PLANEY & HUNT

[2012] FamCA 46

FAMILY COURT OF AUSTRALIA

PLANEY & HUNT [2012] FamCA 46

FAMILY LAW - SPOUSAL MAINTENANCE – Application for interim spousal maintenance – Whether the wife is unable to adequately support herself – Whether the husband has capacity to pay spousal maintenance – Where the wife has primary responsibility for the care of a three year old child – Husband’s argument that the wife should have paid employment rejected - Where income exceeds expenditure for both the wife and the husband – Where is it reasonable that husband adjust work arrangements to spend time with the child - Where husband’s earning capacity can be expected to increase – Where both parties are able to realise assets – Ordered that husband pay interim spousal maintenance in the sum of $500 per week.

Family Law Act 1975 (Cth), ss 72, 75

APPLICANT: Ms Planey

RESPONDENT: Mr Hunt

FILE NUMBER: SYC 4416 of 2010

DATE DELIVERED: 8 February 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATE: 30 January 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Tocker

SOLICITOR FOR THE APPLICANT: Blanchfield Nicholls Partners

SOLICITOR FOR THE RESPONDENT: Mr Cohen as agent for Humphreys & Feather

Pending further order

1. That Mr Hunt (“the husband”) pay to Ms Planey (“the wife”) the sum of $500.00 per week interim spousal maintenance to be paid monthly into a bank account nominated by the wife in writing.

2. That the first payment of interim spousal maintenance referred to in Order 1 be paid within seven (7) days from the date of these orders and thereafter on the monthly anniversary of the date of the first payment.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Planey & Hunt 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 SYDNEY

FILE NUMBER: SYC 4416 of 2010

Ms Planey

Applicant

And

Mr Hunt

Respondent

REASONS FOR JUDGMENT

1. This is an application by Ms Planey (“the wife”) that her husband, Mr Hunt (“the husband”) pays her $1,450.00 per week interim spousal maintenance.  It is the husband’s case that her application be dismissed.  It is submitted on his behalf that the wife has not demonstrated that she is unable to support herself and, in the event that the Court is satisfied she has demonstrated a need for spousal maintenance, the Court would be satisfied that he lacks the capacity to pay.

Applicable law

1. Section 72 of the Family Law Act 1975 (Cth) sets the relevant provision in relation to the wife’s “right to maintenance”. Section 72 is set out below:

   (1)  A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   (a)  by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   (b)  by reason of age or physical or mental incapacity for appropriate gainful employment; or

   (c)  for any other adequate reason;

   having regard to any relevant matter referred to in subsection 75(2).

   (2)  The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.

Is the wife unable to adequately support herself?

1. The first question, which must be answered, is whether the wife has established that she is unable to support herself adequately by reason of one of the factors referred to in s 72(1)?

2. The wife has post graduate qualifications in business from the United States of America.  In mid 2008 she moved to Australia to be with the husband.  He is an Australian citizen resident here.  Not long afterwards the parties married, following which the wife was granted permanent residence.  When the wife emigrated she gave up her position as a manager in the finance industry where she earned approximately $US120,000.00 per annum.  She had been offered, but declined, a better remunerated position with an international company.  Not long after the wife migrated to Australia, she fell pregnant and as events transpired, she has not sought paid work in Australia.

3. The parties’ daughter, L, was born in March 2009.  It would appear to be common ground that from when L was born, the wife has been primarily responsible for her care.  Although the husband may have preferred the wife to commence at least part-time employment, she considered it in their daughter’s best interests to care for the child full-time.  L will shortly turn three and it is the husband’s contention that the wife should look for paid work.  Hence, his argument that she failed to establish that she is unable to adequately support herself. 

4. Although the wife may well be able to find work in her chosen field, I am satisfied that her decision to personally care for L fits comfortably within the provision of s 72(1)(a). Although there is evidence that the wife suffers from depression, the evidence did not demonstrate that this constituted a “mental incapacity for appropriate gainful employment” (s 72(1)(b)).

5. The wife’s financial circumstances are set out in her Financial Statement filed 23 December 2011.  She asserts total weekly personal expenditure of $3,007.00 and total average weekly income of $726.00.  Her income comprises welfare payments of $382.00 which, pursuant to s 75(3), the Court must disregard in assessing her capacity to support herself.  Otherwise, she receives $344.00 child support from the husband.  Excluding about $24,000.00 in legal fees, the wife has total net assets worth $125,636.00, of which $98,207.00 is in a US superannuation fund.  Albeit taxed at a higher rate, she is able to withdraw from her superannuation to meet her expenses.

6. In terms of her personal expenditure there is some, albeit comparatively little, distinction drawn between her and L’s expenses.  Spousal maintenance is not an alternate pathway to increased child support, or visa versa.  Thus, it is not accepted that her entire rent, health insurance, car insurance, utilities and the like should be attributed to the wife’s claim for spousal maintenance.  Nor, is her claim of $1,379.00 per week for legal fees.  With that latter amount excluded and an apportionment of 50 per cent of some of the expenses claimed by the wife but attributable to the child, also excluded, the wife has established a need for interim spousal maintenance in the sum of approximately $930.00 per week.  Although it is not apparent how the wife incurs personal medical expenses of $158.00 per week for medical, dental and optical expenses this amount is included.  So that it is clear she pays $175.00 each time she sees her psychologist, two or three times a month.  It follows that part of her medical expenses must relate to other attendances.

7. On this basis, there can be no doubt that the $126,000.00 paid by the husband since separation in July 2010 should have easily covered the wife’s reasonable expenses, as well as affording her a buffer for slightly greater expenditure.  She spent more than this and funded the shortfall by borrowing from friends, selling her engagement ring and drawing from her US superannuation. 

8. When child support is included, since separation in July 2010, the husband has paid the wife approximately $174,000.00.  Putting child support to one side, it is submitted on the husband’s behalf that he has provided the wife with “appropriate support” and should not now be required to supplement what he suggests is her pattern of unreasonable expenditure.  Although I agree with part of this submission, the parties left to the trial Judge the question of how $100,000.00 of the funds advanced are to be categorised.  Thus, rather than place significant weight upon whether the wife’s expenditure has been unreasonable in assessing whether she is able to adequately support herself, greater weight is placed upon the fact that she is now in a financially difficult position.  Any injustice that the husband claims this visits upon him can be considered at the final hearing.

Does the husband have the capacity to pay?

1. The husband’s financial circumstances are addressed in his affidavit and financial statement filed 30 January 2012.  He is a consultant with considerable expertise and a history of well paid consultancies.  He is self-employed and conducts his work through a corporate vehicle, “[C Pty Ltd]” (“the company”) which is his alter ego.

2. At paragraphs 81 – 83 inclusive of her affidavit, the wife summarised the company’s income and after tax profits for the years ended 30 June 2004 – 30 June 2010 (inclusive).  There is no dispute that as at 30 June 2010 the company accounts disclose retained profits in the amount of $633,037.00.  That amount, however, reflects the cost price of retained profits invested in the stock market.  Falls in the stock market has resulted in a significant fall in the company’s investment.  The retained profits are more than offset by a liability to Mr P.  I do not accept the wife’s submission that this “soft” loan should be disregarded or take lower priority than her need for financial support.  For the financial years ended 2005, 2006 and 2007 the company’s income includes significant consultants fees, which are identified at paragraph 37 of the husband’s affidavit.  The point being, that the company’s income must be understood in the context of expenses paid to consultants.  The company’s after tax profit constitutes a better representation of its income and value to the husband.  For the three years preceding this hearing, this constitutes:

   ·30 June 2008 - $53,032.00;

   ·30 June 2009 - $63,105.00;

   ·30 June 2010 - $83,454.00.

3. For these years, the company provided the husband with a personal taxable income of:

   ·30 June 2008 - $59,138.00;

   ·30 June 2009 - $68,841.00;

   ·30 June 2010 - $84,997.00.

4. In addition, for the year ended 30 June 2010, the company contributed $17,000.00 to the husband’s superannuation fund.

5. Presently the husband works two days each week.  It is submitted on the wife’s behalf that his earning capacity is greater than his actual income.  It would appear that not long after the parties commenced cohabitation, the husband accepted contract work in Darwin.  He worked in Darwin five days a week and returned to Sydney on weekends.  When the wife became pregnant, he sought permanent work and was offered a full-time permanent position in Darwin.  When the wife refused to move to Darwin he did not take up the position.

6. Following L’s birth, the husband obtained a contract position in Sydney where he worked five days per week.  This position ended in about June 2010.

7. He then, in about October 2010, obtained contract work in Darwin, where he worked three days per week until March 2011.  A further Darwin contract then became available.  However, when agreement could not be reached with the wife about changes to the child’s time with him, he did not take up the offer.  It would appear similar difficulties arose in relation to a consultancy offered overseas.  The effect of this is that the husband no longer looks interstate for work and needs to establish a Sydney based referral network.  In short, his earning capacity is not presently the equivalent to that which was available when he could readily work interstate.  So that it is clear, just as it is reasonable for the wife to adjust her capacity for paid employment because of the child’s needs, it is no less reasonable for the husband to alter his circumstances in order to build and maintain his relationship with their daughter.  In this regard, interim parenting orders were made on 19 December 2011 which provide that the husband spends time with L as follows:

   2.That subject to Order 3 herein, from 21 November 2011 all previous orders in respect of the time the father spends with L be discharged and in their stead the father spend time with L:

   2.1Each Thursday from 2.30 pm to 5.30 pm;

   2.2Each Friday from 2.30 pm to 5.30 pm, except for the Friday immediately preceding the first Saturday of each month;

   2.3On the first Saturday of each month from 2.30 pm to 5.30 pm on Sunday;

   2.4Each other Sunday from 9.00 am to 5.30 pm;

   2.5Christmas Day from 2.30 pm to 6.30 pm;

   2.6Boxing Day from 9.00 am to 2.30 pm;

   2.7On L’s birthday from 2.30 pm to 5.30 pm;

   2.8The father’s birthday from 9.00 am to 5.30 pm;   

8. It will be immediately apparent that the husband could work an additional day each week, if not an additional 1½ days each week, without jeopardising his time with L or needing to negotiate the wife’s consent to vary the orders.  However, it is not readily apparent that the husband’s increased availability is likely to be matched by additional offers of work.  While this may occur over time, at present, the Court cannot be confident that in the period between now and when the matter comes on for a final hearing in a few months time, the husband is likely to earn more than he does at present.

9. Thus, at present, the husband’s weekly income is about $2,034.00.  Government benefits of $37.00 per week have been disregarded.  His weekly income includes $327.00 superannuation which is not accessible to him.  Excluding superannuation he has an average weekly income of $1,707.00.  From this, he pays income tax, rent and various insurances which, combined, amount to $1,179.00.  In addition, he pays $344.00 per week child support and said he has a further $736.00 per week personal expenses.  It is thus, immediately apparent, that the husband’s expenses exceed his income.  It is, accordingly, something of a surprise to see that his weekly expenses include $67.00 entertainment and hobbies, $96.00 holidays and $48.00 clothing and shoes.  Although no attempt was made by him to identify weekly expenses which are his and those which relate to the child, because she spends reasonably short periods with him, nothing turns on this.

10. It would appear that in order to pay the wife, as well as supplement his own expenses, the husband has borrowed a not insignificant sum from his father.  There is reliable evidence that from the period commencing 5 October 2010, the husband’s father has loaned him $205,000.00 in relation to which interest accrues at 6.75 per cent per annum.  In addition, the husband sold a boat for $14,288.00 and shares for $40,810.00.

11. In relation to assets and liabilities, he owns a property in the Hunter region of NSW worth about $375,000.00, has shares and savings worth approximately $80,000.00, a motor vehicle worth approximately $8,000.00 and his interest in C Pty Ltd.  As was earlier mentioned, it would appear that the company’s assets are more than offset by its and/or the husband’s liability to Mr P.  The husband has superannuation worth approximately $205,000.00 and is indebted to his father as earlier referred to.  His superannuation would not seem to be accessible.

Conclusion

1. It is immediately apparent that each party spends more than they receive. 

2. The wife has modest assets and it is only her superannuation that she can use to supplement her income.  Although the period of cohabitation is short and the wife’s financial contribution to the matrimonial assets is seemingly modest, she has been primarily responsible for the child’s care and it is reasonable that at least for a little while longer, she continues to care for the child full time. 

3. It is similarly reasonable that the husband adjust his work in order to spend time with the child.  This has necessarily required that he no longer work interstate or look for work abroad, as a consequence of which, at this point of time, his earning capacity is reflected by his actual income.  However, it is reasonably likely that within the short to medium term he will be able to expand his Sydney based referral network and his earning capacity can be expected to increase significantly.  Thus, it is likely that his father and Mr P will continue to accommodate his indebtedness and that, to a degree, repayment of those advances/loans can be deferred.

4. Accordingly, it is not essential that the husband retains all of his personal assets in order to pay the company shortfall to Mr P and his loan to his father.  In short, the husband is able to gradually draw down on his shareholdings without adversely affecting his ability to meet his liabilities.  Because I accept that in the short term he too will need to meet the shortfall between his income and expenses from savings, a balance must be struck between the wife’s and his needs.  Although it will occasion some hardship to the wife I am satisfied that it is proper to order that the husband pay her $500.00 per week interim spousal maintenance.  A longer periodic sum would inappropriately jeopardise his capacity to repay legitimate third party debts.  It follows that the wife too will need to draw on capital to meet her expenses but at a lower rate than these orders require from the husband.  Because the husband has already provided her with significant funds, his liability will commence from the date of these orders.

5. For these reasons, I make the orders identified at the commencement of this judgment.

I certify that the preceding twenty six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 8 February 2012.

Associate:     

Date:              8 February 2012