Raymond & Raymond
[2024] FedCFamC1A 45
•28 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Raymond & Raymond [2024] FedCFamC1A 45
Appeal from: Raymond & Raymond [2023] FedCFamC2F 1396 Appeal number: NAA 316 of 2023 File number: NCC 838 of 2023 Judgment of: AUSTIN J Date of judgment: 28 March 2024 Catchwords: FAMILY LAW – APPEAL – LEAVE TO APPEAL – Where the husband seeks leave to appeal interlocutory financial orders requiring him to pay the wife lump sum and periodic spousal maintenance – Where at least one of the grounds of appeal appeared to have merit – Leave to appeal granted – Where the primary judge did not deny the husband procedural fairness by discounting his weekly expenses in determining his capacity to pay spousal maintenance – Where the husband alleges mistaken findings by the primary judge about the wife’s need for spousal maintenance – Where the findings made about the wife’s need for financial support were open on the available evidence and withstands complaints in the appeal that the primary judge could or should have come to different conclusions – Where the primary judge found the husband will earn a higher income from his new business – Where the husband contends the primary judge failed to make due allowance for the extra income tax for which he would inevitably be prospectively liable – Where the amount of the periodic interim spousal maintenance order is too high and the obligation to pay it under the appealed order causes the husband financial hardship – Appeal allowed in part – Where the husband refused the re-exercise of discretion and insisted on his right to adduce updated evidence – Where the periodic spousal maintenance amount is substituted for a lesser sum in the interim – Where the wife’s application for periodic spousal maintenance is remitted for rehearing – Costs reserved. Legislation: Family Law Act 1975 (Cth) Pt VII, ss 72, 74, 75, 83
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 28
Federal Court and Federal Circuit and Family Court Regulations 2022 (Cth) reg 4.02
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139
Bolitho and Cohen (2005) FLC 93-224; [2005] FamCA 458
Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17
Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
De Winter and De Winter (1979) FLC 90-605
Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553
Faulkes & Tomkins (2018) FLC 93-854; [2018] FamCAFC 151
GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 97 ALJR 857; [2023] HCA 32
Hall v Hall (2016) 257 CLR 490; [2016] HCA 23
HML v The Queen (2008) 235 CLR 334; [2008] HCA 16
Kearney & McMasters [2024] FedCFamC1A 2
Lenova & Lenova (2011) FLC 93-467; [2011] FamCAFC 114
Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61
McPhee v S Bennett Ltd (1934) 52 WN (NSW) 8
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30
Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594; [2011] HCA 1
Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v AAM17 (2021) 272 CLR 329; [2021] HCA 6
Robertson & Sento [2009] FamCAFC 49
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88
Scott & Scott (1994) FLC 92-457
Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54
Swain v Waverley Municipal Council (2005) 220 CLR 517; [2005] HCA 4
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63
Vetter v Lake Macquarie City Council (2001) 202 CLR 439; [2001] HCA 12
Number of paragraphs: 72 Date of hearing: 25 March 2024 Place: Newcastle Counsel for the Appellant: Mr Kelly Solicitor for the Appellant: CopperTree Family Law Counsel for the Respondent: Mr Bithrey Solicitor for the Respondent: Seton Family Lawyers ORDERS
NAA 316 of 2023
NCC 838 of 2023FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR RAYMOND
Appellant
AND: MS RAYMOND
Respondent
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
28 MARCH 2024
THE COURT ORDERS THAT:
1.The application for leave to appeal is granted.
2.The appeal is allowed in part.
3.Order 3(b) made on 20 October 2023 is:
(a)varied by the substitution of “$545.00” for “$685.00” in the interim, but
(b)set aside upon the re-determination of the respondent’s application for the appellant’s payment of interim periodic spousal maintenance pursuant to Order 4 hereof.
4.The respondent’s application for the appellant’s payment of interim periodic spousal maintenance is remitted for rehearing by the Federal Circuit and Family Court of Australia (Division 2).
5.Costs of the appeal are reserved for 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Raymond & Raymond has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN J:
By an Amended Notice of Appeal filed on 11 January 2024, subject to the grant of leave to do so, the husband appeals from two interlocutory financial orders made by a judge of the Federal Circuit and Family Court of Australia (Division 2) on 20 October 2023.
For the following reasons, leave to appeal is granted, the appeal is allowed in part, the dispute over the payment of interim periodic spousal maintenance is remitted for rehearing, and as an interim measure the existing order is varied as to its amount.
Background
The parties separated in January 2023 and proceedings between them for financial relief under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) were commenced by the husband in March 2023.
Numerous competing interlocutory applications were listed for hearing before the primary judge in August 2023. Somewhat unusually, the interim hearing spanned three days and entailed the cross-examination of witnesses. The hearing was concluded in October 2023 and judgment was delivered a few days later.
Several orders were made to determine the applications, but the only orders which are presently relevant are these:
2.The wife shall have sole use and occupation of the property situate and known as [the former family home] subject to the following:
(a)The wife is responsible to pay one half of all periodic and minimum principal and interest repayments due to [the bank] pursuant to the home loan accounts [numbers] as and when they fall due and payable; and
(b)The wife is responsible to pay on half of the rates, insurances and utilities as and when they fall due and payable.
3.Pursuant to s. 74 of the Family Law Act 1975(Cth) the husband shall pay or cause to be paid for the benefit of the wife by way of spousal maintenance:
(a)A lump sum of $5,500.00 with payment to the wife to be made within 14 days of the date of these orders; and
(b)A periodic sum of $685.00 each week with the first payment to be made within 7 days of the date of these orders and weekly thereafter; and
(c)All Health insurance premiums due and payable for the [private health fund] family health insurance.
As can be seen, Order 2 grants the wife exclusive occupation of the former family home, subject to her fulfilment of certain conditions, and Order 3 requires the husband to pay her spousal maintenance in three different forms.
Leave to appeal
It is uncontentious the appealed judgment, as is embodied in two those orders, is a “prescribed judgment” (reg 4.02(1)(a) of the Federal Court and Federal Circuit and Family Court Regulations 2022 (Cth)), meaning any appeal from it requires the grant of leave (s 28(1)(b) of the Federal Circuit and Family Court of Australia Act 2021 (Cth)).
While the discretion to grant leave to appeal is unfettered, the grant ordinarily requires the applicant to show the decision at first instance is attended by sufficient doubt to warrant appellate scrutiny and, additionally, substantial injustice would result if leave were refused, supposing the decision at first instance to be wrong (Medlow & Medlow (2016) FLC 93-692 at [44]–[57]).
In determining whether the first instance decision is attended by sufficient doubt, it is necessary to analyse the merit of the proposed grounds of appeal. As will be explained, the husband can only establish such doubt in respect of Order 3(b). The amount of the periodic interim spousal maintenance order is too high and the obligation to pay it under the current order causes the husband financial hardship. Leave to appeal should be granted.
The proposed appeal
While the Notice of Appeal asserts its challenge to both Orders 2 and 3, that is not actually correct because the grounds of appeal are directed exclusively to Order 3, which concerns itself only with the payment of spousal maintenance.
Order 2 imposes no financial obligation upon the husband. His liability to meet one-half of the mortgage repayments and the rates levied upon the former family home arises per force of his entry into the mortgage and his one-half legal proprietary interest in the property, though he gave evidence about the temporary relaxation of his obligation to meet mortgage repayments.
There are 15 intended grounds of appeal, but they can be conveniently grouped.
Grounds 13 and 14 complain of the husband’s denial of procedural fairness and are addressed first, as required (Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577 at 611–612; Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 at [9]–[10]). Although not styled as a complaint about the denial of procedural fairness, it transpired that was also the gravamen of Ground 3.
Grounds 4, 5, 6 and 7 complain of mistaken findings in respect of the wife’s need for spousal maintenance.
Grounds 10, 11 and 12 are specific complaints about the treatment of the husband’s past and future taxation liabilities, in so far as such liabilities affected the conclusion about his capacity to pay spousal maintenance.
Grounds 1, 2, 8, 9 and 15 complain of other mistaken findings about the husband’s capacity to pay spousal maintenance.
Grounds 13 and 14
These two grounds are pleaded as follows:
13. The Trial Judge failed to afford the Applicant Husband procedural fairness.
14.The Trial Judge failed to afford the Applicant Husband procedural fairness by not advising the parties that the husband’s deposed expenses were not accepted and would be reduced.
As argued in the husband’s Summary of Argument, Ground 13 adds nothing to Ground 14. The entire contention of the denial of procedural fairness devolves to the singular complaint of the primary judge making findings (at [154]–[155]) by discounting the husband’s weekly expenses in determining his capacity to pay spousal maintenance, when his evidence about such expenses passed unchallenged in cross-examination and he was not forewarned by the primary judge of the prospect that his claimed expenses might be discounted. Unsurprisingly, the husband did not cite any authority in support of the proposition, as it is doubtful any exists.
Three misconceptions underpin these grounds: first, the failure to draw any distinction between factual findings and the exercise of discretion; secondly, the mistaken belief the primary judge was obliged to accept and act on unchallenged evidence; and thirdly, the supposed obligation of the primary judge to forewarn the husband that his evidence may not be accepted.
In answering these grounds it is necessary to initially say something about the forensic process. The discretionary determination of an application for interim spousal maintenance entails only an impressionistic evaluation of the available evidence. The interim hearing does not admit of exhaustive and intricate analysis of the parties’ claimed living expenses. The High Court has emphasised the statutory mandate for such applications to be determined speedily (Hall v Hall (2016) 257 CLR 490 at [2]). The task is to assess one party’s “reasonable” capacity to support the other, if the other is unable to support him or herself “adequately” (s 72(1)), and to then make such order as the Court considers “proper” (s 74(1)). Of the statutory considerations which influence the decision, one is the parties’ respective “necessary” financial commitments (s 75(2)(d)) and another is the “reasonableness” of their standards of living (s 75(2)(g)).
Within that context, I respectfully adopt the following principles distilled by Aldridge J in Qin & Donato [2023] FedCFamC1A 223:
6.In hearing interim spousal maintenance, the Court does not conduct an audit of the parties’ expenses or require extensive proof of every expense. Such a course would place an intolerable burden on those seeking maintenance, who after all, are doing so because they assert they are unable to support themselves adequately.
7.Of course, the applicant must prove his or her case. However, long standing and widely accepted authority states the Court conducts “not perhaps as final or exhaustive a hearing as would be the case if one were hearing the matter finally” (Williamson and Williamson (1978) FLC 90-505 at 77,650). This was quoted with approval by the Full Court in Redman and Redman (1987) FLC 91-805 at 76,081 where the Full Court added:
The evidence need not be so extensive and the findings not so precise.
8.This last comment was approved by the High Court in Hall v Hall (2016) 257 CLR 490.
9.Justice Strauss referred to both of these decisions in Wilson and Wilson (1989) FLC 92-033 at 77,451 and said:
The practice of this Court has been to deal with applications for orders for maintenance pending the determination of a property settlement in a fairly summary manner.
10.The approach of the parties, particularly it seems the respondent, in requiring precise proof of many ordinary everyday expenses when his expenses for the same were over four times as high, does not appear to be in accordance with their obligation under s 67 and s 68 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCA Act”) to conduct the proceedings according to law and as quickly, inexpensively and as efficiently as possible. The evidence in what is supposed to be a summary procedure was more extensive than in some final property hearings. This approach is not to be encouraged.
(Emphasis added)
As Aldridge J sensibly cautioned (at [11]), contrary to the expectations of one or both parties in interim spousal maintenance disputes, the primary judge should be astute not to be drawn into “the vortex of minutiae”.
Discretion must be exercised to determine whether or not the parties’ claimed living expenses are “necessary” or “reasonable” to support themselves adequately as a step to deciding either the entitlement to receipt of, or the obligation to pay, spousal maintenance. Just because a party actually incurs an expense does not mean it is necessary or reasonable to do so.
It is important to distinguish between, on the one hand, the discretionary exercise of refusing to allow a party to have all of his or her claimed living expenses, and on the other hand, finding his or her living expenses are actually less than he or she claims. The latter entails a factual finding, whereas the former does not. Here, the primary judge took the former course. When calculating the husband’s capacity to pay spousal maintenance, in an exercise of discretion, her Honour assessed his capacity by refusing to allow his reliance upon the total amount of living expenses he claimed. But that did not mean her Honour rejected his evidence about the amount he spent each week on living expenses and actually found he spent less than he deposed.
Even if the primary judge had rejected the husband’s evidence, no court is compelled to accept the unchallenged or uncontradicted evidence of a witness (GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 97 ALJR 857 at [60] and [71]; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 587–588; Scott & Scott (1994) FLC 92-457 at 80,729). A court is at liberty to accept all, some, or none of the evidence given by a witness (HML v The Queen (2008) 235 CLR 334 at [130]; Louth v Diprose (1992) 175 CLR 621 at 624–625 and 635–636; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155; McPhee v S Bennett Ltd (1934) 52 WN (NSW) 8 at 9).
That being so, it may be wondered how the husband was denied procedural fairness, the principles of which doctrine only govern the manner in which a hearing is conducted and cease to apply once the hearing is complete (Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v AAM17 (2021) 272 CLR 329 at [22]). There was certainly nothing unfair about the way in which the primary judge heard the parties’ interim applications in this instance, given they were allowed three days to vent their cases.
Sometimes reserved reasons for judgment may retrospectively reveal a party’s deprivation of procedural fairness at the hearing. For example, an order might be made to determine (either in whole or in part) the cause of action when it was both unheralded and beyond the reasonable expectations of the parties, against which they were not given the chance to object at the hearing (Kearney & McMasters [2024] FedCFamC1A 2; Robertson & Sento [2009] FamCAFC 49 at [138]; Bolitho and Cohen (2005) FLC 93-224 at [85]). Alternatively, a party might have altered the manner in which he or she conducted the hearing based upon an assurance given by the judge about how a particular issue would be resolved, but the issue is then resolved in a different way by the judgment (Stead v State Government Insurance Commission (1986) 161 CLR 141; Faulkes & Tomkins (2018) FLC 93-854; Lenova & Lenova (2011) FLC 93-467 at [55]).
However, those situations are quite different and must be distinguished from a judge reserving judgment upon completion of a hearing and thereafter reflecting upon the reliability of the evidence adduced in the hearing. It is a novel proposition to expect a judge to re-list the proceeding to inform a party of a provisional judicial view formed that his or her evidence would not be accepted, either in whole or in part, to give the party a chance to be heard against the provisional view hardening into a concluded view. Once critical issues in the proceedings are known to the parties, the judge is not required to expose his or her thought processes or provisional views for comment before making the decision (Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 599; SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at [48]).
Here, the parties’ claimed living expenses were critical to the outcome of their dispute over spousal maintenance. The husband realised the wife contended for his capacity to pay spousal maintenance, even though he denied it. The quantum of his claimed expenses was an intrinsic component of his alleged incapacity to pay spousal maintenance. The issue was live and he knew it. His counsel made final submissions about the amount of his weekly living expenses, about which he was engaged in debate by the primary judge. Her Honour was not obliged to accept the husband’s submissions.
There was neither procedural unfairness nor any error of legal principle by the primary judge discounting the husband’s claimed expenses. These grounds fail.
Ground 3
Ground 3 is but a minor variation of Grounds 13 and 14 and is pleaded in this way:
3.The Trial Judge erred by rejecting and varying the Applicant Husband’s unchallenged evidence as to his expenses.
As can be seen, the ground does not characterise the alleged error as being legal, factual or discretionary. Nor does the husband’s Summary of Argument. In fact, no submission was made by the husband, either orally or in writing, which ventured above or beyond the submissions made in support of Ground 14, in which event Ground 3 is rejected.
Grounds 4, 5, 6 and 7
These grounds all concern allegedly mistaken findings about the wife’s need for spousal maintenance.
The grounds are pleaded as follows:
4.The Trial Judge erred in finding that the Respondent Wife has a need for spousal maintenance.
5.The Trial Judge erred in finding that the Respondent Wife could not support herself.
6.The Trial Judge erred in finding that the Respondent Wife was not able to re-establish her employment contracting with [B company].
7.The Trial Judge erred in finding that the Respondent Wife’s contracting employment with [B company] required her to travel.
A contested factual issue lies behind these grounds of appeal, which it is useful to explain. Before the parties’ separation, they conducted an incorporated business (“[C business]”), which corporation formerly enjoyed a profitable business association with a supplier (“[B company]”). After the parties separated, the husband set up his own business (“[D company]”) doing the same type of work as C company. The wife alleged the husband took business away from C company, but he alleged she could still operate C company profitably.
Relevantly, the primary judge found: the wife could not presently cultivate the business relationship with B company, not least due to her role as the primary carer of the three children, all of whom have “diagnosed conditions” or “mental health” challenges, and her relationship with B company was “not good currently” (at [115], [118], [134], [135]); her income was negligible (at [121], [123]); she has no immediate income-earning potential (at [127], [128], [129], [138]); and the husband worked hard to set up D company and generate income, taking business off C company (at [116], [120], [128], [161]). Upon the collective foundation of those basal findings, the primary judge had no difficulty finding the wife had no present capacity to generate sufficient income to support herself adequately (at [146]).
Despite these grounds asserting multiple mistaken facts, the single finding identified in submissions was that the wife was not able to “travel extensively” and the C company business was one which required the proprietor to travel extensively to “build necessary client relationships” (at [118]), which facts the husband disputed. To illustrate the point, he pointed to admissions made by the wife in cross-examination about her ability to operate the C company business online around her commitments to the children, without needing to travel away from home. However, I accept the wife’s submissions that such admissions were made in the context of an assumption that the C company business was intact and had its usual clientele at its disposal. But it was not and does not. The husband was found to have taken at least part of the C company business and the wife’s present business association with B company was strained, which findings were not challenged. The husband asserted he had to work hard and travel extensively to establish the comparable business of D company, so the inference the wife would also have to do so to resurrect the business of C company could be relatively easily drawn.
Otherwise, the submissions made by the husband to impugn the basal factual findings about the wife’s present inability to support herself were no more than the same contentions which were put to and rejected by the primary judge, but this appeal is not a hearing de novo. An indispensable pre-condition to the success of this appeal, conducted by rehearing, is the demonstration of appealable error by the primary judge (Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 at [30]) and neither these grounds nor the submissions made in support of them reveal appealable error.
The findings made by the primary judge about the wife’s need for financial support were open on the available evidence, in which event the findings withstand complaints in the appeal that her Honour could or should have come to different conclusions (Edwards v Noble (1971) 125 CLR 296). Repetition of the arguments rejected at first instance does not demonstrate error. These grounds fail.
Grounds 10, 11 and 12
These three grounds relate to the husband’s obligation to pay tax and are pleaded as follows:
10.The Trial Judge erred in failing to make any allowance for the subsequent increase in the Applicant Husband’s tax liability if the Applicant Husband’s income was increased to $3,000 per week.
11.The Trial Judge erred in finding that the Applicant Husband should not prioritise his tax obligations particularly in circumstances where he was already on a payment plan with the ATO and any default in the Applicant Husband’s tax obligations would have caused all of his outstanding tax liabilities to become immediately due and payable.
12.The trial judge failed to consider and distinguish the Applicant Husband’s liquidated and unliquidated debts.
None of these grounds nor the husband’s Summary of Argument attempts to characterise the alleged errors as legal, factual or discretionary, though they may be imputed to be ones of law, since the husband articulated them to be the primary judge’s failure to make due allowance for, or give priority to, the tax liabilities for which he already is, and will in future be, indebted to the Australian Taxation Office (“the ATO”).
Grounds 11 and 12 were articulated to relate to an existing tax debt and will be addressed first.
In that regard, the primary judge relevantly said this:
167.… The husband does have funds at the bank. I appreciate that he has to apportion funds to pay tax and the like, but I am not going to prioritise the husband’s obligations to pay tax over his obligation to support the wife, given that I found that she has a need.
On the husband’s evidence, he was indebted for tax in respect of the 2022 financial year in the specific sum of $5,392, which he was repaying by instalments under a payment plan agreed with the ATO. His complaint is that the primary judge erred by failing to prioritise the tax debt over the payment of spousal maintenance, as it was an unavoidable liability.
Her Honour did not prioritise the tax debt because the evidence did not fall as the husband originally deposed. He admitted the tax debt was a combination of past personal income tax and GST remittances. He also admitted the repayments of the 2022 tax debt have been paid sporadically, not in regular weekly payments of $150 as he had contended in his most recent financial statement. He admitted in cross-examination that his last repayments were spread irregularly over the preceding six months, implying the instalment payment plan with the ATO is not as inflexible as he sought to suggest. The husband filed two financial statements, roughly about eight weeks apart, deposing that in that discrete period he only reduced the tax debt from $6,091 to $5,392, so he obviously was not paying $150 per week to the ATO. If he were, he would have reduced the tax debt to about $4,900 over that period.
In any event, the husband admitted he had $9,718 saved in bank accounts. Even allowing for the payment of the lump sum spousal maintenance of $5,500 to the wife under Order 3(a), the husband still had residual savings of more than $4,000 to cover:
(a)future repayments in respect of the outstanding 2022 tax debt of $5,392 he was choosing to pay by modest instalments; and
(b)the tax debt of either $3,092 (Exhibit H8) or $3,225 (Exhibit W8), whatever be the correct figure, he incurred for the September 2023 quarter.
The primary judge’s discretionary treatment of the 2022 tax liability is not shown to be legally erroneous and so Grounds 11 and 12 fail.
Ground 10 contends for the erroneous failure by the primary judge to make due allowance for the tax the husband will accrue into the future in respect of the higher income her Honour found he will earn from his new business. The evidence was and remains unclear whether the business is incorporated or unincorporated. The husband gave inconsistent evidence in his financial statements, describing the business as being both a company and his employer, yet describing himself as a “sole trader”. The quarterly BAS returns of the business do not describe it as an incorporated entity so it is most probably unincorporated.
The primary judge found the husband’s gross income to be $3,000 per week and his reasonable weekly expenses to be $2,315, leaving a differential of $685 (at [156]). Consequently, that was the periodic sum the husband was ordered to pay the wife. That calculation entailed an error. Having found the husband’s weekly income was really $3,000, not the lesser sum of $2,200 to which he deposed, the primary judge failed to make any allowance for the extra income tax for which he would inevitably be prospectively liable. Had that extra expense been taken into account, the differential between the husband’s weekly income and expenses would not have been as great as $685.
The wife sought to protect the primary judge’s findings by asserting the husband was bound by the way in which he ran the hearing and, since he elected to adduce no evidence about the quantum of extra tax, he could not be heard to complain in the appeal, but there are two flaws in the argument. First, the husband could hardly lead evidence about the quantum of extra tax for which he would be liable in respect of a hypothetical and as-yet unfound weekly income, assuming the primary judge would not accept his evidence of his weekly gross income being $2,200. Secondly, the tax liability is established by law and the husband is not estopped from raising an issue of law in the appeal.
Ground 10 succeeds. The manner in which the error must be corrected is addressed below.
Grounds 1, 2, 8, 9 and 15
These grounds all concern allegedly mistaken findings about the husband’s capacity to pay spousal maintenance.
The grounds are pleaded as follows:
1.The Trial Judge erred in finding that the Applicant Husband had a capacity to pay spousal maintenance.
2.The Trial Judge erred in finding that Applicant Husband had $9,000 in his [Bank E] bank accounts when the actual amount in the Applicant Husband’s [Bank E] accounts was $1,427.
…
8.The Trial Judge erred in finding that the Applicant Husband’s income from [D company] in the last quarter of the 2024 was $3,000 per week.
9.The Trial Judge erred in finding the Applicant Husband’s income from [D company] in the first quarter of the 2024 was $3,000 per week.
…
15.The Trial Judge erred in finding the Applicant Husband had either $17,291 or $15,714 funds in bank accounts.
It is as well to start with Grounds 2 and 15, because the wife admits the primary judge mistakenly found the husband had $15,714 in savings (at [120]). In fact, he only had $9,718. However, the husband is unable to establish the mistake, quantifiable at about $6,000, had any material effect upon the judgment in respect of lump sum spousal maintenance, in which event the factual error does not sustain the appeal against Order 3(a) (De Winter and De Winter (1979) FLC 90-605).
The savings of $9,718 which the husband certainly did have were enough to cover the lump sum payment of $5,500 in spousal maintenance to the wife (Order 3(a)), which sum was intended to enable her to retain the use of the car she possessed by paying out the finance agreement or to buy another (at [158], [167]–[168]). The husband admitted the lease payout figure of $5,000 fell due in the next week or so.
As to periodic spousal maintenance under Ground 3(b), the primary judge found the husband’s income was sufficient to cover his reasonable living expenses, his periodic repayment of the tax debt to the ATO, and the periodic repayment of his credit card debts (at [153]–[156], [158]), leaving sufficient margin to also pay periodic spousal maintenance to the wife.
In that regard, Grounds 8 and 9 challenge the findings made about the husband’s income, contending it was not open to the primary judge to find his gross weekly income was $3,000 instead of the lesser figure of $2,200 to which he deposed.
The relevant findings were expressed this way:
120.The husband submitted that when he filled out his Financial Statement he took away what he described as “the blip” in the April earnings, which he said was occasioned by deposits made for him scheduling travel and the like, and averaged it out, but it is quite clear on my view of Exhibits W7 and W8 that there is no blip, and that the business of [D company] is continuing to perform well, and undoubtedly the husband is working hard in making sure it performs well, which is a credit to him. …
…
148.I will turn now to the husband’s income. The husband discloses in both his Financial Statements that he earns $2,200 per week by way of income from [D company]. The Financial Statement makes it more than plain that, when you indicate what your income is in the relevant column, it is an average weekly amount, and it is a gross amount, because otherwise there wouldn’t be a provision for the payment of tax and other expenditures in the expenditure section. I consider that the husband’s disclosure of $2200 per week by way of income is a gross amount. He asserts an income of $2200 a week, as against expenses of $3621 a week. He says he is paying rental payments of $575 a week. There’s no documentary evidence to support the obligation to pay that amount. I am not even sure whether he needs to have a three-bedroom apartment if he is not spending time with the children. But that’s a matter for him. I will take into account that he is spending that amount of money at the moment on rent.
149.Exhibits W7 and W8 are the activity statements for [D company], for the last quarter of the financial year 2023, and the first quarter of the financial year 2024. I have regard to the fact that it’s quite clear that the first quarter of income for the husband’s new business was $51,360, including GST, and after GST it’s $47,000. Plus, he has GST free income of just over $7000. After GST the husband’s first quarter income for his business was $54,392. I am doing the best I can on the documentary evidence. The husband had business expenses of $16,256 after GST. I’ve said ‘after’ because, of course, he claims back the GST on his business expenses, and I’ve already allowed him the full amount of the GST in terms of deducting it from the income.
150.After GST his business expenses are $16,256 plus GST free expenses of $2,423. So he has business expenses, in the last quarter of the financial year, but the first quarter of operation of his business, of $18,679. His gross profit is $35,713, which equates to a gross weekly income of around $3000 in the first quarter of his operation.
151.In the next quarter of his operation, which is Exhibit W8, the business receives income of $65,869. The income goes up in the second quarter of business operation. After GST it’s $60,000-odd. Plus, it has GST free income of around $2274. A total of $62,000-odd, less business expenses, after GST, of $26,500.
152.Gross profit, I calculate on W8, is around $35,000 in the second quarter of business operations, or the first quarter of this financial year. It’s the same. It’s around $3000 per week. I consider that the husband has likely underestimated his gross income and that it’s more likely on average $3000 gross per week, than the $2200 that he has estimated in his Financial Statements.
Exhibits W7 and W8, referred to in the reasons for judgment, were the business activity statements of D company for the two quarters ended 30 June 2023 and 30 September 2023, upon which the husband was cross-examined. Examination of them reveals the primary judge mistakenly double-counted “GST free income” in both quarters (at [149] and [151]), but again the question of materiality arises.
The hearing concluded in October 2023, by which time the quarter ended 30 September 2023 was the most recent. The double-count of “GST free income” for that period was $2,275. The primary judge found the husband’s gross income for that quarter was “around $35,000”, when the husband contended it should be accurately calculated at $33,609 from the evidence within Exhibit W8. The difference is $1,391 for the quarter (equating to $107 per week), which makes Aldridge J’s admonition to avoid obsession with intricate details resonate.
While the findings made by the primary judge about the husband’s income were based upon recent documentary exhibits, there was other evidence adduced on the topic. Relevantly, the husband either deposed or admitted in cross-examination:
(a)he started his business in April 2023 and collected fees of more than $40,000 in the first month of operation;
(b)the income of the business, net of business expenses, was around $4,000 per week in the June 2023 quarter; and
(c)the business income in mid-2023 enabled an extrapolation to predict it would generate gross income of $280,000 in the 2023/2024 financial year and thereby match the former financial performance of C company.
In the face of such other evidence, the discrepancy between the primary judge’s finding and the content of Exhibit W8, quantified at $1,391 for the September 2023 quarter, is immaterial when considered in context. It should not be overlooked the husband’s own evidence was irreconcilable. He deposed to gross weekly income of only $2,200, he produced documents showing he earned gross weekly income of $2,585 in the September 2023 quarter, but then he admitted to gross weekly income of about $4,000 in cross-examination.
All evidence must be weighed and assessed having regard to the capacities of the parties to adduce and contradict it (see Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 454; Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 330; Swain v Waverley Municipal Council (2005) 220 CLR 517 at [17]). In relation to the issue of the husband’s income, he had all the power and the wife had none. The finding of his gross weekly income being approximately $3,000 per week was open on the available evidence, so Grounds 8 and 9 fail.
Finally, Ground 1 challenges the overall finding that the husband had the capacity to pay spousal maintenance. It is unadorned by any particulars, though the husband said this in his Summary of Argument:
61.It is submitted that ground 1 is encompassed in grounds 2, 3, 8, 9, 10 and 15.
It is therefore unnecessary to separately address Ground 1 save that, in an overall sense, the husband sought to attack the primary judge’s calculation of his weekly expenses by the omission of any allowance for his liability for one-half of the mortgage repayments on the former family home. However, the complaint is rejected.
In neither of the husband’s two financial statements, filed in August 2023 and October 2023, did he claim he was paying any amount in satisfaction of the mortgaged loan. He deposed in his affidavit he had stopped paying it, though he did not say when. His counsel confirmed in final submissions that occurred in June 2023, apparently pursuant to the grant of some hardship application by the mortgagee. In the appeal, the husband submitted the primary judge should have made allowance for the eventual revival of that obligation at some point in the future so as to either eradicate to reduce his capacity to pay spousal maintenance, but the submission is rejected. The primary judge was required to adjudicate the dispute on the basis of the evidence actually adduced. The husband was not paying the mortgage and there was no evidence of when the obligation might be revived. If and when that occurs, he could resort to s 83(1)(c) of the Act to seek a variation of the periodic spousal maintenance order on account of changed circumstances (Hall v Hall at [9]-[10]).
Order 2 made by the primary judge requires the wife to meet one-half of the payments due on the mortgaged loan, rates and insurance as the pre-condition to her exclusive occupation of the property. The order imposes no financial burden upon the husband.
Disposition
The appeal is allowed in respect of only Ground 10.
The error made by the primary judge could easily be corrected by the re-exercise of discretion, taking into account the proper amount of tax the husband would incur on future income. However, the husband refused to take that course, insisting on his right to adduce updated evidence (Allesch v Maunz (2000) 203 CLR 172 at 183 and 191–192), which he did not have available for use at the appeal hearing. Accordingly, subject to variation as to the amount payable in the interim, the periodic spousal maintenance order (Order 3(b)) is set aside and the wife’s application for periodic spousal maintenance is remitted for rehearing.
As an interim measure before the rehearing occurs, in the re-exercise of discretion, the periodic spousal maintenance order is varied consistently with the concession made by the husband in his Summary of Argument. In Order 3(b), the sum of $545 (being the primary judge’s order of $685, less the extra tax of $140 per week likely incurred by the husband) is substituted for the existing figure of $685.
For clarity, Orders 3(a) and 3(c) remain valid and operable.
The parties asked that the question of costs be reserved until the judgment was published and considered. Costs are reserved for another 28 days.
I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 28 March 2024
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