RAINE & CREED

[2012] FamCA 529

FAMILY COURT OF AUSTRALIA

RAINE & CREED [2012] FamCA 529

FAMILY LAW - SPOUSAL MAINTENANCE – Interim – Consideration of ss 72, 75 of the Family Law Act 1975 (Cth) - Whether the wife’s access to partial property settlement payment impedes application for maintenance – Whether the wife’s earning capacity is greater than her income – Where the husband receives income from disability insurance – Where the wife has obtained little paid work since separation – Where the wife’s expenses exceed her income – Interim spousal maintenance ordered - Wife entitled to an order for costs

Family Law Act 1975 (Cth), s 72, s 74, s 75(2), s 117(1), s 117(2), s 117(2A)
Family Law Rules 2004, r 9.08

Bevan & Bevan (1995) FLC 92-600
Mitchell & Mitchell (1995) FLC 92-601
Strahan & Strahan (2010) FLC 93-466

APPLICANT: Ms Raine

RESPONDENT: Mr Creed

FILE NUMBER: SYC 2012 of 2011

DATE DELIVERED: 13 July 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATE: 25 May 2012, 5 July 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gould

SOLICITOR FOR THE APPLICANT: Edwards Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Schonell SC

SOLICITOR FOR THE RESPONDENT: Barkus Doolan Kelly

Pending further order

1. Commencing from 25 May 2012 that Mr Creed (“the husband”) pay spousal maintenance to Ms Raine (“the wife”) in the amount of six hundred and sixty seven dollars ($667.00) per week in relation to which the first payment is to be made within seven (7) days thereafter, monthly in advance, on the first day of each calendar month.

2. Commencing from 25 May 2012 by way of further interim spousal maintenance, all income received by the husband from copyright usages and art business (after provision is made for taxation as quantified by the husband’s accountant in relation to each payment), provided that the amount does not exceed the equivalent of one thousand and twenty three dollars ($1,023.00) per week (calculated from 25 May 2012).  These payments are to be made within seven (7) days of receipt by the husband to an account nominated by the wife.

3. In the event that any amount received by the husband and paid to the wife pursuant to Order 2 is less than $1,023.00 per week from the commencement date, the shortfall will carry over and be taken into account with each subsequent payment.

4. That in relation to the wife’s oral application for costs thrown away on 25 May 2012, within fourteen (14) days, the husband pay three thousand dollars ($3,000.00) being two thousand dollars ($2,000.00) for counsel and one thousand dollars ($1,000.00) for the wife’s solicitor.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Raine & Creed 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 2012 of 2011

Ms Raine

Applicant

And

Mr Creed

Respondent

REASONS FOR JUDGMENT

1. This is an application by Ms Raine (“the wife”) for interim spousal maintenance in the amount of $1,800.00 per week.  Her application, which was filed on 24 April 2012, is brought in the context of her application for property settlement and spousal maintenance.  By way of final order, essentially she seeks the remaining sale proceeds of the parties’ home (about $1.2 million), that the parties otherwise retain assets and liabilities in their names and, for a period of two years, spousal maintenance in the amount of $1,000.00 per week. 

2. In his response filed 30 May 2012, Mr Creed (“the husband”) applied for $220,000.00 from the sale proceeds, which are held in a controlled monies account, and a payment equal to 55 per cent of the balance then remaining.  In addition, that the wife transfers to him her share in his art business and subject to him receiving an equal share of the parties’ household items, each would otherwise retain individual assets and liabilities.  There is an issue about the value of the husband’s business, in particular, the art pieces which, until recently, have continued to provide him with a not insignificant income.  Another significant issue relates to disability income paid to the husband by Tower Australia Limited (“TAL”) (approximately $15,000.00 per month) which, subject to the conditions of his disability income protection insurance policy, he is eligible to receive until he turns 70.  Thus, on the wife’s application, the husband would retain his art business (including art pieces) and disability income (from which he would pay spousal maintenance).

3. The property settlement and interim applications came before the Court on 25 May 2012.  Having previously informed the wife’s solicitors that the husband “disputes that your client is unable to support herself” (letter dated 10 April 2012 attached to wife’s affidavit filed 24 April 2012), through his counsel, the husband confirmed that he sought that her interim spousal maintenance application be dismissed.  In circumstances where the husband had not filed his response and affidavit it was necessary to adjourn the hearing.  Nonetheless, partial property orders were made by reason of which each party received $100,000.00 from the controlled monies account.  Otherwise, directions were made in relation to the appointment of experts for the final hearing and the wife’s interim spousal maintenance application listed for further hearing on 5 July 2012.  The wife asks that the husband pays her costs thrown away.

Background Facts

1. Unless it is stated otherwise, the following matters appear to be uncontentious.

2. The wife was born in 1958.

3. The husband was born in 1960.

4. The parties commenced living together in 1987 and married in 1990.

5. There are no children from this relationship.

6. At the time of cohabitation, the husband was a salaried art assistant and the wife a freelance consultant in the art field, trading as J Pty Ltd.  At that time, the husband had few assets, the details of which are set out at paragraph 11(a) of his affidavit sworn 24 May 2012.  According to the wife her assets were worth about $66,000.00 comprising superannuation worth $10,000.00 and savings.  It is conceded by the husband that the wife had “some limited” savings in relation to which he has requested evidence that the quantum was in the magnitude alleged.

7. In 1988, the husband became a full-time professional artist about which there is no dispute that he was financially successful and thereafter the primary income earner for the family.

8. In 1991/1992, the parties purchased a dilapidated home at Suburb N for $280,000.00.  From the wife’s pre-cohabitation savings, a 20 per cent deposit ($56,000.00) was paid with the balance ($224,000.00) jointly borrowed from Westpac.

9. In 1993, the husband leased a large art studio, plus equipment, for his business.

10. In 1999, the parties undertook a significant rebuild of the Suburb N property, which was funded by further borrowings.

11. In 2000, the husband became a sole trader operating under his company, A Pty Ltd.  He is its sole director with the parties being equal shareholders. 

12. In June 2000, the parties agreed to offer the Suburb N property as collateral security for a line of credit to establish for the husband, a business operating account.  There appears to be no dispute that, at various times, the wife did the company and the husband’s bookkeeping or that, from when the line of credit was established, his income was deposited into the mortgage accounts held in the parties’ joint names and that his business creditors were paid out of the new business operating account.  The business line of credit had an initial limit of $75,000.00 which increased in $75,000.00 increments as the joint mortgage was reduced.  When $375,000.00 was paid off the mortgages secured on the Suburb N property, a second overdraft account, being the business loan account was established.  From that point, the business operating account continued to pay creditors of the business and remained at a $75,000.00 limit.  Although there would appear to be a dispute about when the Suburb N property was paid off, there is no dispute that the effect of the establishment of the business loan accounts was that overall the parties’ liabilities stayed the same.

13. In February 2006, the wife ceased work to project-manage further construction on the Suburb N property.  This was funded by an equity access loan, which was discharged in August 2006.

14. Helpfully, the husband set out the parties’ taxable incomes for the years ending 2006 – 2012.  In addition, his income for the taxation years ended 1996 – 2005 is in evidence.  In any event, the comparative tables are set out below:

Year ending	Husband’s taxable income	Wife’s taxable income
2006	$147,531	$37,607 (dividends from husband’s company $7,475)
2007	$178,789	$49,226 (dividends from husband’s company $7,569)
2008	$43,445	$29,446 (dividends from husband’s company $6,993)
2009	$77,142	$3,975
2010	$96,447	$575

1. The husband was diagnosed as suffering from depression, for which he was prescribed medication, in either 2007 or early 2008.  According to the husband his depressive disorder impacted upon his ability to work at the level he had previously and, by the time the parties separated in March 2009, he was not working.  According to the wife the husband has a long standing alcohol abuse problem, the effect of which was that he spent too much and did not work as hard as he had previously.  There is no doubt that the husband abused alcohol, which he described as self-medicating a subsequently diagnosed depressive disorder, or that in the 2008 and 2009 financial years, the husband’s taxable income was substantially lower than the amounts earned in preceding years.

2. As was mentioned earlier, the parties separated in March 2009.  At separation, the wife remained in the Suburb N home and, although it is not entirely clear when, the husband moved to his now partner, Ms B’s home at Suburb F.

3. At the date of separation, the parties had the following liabilities:

   ·    $375,000.00 outstanding on the business loan;

   ·    $75,000.00 outstanding on the business operating account;

   ·    $20,000.00 outstanding on a loan in the name of A Pty Ltd;

   ·    equity access loan in the amount of $220,000.00; and

   ·    approximately $10,000.00 in the name of J Pty Ltd.

4. The parties agree that prior to separation they spent more than they earned, albeit whether this is something for which they share responsibility is hotly contested.  There would appear to be little doubt that post-separation each continued to do so.

5. It was agreed that Suburb N would be sold.  According to the wife, this was a significant venture which saw her devote the following two years, in effect, as project manager, and which she says resulted in a significant increase in the eventual sale price.  Somewhat unusually she contends that the difference between the value of the home at the date of separation and the sale price 2½ years later is a contribution made solely by her.  In any event, after separation and without the husband’s agreement, the wife withdrew $70,000.00 from the equity access loan and instructed Westpac to stop withdrawals from the husband’s accounts, other than his personal account.  In this regard, “as a sign of goodwill [the wife] transferred $5,000.00 into his personal account before this (the stop) was activated by the bank”.  That this occasioned some difficulty for the husband does not appear in dispute. 

6. Further withdrawals were made by the wife from the equity access loan, the effect of which is that post-separation, in total, the wife withdrew $107,727.34.  Of this, $32,774.80 was paid in interest on the various loans attached to the husband’s business and the equity access loan referred to above, $9,796.88 for rates, insurances and the like, $48,832.68 maintenance and improvement to the home and $16,322.98 for her personal expenses.  For the purpose of these proceedings, the wife has adequately accounted for the funds withdrawn by her post-separation from the equity access loan. 

7. The wife ceased making interest payments on the debts secured against the Suburb N property in November/December 2009 following which these were paid by the husband alone.  Rounded out, he paid approximately $64,000.00.

8. It is the husband’s evidence that following separation he continued to have little or no work and, it would appear, his income primarily constituted rollover (copyright) usage rights from previously created art pieces.  Although the wife disputes his evidence that he was unemployed, there is no dispute that she assisted him to claim against his disability insurance with TAL.  If, as she says, she completed the insurance claim for him, the representations contained in that document were jointly made.  So that it is clear, the TAL policy was obtained some years prior to separation.

9. The husband’s insurance claim was accepted in March 2010, with the first payment in the amount of $135,495.32 received in November 2010.  Pending receipt of these funds, the husband borrowed money from family and friends which totalled $90,145.00.  From the first payment, these advances were repaid.  Tax in the amount of $51,478.00 was due on the first TAL payment which has now been paid.

10. On 4 August 2010 the wife applied for but subsequently withdrew an application for unemployment benefits.

11. Suburb N sold in February 2011 for $2.5 million which was applied as follows:

    ·    selling costs;

    ·    discharge of all loans in the approximate sum of $708,000.00;

    ·    $150,000.00 lump sum payment to the wife;

    ·    to the parties, $100,000.00 as partial property settlements.

12. The remaining balance of $1.443 million was deposited in a controlled monies account.

13. According to the wife, she received the $150,000.00 individual payment “to equalise the lump sum payment [the husband] received from Tower”.  According to the husband:

    …Following the sale of the [Suburb N] property, [the wife] asserted that she had accumulated $150,000 in debt by way of credit cards and personal liabilities.  I consented to allowing [the wife] to access a further $150,000 from the controlled monies account (on top of the $100,000 that we each received by way of partial property settlement) to alleviate her asserted debt position.  I was of the view that this was a reasonable position in circumstances where I had used the lump sum payment received by me from Tower to alleviate my own debt position…  (husband’s affidavit sworn 24 May 2012, p 19, par 93 (20.4))

14. The point being, in circumstances where the wife had very little paid work in the 2½ years following separation, the husband accepted that she should receive that amount to address her liabilities.  Having agreed that she should receive that payment for that purpose it is not reasonable for him to complain here that she does not produce source documents to support what she says she did with the money.  Simply put, her evidence in these proceedings is consistent with what she previously told the husband and, while legally represented, he accepted.

15. It is the wife’s evidence that, from the total $250,000.00 she received at settlement, those funds were applied as follows:

    ·    $122,144.00 of a total debt of $146,928.00 essentially borrowed from friends, family and credit cards post-separation;

    ·    $35,568.26 to her former solicitors;

    ·    $10,334.08 to her current solicitors;

    ·    $3,300.00 to a barrister;

    ·    $78,653.66 personal living expenses.

16. When regard is had to the standard of living that the parties enjoyed during the marriage, the wife’s expenditure would not appear unreasonable and, for the purposes of these proceedings, she has adequately accounted for the $250,000.00 she received from Suburb N. 

17. It would appear that the husband applied his property settlement to day-to-day living, savings and tax.

18. As was earlier mentioned, on 25 May 2012, by way of partial property settlement, I ordered that the parties each receive a further $100,000.00 from the controlled monies account.  From his payment, the husband paid $67,550.00 to the ATO for the years ended 30 June 2010 and 30 June 2011, $16,000.00 in legal costs associated with these proceedings, $3,800.00 on credit cards and the balance for living expenses.  The wife’s application for the partial property settlement payment of $100,000.00 was so that these funds could be used for legal expenses, which she understands will be in the vicinity of $101,408.00.  Presently, she has $75,000.00 of the $100,000.00 advance on deposit.  Whilst it is accepted that these funds could be used for her day-to-day living expenses, that was not the basis of her application and it is not accepted that it would be reasonable for her to be required to live on capital and her capacity to retain her current legal advisors seriously compromised.  Thus, although the wife has access to her partial property settlement payment, this does not stand in the way of her application for interim spousal maintenance.  Strahan & Strahan (2010) FLC 93-466.

19. In late June 2012, the husband received a backdated payment from TAL in the amount of $94,157.07.  Taxation in the amount of approximately $31,000.00 is payable on this amount.

20. To place the wife’s interim spousal maintenance application in context, it is useful to record the parties’ contentions in relation to the asset pool.  A draft joint Balance Sheet was provided for the appearance on 24 May 2012, which is set out below:

Ownership	Description	Wife's Value	Husband's Value
Assets
Joint	Net proceeds of sale of [W Street, Suburb N] held in controlled monies account - as at 14/02/12	$1,433,044	$1,433,044
Husband	Mercedes	$36,000	$36,000
Husband	[Art] equipment	$30,000	$30,000
Husband	[A] Pty Limited	NIL	$0
Wife	[J] Pty Limited	NIL	$102,144
Wife	U Bank No […]33	$1,332	$1,322
Wife	Westpac Account No. […]05	$388	$388
Husband	Westpac Account	$75,160	$26,600
Wife	Furniture and Contents	$15,000	$20,000
Husband	Furniture and Contents (incl. wine collection)	$20,000	$2,000
Wife	[VW]	NIL	NK
Total	$1,610,924	$1,651,498
Addbacks
Ownership	Description	Wife's Value	Husband's Value
Husband	WBC [A] P/L O/Draft paid out of proceeds FMH	$20,388	$0
Husband	WBC [Mr Creed] Business Loan - paid out of proceeds of FMH	$379,219	$0
Husband	WBC [Mr Creed] Operating Account - paid out of proceeds of FMH	$76,109	$0
Husband	WBC Equity Access - paid out of the proceeds of the FMH	$114,591	$0
Husband	Husband's house/garden & household expenses incurred post- separation	$62,089	$0
Wife	WBC [J] P/L - unsecured overdraft	$10,034	$0
Wife	Wife's house/garden & household expenses incurred post- separation	$45,637	$0
Husband	Lump Sum Payment from Tower Australia Ltd (TAL)	$135,495	$0
Wife	Funds from FMH to equalise TAL payment to husband	$150,000	$150,000
Husband	Monthly payments from TAL to 03/01/2012	$184,120	$0
Husband	Estimate of next 4 months payments from TAL	$60,000	$0
Wife	Partial property settlement	$100,000	$100,000
Husband	Partial property settlement	$100,000	$100,000
Husband	TAL Business Expenses Policy - yet to be claimed, estimated	$50,000	$0
Husband	Loss of claim from TAL from when husband ceased to work in December 2007 - example of husband's waste	$240,000	$0
Husband	Damaged [Art] Equipment - insured value only	$90,006	$0
Husband	Addback to wife for obtaining at least an extra $800,000 for the FMH	$400,000	$0
Wife	Sale of Telstra shares	$0	$2,880
Wife	[Landrover]	$0	$4,000
Husband	Lease on Mercedes	NK	$36,000
Husband	Income from rollovers received post separation from [art pieces created] during the marriage	$150,000	$0
Total	$2,367,688	$392,880
Liabilities
Ownership	Description	Wife's Value	Husband's Value
Wife	[J] P/L	$102,144	$0
Wife	WBC Mastercard - Personal	$415
Wife	WBC Mastercard - Company	$1,475
Wife	American Express - Company	$1,718
Husband	Westpac Visa	$4,090
Total	$105,752	$0

Superannuation
Member	Fund & Interest	Wife's Value	Husband's Value
Wife	ING Integra	$60,823	$60,283
Husband	AXA	$43,042	$44,764
Husband	ING Integra	$123,335	$114,000
Total	$227,200	$227,200
Financial Resources
Ownership	Description	Wife's Value	Husband's Value
Husband	Capitalised Tower Income Protection Policy Payments before tax and increased quarterly to age 70 - before tax, estimated	$4,482,022	$0
Husband	Future income from copyright rollovers/ usage from [art pieces created] during the marriage	NK	$0
Total	$4,482,022	$0

1. Now that the wife is in funds, it is expected that she will obtain advice about the efficacy of her claim for many of the notional assets she seeks to add back.

Application of the law to the facts

1. It is submitted on the husband’s behalf, that the wife has not established that she is unable to adequately support herself and thus the threshold requirement (s 72) has not been made out and thus the power to order spousal maintenance pursuant to s 74 is not enlivened.  Adequately is a relative concept which varies from case to case and in relation to which the standard of living to which the parties enjoyed prior to separation is relevant.  Bevan & Bevan (1995) FLC 92-600; Mitchell & Mitchell (1995) FLC 92-601.

2. The husband’s challenge that the wife has not established a s 72 right to maintenance is pressed on three bases. Firstly, as a consequence of the property settlement payments she has sufficient funds to adequately support herself. As has already been mentioned, this argument is rejected. Secondly that the wife’s earning capacity is greater than her actual income. Thirdly, that inconsistencies in her evidence and with her taxation returns, suggest that her evidence is either unreliable or she has an undisclosed source of income. In relation to the third point, there is no doubt that the wife’s evidence is presented in a somewhat confused fashion, with little attempt made in her Financial Statements to distinguish between company and personal liabilities and company and personal expenses. However, close analysis of the wife’s evidence, including the large quantity of documents annexed to her affidavits enables a clearer picture to emerge, such that it is not established that she has an undisclosed source of income and it is possible to draw her evidence together into a comprehensive whole.

3. It is appropriate, before consideration is given to whether the wife has a greater earning capacity, to assess her current circumstances.  At paragraph 33 of her affidavit filed 24 April 2012, the wife said “[m]y income post-separation (3 years) has been $46,404.51 (net of income tax) which has been used to cover some of my business expenses only and has not enabled me to pay myself any wages” (emphasis as per original).  She goes on to say (at paragraph 34):

   Since prior to separation I have been struggling to obtain work as [consultant in the art field] and the amount of work I have been able to attract has been dwindling over the years.  I have currently only one client despite my constant efforts to source new clients.  I have an agent called [Company T] whom I pay a monthly fee to represent me.  Also, I pay a monthly fee to have my [advertisement] on the main industry freelance site… 

4. Attached to this affidavit are copies of the wife’s personal and company income tax returns.  In addition, the Court has a volume of invoices issued by her from 2 November 2010 to 2 July 2012.  These are in numerical order and three only are missing.  In relation to the wife’s evidence, at paragraph 33, this addresses her income between March 2009 and 24 April 2012.  The three missing invoices relate to the period November 2010 – 13 December 2010.  Although it was suggested by counsel for the husband that it is not possible to distinguish between invoices issued for the wife’s services and those claiming reimbursement for out-of-pocket expenses, this submission is not accepted.  On the face of the documents there is a clear distinction between those invoices which relate to the wife’s personal exertion and those which claim reimbursement.  Set out below are the wife’s gross receipts divided between personal exertion and reimbursement.  So that it is clear, in her most recent affidavit the wife gave evidence about three recent consultant commissions which post-date her paragraph 33:

Source	Invoice Date	Inv #	Amount  $ (incl GST)	Personal Exertion  $	Reimburse-ment  $
Exhibit "E"	2/11/2010	1210	545.30	545.30
Not provided	1211
Exhibit "E"	26/11/2010	1212	527.50	527.50
Exhibit "E"	26/11/2010	1213	714.25	714.25
Exhibit "E"	26/11/2010	1214	424.90	424.90
Not provided	1215
Not provided	1216
Exhibit "E"	13/12/2010	1217	629.00	629.00
Exhibit "E"	24/12/2010	1218	238.76	238.76
Exhibit "E"*	8/02/2011	1219	2,739.00	2,739.00
H's affidavit "G"	8/02/2011	1220	1,276.09	1,276.09
H's affidavit "G"	23/02/2011	1221	900.00	900.00
Exhibit "E"*	23/02/2011	1222	487.62	429.00	58.62
Exhibit "E" *	23/05/2011	1223	560.95	560.95
Exhibit "E" *	23/05/2011	1224	357.69	357.69
Exhibit "E" *	23/05/2011	1225	214.90	214.90
Exhibit "E" *	23/05/2011	1226	72.93	72.93
Exhibit "E" *	12/07/2011	1227	6,831.00	6,831.00
H's affidavit  "G"	12/07/2011	1228	2,431.86	2,431.86
Exhibit "E" *	1/08/2011	1229	594.00	594.00
Exhibit "E" *	23/08/2011	1230	5,990.60	5,990.60
H's affidavit "G"	23/08/2011	1231	2,497.64	2,497.64
Exhibit "E" *	28/08/2011	1232	374.00	374.00
Exhibit "E" *	11/11/2011	1233	6,001.60	6,001.60
H's affidavit "G"	11/11/2011	1234	2,059.68	2,059.68
Exhibit "E" *	1/12/2011	1235	1,870.00	1,870.00
H's affidavit  "G"	1/12/2011	1236	510.05	510.05
Exhibit "E" *	1/12/2011	1237	3,828.00	3,828.00
H's affidavit  "G"	1/12/2011	1238	1,265.45	1,265.45
Exhibit "E" &"B"	26/03/2012	1239	8,570.00	7,971.60	598.40
Exhibit "B"	26/03/2012	1240	5,748.23	5,748.23
Exhibit "B"**	14/04/2012	1241	985.06	900.00	85.06
Exhibit "B"	1/06/2012	1242	1,560.19	1,320.00	240.19
Exhibit "B"	5/06/2012	1243	4,620.00	4,620.00
Exhibit "B"	5/06/2012	1244	2,520.99	2,520.99
Exhibit "B"	20/06/2012	1246	4,915.39	4,915.39
Exhibit "B"	2/07/2012	1245	6,765.00	6,765.00
TOTAL	79,627.63	54,519.98	25,107.65

* Also included in H's affidavit annexure "G"  

** GST exclusive  

1. Calculated by financial year, the wife established that through her personal exertion, her company earned the following income (post-separation to 2 July 2012):

Invoice Date	Inv #	2011 $	2012 $	2013       $		Post Separation*
2/11/2010	1210	545.30	545.30
Not provided	1211
26/11/2010	1212	527.50	527.50
26/11/2010	1213	714.25	714.25
26/11/2010	1214	424.90	424.90
Not provided	1215
Not provided	1216
13/12/2010	1217	629.00	629.00
24/12/2010	1218	238.76	238.76
8/02/2011	1219	2,739.00	2,739.00
23/02/2011	1222	429.00	429.00
23/05/2011	1223	560.95	560.95
23/05/2011	1224	357.69	357.69
23/05/2011	1225	214.90	214.90
23/05/2011	1226	72.93	72.93
12/07/2011	1227	6,831.00		6,831.00
1/08/2011	1229	594.00		594.00
23/08/2011	1230	5,990.60		5,990.60
28/08/2011	1232	374.00		374.00
11/11/2011	1233	6,001.60		6,001.60
1/12/2011	1235	1,870.00		1,870.00
1/12/2011	1237	3,828.00		3,828.00
26/03/2012	1239	7,971.60		7,971.60
14/04/2012	1241	900.00		900.00
1/06/2012	1242	1,320.00
5/06/2012	1243	4,620.00
2/07/2012	1245	6,765.00
TOTAL	7,454.18	40,300.80		6,765.00		41,814.98

1. When personal exertion and reimbursement are combined, for the same period the following picture emerges:

Invoice Date	Inv #	2011      $	2012     $	2013      $	Post separation*
2/11/2010	1210	545.30	545.30
Not provided	1211
26/11/2010	1212	527.50	527.50
26/11/2010	1213	714.25	714.25
26/11/2010	1214	424.90	424.90
Not provided	1215
Not provided	1216
13/12/2010	1217	629.00	629.00
24/12/2010	1218	238.76	238.76
8/02/2011	1219	2,739.00	2,739.00
8/02/2011	1220	1,276.09	1,276.09
23/02/2011	1221	900.00	900.00
23/02/2011	1222	487.62	487.62
23/05/2011	1223	560.95	560.95
23/05/2011	1224	357.69	357.69
23/05/2011	1225	214.90	214.90
23/05/2011	1226	72.93	72.93
12/07/2011	1227	6,831.00	6,831.00
12/07/2011	1228	2,431.86	2,431.86
1/08/2011	1229	594.00	594.00
23/08/2011	1230	5,990.60	5,990.60
23/08/2011	1231	2,497.64	2,497.64
28/08/2011	1232	374.00	374.00
11/11/2011	1233	6,001.60	6,001.60
11/11/2011	1234	2,059.68	2,059.68
1/12/2011	1235	1,870.00	1,870.00
1/12/2011	1236	510.05	510.05
1/12/2011	1237	3,828.00	3,828.00
1/12/2011	1238	1,265.45	1,265.45
26/03/2012	1239	8,570.00	8,570.00
26/03/2012	1240	5,748.23	5,748.23
14/04/2012	1241	985.06	985.06
1/06/2012	1242	1,560.19
5/06/2012	1243	4,620.00
5/06/2012	1244	2,520.99
20/06/2012	1246	4,915.39
2/07/2012	1245	6,765.00
TOTAL	9,688.89	63,173.74	6,765.00	59,246.06

1. It will be seen that the table which sets out the wife’s income from personal exertion when compared to her paragraph 33 shows a $5,000.00 shortfall for which invoices were not provided.  However, the wife’s evidence covers the period which commenced March 2009 whereas her invoices commence 2 November 2010.  In circumstances where there is no dispute that the wife had some work in the intervening period, see for example paragraph 17 of these reasons, the difference between paragraph 33, her taxation returns and the invoices is so small that there is no support for the contention that she has undisclosed income.

2. The wife’s income from personal exertion for the financial year ended 2012 shows reasonably regular work.  Clearly she has less than full time work but she has also had reasonably regular income and it is thus appropriate to proceed on the basis that she is likely to continue to earn at about the same rate.   Calculated on the basis of income from personal exertion the wife earns an average $775.00 per week. 

3. Because of the lack of clarity in relation to the wife’s unspecified business expenses mentioned in her company tax returns, it is appropriate to proceed on the basis that the totality of her personal and business expenses are identified in her Financial Statement.  So that it is clear, this does not include personal or company income tax, the manner by which the wife has arranged her financial affairs means is not levied.  Thus, her expenses are:

   ·     rent  $598.00

   ·     motor vehicle insurance  $27.00

   ·     health insurance  $28.00

   ·     contents insurance  $10.00

   ·     motor vehicle registration  $27.00

   ·     car lease payments  $268.00

   ·     Part N expenses  $1,507.00

   Total  $2,465.00   

4. Thus, the wife has established that her expenses, which it is accepted are reasonable, exceed her income by $1,690.00 per week. 

5. However, it is the husband’s contention that the wife could earn more.  The effect of his evidence is that the parties retained separate careers and that in the early part of this century the wife abandoned her “profitable [consultant] career” to pursue other ventures, namely, designer and as a consultant in a different field.  It is his evidence that long before separation the wife “let her own [consultant] career go by simply removing herself from it”.  There is no dispute that shortly before the parties separated, the wife obtained a short-term consulting contract which she relinquished.  According to the husband, the wife disliked the long hours, staff politics and working to an under-qualified superior whereas, it is the wife’s evidence, that the husband’s alcohol abuse made it impossible for her to manage a home and work life.

6. Post-separation, there is no dispute that the wife did not actively pursue paid employment until, it would appear, 2011.  She has, however, returned to her previously “profitable [consulting] career” in relation to which the wife actively markets her services and there is no evidence that she has turned down work or failed to take steps which might see her earn more.  In short, the husband has not established that the wife has a greater earning capacity than her actual income.  Although in time the wife may be better placed to pursue a different career, it is reasonable that she does so in the context of a final property settlement.  On balance, the wife has established that she is presently unable to adequately support herself by reason of the manner which, prior to separation, the parties agreed she would spend her time and arrange her working life and the income presently available to her.

7. Turning then to consideration of the relevant s 75(2) factors.

8. Both parties receive psychiatric assistance and take medication.  Whilst the husband’s state of health adversely affects his capacity for work, the wife’s health issues do not appear to compromise her working capacity. 

9. Neither party is obligated to contribute to the support of any other person or eligible to receive a benefit of the type referred to in s 75(2)(f).

10. This has been a long marriage and although aspects of the wife’s evidence about her contribution to the husband’s income, earning capacity, property and financial resources are disputed by him, there is no dispute that the disability insurance policy was established whilst the parties cohabited and paid for from income earned by the husband which, had it not been diverted to the cost of the policy, would otherwise have been available to the parties.  There is also no doubt that the wife did some work for the husband and his business, assumed joint responsibility for business liabilities and contributed to the acquisition, maintenance and improvement at Suburb N.

11. Reference has already been made to the financial circumstances relating to the husband’s cohabitation with Ms B.  Simply put, these arrangements would appear to be advantageous to the husband in the sense that his housing costs are comparatively modest.

12. The wife’s financial circumstances have already been discussed.  In short, her expenses reflect the standard of living enjoyed by the parties prior to separation and although the amount is not insignificant it is, in all of the circumstances, reasonable.

13. The husband’s financial circumstances are set out in his most recent Financial Statement and affidavit.

14. According to the husband’s Financial Statement filed 28 May 2012, his sole source of income is disability insurance of $3,430.00 per week.  His personal expenditure (items 19-31) is $1,553.00, of which $995.00 tax, $143.00 hire purchase for his Mercedes and $206.00 disability insurance premiums are the largest items.  His Part N personal expenditure is $1,660.00 per week which relevantly, includes $200.00 per week board to his partner and $115.00 in expenses he pays for her.  As to the latter, these are voluntary.  In circumstances where the husband’s partner earns approximately $4,500.00 per week, it is apparent that she is not reliant upon him for the $115.00 per week payment.  By comparison to the wife, the husband claims double the amount for entertainment and hobbies, $200.00 compared to nothing for holidays, and more for golf, telephone and petrol.  The wife’s medical expenses are considerably more than the husband’s, as is her clothing and shoe expenditure. Given that she has returned to paid work this later amount is not surprising. Otherwise, the differences appear to relate to the wife living alone in rented accommodation whereas the husband pays board.  However, even if the husband’s expenses are taken into account without adjustment, his disability income exceeds his expenses by $217.00 per week.

15. It is the wife’s contention, however, that the husband has failed to account for rollover usage and art business income.  At Annexure “K” to her affidavit filed 3 July 2012, she produced a schedule of that income post-separation.  Excluding an erroneously included amount (14 July 2009), this shows rollover usage income and from the business of approximately $395,000.00.

16. The husband’s bank statements (Exhibit “E”) show deposits from art business work in the amount of $14,100.00 on 20 April 2012 and $3,905.00 on 6 June 2012.  The significance of this is that, in addition to disability income, in 2012 the husband earned $48,298.00 from rollover income and art business work.  Averaged out this is an additional $1,800.00 per week about which there is no mention in his Financial Statement.

17. While these matters will require clarification at the final hearing, Annexure “K” referred to above, demonstrates that post-separation the husband’s income from copyright usages and art business work has varied wildly and, for example, in 2011, only one payment ($14,100.00) was received.  There is, evidently, an element of uncertainty about the husband’s continued receipt of this income.  In the event that the wife is entitled to maintenance, that uncertainty is best addressed by distribution between the parties of the amount received rather than payment to the wife of a fixed amount based upon this component of the husband’s past income.  So that it is clear, the husband’s failure to account for this income in his most recent Financial Statement is a significant omission which made the task of understanding his financial circumstances unnecessarily complicated.

18. Counsel for the husband properly conceded that the husband can afford to pay the wife a few hundred dollars per week interim spousal maintenance.  That concession was made on the basis that his income identified in his Financial Statement clearly exceeds his weekly expenses.  However, it is not accepted that the husband’s average weekly expenses are entirely necessary, albeit they may be consistent with the standard of living enjoyed by the parties prior to separation.  In light of the separation, it is not reasonable for the husband to expect to maintain every aspect of that lifestyle ahead of his financial obligation to the wife.  With little effort by him his expenses could be modified, for example, in relation to entertainment, hobbies and holidays.  This would free up a further $450.00 per week.

19. Thus, it is established that from the husband’s disability insurance income he is reasonably able to pay the wife $667.00 per week.  As she has established that her need is greater than that amount, it is also proper that she receive a significant component of his rollover/copyright and art business income provided that the total amount received by her does not exceed $1,023.00 per week, that is, $1,690.00 less $667.00.  The formula will also need to take into account that the husband will need to retain an amount for taxation, which shall be quantified by his accountant.  In the unlikely event that the husband cumulatively receives $1,023.00 from this source the wife’s total income may exceed his.  Of course, if he consistently earns more than the $1,023.00 he alone will have the benefit of the excess.  Assuming, however, that he does not, the parties comparative reasonable needs renders appropriate an outcome which includes the potential that the wife will have greater income than the husband.

1. As the husband has recently received a significant TAL payment, the order will be directed to him personally and not TAL.  Because this matter was adjourned as a consequence of the husband’s failure to file his documents, it is appropriate that the order commence from the first hearing date.  In relation to his non TAL income as nothing has been received since 25 May 2012, although the commencement date predates these orders, the effect is that it will apply to future income.

Costs

1. The wife seeks costs in the amount of $4,000.00 being costs she says were unreasonably thrown away as a consequence of the adjournment which resulted from the husband’s failure to file his response to her Application in a Case and affidavit prior to the interim hearing.

2. Section 117(1) is the basic provision concerning costs and provides the general rule that subject to s 117(2), s 117AA and s 118, each party to proceedings under the Act shall bear his or her own costs.  If there are circumstances that justify it in so doing, the Court may make an order for costs pursuant to s 117(2) as the Court considers just.  In considering what order, if any, should be made I am required to have regard to the provisions of s 117(2A) of the Act.

3. It is submitted on the husband’s behalf that there are no justifying circumstances. 

4. The wife’s Application in a Case was filed on 24 April 2012, a sealed copy of which and supporting documents were served on the respondent’s solicitors on 27 April 2012.  By letter dated 30 April 2012, having referred to service of these documents, the wife’s solicitors confirmed that they would be seeking to proceed with the application “on the day it is returnable on 25 May 2012”.  It is submitted on the husband’s behalf that his solicitors were uncertain that the wife’s Application in a Case had been listed for hearing on the date recorded on the interim application, that being a day on which the substantive proceedings were already listed.  Because the Court date and time on the Application in a Case were typed rather than handwritten, they were unclear that the application was returnable on the same day.  Their point being that ordinarily the Court date and time are inserted by hand by the Court.  However, the document had been sealed by the Court and clearly identified the return date.  In this regard, the letter of 30 April 2012 made plain that the application was returnable on the nominated date.

5. Reference was made to the fact that the Court did not directly communicate to the husband’s solicitors that the wife’s Application in a Case had been listed. In circumstances where the Family Law Rules require service of a sealed copy of the Application in a Case upon the respondent, the respondent’s solicitors could not have reasonably expected additional notification from the Court. During submissions, I expressed the view that if there was any uncertainty about whether the application was listed, a simple conversation between the solicitors could have resolved the matter.

6. The husband was served in a timely way and had adequate notice and time within which to file his response to the Application in a Case and affidavit prior to the hearing.  While is it accepted that, on 25 May 2012, other matters were dealt with and the majority of the time used to deal with partial property settlement and trial issues, had the husband’s material been filed the time taken to deal with the matters which were addressed would have been reduced and the entirety of the wife’s Application in a Case finalised that day.  This constitutes justifying circumstances.

7. To determine what order, if any, should be made as a consequence of my findings pursuant to s 117(2), I am required to consider those matters set out in s 117(2A)(a)-(g) insofar as they are relevant.

8. The parties’ financial circumstances have already been considered and in relation to the application of the subsection, the point is moot.  

9. Neither party is in receipt of a grant of legal aid.

10. In relation to subsection (c), the husband’s failure to file his documents so that the matter could proceed on the date on which it was listed, contravened r 9.08 of the Family Law Rules 2004 and meant it was impossible for me to read the material beforehand. When the matters which have established justifying circumstances are taken into account, the application of subsection (c) weighs heavily in favour of an order for costs in the wife’s favour.

11. There are no other relevant matters.

12. On balance, I am satisfied that the wife is entitled to an order for costs.  In relation to quantum, she sought $2,000.00 in relation to counsel’s fees and the same amount for her solicitor.  Quite properly, there is no submission made in support of indemnity costs, as a consequence of which the amount sought for solicitor’s costs is high.  There is no argument that it was appropriate for the wife (as did the husband) to retain counsel nor issue taken with the quantum of counsel’s fees.  Neither party submitted that for such a comparatively small issue that the quantum of the wife’s solicitor’s costs would be referred for assessment.  Having regard to the time taken on 25 May 2012, and that other matters were addressed, an order will be made in relation to the wife’s solicitor’s costs in the amount of $1,000.00.  I agree the costs sought by counsel are appropriate.

I certify that the preceding seventy six (76) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 13 July 2012

Associate:     

Date:              13 July 2012