an applicant for relief.
In that respect r 4.15 of the Family Law Rules 2004 (Cth) (“the Rules”) provides:
FAMILY LAW RULES 2004 - RULE 4.15
Evidence to be provided
(1) On the first court date and the hearing date of an Application for spousal or de facto maintenance, each party must bring to the court the following documents:
(a) a copy of the party's taxation returns for the 3 most recent financial years;
(b) the party's taxation assessments for the 3 most recent financial years;
(c) the party's bank records for the period of 3 years ending on the date on which the application was filed;
(d) if the party receives wages or salary payments--the party's payslips for the past 12 months;
(e) if the party owns or controls a business, either as sole trader, partnership or a company--the business activity statements and the financial statements (including profit and loss statements and balance sheets) for the 3 most recent financial years of the business; and
(f) any other document relevant to determining the income, needs and financial resources of the party.
Note 1: Documents that may need to be produced under paragraph (f) include documents setting out the details mentioned in rule 13.04.
Note 2: For modification of a spousal maintenance order, see section 83 of the Act. For modification of a de facto maintenance order, see section 90SI of the Act.
(2) Before the hearing date, a party must produce the documents mentioned in subrule (1) for inspection, if the other party to the proceedings makes a written request for their production.
(3) If a request is made under subrule (2), the documents must be produced within 7 working days of the request being received
This rule has not been complied with by either of the parties to date. Consequently, there is insufficient evidence to satisfy me that the wife incurs the expenses that she has set out in her Financial Statement.
In that context I have concerns with a number of the items claimed by the wife as part of her weekly expenses. In that respect I note the following:
·The wife resides with her parents whom the wife says do not charge her board and cover all of their own utilities (paragraph 54 of her affidavit filed 16 September 2016). Accordingly, it is inappropriate for the wife to assert expenses related to their home such as house repairs, electricity, gas, heating fuel, repairs (furnishings & appliances).
·The wife deposed that her parents cover her storage costs (paragraph 55 of her affidavit filed 16 September 2016). Accordingly, it is also inappropriate for the wife to include the amount of $185 per week.
·The amount claimed by the wife in respect to her telephone at $100 per week which equates to approximately $5200 per year, is simply excessive. I propose that an amount of $25 per week is more appropriate.
·The amount claimed by the wife in respect to food is also somewhat excessive in circumstances where it equates to the same amount spent by her per week on the parties’ two children. Accordingly I consider that an amount of $100 to be more appropriate.
·The wife has the capacity to discharge both of her credit card liabilities utilising her savings.
Accordingly, I determine that a reasonable amount to allow for the wife’s weekly expenditure, excluding rent, is $500 per week.
In that context I note that in Drysdale & Drysdale [2011] FamCAFC 85, Coleman J of the Full Court said:
40. It is the nature of an interim spousal maintenance order that, as here, it is made after a circumscribed hearing, in reliance upon evidence which is incomplete and/or unable to be fully tested. Whilst different to urgent spousal maintenance pursuant to s 77 of the Act, orders for interim maintenance are as their title implies. The Court hearing and determining financial proceedings between the parties on a final basis, as clearly will occur in this case in the absence of any intervening settlement, has abundant power to accommodate within its final orders, whether by way of settlement of property or spousal maintenance, any anomalies which full agitation of disputed issues of fact may reveal to have resulted from an earlier interim spousal maintenance order…
It is further noted that it is the wife’s case that her current accommodation with her parents is unsatisfactory and she should be able to obtain appropriate accommodation for herself and the parties’ two children. This is entirely reasonable and consistent with the concept of seeking to support herself adequately. In that context, I note that in McCrossen & McCrossen (2006) FLC 93-283 at 80,838, the Full Court said that the question as to whether or not a person is able to support themselves “adequately” is:
not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances.
(References omitted)
A reasonable standard of living in the case of the wife, in my view, is one where she has independent accommodation that is adequate for herself and for the parties’ two children.
The wife has provided an evidentiary basis for seeking an amount of between $520 and $650 per week for suitable rental accommodation within the local area where she currently resides and which is close to the children’s current schools.[3]
[3] Wife’s affidavit filed 18 November 2016 at Annexure ‘K’.
Accordingly, I determine that the wife’s reasonable needs are $1020 per week - being the combined amount of $500 and $520.
As noted, the husband disputes the wife’s claim that she requires spousal maintenance because the husband alleges that the wife has had and continues to have access to capital funds.
However, in that respect, I note that the Full Court, citing Mitchell & Mitchell (1995) FLC 92-601, observed that:
It is not necessary for an applicant for maintenance to use up all of his or her assets and capital in order to satisfy the requirements that he or she is unable to support himself or herself “adequately”.

What capacity does the husband have to meet a spousal maintenance order, if such an order was to be made?

The husband asserts that he does not have the capacity to meet a spousal maintenance order as sought by the wife. In that respect, the husband asserts that he receives an income of $577 per week from L Pty Ltd. He disputes the wife’s contention that bank statements of the business (Exhibit 1) establishes that the revenue of the business is available for his personal use. Specifically, the husband asserts that, other than the income referred to in his Financial Statement, the funds of the business are fully committed to its ongoing operation.
In these interim proceedings it is unnecessary to resolve that factual controversy. As was made clear in Maroney & Maroney [2009] FamCAFC 45, in determining the “capacity” of a party to satisfy an order for interim spousal maintenance the Court is not confined to considering only that party’s income, but rather:
Once a party…establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse’s reasonable needs, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or borrowings against capital assets.[4]
[4] at [56].
Leaving aside the complicated issues regarding the potential value of L Pty Ltd, the husband’s Financial Statement filed 21 November 2016 states that the Suburb F property, which is in the husband’s sole name, is valued at $760 000 and is unencumbered. The husband’s Financial Statement further states that the Suburb I property, which is also in the husband’s sole name, is valued at $1 950 000 and has a mortgage of $250 000.
I am therefore satisfied that the husband has the capacity to satisfy an order for interim spousal maintenance by drawing down against those assets.

What order is reasonable having regard to section 75(2) of the Act?

Section 75(2) provides that the matters to be taken into account in considering whether to make an order for spousal maintenance are:
(a)      the age and state of health of each of the parties; and
(b)      the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)      whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)      commitments of each of the parties that are necessary to enable the party to support:
(i)       himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)      the responsibilities of either party to support any other person; and
(f)       subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)      any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)      where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)      the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)     the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)       the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)      the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)       the need to protect a party who wishes to continue that party’s role as a parent; and
(m)     if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n)      the terms of any order made or proposed to be made under section 79 in relation to:
(i)       the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)    the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)       a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)     the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)      any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)      the terms of any financial agreement that is binding on the parties to the marriage; and
(q)      the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In terms of s 75(2)(a) I note that the wife is 43 years of age and the husband is 45 years of age. Both are in good physical health, although the husband has suffered from episodes of depression that have required professional intervention. Those mental health issues do not, however, appear to have impacted upon the husband’s income earning capacity.
In terms of s 75(2)(b) the parties’ income, property and financial resources are set out in each of the parties’ Financial Statements filed in the proceedings. Both parties allege that their expenditure exceeds their income.
In addition, the husband alleges that the wife has not fully disclosed how she has utilised joint funds or has disclosed the extent to which she is able to currently access capital funds. Equally, the wife says that the husband has not provided full and frank disclosure of his financial circumstances.
The wife further asserts that L Pty Ltd is utilised by the husband to meet his personal expenses and is therefore a financial resource to the husband. I note that the husband has a degree of control over the company although, at this stage of the proceedings, it is not possible to ascertain the extent to which he may be able to borrow funds from the company. Nevertheless, on the evidence available, the company would appear to be either property of the husband or a financial resource of the husband.
As I have previously noted, the Suburb F and Suburb I properties are in the husband’s sole name and, in that respect, it is reasonable to assume that he has the capacity to deal with or otherwise borrow against the equity in those properties.
Further, I note that the wife alleges that the husband has the capacity to rent out the Suburb F property but, instead, has permitted friends to occupy the property rent free. The husband, on the other hand, asserts that the property is not in an appropriate state of repair to be commercially rented and that it is necessary for the property to be occupied in order for it to be insured. It is not necessary in these interim proceedings to make a finding as to whether the Suburb F property is currently in a sufficient state of repair to be commercially rented. I note, however, that there is at least the potential for necessary repairs to be undertaken and for that property to be rented out by the husband. That rental would provide an additional source of income for him.
The husband alleges that the wife has failed to fully exercise her income earning capacity. I have previously indicated that it is reasonable to assume that the wife’s responsibilities as the primary carer of the parties’ two children would impact upon her ability to engage in full time employment and therefore her income earning capacity. Similarly, as I have noted, it is reasonable that the fact that the wife has not been in full-time employment for a period of some nine years would present some challenges to the wife in re-entering the workforce, including the possibility of her having to update her skills. Nevertheless, I have given consideration to the fact that the wife does have some income earning capacity which she is not currently utilising.

In terms of s 75(2)(c) I note that the wife is the primary carer of the parties two children who are currently aged 9 and 5. This responsibility inevitably requires the wife to devote time to their care which undoubtedly impacts upon her earning capacity. The wife will also inevitably incur expenses in providing for the children’s physical, emotional and intellectual needs.
In terms of ss 75(2)(d) and (e) I have referred to what I have determined, on the available evidence, to be the reasonable expenses of each of the parties. I have also referred to the responsibilities of the wife in her capacity as the primary carer of the children.
A relevant consideration in respect to this matter is that it does not appear to be in dispute that the parties’ daughter, B, suffers from a number of health conditions. These are set out in paragraphs 43 to 48 of the wife’s affidavit filed 18 November 2016.
In terms of s 75(2)(f) I note that s 75(3) requires me to disregard the entitlement of the wife to an income tested pension.
I note that the Financial Statements of both of the parties sets out their respective superannuation entitlements. Those entitlements are not substantial and both parties are at an age where it can reasonably be assumed that they will not access their superannuation entitlements for a number of years.
In terms of s 75(2)(g) I have referred to the fact that the parties are entitled to enjoy a standard of living that is reasonable in all the circumstances. In that respect I note that, having regard to the husband’s Financial Statement filed 11 April 2006 as against the husband’s more recent Financial Statement filed 21 November 2016, it appears that he has been able to reduce the mortgage secured over the Suburb I property by approximately $77 000. It is also reasonable to assume that the husband’s financial circumstances are not so desperate that he finds it necessary to rent out the Suburb F property.
On the other hand, the wife is currently living with the parties’ two children at her parents’ home. This is a situation that she understandably finds less than satisfactory.
In terms of s 75(2)(h) there is no evidence before me that the wife intends to undertake an education course or training to update her skills in beauty therapy and/or administration with a view to returning to the workforce. Accordingly, save insofar as I have referred to the wife’s potential earning capacity if she were to undertake appropriate training to update her skills, this consideration is not relevant.
Section 75(2)(ha) is not a relevant consideration.
In terms of s 75(2)(j), in these interim proceedings, it is not possible to explore the extent to which the wife has contributed to the income earning capacity, property and financial resources of the husband. These will clearly be a significant issue at the final hearing. Nevertheless, the husband acknowledges that the wife has, during the marriage, taken on the responsibility as the primary carer of the children and this enabled him to devote time to building the parties’ business interests. The husband also acknowledges that the wife has undertaken administrative tasks associated with the parties’ business.
In terms of s 75(2)(k) it is noted that the parties were married for a period of approximately nine years. I have referred to the fact that the wife has not been in full-time employment since the parties’ first child was born. I have also referred to the fact that the wife’s responsibilities as the primary carer of the parties’ two children would have impacted upon her income earning capacity and her career development.
In terms of s 75(2)(l) I note that the wife wishes to continue to be the primary carer of the children. In circumstances where the children are spending a limited amount of time with the husband, it is inevitable that she will continue to fulfil that role. I further note that, in her capacity as primary carer of the children, the wife has referred to steps she is taking to address B’s health issues and she appears to be acting entirely appropriately in doing so.
Sections 75(2)(m) and (naa) are not a relevant considerations in this matter.
Section 75(2)(n) is not a relevant consideration at this stage of the proceedings.
In terms of s 75(2)(na) I note that the husband asserts that he is paying child support in the sum of $305 per week. This appears to be consistent with Annexure N of the wife’s affidavit filed 18 November 2016 which shows a credit entry in the wife’s bank account of $1219.17 for the month of October 2016 and also a further entry showing child support paid on 2 November 2016 for the same amount.
In terms of s 75(2)(o) I note that the wife has filed evidence of legal fees that she has incurred and is likely to incur in the future. These are referred to in the affidavit of Mr N, the wife’s solicitor, filed on 11 November 2016. The husband submitted that the wife’s application for spousal maintenance and, specifically lump sum spousal maintenance, should not be utilised as an alternative method of funding her legal representation. I agree with that submission. Nevertheless, the fact that the wife has incurred legal expenses and is likely to incur future legal expenses is a factor that I consider relevant insofar as it will impact upon the wife’s ability to draw upon capital that is available to her. At this point, the capital available to the wife appears to include an amount of $48 517 in a St George bank account ending 8773 and an amount of $2012 in a St George bank account ending 2431.
As I have previously noted, the husband asserts that additional funds are available to the wife. However, I have not been able to resolve that contention at this stage of the proceedings.
Sections 75(2)(p) and (q) are not relevant considerations.

Evaluation of section 75(2) considerations

Having regard to those s 75(2) considerations to which I have referred above, I am of the opinion that the wife’s responsibilities as the primary carer of the parties’ two children is the most relevant factor which justifies the Court making an interim spousal maintenance order.
It is unsatisfactory that the wife and the children are currently residing with the wife’s parents. The wife is entitled to obtain independent accommodation where she can care for the parties’ two children.
As against the wife’s needs I note that, even allowing for ongoing business expenses, the husband has been able to pay down a substantial amount of the mortgage secured over the Suburb I property. I further note that the husband’s financial resources are not so limited that he finds it necessary to place the Suburb F property on the rental market.
I further note that even leaving aside the question as to the extent to which L Pty Ltd is a financial resource of the husband, it is reasonable to assume that the husband has the capacity to borrow against the equity in the Suburb I and Suburb F properties in order to satisfy an order for interim spousal maintenance to the extent that I have quantified the wife’s needs. This is particularly the case in circumstances where the payment of interim spousal maintenance can be taken into consideration at final hearing in the context of a Court determining what might be a just and equitable adjustment of the parties’ matrimonial property.
Accordingly I have determined that the wife’s current circumstances are such that she is unable to support herself adequately and the husband has a capacity to provide financial support to the wife, at least to the amount that I have identified as being the wife’s reasonable needs.

Lump Sum Spousal Maintenance

The wife’s primary application was for an order that she be paid the sum of $100 000 from the husband by way of lump sum spousal maintenance.
Sub-section 80(1) of the Act relevantly provides:
(1) The court, in exercising its powers under this Part, may do any or all of the following:
(a) order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic sum;
…
In Vautin & Vautin (1998) FLC 92-827, the Full Court said at 85,423-4:
...in the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future. However, it is a power, the exercise of which may be appropriate in particular cases. It may be ordered, amongst other reasons, to meet non-periodic expenditure for the maintenance of that person where there is an established need and a capacity to pay. It is not confined to cases of the capitalisation of periodic maintenance and/or where periodic maintenance is unlikely to be paid because of concerns about the capacity or willingness of the liable parent to pay...
In this matter, the wife’s primary submission in respect to her need for a lump sum spousal maintenance is to enable her to fund her legal representation. The purpose of an order for spousal maintenance is, however, to provide the means whereby a party is able to adequately support themselves. I respectfully agree with the submission of counsel for the husband that it is inappropriate to seek such funds for the payment of legal fees under the guise of an order for lump sum spousal maintenance.
If the wife seeks a lump sum payment for that purpose, it should be properly framed and supported by appropriate evidence in terms of the relevant authorities. I have recently discussed some of the principles applicable to an order for an interim property distribution and costs for the payment of legal fees pursuant to s 117 in Simpkin & Simpkin [2016] FamCA 766.
In opposing the orders sought by the wife the husband disputes his capacity to pay spousal maintenance. However, there is no basis to assume that, in the event of such an order being made, it would not be complied with by the husband.
Further, other than in respect to the requirement for the wife to pay a rental bond, the wife has not presented evidence to satisfy me that a lump sum spousal maintenance order is required to enable her to support herself. Indeed, as previously noted, the wife has access to funds of at least $50 000. That amount will also be supplemented by any funds received as result of the return of the deposit in respect to the Suburb K property.
Accordingly, aside from ordering the husband to pay a sum in respect to a rental bond payable by the wife, being a sum which is either equivalent to four weeks rent, or not more than $2080, I do not propose to make an order that the husband pay a lump sum amount to the wife by way of spousal maintenance.

Orders

Accordingly, for the reasons set out above I make the orders as set out at the commencement of these Reasons for Judgment.

I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 21 December 2016.

Associate:

Date: 21 December 2016

[2016] FamCA 1107

21 December 2016

Key Legal Topics

Areas of Law

Civil Procedure

Family Law

Legal Concepts

Abuse of Process

Res Judicata

Costs

Stay of Proceedings