PETERS & GIANNOPOULOS
[2016] FamCA 260
•22 April 2016
FAMILY COURT OF AUSTRALIA
| PETERS & GIANNOPOULOS | [2016] FamCA 260 |
| FAMILY LAW – PROPERTY – interim – litigation funding – where the wife seeks a lump sum payment for the purpose of litigation funding and disbursement costs – where the wife suggests the husband has a significant entitlement to the accumulated wealth of a number of entities controlled by his parents – where the husband denies he has access to the financial resources alleged by the wife – where the husband is ordered to pay the wife a lump sum in direct deduction of the wife’s legal fees – where a “dollar for dollar” order is made in favour of the wife. FAMILY LAW – DISCOVERY – where the wife seeks that the husband produce a vast range of documents relating to the company and trust entities – where the husband opposes the order on the basis that he has already provided all of the documents in his possession, power and control – where consideration is given as to whether the husband has a right to have regard to the due administration of any trust in which he is a beneficiary and on that basis is entitled to call for documents – where the Court declines to make the order – where it is ordered that the husband provide discovery of bank statements. |
FAMILY LAW – SPOUSAL MAINTENANCE – interim – where the wife seeks an order that the husband pay spousal maintenance – where the husband opposes the order – where consideration is given to the extent to which the wife can support herself – where consideration is given to the wife’s capacity for employment – where consideration is given to the husband’s capacity to pay – where an order for spousal maintenance is made in favour of the wife.
| Family Law Act 1975 (Cth) s 72, 75, 79, 80, 117 Family Law Rules 2004 (Cth) ch 13 |
| Breen v Breen (1990) 65 ALJR 195 |
| APPLICANT: | Ms Peters |
| RESPONDENT: | Mr Giannopoulos |
| FILE NUMBER: | ADC | 3056 | of | 2014 |
| DATE DELIVERED: | 22 April 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 31 March 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Pyke QC |
| SOLICITOR FOR THE APPLICANT: | Tolis & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Richards |
| SOLICITOR FOR THE RESPONDENT: | Lempriere Abbott Mcleod |
Orders
That pursuant to section 117 of the Family Law Act 1975 (Cth) the husband do pay to the wife the sum of SIXTY THREE THOUSAND SEVEN HUNDRED AND SEVENTEEN DOLLARS ($63,717) with such sum to be paid to the trust account of Tolis & Co Lawyers and to be used in payment of the wife’s legal fees, costs and disbursements.
That within seven (7) days after the payment by or on behalf of the husband of any money in payment of accounts rendered by his solicitors including in relation to expenses associated with the preparation of his case, the husband pay or cause to be paid the same sum of money to the solicitors for the wife.
That within twenty four (24) hours after the payment by or on behalf of the husband of any money referred to in paragraph (2) hereof, the husband cause to be given to the wife’s solicitors a memorandum stating the amount or amounts so paid to the solicitors.
That all money paid to the solicitors for the husband including on his behalf arising out of paragraph (2) hereof, shall be held in trust by the solicitors for the husband and not applied in payment until such time as the same amount has been paid by or on behalf of the husband to the solicitors for the wife.
In the event that the payment referred to in paragraph (4) is not made within seven (7) days thereafter, the husband is to direct his solicitors to pay fifty (50) per cent of whatever is received by them in trust to the solicitors for the wife.
That the amount paid pursuant to these orders to the solicitors for the wife are to be applied by them in payment of the costs and disbursements incurred by the wife in the conduct of these proceedings.
That the husband pay to the wife the weekly sum of EIGHT HUNDRED AND ONE DOLLARS ($801).
That the husband pay registration, insurance, servicing and maintenance in respect of the 4WD motor vehicle registration number … PROVIDED that in any twelve (12) month period the extent of the husband’s liability shall be limited to TWO THOUSAND DOLLARS ($2,000).
That the question of the categorisation of any payments made pursuant to these orders shall be matters for the determination by the trial judge.
That the husband do provide mutual informal discovery and disclosure in respect of the following:
(a)copies of all bank statements of any account including any savings or loan account in the husband’s name (solely or jointly with any other person) as and from 1 July 2012.
That the interim proceedings be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Peters & Giannopoulos has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 3056 of 2014
| Ms Peters |
Applicant
And
| Mr Giannopoulos |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
By Amended Initiating Application filed 10 April 2015, Ms Peters (“the wife”) seeks final orders for property settlement, lump sum spousal maintenance, an order of departure from the administrative assessment of child support for B (“B”) born … 2007 and C (“C”) born … 2008 (“the children”) and a change to the parenting arrangements in respect of the said children such that they would primarily live with the wife and spend significant and substantial time with the husband.
In addition, the wife seeks interim orders by reference to the Amended Initiating Application summarised as follows:-
[2]That pursuant to section 117 of the Family Law Act 1975 (Cth) (“the Act”) the husband pay to the wife the sum of $200,000 by way of litigation funding.
[3]That in the alternative to paragraph 2 and pursuant to section 79 of the Act the husband pay to the wife the sum of $200,000 by way of interim or partial property settlement.
[4]That the cost of property valuations, accounting reports and forensic examination and analysis of the husband’s financial affairs be paid for solely by the husband.
[5]That the parties provide mutual informal disclosure and in particular that the husband produce a range of documents that relate to his personal accounts, savings and loans and a range of documents pertaining to any trust to which the husband or any company in which the company has or has had an interest at any time during the relationship and to the present has been a trustee, appointor or beneficiary.
Paragraphs 5.2.1 to 5.2.5 better particularise the description of the documents sought.
Paragraphs 5.3 and 5.4 seek documents that pertain to a range of corporate entities as described in 5.3.1 to 5.3.16 for the financial years 2007 to 2014 inclusive, together with memorandum and articles of association and incorporation, instruments in respect of shareholdings and “copies of all documents including but not limited to correspondence and/or company minutes, containing information and changes in respect of shareholdings and/or office holdings involving the husband or any entity related to the husband, including the companies listed herein, from the commencement of cohabitation until the present”.
Paragraphs 5.5 and 5.6 relate to copies of purchase/sale contracts, deeds of assignment, settlement statements and current title register searches for all real estate either owned by the husband or by any entity in which the husband is or was during the period of the cohabitation to the present an office holder, shareholder, trustee, appointor or beneficiary.
Paragraph 6 seeks that the husband pay to the wife urgent and/or interim spousal maintenance pursuant to s 77 of the Act in the sum of $1,120 per week.
Paragraph 7 seeks that the wife continue to have the use of a 4WD motor vehicle without interference and that the husband pay all registration, insurance, servicing, running and maintenance costs in respect of the said vehicle.
Paragraphs 8 and 9 are abandoned and the wife does not seek orders by way of a change to the parenting arrangements affecting the children.
The wife does not press her Application in a Case filed 4 February 2016.
By Amended Response filed 26 August 2015, Mr Giannopoulos (“the husband”) seeks to dismiss the interim orders sought by the wife.
The wife’s application is supported by the following documents:-
(1)Amended Initiating Application filed 10 April 2015
(2)Financial Statement of the wife filed 26 February 2016
(3)Affidavit of the wife filed 15 January 2015
(4)Affidavit of the wife filed 4 February 2016
(5)Affidavit of the wife filed 1 March 2016.
The husband’s response is supported by the following documents:-
(1)Amended Response filed 26 August 2015
(2)Financial Statement of the husband filed 9 March 2016
(3)Financial Statement of the husband filed 9 April 2015
(4)Affidavit of the husband filed 9 April 2015
(5)Affidavit of the husband filed 26 August 2015
(6)Affidavit of the husband filed 22 February 2016
(7)Affidavit of the husband filed 9 March 2016
(8)Affidavit of Ms D Giannopoulos (“the husband’s mother”) filed 9 March 2016.
The proceedings commenced in the Federal Circuit Court and were transferred to the Family Court of Australia on 13 October 2015 with the transfer order noting that the parties were to attend mediation.
Relevant to the interim proceedings are orders made 13 April 2015 by consent of the parties. The notation to the order is in the following terms:-
A.That the husband’s case as set out in his responding documents is as follows:-
(a)That he is providing financial accommodation for the wife on an interim basis;
(b)That he is borrowing funds in order to do so which is resulting in an increase in the husband’s liabilities by way of debit loan accounts in certain entities;
(c)That while it is not within the power of the husband to ensure that such payments will continue and he expects that he will be able to facilitate such payments continuing during the period of the adjournment;
2.…
3.That the wife’s case is that the husband has the income and financial resources to make all payments and his case is contested.
…by consent:
1. That the parties undertake discovery on oath within 28 days.
2. That the husband file and serve answering documents in relation to children’s issues within 28 days.
3. That during the period of the adjournment the husband shall use his best endeavours to ensure that the following payments are made to the wife for the benefit of the children:-
3.1 The wife’s rent of $620 per week;
3.2 The sum of $2,000 per calendar month;
3.3 All school fees, uniforms and other expenses for the children;
3.4 Extra-curricular activities of the children;
3.5 All health insurance and gap payments for the children at the present level of cover.
4.That during the period of the adjournment the husband shall use his best endeavours to ensure that the wife will continue to have full use of the [4WD] motor vehicle (registration …) and to pay all registration, insurance, servicing and maintenance costs.
5. That the husband and the wife be restrained and an injunction be granted restraining each of them from making any instrument or disposition by or on behalf of, or by direction or in the interests of, any party which is made or proposed to be made to defeat an existing or anticipated order in these proceedings or which is likely to defeat any such order, including but not limited to disposing of, transferring, encumbering, assigning, selling, or diminishing the value of the parties’ equity in any property to the marriage.
By way of notation to the order of 24 February 2016, the husband agreed that:-
From the husband’s own resources and cash held by him, he will pay rental and rental arrears due and payable by the wife at the premises in which she resides and will continue to pay $1,000 per month directed to the wife by electronic means, which sum includes the child support assessment of $509.67 a month.
At the commencement of the hearing each party tendered a costs statement pursuant to my order of 11 March 2016. To the date of the hearing the costs of the husband are in the sum of $63,717.01 of which $20,113.59 remains unpaid, with $43,603.42 having been paid principally by trusts under the control of the husband’s parents and debited to the husband’s loan account in such entities. It is anticipated that a further $4,420 will be incurred up to the completion of the hearing.
The wife has total costs paid and owing to 30 March 2016 in the sum of $187,409.32 of which $18,000 has been paid, leaving the balance of $169,409.32. It is anticipated that a further $3,069 will be incurred to the conclusion of the hearing.
BACKGROUND
The parties commenced their relationship in September 2002 and were married in 2003.
As at the date of marriage, the wife had undertaken some volunteer telephone counselling work for a period of about two years. She completed a bachelor degree in 2001 and a post graduate degree in 2006. She says that she has never worked in her chosen profession and considers that she would need to complete a masters degree if she were to practice.
She worked for some time in a bank but it is conceded that she ceased employment consequent upon the birth of their first child. In 2012 she enrolled but did not complete a course in music.
More recently the wife worked as a receptionist. By letter dated 24 February 2016 the wife’s employment was terminated and she has thereafter remained unemployed. She has however enrolled and now commenced as a full-time student studying a bachelor degree in another discipline. It is the wife’s hope and expectation that the course will lead to employment. The other advantage is that the wife considers that eventually, if successful, the working hours and commitments of such a position will assist in the care arrangements for the children.
The husband has two adult siblings. The husband concedes that his parents have accumulated substantial wealth. He asserts that the assets are held predominantly if not exclusively by his parents and importantly, they have not “devolved significant assets to me or my sisters”. That contention is central to the proceedings.
The husband qualified as in a profession and practised 1997 to 2010. All work undertaken for his parents occurred as an employee and accordingly accounts were rendered and his employer from time to time gained the benefit.
The husband ceased employment in 2010. It appears uncontroversial that he no longer has a professional license. He is now the managing director of E Pty Ltd (“E”) which operates a shopping centre. He asserts that he holds no shares in E and is one of five directors including his parents and two other directors who are not related to the husband’s family. He receives a salary and is a PAYG employee.
The husband concedes that from time to time he has undertaken consultancy work for his parents, has rendered accounts and has been paid on a commercial basis.
The husband accepts that he is a beneficiary of a number of trusts that are effectively controlled by his parents and has received distributions at his parents’ discretion.
The husband acknowledges that since separation his expenditure both in respect of the wife, himself and the children is significantly in excess of his average taxable income of about $105,004 between 2008 and 2014 financial years. His financial statement filed 9 March 2016 reflects a total income of $67,860. There is no obvious explanation as to why the husband’s current income is effectively two thirds of his previous average income up to 30 June 2014.
The husband reports that he has suffered with depression from 1993, currently has an anxiety disorder and receives therapeutic counselling from a psychologist. He says that his earning capacity is reduced on account of these matters, but there is no explanation as to why that would be the case and in what way his condition has been exacerbated since 2014 and perhaps of greater relevance, what is to be the likely prognosis. It is not asserted by the husband that his current level of income represents the extent of his earning capacity.
The parties separated in December 2012 and the wife left the former matrimonial home situate at F Street, Suburb G (“the Suburb G property”). The husband has remained in the Suburb G property whereas the wife and children when they are with her, have taken up rental accommodation. The orders reflect an agreement that the wife’s rent and other expenses would be paid. For his part, the husband says that the agreement was strictly for a period of 12 months and that the wife understood that the monies would be funded either directly from the husband’s parents and reimbursed to them by way of a debit to loan accounts in the husband’s name in various entities, or that he would be able to draw down on his loan account notwithstanding that the payments would likely render the husband in debit.
The husband complains that the arrangement has gone on significantly longer than anticipated and that the continued payment to the wife was beyond his financial resource and the best that he could do was to use his “best endeavours” to continue the promised payments. He continues to pay the sum of $1,000 per month to the wife purportedly from his own resources and acknowledging that the payment far exceeds his child support obligation of $509.67 per month. Moreover, the wife’s rent has also been paid up until either January or February 2016. The current status of the wife’s rent is uncertain, but in submissions it was asserted that her rent was now in arrears. The husband is prepared to continue the payment of $1,000 but is not able to pay the wife’s rent or indeed the further payment that she seeks by way of spousal maintenance adjustment.
The wife does not accept the husband’s assertion that he is impecunious. She clearly considers that whatever the arrangements may be, the husband is able to drawn down on monies available to him via the Giannopoulos Group seemingly without restriction.
The wife points to what she considers to have been a lavish lifestyle prior to separation. In particular, she highlights that the Suburb G property was a substantial family home with a value in excess of four million dollars. The house was well appointed and maintained. Whatever the ownership arrangements were in respect of the property, it was clear that the family were entitled to consider the Suburb G property as the family home. Additionally, the family travelled, she was able to purchase clothes and other adornments without fetter and the husband engaged in motor sport activities.
The wife acknowledges that the husband’s parents were generous, but considers that the provision of funds to the family and the household sufficient to support their lifestyle was not simply an act of generosity, but a reflection of the recognition of the management and possibly control of the husband in respect of various components of the Giannopoulos Group. The husband denies the wife’s description of their lifestyle. Whilst acknowledging that their Suburb G property is a substantial residence, he says that the maintenance of the property is undertaken by him without significant outside assistance and that it was the wife who was extravagant in her spending, which exacerbated their fractured relationship. But for his parents and their generosity, the husband asserts that the parties would have been unable to meet their liabilities from an early stage.
The wife received compensation in the sum of $57,491.26 for injuries sustained in a motor vehicle accident in 2009. As at 1 March 2016 most of those funds had been expended by the wife and only $4189 remains. Her financial position is poor.
An unfortunate distraction in the proceedings relates to the use by the wife of a 4WD motor vehicle. The wife had the use of this vehicle prior to separation and it appears that it was maintained in good working order. Following separation, the husband was not prepared to agree to the wife retaining the vehicle on the basis that he was not the registered owner but rather, the vehicle was owned by H Pty Ltd (“H”) being a company owned and controlled by his parents. With some reluctance, the husband concedes that the vehicle will not be removed from the wife and presumably has requested that H reconsider its earlier position namely, that the vehicle should be returned. By letter dated 12 February 2016, solicitors for H forwarded correspondence to the effect that the wife may have the use of the vehicle until further notice provided that she is responsible for maintenance, repairs, registration and insurance. It is part of her claim for spousal maintenance that she seeks the husband be responsible for the maintenance, registration and insurance of the vehicle.
The children currently enjoy private school education. It was asserted that accommodation was made by the husband’s parents for the payment of school tuition fees and related expenses. That appears not to be the case. School fees have been paid by the husband via his ability to draw down on his (debit) loan accounts, reflected as a liability that he brings to account in his financial statement.
It may be that the husband’s parents in their capacity as trustees of the relevant trusts forebear from enforcing a portion of the outstanding amount that relates to the children’s school fees. At present no concession has been made and the husband brings to account the extent of his (debit) loan account as a liability. As matters presently stand and without any contrary position put by the husband, consideration may have to be given as to whether it is financially viable for the children’s school expenses to be paid by increasing the husband’s (debit) loan account liability.
ASSETS AND LIABILITIES
The parties are not agreed as to any aspect of their legal and equitable interests in property. The wife complains that the husband has refused to make full and frank disclosure of his financial position and in particular his access to the financial resources of the Giannopoulos Group.
Doing the best that she can, she says that the husband has interest in real estate totalling $12,978,000 and particularised as follows:-
Quarter share of I Street
$500,000
Suburb G property
$4,100,000
Suburb J house
$540,000
Quarter share of 1 K Street
$155,000
Quarter share of 2 K Street
$170,000
Quarter share of L Street
$500,000
Quarter share of M Street, N Town
$125,000
One fifth share of O Street, Suburb P
$6,700,000
Furniture in the Suburb G property
$38,000
Prestige motor vehicle
$50,000
4WD motor vehicle
$50,000
European motor vehicle 1
$10,000
Telstra shares
$40,000
At this stage of the proceedings there has not been any formal valuations undertaken and the wife relies upon the Valuer General capital values as an indication only of the extent of the value to be attributed to property.
The husband rejects the wife’s proposition and he estimates the value of his interest in property as follows:-
Suburb G property
$3,100
Interest in Q Pty Ltd
$400,000
European vehicle 1
$8,000
Cash on hand and money in bank
$5,200
Jewellery
$5,000
Furniture and personal property
$33,105
European motor vehicle 2 (one half interest)
$1,500
Telstra shares (6,240)
$32,635
Total
$488,540
Liabilities
Mr & Ms Giannopoulos Snr (parents)
$36,000
Giannopoulos Family Trust
$233,049
R Trust
$185,520
Solicitors costs
$9,040
Unpaid counsel fees
$1,100
Total liabilities
$464,709
In addition and as at 30 June 2015, the husband has a member interest in Statewide Super at $130,252.
Accordingly, there is a significant disparity in the expectations of the parties as to the extent of their legal and equitable interest in property.
GIANNOPOULOS GROUP OF ENTITIES
At paragraphs 56 to 60 of the wife’s affidavit filed 15 January 2015 she sets out a number of the entities that comprise the Giannopoulos Group and highlights the husband’s current shareholding and whether he is a director of those companies. A convenient summary is that he remains a shareholder in Q Pty Ltd (“Q”) as to 25 per cent of the shareholding and did hold shares in H but transferred those shares on 18 September 2012.
Paragraph 57.4 sets out the companies in which the husband continues to hold office and paragraph 57.5 sets out the companies from which the husband resigned within three weeks of the final separation.
The husband continues as a managing director of E but holds no shares in that entity.
The husband acknowledges and annexes correspondence from his solicitor to the Giannopoulos Group accountants dated 19 November 2014 seeking information that:
will provide [the wife’s solicitors] with sufficient information to be able to advise their client, while at the same time preserving the rights of the other parties who have no interest in the proceedings between our client and his former wife.
The questions as appear in that correspondence were answered by letter dated 16 January 2015, but importantly annexing two spreadsheets (“schedules”) which assist in understanding the husband’s involvement both historically and at the present in relevant trusts and companies.
As at the date of the correspondence and presently the husband is the holder of one share in Q and no other corporate entity. The husband did hold shares in the following entities but does not now do so:-
(1)S Pty Ltd (as trustee of R Trust), 20 ordinary shares transferred on 19 February 2007;
(2)H Pty Ltd (trustee of Giannopoulos Family Trust), 10 ordinary shares transferred on 24 August 2012;
(3)T Pty Ltd (likely as trustee company), 1 ordinary share transferred several years ago;
(4)U Pty Ltd (likely a trustee company), 50 ordinary shares transferred at some earlier date;
(5)V Pty Ltd (non-trading entity), 2 ordinary shares transferred 29 October 1997.
The schedule confirms that the husband resigned his directorship of various entities in October 2012 coincident with the date of separation. The schedule reveals that the husband held his directorship in the minority with his parents in some cases, but also with independent third parties.
The second schedule sets out the relevant trusts, the past and current trustees of each separate entity and importantly, who or what entity has the power of appointment.
It does not appear that the husband has ever held the power of appointment in respect of any of the trusts.
I consider that the gravamen of these proceedings is properly focused upon the R Trust (S Pty Ltd as trustee) (“R”) and Giannopoulos Family Trust (H as trustee) (“GFT”). The husband agrees that he is a discretionary beneficiary in respect of these trusts and they are the only trust entities in which he has a loan account whether in debit or credit.
As discussed, the husband’s current financial statements reflects that he has a liability to R of $185,520 and GFT of $233,049. To the extent that the husband asserts that his expenditure exceeds his income, it is via the continuing draw down on his loan accounts with the two trusts that he has met the purported shortfall.
The husband argues that the property referred to by the wife as being controlled by the husband are held within the Giannopoulos Group.
The wife maintains that the husband has made a contribution to the acquisition, conservation and maintenance of the property that is generally comprised within the Giannopoulos Group and that he has control, if not reflected by power of appointment, directorship or shareholding, then by reason of his day to day management and presumably a purported understanding between he and his parents.
LUMP SUM BY WAY OF LITIGATION FUNDING
The wife seeks the sum of $200,000, based upon an estimate found at paragraphs 76 and 77 of her affidavit filed 15 January 2015. The wife considers that she would incur solicitors fees additional to the amount already incurred of $38,731, a further $120,000 and counsel fees of a further $40,000 but apparently expressed as $80,000 in error in paragraph 76.2.
It is also the wife’s estimate that her legal costs up to and including discovery of the documents sought in the Amended Initiating Application together with advice on property valuations and forensic assessment of the same would be at $200,000. I am uncertain whether it is intended that the total costs should be an amount in excess of $400,000. It appears that the wife seeks that the husband pay her $200,000 either by way of litigation funding or interim property settlement and also to pay all of the valuation and forensic examination costs estimated to be in the further sum of $150,000.
The difficulty is that the wife’s costs as they presently stand are now in excess of $190,000 with no valuation and/or forensic examination having been undertaken.
In summary, if successful, the lump sum of $200,000 may well see the wife’s costs paid to date but would not make any provision for future costs and valuation disbursements.
In Strahan & Strahan(Interim property orders) (2011) FLC 93-466 at [79] the Full Court said:-
The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that "very often the wealth of the parties is controlled by one rather than by both of them”; Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmeyer and O’Ryan JJ).
Whilst not expressly raised by the wife, I accept that having incurred almost $200,000 of costs and estimating a similar amount for future costs together with disbursements of approximately $150,000, it is reasonable that the wife would make an application either for litigation funding or a partial property order in circumstances where to date the husband’s costs, whilst significantly more modest than those currently incurred by the wife, have been paid by the husband’s ability to draw down on his loan account facilities and with a clear representation that he will be able to do so into the future.
Following the decision of Zschokke & Zschokke (1996) FLC 92-693, the heads of power that would permit the making of an interim order are summarised as follows:-
(1)A maintenance order (either periodic or lump sum) under s 72 and 74;
(2)An order under s 79 as allowed pursuant to s 80(1)(h); and
(3)A costs order under s 117.
In Zschokke (supra) the Full Court said at 83,217:-
If the order is to be made under s 117(2) then, in our view, the matters contained in s 117(2A) must be addressed and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti. In saying this we acknowledge that a number of the paragraphs in the sub-section (notably) paragraphs (d) failure by one party to comply with Court orders); (e) total lack of success by one party in the proceedings; and (f) (existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question. We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the sub-section, as is permitted by (g).
In Strahan (supra), the Full Court at [90] said:-
In Zschokke at 83,217 the Full Court said that “whether the matter was determined as an interim property settlement order under s 80(1)(h), or as an interim costs (or security for costs) order under s 117(2), or indeed a maintenance order”, three matters would all be relevant, namely:
(i)a position of relative financial strength on the part of the respondent;
(ii)a capacity on the part of the respondent to meet his or her own litigation costs;
(iii)an inability on the part of the applicant to meet his or own litigation costs.
When considering s 117(2A), clearly the relevant sections relate to the financial circumstances of each of the parties to the proceedings, the conduct of the parties to the proceedings and such other matters as the Court considers relevant.
At this stage the financial circumstances of the wife is relatively clear. She is at present impecunious. It is not likely that she is able to fund her own litigation without the forbearance of her solicitors. There is no evidence of that accommodation.
Much of the submissions of senior counsel for the wife concerned the complaint that the husband had been deliberately recalcitrant in providing full and frank disclosure and as a result, the wife has been put to significant expenditure and cost in order to bring into existence that which the husband would have been easily able to provide.
That complaint will be dealt with later in these reasons, but for the purposes of the wife’s claim for lump sum payment under s 117(2A), the husband denies the wife’s allegation and counters that he has made full and frank disclosure, but it is that the wife is not prepared to accept what he says is easily apparent from the documents provided namely, that he does not have control nor has he ever had control of the relevant entities in the Giannopoulos Group.
Accordingly, the matters to be considered are those as set out in s 117(2A)(g) namely, such other matters as the Court considers relevant.
If the application is to be founded upon s 79 considerations, the Court is obliged to consider whether the jurisdiction will be entertained and then matters relevant to the exercise of the jurisdiction pursuant to s 79.
That approach is not required if the source of the jurisdiction is s 117(2).
In Strahan (supra), the Full Court at [96] referred to the remarks of Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 as follows:-
In Paris King Investments Brereton J at [30] and [31] said that in addition to the three matters described in Zschokke, where the order was made pursuant to either s 74 or s 117 of the Act:
·an applicant should have “at least an arguable case for substantive relief which deserves to be heard”: Chester v Chester (1995) FLC 92-612 (“Chester”) at 82,107 per Moss J;
·there would be evidence of the applicant’s “likely costs of the litigation”: see Wilson & Chester;
·“it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing bias: Columb & Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes & Coomes (1995) FLC 92-558 per Cohan J;
·an order may “make provision for litigation expenses at a rate that appears in all the circumstances”;
·an order can be made “in respect of costs already incurred as well a future costs”;
·“whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of the provision for costs to be incurred, may be relevant to the discretion to make an order, and its quantum”;
·“any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended” and this may be done “by requiring that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination on the issue of costs”: Breen.
The above matters are relevant considerations not just in respect of s 117(2A)(g), but whilst less important, may have some relevance and application where the source of power is pursuant to s 79 and s 80(h).
The statement of the wife’s costs provides a breakdown of the solicitors fees, counsel fees and disbursements, but provides no assistance as to the manner in which the costs were incurred. There is no pronouncement as to whether the costs have been incurred on a party/party or solicitor/client basis, or indeed the extent to which the costs incurred have exceeded the relevant scale of costs applicable. No agreement purporting to represent the cost agreement between the wife and her solicitors has been provided and accordingly, no guide is available as to the manner in which the wife’s costs have accrued or perhaps more importantly, the extent to which they are likely to accrue into the future.
The decisions of Chester & Chester (1995) FLC 92-612 and Breen v Breen (1990) 65 ALJR 195 impose a level of rigor in terms of the ability to calculate both how costs have been incurred and are likely to be incurred into the future. It is only by some reasonable assessment upon the basis upon which costs have accrued that the Court is able to consider with any accuracy what is required by way of lump sum order.
Notwithstanding that I consider it permissible, I consider that the concept of litigation funding in respect of costs already incurred to be potentially problematic.
If the rationale behind an order for litigation funding is to provide a level playing field in respect of an impecunious party engaging in apparently meritorious litigation with the party who is able to meet his own litigation costs and expenses, the payment of the wife’s current outstanding fees does not assist in that goal. There is no suggestion that if the wife’s past fees are paid, then her solicitors will forbear in respect of any future costs and the very real likelihood is that the litigation will not be able to go forward without the wife seeking a further order.
An order pursuant to s 117 imposes by its very nature some consideration of the manner in which the lump sum is sought will be utilised. It would be difficult to “protect the parties from any risk of injustice arising from the manner in which the funds are expended” if the Court was not able to consider how the funds are used. Similarly, whilst I accept that the wife has incurred legal fees, no attempt has been made to particularise even by the most general summary, how the costs have been incurred and whether the expenditure was reasonably necessary in the circumstances of the case.
If the order is by way of partial property settlement pursuant to s 79, then the exercise of the power must be pursuant to the provisions of s 79, but given that it is an interim hearing, the exercise is necessarily confined to the evidence reasonably presented to the Court.
It is well understood that whilst the circumstances are not required to be compelling before an award can be made, regard must be had to the general principle that the Court and parties are better served by one hearing under s 79 than multiple hearings.
A significant concern is the ability of the Court to predict the range of outcomes reasonably likely to ensure that if an order is made the wife’s entitlement will equal or exceed the amount ordered, or if not then she should have the resource to refund to the husband any overpayment.
Accordingly, what is required is a determination that it is appropriate and proper to exercise the power taking into account the following:-
·That any order made under s 79 must be just and equitable and provide some underlying consideration of the matters expressed in s 79(4);
·That the application is a proper reflection of disparity between the parties in respect of their relative financial strengths and an incapacity on the part of the applicant to meet his own legal costs and an ability on the part of the respondent to meet his;
·The financial circumstances of the parties;
·The extent of the property settlement likely to be received by the applicant and whether it will be sufficient to cover the interim lump sum sought.
In this case the difficulties are manifest. Whilst the wife is not required to provide an itemised account in respect of the costs already incurred, the focus of an order under s 117 is to advance the litigation. Furthermore, without some detail, there is a risk that the wife’s claim descends to a simple request for money without any properly explained basis.
The financial circumstances of the parties are very much in dispute. Whilst not making a clear assertion, the wife promotes the proceeding as taking place against the backdrop of the husband having a significant entitlement to the accumulated wealth of the Giannopoulos Group.
The husband’s position is a more black letter approach. He challenges the wife to present evidence that goes beyond what he says is the only possible position namely, he does not have and has never had any element of control over any of the companies or the trusts that comprise the Giannopoulos Group, nor is he likely to in the foreseeable future.
Accordingly, other than his interest in Q, which whilst valuable is not easily able to be realised, the parties have few assets and the pool is at best modest.
Perhaps more relevantly, the husband challenges the wife to point to any asset in his control that could be sold or disposed of and thereby provide the funds that the wife seeks.
In summary, it is his position that there is no point making an order if it has no real chance of being complied with in circumstances where there is a live issue between the parties as to whether the amount that will be received by the wife would be equal to or greater than the lump sum amount sought by way of advance.
In a similar consideration to the matters relevant to s 117(2A), the husband argues that even if the money was available for the wife, it would do no more than discharge her outstanding legal fees, but not enable the Court to have any certainty that the litigation would continue without further application.
Whilst some of the matters relevant under s 117 are not required when the head of power sought to be relied upon is s 79, nonetheless, the tenor of the wife’s application is based upon litigation funding and it is reasonable for the Court to consider that the intent of the order is to enable the litigation to properly progress without one party being disadvantaged.
I have looked carefully at the financial circumstances of each of the parties and I am satisfied that whilst the husband has the ability to draw down on the loan accounts made available to him in the R and GFT, I do not consider that such a resource extends to the amount as sought by the wife namely, a lump sum of $200,000 and a further sum of $150,000 by way of likely anticipated disbursement costs.
In the final orders sought in the husband’s Amended Response, the only order he seeks is that there be an order by way settlement of property as the Court may determine. There is no particularity to the proposed order and I am uncertain as to the parameters of the husband’s case. He does however list the total property at $492,304 principally made up of his interest in Q at $400,000 and the Telstra shares at $32,635. In addition, he has a superannuation interest of $130,252.68.
I am however alive to the assertion of the husband that the interest in Q is provided to him without cost to the parties.
Nonetheless, to date the husband has paid $43,603.42 from his loan accounts and that it is anticipated a further $20,113.59 will be paid in due course. Accordingly, if it is reasonable to assume that whatever the husband’s view of the wife’s case is, it is nonetheless arguable and that she should be entitled to pursue her litigation providing any advance to her is not likely to exceed her reasonable settlement prospects, I consider that the husband should pay to the wife in direct deduction of the wife’s legal fees the lump sum of $63,717. It is a matter for the husband as to how that sum is achieved. I note that he proposes to dispose of the Telstra shares. Any shortfall is a matter that may be able to be supplemented by the husband personally or by further loan account drawdown.
That will not discharge the wife’s legal fees, but it seems to me that in the circumstances of this case and where the amount as sought by the wife is likely to be less than she would receive even upon the most reasonable outcome as promoted by the husband, there is at least a level playing field broadly achieved.
That does not assist the wife in terms of her litigation funding into the future.
It is within the general consideration of s 117 to consider how the litigation will be conducted on an ongoing basis.
I do not consider that s 79 considerations assist the wife in respect of her future litigation funding. Unless she is successful in satisfying the Court that the husband has an interest beneficial or otherwise in some or all of the Giannopoulos Group and that it can be quantified, but also importantly brought into the pool, the first step in respect of s 79 considerations cannot be easily made in terms of what comprises the legal and equitable interests of the parties over and above that which has been set out and conceded by the husband in his most recently filed financial statement.
The wife would have to concede if she is unsuccessful in her endeavour, to establish interest or control in the Giannopoulos Group by the husband, her claim may well be significantly compromised.
Until those matters have been determined, I am only able to deal with the interests of the parties in property as would appear to be unchallenged.
I have however considered a range of factors relevant to the application of s 117 and in particular I have the clear evidence that the husband expects his legal fees to be met as and when they fall due.
In G & T (2004) FLC 93-176 O’Reilly J referred to her decision in McL & McL (Unreported, Family Court of Australia, O’Reilly J, 30 January 2003) where her Honour found that there was sufficient power to make a “dollar for dollar” order pursuant to s 117(2) and (2A) of the Act.
The case as presented by the husband and the wife is what might be described as a complex family dispute and notwithstanding the order for lump sum that I propose to make, the playing field is not level going into the future.
As was found by Cronin J in Iphostrou & Iphostrou & Ors [2011] FamCA 20:-
[60]As has been said before, cases involving complex commercial family disputes are not a level playing field. It is important that if possible, an attempt is made to level that field. The best way to do that in this case is to ensure that wherever a payment is made to the husband’s lawyers for the preparation of material, an equal amount is paid to the wife’s practitioners.
[61]I am satisfied that the wife has no other source of funds other than family and friends and without this sort of assistance, there will not be a level playing field. I propose to make orders accordingly.
Not dissimilar to his Honour, the same circumstances apply in this case and I propose to make a “dollar for dollar” order in favour of the wife unless the parties reach an alternative arrangement.
DISCOVERY
As discussed, the wife seeks that the husband produce by way of informal disclosure and production, a vast range of documents that relate to his personal financial circumstances, but also that relate to the company and trust entities that comprise the Giannopoulos Group.
The husband opposes the order and says that he has provided all of the documents that are in his possession, power and control. There has been formality to his disclosure.
The wife however is not satisfied and she considers that unless she has access to the range of documents as expressed in paragraph 5 of her Amended Initiating Application, she will not be able to properly determine the extent to which, if any, the husband has involved himself in the management and operation of the Giannopoulos Group.
The difficulty for the wife is that the husband does not now hold any directorship, shareholding or has any involvement as either trustee or appointor in respect of any of the relevant entities other than those the subject of discovery.
It is not asserted by the wife that the status of the husband’s involvement in the Giannopoulos Group as set out in the schedules annexed to his affidavit and as prepared by the Giannopoulos Group accountants, is inaccurate or not properly representative of the legal and equitable interest that he holds.
Notwithstanding that Chapter 13 of the Family Law Rules 2004 (Cth) (“the Rules”) imposes an obligation of full and frank disclosure on parties to Family Court proceedings and provides specific means by which that obligation must be fulfilled, nonetheless, the scope and reach is not unlimited.
In Re Ronald Neville McGorm Ex Parte: the Co-operative Building Society of South Australia [1989] FCA 87 von Doussa J said:-
The obligation resting on a party obliged to give discovery requires that he makes proper enquiries and efforts to identify and disclose all relevant documents that are not in his possession. The obligation extends to making enquiries from persons that from the person in whose possession the documents now are…
The scope of the enquiries which should be made will depend upon the circumstances of the case having regard to the need for discovery in order to dispose fairly of the matters in question, or to save costs in the proceedings. The enquiries must be reasonable, but do not demand of the party giving discovery that he goes to length which are oppressive…
In recent years, superior courts have taken a modern approach to general discovery. This is in part due to the enormous documentation that is involved and the burden and costs of discovery in a large number of cases, particularly commercial cases. The discovery process has been criticised as having disadvantages including the swamping of parties with massive material tending to delay the proceedings and fogging the real issue.
In this Court, sometimes the converse is true namely, that the requests for documents (and sometimes production sought by way of subpoena) is oppressive without regard to the potential relevance of the document.
On 1 August 2011 the Federal Court of Australia adopted the Federal Court Rules 2011 (Cth) and provided for a revised regime for discovery in Part 20. These changes impact the extent and cost of discovery. Part 20 provides for:-
·Increased judicial control of discovery;
·A default or standard form of discovery that requires that documents be “directly relevant” to issues in the pleadings and in the parties’ “control” after conducting “a reasonable search”; and
·A more flexible and responsive non-standard discovery regime that can be tailored to the specific case, such as those that are likely to be documents intensive, especially where the documents are stored electronically.
The intent of the rules is to prevent unnecessary discovery and there must be a clear explanation, in respect of documents that are not able to be easily obtained or have an apparent connection or relevance to the proceedings, as to why the document or category of documents is sought. Similar attempts to limit and/or prescribe disclosure and discovery are to be found in the Supreme Courts of South Australia and New South Wales.
The category and breadth of the documents as sought by the wife in the current proceedings must be given some clear consideration.
Paragraph 5.1 of the Amended Initiating Application seeks copies of all bank statements of any account that the husband is involved in for the last five years. It is difficult to ascertain what would be the relevance at this stage of the proceedings in that class of documents, but it does not appear that the husband opposes the request and it is his position that he has provided all of the documents that are available to him.
The issue of discovery becomes more contentious when considering the provisions of paragraphs 5.2, 5.3 and 5.4 of the Amended Initiating Application. At best, the husband was a director (always in the minority) in various companies but has not held office since 2012. The range of documents sought is extensive. Some of the categories are not unreasonable. Paragraph 5.2.2 requires a summary of distributions of the husband from any trust during the course of the relationship and to the present. They are matters that relate directly to the husband and are no doubt reflected in taxation returns, or in any event, likely to be provided upon request to the accountants for the Giannopoulos Group given that they have already supplied that information from the financial year ending 30 June 2012.
A similar consideration applies to paragraphs 5.2.3, 5.2.4 and 5.2.5. They are open-ended requests that are likely to be oppressive. It might well be understood that the termination of the husband’s directorship in various companies whether they be corporate trustees or otherwise, may well be a matter of interest to the wife and accordingly, focus on the minutes of meeting and may have some relevance. The wife however seeks an open-ended range of documents, the relevance of which could only be out of a hope that there may be something that will assist in the wife’s case.
Similar requests are made in respect of the corporate entities. It is reasonably clear that some of the entities are no more than corporate trustees for various trusts, but in particular R and GFT.
The husband does not have access to these documents. Any attempt to obtain the documents (assuming that he does not have personal access to them) must be by request to the relevant entities that comprise the Giannopoulos Group resulting in instruction to the Giannopoulos Group’s accountants.
I am satisfied based on the husband’s statements that he does not have the documents in his possession and that if they are to be obtained it must be by request.
The wife is understandably suspicious of the husband’s position that a request has been made and that he has now been told that the documents will not be forthcoming.
To some extent the wife is entitled to be concerned given that an earlier request was met with approval and certain information was provided by the company accountants.
Nonetheless, if the husband does not have the documents, then consideration must be given as to whether or not he has any entitlement to the documents.
It was raised during the hearing that the husband may have an entitlement under s 290 of the Corporations Act 2001 (Cth) (“Corporations Act”) to relevant documents arising out of his directorship with various companies and that he has a right to have regard to the due administration of any trust in which he is a beneficiary and on that basis is entitled to call for documents.
Whether the extent of the documents sought by the wife would fall conveniently within the category of documents available to the husband under s 290 of the Corporations Act, or by reason of the husband’s beneficial entitlement in any trust, is a more complex issue.
The matter was not argued before me, although it is the husband’s position that he is not entitled to the documents under s 290 of the Corporations Act and he has no concern in respect of the due administration of any trust in which he is a beneficiary and as such, does not need to make a call on the documents.
At first instance, the response on behalf of the husband may seem trite. To the wife, it may well appear to be a convenient device to avoid obtaining documents which if provided would give an indication as to the extent of the husband’s involvement in the Giannopoulos Group and thereby lend support to the wife’s claim that the husband has some level of control or interest that he is not disclosing.
Whilst that view may have some initial attraction, the issue has been given recent judicial attention by the Full Court in Masoud & Masoud [2016] FamCAFC 24 .
At [19] the Full Court considered the obligation under the Rules to make full and frank disclosure. Consideration was given to r 13.07 which the Full Court found “narrows the scope of the duty to “each document that is or has been in the possession, or under the control of the party disclosing the document; and is relevant to an issue in this case””.
Importantly, at [20] the following is said:-
The meaning of “possession and control” has been considered extensively. For a document to be within the power of a party, the party must be in actual possession of it or must have an immediate indefeasible right at the time of discovery to demand possession from the person who has physical possession of it: see Lonrho Ltd v Shell Petroleum Co Ltd(No 1) [1980] 1 WLR 627. In Schweitzer & Schweitzer [2012] FamCA 445, O’Reilly J held at [45] that “possession” as contemplated by r 13.07 “means not mere physical possession (custody) but “possession” within the accepted meaning being “the legal right to possession”: see in B v B, per Dunn J at 805; 807”. Further, her Honour stated at [50] that a beneficiary of a discretionary trust: “has no interest in the corpus, but only the right to require due administration of the trusts, and…is entitled to access to the financial documents of the trustee only for the purpose of ascertaining that there is due administration.” In the present case, therefore, the husband has no access to the financial documents of the trustees beyond that required to ascertain there is due administration. It cannot be said that he has the requisite “control” of the trustee that would warrant its disclosure.
A further criticism was that it was open to the wife to issue a subpoena to the trustees of the trust or to the directors of any company to produce the documents that were considered relevant. Providing those documents are appropriately targeted, not oppressive or impose unnecessary obligation on the subpoena recipient and have a material relevance, there may be no opposition or objection.
Accordingly, I am satisfied that notwithstanding that the husband may have been a director of certain companies up until 2012 and remains as a beneficiary of certain trusts, a request by the wife for discovery would not be a purpose properly applicable to s 290 of the Corporations Act nor necessary to consider whether there has been due administration of the trust.
Accordingly, I do not propose to make an order in terms of paragraphs 5.3 and 5.4.
Paragraphs 5.5 and 5.6 are again drafted without seeming limit. It cannot be the wife’s case would be assisted by all documents relating to the sale and/or purchase of all the real property whether by the husband personally or in respect of any other person or entity in which the husband may have an interest or a connection.
Clearly, the husband may well have an obligation to produce documents in relation to any property bought or sold by him, or any entity in which he has control and is likely to have a pecuniary interest.
The request for documents in paragraph 5.6 is simply untenable and suffers from the same difficulty as the documents requested in paragraphs 5.2 to 5.4.
I do not propose to make orders in respect of discovery as they relate to paragraphs 5.2, 5.3, 5.4, 5.5 or 5.6, noting that if the documents are in the possession of the husband for whatever reason, then they are properly discoverable.
INTERIM SPOUSAL MAINTENANCE
Section 72(1) of the Act provides:-
Right of spouse to maintenance
(1)A party to a marriage is liable to maintain the other, 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 matters referred to in subsection 75(2).
The wife seeks an order for interim spousal maintenance in the following terms:-
(a)The sum of $630 per week in payment of the wife’s rent;
(b)Such sum as may be required to pay the ongoing utilities of the wife;
(c)Such sum as may be required to register, repair and maintain the 4WD motor vehicle;
(d)The sum of $500 per week for the wife’s personal expenses.
The wife currently resides in a property at Suburb W. She says that the tenancy agreement expired in December 2015 and she continues the arrangement on a periodic basis. Apparently, the wife is in arrears of rent in the sum of $1,767.38 and unless the arrears are made up and the wife is able to maintain the anticipated rent in the sum of $630 per week, she is concerned that she will have to vacate the property. She has no ability to pay rent.
The wife also seeks that the husband pay her utilities which are in the sum of $80 per week according to her financial statement.
There is no other information in respect to the extent of the wife’s utilities other than that there are arrears in respect of water usage of $740.
The wife retains the use of a 4WD motor vehicle which has been in her possession since December 2006. The vehicle is registered to H (as trustee for GFT).
The husband concedes that H will allow the wife to retain the vehicle, but the trust refuses to be responsible for its maintenance.
Accordingly, the wife seeks that the husband pay the expenses pertaining to the vehicle, but not petrol.
The husband remains intractably opposed to any order of spousal maintenance in favour of the wife and it has been a feature of his presentation to the Court that his continued financial accommodation to the wife is with significant, overt reluctance and objection.
The wife and husband have reached interim agreement as to the parenting of the children. They are with the husband from Saturday morning to the following Tuesday of each week. They are with the wife for the balance of the time. The parties effectively share the care of the children, although it is notable that the conflict and hostility between them is likely to make joint parenting difficult.
Nonetheless, the wife’s care of the children has allowed her to undertake various forms of employment. As highlighted, the wife holds considerable skills and professional qualifications. It is acknowledged that with the husband’s agreement and support as and from the birth of the first child, the wife has been out of the workforce and only returned with some level of formality in early October 2015 when she commenced employment on a casual basis as an administrative assistant.
That work has come to an end and the wife has now enrolled in a full-time study for a bachelor degree. Her lectures have commenced.
She acknowledges that whilst she was employed, it did not interfere with her ability to care for the children and she was paid on average between $200 and $350 per week.
There is no information provided by the wife as to the extent of her current course of study, nor with any certainty as to the employment prospects thereafter. In any event, the course is likely to run for two to three years and there is no suggestion by the wife that she has any intention or expectation that she will supplement her financial position by any part-time employment.
The husband alleges that the wife is artistically talented and when considered as a whole, she has a range of potential employment opportunities that she could explore but has chosen to undertake a course of study.
In her affidavit filed 1 March 2016, she agrees with the husband’s assertion that she already holds a bachelor degree in a professional discipline. She comments however that these qualifications were completed in her early 20’s and she would not be able now to undertake the masters degree which is necessary to practice in this field.
Notwithstanding the high standard of the qualifications obtained by the wife, she argues that she does not have the necessary experience to work as a psychologist or a counsellor never having undertaken such employment.
She did apply for a counselling position through Jobs Statewide in 2015, but was unsuccessful.
She further highlights that she has injuries and residual disabilities sustained in a motor vehicle accident which “prevent me from being able to tolerate the physical demands of work as a remedial massage therapist”.
I do not understand that the wife’s residual disabilities prevent her from employment in less physically demanding work.
The wife did work in a bank 14 years ago and in the hospitality industry prior to that. She no longer holds a gaming licence nor are there any qualifications that would enable her to return to the banking sector.
She alleges that she has some ongoing thyroid issues of an indeterminate nature and has been diagnosed with chronic fatigue syndrome.
The husband pays child support. An earlier child support assessment required the husband to pay $807 per month, but following his most recently filed taxation return which highlights a significant drop in the husband’s income, his obligation is now $509.67 per month. The husband argues that he intends to continue making the payment of $1000 per month which is $490 in excess of his current assessment.
The husband challenges the wife’s entitlement to spousal maintenance on the basis that he says that she is able to maintain herself but chooses not to do so.
I accept that the wife’s financial position is difficult. It is made more so by the clarity of the husband’s position namely, that he would not wish to continue to support the wife other than in respect of a payment that he considers is properly representative of child support and presumably, the children’s needs.
To some extent, the husband’s commitment to the sum of $1000 per month must be seen against the earlier assessment of $807 per month in circumstances where the husband’s average income was in excess of $100,000 per annum whereas his current income is $67,000.
There is no explanation as to why the wife undertook a course of full-time study in circumstances where she knew that the husband was opposed to providing her with any ongoing support.
Her attempts to find employment are at best a cursory acknowledgement that she has an obligation to demonstrate that she is not able to maintain herself.
There is no explanation as to why the wife decided to undertake a full-time course as opposed to a part-time course and at this stage I cannot be satisfied that the wife has reasonably explored all avenues open to her for employment. In terms of the wife’s circumstances, enrolling in a full-time course of study may not have been the most obvious choice for her.
Section 72 places the obligation on the wife to establish that she cannot support herself, not that she is unable to do so in a particular area of employment or occupation. This is particularly so where another employment opportunity may exist but the wife chooses to embark upon a less remunerative endeavour.
In determining the extent to which an applicant wife can support herself, I must have regard to the matters as set out in s 75(2) of the Act. In M v M (2006) 36 Fam LR 97 held:-
[31]The question whether an applicant can support his or herself “adequately” is not to be determined by reference to any fixed or absolute standard but by having regard to the matters in s 75(2): Mitchell (above at Fam LR 59; FLR 308; FLC 81,995)
[32]The question 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:…
Further at:-
[35] Thus in our view the trial Judge was required to consider:-
(a)whether employment was available to the wife having regard to the practical realities of her age, experience and confidence having been out of the work force for a number of years; and
(b)if so, the level of income the applicant might earn from such employment and whether in the circumstances of this case such income fell below adequate support and thus met the requirement of s 72.
I am not satisfied that the wife has appropriately explored or investigated employment opportunities that might be available to her. I note that there are limitations as a result of age, experience and the shared care of the children, nonetheless, but for her being made redundant, the wife would currently have retained her employment as an administrative assistant working on a part-time basis. There is no reason why the wife is not clearly suited to that area of work and she is able to promote her own abilities relying upon her most recent work history.
I propose to attribute to the wife an earning capacity of $350 per week noting that this amount (and absent any other income) would fall below the tax free threshold.
It is necessary to consider the wife’s financial position in order to determine whether an attributed income of $350 per week is sufficient for the wife to maintain herself.
The most recent information is as contained in the wife’s financial statement filed 26 February 2016. Her Part G expenses are principally comprised of her rent at $620, an amount for unit levy and rates of $20 and the minimum payments on her credit cards of $27 and $25 making a total of $692.
I note that the wife has a small residual sum remaining to her credit in the Credit Union account of $4,189 as against credit card liabilities totalling $8,237. Whilst not arithmetically equivalent, I consider it reasonable that the wife continue to pay the minimum payments on her credit cards from her own resources thereby reducing the Part G personal expenditure total to $640.
The significant contention arises in respect of the wife’s Part N expenses totalling $1,240. Some attempt has been made to separate the children’s expenses at $555. Whilst it is the wife’s position that items of expenditure for and on behalf of the children should be considered as part of the wife’s total household expenditure and then to bring to account as income the amount paid by the husband in the sum of $250 per week, to do so would distort the process by which I am required to consider the wife’s financial needs that she seeks to be satisfied by an order of spousal maintenance as opposed to the needs of the children.
Whilst s 75(2)(d) provides:-
commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself;
(ii)a child or other person that the party has a duty to maintain…
The Full Court in Stein & Stein (2000) FLC 93-004 said as follows:-
[49]It seems to us that in the context of an application for spousal maintenance and consideration in section 75(2)(d) of
“the commitments of each of the parties are necessary to enable the party to support…a child…the party has a duty to maintain”
has greater significance in determining the capacity of a payer to provide support rather than determining the extent to which the other party requires support. In a maintenance case if, for example, a husband is called upon to pay maintenance for his wife, the Court must determine his capacity to pay the maintenance having regard to his obligation to support his children. The level of support that the wife needs for herself is not dependent upon the level of support that she must give to others. In a property case however, the extent to which a division of property may be seen as being appropriate might only properly be measured by examining all the demands that each spouse has to meet.
I do not consider that expenses in respect of the children or even a shortfall in meeting those expenses should properly be categorised as the wife’s proper expenses for the purposes of determining an award of spousal maintenance.
There has not been any attempt made by the wife to establish the accuracy of the Part N items, particularly in circumstances where presently the level of potential expenditure is not being incurred. At present the wife’s total average income is $722 comprising government benefits and pension together with the sum of $250 a week provided by the husband.
The difficulty for the wife is that she has been using her diminishing savings to supplement her expenditure.
I have not however received any evidence from the wife as to the basis upon which she calculates the estimated expenses in Part N.
It is not a matter for me to guess what should be a reasonable standard of living.
I am however satisfied that the standard of living of the parties previously enjoyed should not be ignored.
Whatever the protestations of the husband may have been, it could not be said that the parties lived a lifestyle that was anything other than generous.
An indication is the continued residence by the husband in the Suburb G property which by his own admission is a property worth in excess of $4,000,000 situate in an attractive suburb and comprising a dwelling of substantial proportion and amenity.
The husband does not know what the property costs H to maintain, nor does he provide any assessment as to the benefit he receives from the continuing use of the Suburb G property in terms of a notional rent. The husband’s counsel conceded that it would be a substantial rental equivalent.
The best that I can do is to look to the husband’s expenses as a guide of what he considers to be a reasonable level of expenditure. In doing so I note the wife’s argument that much of the husband’s expenditure is able to be traced to direct draw down on his loan account facilities, rather than by deduction from his modest income.
Noting that there is $50 of expenses in respect of the children, the husband’s Part N expenses are in the sum $793 per week. I further reduce the entertainment component by $100 and cleaning component by $50, leaving a net balance of $643.
In the absence of any evidence from the wife, I propose to reduce the wife’s Part N expenditure from $1,240 to $643 and taking into account the Part G expenditure items of $640, the wife’s total expenditure is brought to account at $1,283.
I note that the husband pays $250 per week for the children as against the current assessment of $509 per calendar month, or $118 per week. The difference is $132 and I propose to further reduce the wife’s expenditure by that sum with the resultant balance of $1,151.
The husband does not offer anything by way of spousal maintenance, but concedes that he is prepared to continue his overpayment in respect of the children.
The amount calculated at $1,151 must then be reduced by the sum that I attribute to the wife’s earning capacity of $350 per week, leaving a balance of $801.
The wife does not quantify the expenses in respect of the motor vehicle and other than petrol the financial statement of the husband does not reveal any motor vehicle expenses paid by him.
Accordingly, it is reasonable that a further sum be considered in order to ensure that the 4WD motor vehicle is able to be maintained in reasonable working order. It would be reasonable to cap the expenditure in any twelve month period to a total amount necessary to register, repair and maintain the vehicle in the sum of $2,000.
The husband does not concede that he has any ability to meet the wife’s claim for spousal maintenance.
He sets out in his most recently filed financial statement of 9 March 2016 that he has a total income of $1,305 and total expenditure of $1,417 noting that I have reduced this sum by $150.
He has some small credit balances in his bank accounts, but principally any expenditure beyond that which appears in Part N of the financial statement is met by draw down on his loan accounts with R and GFT currently in the sum of $418,569.
The position that the husband presents is somewhat confused. Whilst his income has gradually decreased over the last three financial years, so has his expenditure principally by reference to a change in a manner in which the husband describes his maintenance payments. In Item 31 of the financial statement filed 9 April 2015, the maintenance payments and support paid to the wife and the children is in the sum of $1,611, whereas the same item in the most recently filed financial statement is $250.
I am uncertain as to the explanation for the difference other than the amounts paid in support of the wife and the children have either come from the husband’s savings, benefit or gift received from others, or from the continued draw down on the loan accounts. In April 2015, the liability of the husband by way of debit loan account was $208,068.
The husband has provided no evidence as to the basis upon which he is able to draw down on his loan account facilities. The children’s school fees are being paid in this way, although there is some uncertainty as to whether the trustees of the two trusts will forebear seeking to bring to account some or all of the items of expenditure that comprise the total outstanding.
As matters presently stand, the husband seeks to bring to account the outstanding amount as a liability that he has, presumably to be offset against his assets. If so, the husband’s liabilities exceed his assets.
Furthermore, there is no evidence as to the basis upon which the husband continues to reside in the Suburb G property. There is clearly an expense to H by the occupation by the husband, the continued and ongoing maintenance and obviously the loss of rental income during the period that the husband continues to reside in the property.
The loan account statements consequent upon the husband’s draw down on R and GFT show the items of expenditure from 1 July 2012.
I do not propose to undertake an audit or any accounting exercise other than to note the obvious, that substantial expenditure items have been paid from the drawings of the husband’s beneficiary entitlement, which transactions comprise the husband’s personal expenses, family expenses, household expenses in respect of the Suburb G property including utilities, private health cover and the children’s private school tuition and other related expenses.
The wife’s rent also appears as a drawing from the accounts.
I also note that the husband remains in full-time employment and holds a responsible position as managing director of E which operates a commercial business.
Over the financial years 2008 to 2014, the average taxable income of the husband was about $105,004. Other than a reference to the husband’s current psychological state, he says that he no longer works in the way that he did and accordingly his income has dropped.
There is no evidence as to the manner in which the husband is no longer able to attend to his duties and whilst I accept his assertion as to his current income, not dissimilar to the wife, it is reasonable that in the absence of evidence to the contrary to consider that the husband has a capacity to return to his duties at a level that may well reinstate the higher level of income that he historically enjoyed.
The uncertainty however is the extent to which the husband will continue to enjoy the financial accommodation of drawing down on the loan account facilities. There is no suggestion by the trustees of R or GFT that the husband’s access to funds will in the short to medium term be the subject of restriction. Nor is it suggested that he will no longer have the free use of the Suburb G property, the prestige motor vehicle and other benefits. A decision may have to be made that will see the money notionally earmarked for payment of the children’s school fees to be reallocated to the parties personal needs.
If the financial position of the husband and the wife is as the husband asserts, then unless the children’s school fees are paid by a third party, it is unlikely that the parties will have the financial ability to continue the children’s tuition and other school related expenses.
Accordingly, I consider that the husband does have the capacity to satisfy the wife’s claim in the sum of $801 per week, together with a capped sum to enable the 4WD motor vehicle to be appropriately maintained.
Accordingly, I make orders as appear at the commencement of these reasons.
I certify that the preceding two hundred and sixteen (216) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 22 April 2016.
Associate:
Date: 22 April 2016
Key Legal Topics
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Family Law
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Civil Procedure
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Discovery
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