Riley and Riley (No 2) - [2014] FamCA 956

FAMILY COURT OF AUSTRALIA

RILEY & RILEY (NO. 2)

[2014] FamCA 956

FAMILY LAW – PROPERTY – interim orders – wife’s application in a case for spousal maintenance and for extension of interim orders made by consent on 30 April 2014 – application opposed by the husband – cross-application of husband for the wife to deliver up possession of a vehicle and for it to be sold, and the chattel mortgage arrangements for the vehicle to be satisfied and the balance to be paid to the husband’s company – order made for husband to continue to pay spousal maintenance to the wife and for a number of payments to be made by way of spousal maintenance – husband’s application dismissed.

Evidence Act 1958 (Cth) s 140.

Family Law Act 1975 (Cth) s 72, 74, 75, 79, 80.

Bevan & Bevan (1995) FLC 92-600
Curnow & Curnow (unreported, Family Court of Australia, Ellis, Kay and Moore JJ, 28 April 1997)

Mitchell and Mitchell (1995) FLC 92-601

APPLICANT:

Ms Riley

RESPONDENT:

Mr Riley

FILE NUMBER:

MLC

9926

2011

DATE DELIVERED:

7 November 2014

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Thornton J

HEARING DATE:

16 and 17 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Minal Vohra

SOLICITOR FOR THE APPLICANT:

Mills Oakley

COUNSEL FOR THE RESPONDENT:

Mr Jeremy St John Q.C.

SOLICITOR FOR THE RESPONDENT:

M A Legal

Orders

Until further order, the husband pay to the wife by way of interim periodic spousal maintenance the weekly sum of $600, from 17 September 2014.
Until further order, the husband, by way of spousal maintenance, make or cause to make the following payments to or for the wife:
(a)all payments and costs of the Westpac home loan account … secured upon R Street, Suburb W;
(b)private health insurance for the wife at the current level;
(c)the wife’s mobile phone charges; and
(d)the lease costs, insurances, registration, fuel and maintenance of the Toyota LandCruiser ….
Should the husband choose to deduct the payments pursuant to order (2) from the parties’ loan accounts with Riley Pty Ltd, they are to be debited equally to those loan accounts.
The wife’s interlocutory application for the husband to cause drawings to be made from Riley Pty Ltd by debiting in equal amounts to the loan accounts of each of the parties in order to pay a sum equivalent to the school fees for the children of the marriage, tuition fees and other school-related expenses (as agreed in writing), is dismissed.
The husband’s interlocutory application for the wife to deliver up to him possession of the Toyota LandCruiser … and for the husband to deliver to the wife contemporaneously the Toyota Camry station wagon … is dismissed.
The costs of both parties be reserved.

AND THE COURT NOTES THAT:

The wife has given a personal undertaking on oath to the court through her counsel on 17 September 2014 that she will immediately inform the husband of any substantial change in her financial circumstances or employment.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Riley & Riley 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 MELBOURNE

FILE NUMBER: MLC 9926 of 2011

Ms Riley

Applicant

And

Mr Riley

Respondent

REASONS FOR JUDGMENT

Introduction

This is an Application in a Case by the wife and a cross-application by the husband for interim orders pending a trial. The substantive proceedings concern competing applications for final alteration of property under s 79 of the Family Law Act (Cth) (“the Act”).
The wife’s application is for an extension of certain interim orders made by consent on 30 April 2014 until the final determination of the substantive proceedings. This is opposed by the husband.
The husband’s cross-application is for the wife to deliver up possession of the Toyota LandCruiser which she drives and for it to be sold, and the chattel mortgage arrangements for the vehicle to be satisfied and the balance to be paid to Riley Pty Ltd (“the Company”). The LandCruiser is registered to the Company and capital gains tax is anticipated if it is sold. Contemporaneously the husband proposes to deliver to the wife a Toyota Camry station wagon, owned by the Company.
The applications arise because both parties were unprepared to proceed with the trial listed for mid-September 2014. There is a dispute about the value of the property of the marriage which includes the Company operated by the husband. The Company is a business primarily engaged in the acquisition, importation and sale of food products. The husband is the sole director and the parties are equal shareholders in the Company.
The husband asserted in a previous hearing that there is an unknown tax liability because he:
… ascertained for the first time on Friday, 11 April 2014 that written loan agreements in respect of the debit loan accounts of each of the wife and me with the business … have never been executed. … If there are no written agreements I am advised the arrangement cannot be regarded as tax compliant.[1]
The husband asserted that there is a tax liability being investigated of allegedly between $440,000 and $1.8 million because the tax planning and structure of the business does not comply with the requirements of Division 7A of the Income Tax Assessment Act 1936 (Cth).
[1] Affidavit of the husband filed 14 April 2014 at paragraph 65.

Background

The parties were married in 1995 and finally separated in November 2010 when the husband vacated the former matrimonial home. They were divorced on 25 June 2012. The three children of the marriage are Y aged 18, O aged 17 and E aged 12.
The children attend V School where they are enrolled in years 12, 11 and grade 6 respectively. Y will complete her final year of secondary school this year. The parties agree that the children should continue at that school.
The husband is aged 49 years and is the sole director of various companies within a group of entities known as the Riley Group, which includes the Company. The husband has been operating the Company full time for the last 11 years and it is the only real income producing asset created by the parties during their 17 year cohabitation.
The wife is aged 52 years and is engaged in home duties. She resides with the three children of the marriage in the former matrimonial home at Suburb W. This property is registered in her name and encumbered with a mortgage funded through the parties’ loan accounts from the Company.
Although the wife deposed that she did work for the Company at various times, she has primarily been at home caring for the children. She has not been employed in paid work since the birth of the eldest child, which is about 18 years. The wife has no control over the Company.
Pursuant to consent orders made on 16 January 2012, the wife received a salary from the Company of $75,000 per annum. In mid-2012 the husband unilaterally classified the amounts to be paid to the wife as spousal maintenance payments and debited the amounts paid against the parties’ loan accounts with the Company. How the loan account/s will be treated in the context of the property dispute between the parties and the ultimate responsibility for tax which may arise on such loan account/s will be a matter for determination by the trial judge.
The following expenses have been funded by way of drawings from the Company by debiting in equal amounts to the loan accounts of each of the husband and wife:
(a)the mortgage payments on the W property;
(b)the children’s school fees, tuition fees, other school related expenses as agreed in writing;
(c)the private health insurance for the wife;
(d)the wife’s mobile phone charges; and
(e)the lease costs, insurances, registration, fuel and maintenance of the Toyota LandCruiser … driven by the wife.
From 1 May 2014, the husband agreed to pay the wife, by way of spousal maintenance, the weekly sum of $600 until the conclusion of the trial, which was anticipated to conclude on 21 September 2014.
The husband has been assessed and has been paying child support for the children. The children spend time with the husband from Friday until Monday on each alternate weekend, when sporting commitments permit.

Procedural history

The substantive matter commenced by way of an Initiating Application filed by the husband on 8 November 2011, seeking final orders for a property division between the parties.
The value of the parties’ interests in the Riley Group will be the key issue in the trial and the value of the parties’ assets is disputed. There are a number of real properties registered to trusts which are part of the Riley Group.
In general terms the husband, subject to some adjustments, seeks that the net assets of the parties be divided as to 50 per cent to the husband and 50 per cent to the wife. Part of his proposal is that the wife retains the W property subject to encumbrances as her part of the settlement.
The wife proposes ultimately that the Company and its assets be sold and that the proceeds be distributed 60 per cent in her favour and the balance to the husband. Amongst other things, she also seeks that as part of the final property settlement she retain the W property unencumbered and that each party retain their respective motor vehicles. The wife also seeks by way of final orders a departure from the administrative assessment of child support.
On 25 October 2013, consent orders were made providing for the appointment of an agent to sell the Company. An agent was subsequently appointed.
On 28 April 2014, being the first day of trial, an application by the wife for an adjournment was granted. This was because a Second Further Amended Initiating Application was filed by the husband one business day before the trial which changed his case. For the first time he proposed that there was no good will in the business and that it was worth only its net tangible assets because the sale process had been unsuccessful. The wife had no prior notice that the husband’s case was that there was no purchaser for the Company.
The wife’s expert accountant had not had the opportunity to value the business on the assumption that it could not be sold. The wife established on the evidence that there was a prospect of two interested parties responding to the sale process.
In addition to those issues the husband had notified the wife for the first time of an alleged tax liability estimated at between $440,000 and $1.8 million.
An interim order was made by consent on 30 April 2014, which provided for the sale by auction of the parties’ holiday home. This is registered in the name of one of the entities in the Riley Group. After the deduction of selling expenses, encumbrances, adjustment on settlement and conveyancing expenses, the proceeds were to be paid into an interest bearing trustee-approved banking account in the name of Riley Investments Pty Ltd. The husband’s solicitors were to control this and not disburse otherwise than with the prior written agreement of the parties. The holiday home has not yet been sold.
The consent orders dated 30 April 2014 also provided for M Accountants to investigate and prepare documents for submission to the Australian Tax Office about the outstanding or pending Division 7A tax liability of the parties and/or the Company (as trustee of the Riley Trading Trust) and/or N Pty Ltd. M Accountants were authorised by the parties to make all representations and responses to the Australian Tax Office to ameliorate such liability to the fullest extent legally possible.
The wife sought to extend the following interim orders made 30 April 2014 by consent:
7. The Husband pay to the Wife until 21/09/2014 by way of spousal maintenance the weekly sum of $600, first payment 1/5/14.
8.That until 21/9/14 the Husband do cause the following payments to be made by way of drawings from [Riley] Pty Ltd, all such drawings to be debited in equal amounts from the loan accounts of each of the Husband and the Wife:
(a)all payments and costs of the Westpac Home Loan a/c …8 secured upon [R Street, Suburb W] ;
(b)private health insurance for the Wife at the current level; and
(c)a sum equivalent to the school fees of the children of the marriage, tuition fees and other school-related expenses (as agreed in writing).
9.The Husband continue to ensure payment by [Riley] Pty Ltd of the Wife’s mobile phone charges and the lease costs, insurances, registration, fuel and maintenance of Toyota Landcruiser ...
A notation to those orders provided:
AND THE COURT NOTES
A.The Husband consents to paragraph 7 & 8 of these Orders without admission as to the necessity therefore and upon the undertaking of the Wife given through her Counsel that she will conscientiously pursue full-time employment to 21/9/14.
B.The undertaking of the Wife given through her Counsel this day that she will in the period to 21/9/14:
(i) conscientiously and continuously seek full time employment; and
(ii)report to the Husband through his legal practitioners any employment she has obtained.
C.The Husband should cause the drawing referred to in paragraph 8(c) of these Orders to be paid to [V] School.
D. The Husband will continue to meet the health insurance coverage in respect of the children of the marriage and the expense (following any applicable rebate) of medical, orthodontic, speech pathology, optometry and physiotherapy and counselling expenses.
E. The Husband will continue to pay his child support obligations as assessed additional to the provisions within these Orders and/or Notations.
The tax investigation being undertaken by M Accountants has not been completed. Therefore neither party was in a position to proceed with the trial set down for 16 September 2014.

The applications for interim orders

The wife’s application for orders 7, 8 and 9 of the consent orders dated 30 April 2014 to be extended pending the final determination of the substantive proceedings, was opposed by the husband.
The wife also sought that the husband pay the costs of and incidental to the Application in a Case and such further orders as deemed appropriate in all the circumstances. However, no submissions were made before me in respect of the costs application.
The husband filed a cross-application and Response to the wife’s Application in a Case together with an affidavit in support of his response, with the leave of the Court, two hours after the time listed for the hearing of the wife’s Application in a Case. The husband sought that the wife’s Application in a Case be dismissed. He also sought that she deliver up to him possession of the Toyota LandCruiser motor vehicle, and that the husband cause the registered owner, the Company, to sell the vehicle and discharge all chattel mortgage arrangements affecting it.
The husband also sought that he contemporaneously deliver to the wife a Toyota Camry station wagon …, owned by the Company, and thereafter until further order, permit her quiet use and sole enjoyment of that vehicle.
The husband sought that order 9 of the orders made 30 April 2014 be discharged. These were the orders where the husband had agreed to continue to ensure payment (by drawings from the Company by debiting equally to the parties’ loan accounts) of the wife’s mobile phone charges and the lease costs, insurance, registration, fuel and maintenance of the Toyota LandCruiser.
The husband also sought the following two orders, which he subsequently withdrew on the second day of the hearing:
4. Each of the Husband and the Wife do all acts and things and execute all documents necessary to procure an additional mortgage loan upon the property at [R Street, Suburb W] (“the [W] property”) of up to an additional $50,000.
5.The Husband and the Wife each be restrained until further Order from withdrawing any further amount from the mortgage loans secured upon the [W] property save to meet periodic mortgage payments, rates & taxes arising upon that property, private school fees and educational expenses of the children.
Counsel for the husband submitted that the husband proposed that all the school fees be met through this mortgage. However, as the wife would not agree to this proposal, that part of the cross-application was withdrawn.
The husband’s cross-application was opposed by the wife.

The evidence

The documents relied on by the parties are listed in Annexure A and are incorporated into these reasons. Counsel for each party made submissions as to the affidavit material relied upon.
Because of the nature of an interim application, contentious facts cannot be determined without properly testing the evidence.
The onus of proof is on the party seeking the orders and the standard of proof is the balance of probabilities.[2]
[2] Evidence Act 1995 (Cth) s 140.

Spousal maintenance

The right of a party to a marriage to spousal maintenance is found in s 72 of the Act which provides:
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).
Section 74(1) of the Act provides that in proceedings with respect to the maintenance of a party to a marriage, the Court may make such order as it considers proper for the provision of maintenance.
The matters which the Court must take into account in relation to spousal maintenance are set out in s 75(2) of the Act. The following factors are relevant to the circumstances of this case:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)the commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
…
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
…
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
…
(n)the terms of the order made or proposed under section 79 in relation to:
(i)the property of the parties; and
…
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;

Under s 75(3) of the Act, any entitlement of the wife to an income tested pension, allowance or benefit, must be disregarded when considering her financial circumstances.
In Bevan & Bevan (1995) FLC 92-600, the Full Court of the Family Court outlined the four general principles (at 81,982) required for an award of spousal maintenance:
1.a threshold finding under s 72;
2.consideration of s 74 and s 75(2);
3.no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit; and
4.discretion exercised in accordance with the provisions of s 74, with “reasonableness in the circumstances” as the guiding principle.
In Curnow & Curnow,[3] the Full Court of the Family Court held that even where the threshold has been met under s 72 of the Act, an obligation to pay spousal maintenance only arises if the party from whom the payment is sought is reasonably able to maintain the other party.[4] The husband’s income and his necessary living expenses, such as the compulsory and unavoidable commitments of taxation, superannuation, Medibank levy, non-discretionary expenses and reasonable living expenses, must be considered. After deducting those expenses, the question then is whether the husband has the capacity to pay spousal maintenance.
[3] Curnow & Curnow (unreported, Family Court of Australia, Ellis, Kay and Moore JJ, 28 April 1997).
[4] Affirmed by the Full Court of the Family Court in Keepkie & Keepkie [1998] FamCA 39; DJM & JLM (1998) FLC 92-816; Freestone & Freestone [2013] FamCAFC 190.
It was the wife’s case that the amount of $600 per week for spousal maintenance was reasonable having regard to the expenses outlined in her financial statement and the fact that the husband’s financial statement sworn 6 August 2014 disclosed under Part N that his personal average weekly expenses are $845.
It is the wife’s case that the husband continues to operate the parties’ only income producing asset, the Company, which has historically paid the parties’ wages since 2002. The Company now pays the husband a salary of $170,000 per annum. This amounts to the parties’ combined wages received during the marriage and until July 2012 when the husband stopped paying the wife’s wages.
It is the husband’s case that he does not accept that the wife is unable to support herself adequately as per s 72(1) of the Act. The husband asserted that it “defies logic” that the wife has been unsuccessful in obtaining employment over the last nine month period, whether that be casual, part-time or full-time, if she were conscientiously pursuing any employment at all. The husband also relied on the fact that the wife did not make an application for Newstart allowance until late August 2014 as evidence that she was not making any effort to obtain employment.
In her earlier affidavit affirmed 3 April 2014,[5] the wife deposed to having submitted between 20 to 30 online job applications for various roles, primarily in the fields of administration, data entry and customer service. She provided responses received for the period from 1 February 2014 to April 2014.
[5] Affidavit of the wife filed 4 April 2014 at [69] – [77].
The wife was interviewed for a job as a customer service officer at a shopping complex but was unsuccessful. She has attended in person and made enquiries with cafes, and unsuccessfully made applications to Bunnings, Costco and Jeans West for customer service positions.
In late January 2014, the wife sought assistance from the husband for employment contacts. She contacted an employment agency suggested by the husband, which did not lead to any job offers or any applications.
The wife has made enquiries with an employer whom she left in 1996 before the birth of the child Y. This was also unsuccessful. She has submitted her resume to a local community centre. She took a temporary role as a volunteer on a committee of a Bendigo Bank branch in Suburb E in early 2013. This volunteer work was undertaken to engage with people from different professional backgrounds, but was discontinued because of a clash with the children’s commitments on a Saturday morning.
During 2012 and 2013 the wife undertook some volunteer work at the X Centre, which assists adults with mental health problems and also at an animal shelter.
In early February 2014, she completed the first two weeks of a Certificate III course in information, digital media and technology. She could not complete the third week because of her daughter’s urgent health issues but she made efforts to complete that certificate.
The wife has also enrolled at Open Universities and has applied to undertake a Bachelor degree in English literature. She deposed that she was undertaking two preliminary short courses with Open Universities in April/May 2014 to assist with practicalities of further study.
The wife has no formal qualifications and, as previously mentioned, has not worked outside the home since the birth of the eldest child approximately 18 years ago. While she has deposed that she worked at the Company, the husband disputes the extent of her involvement and has refused to allow the wife to refer to this in her resume.[6]
[6] Affidavit of the wife filed 4 April 2014, Annexure CER-8.
The wife deposed to having been invited to only one job interview, and having been entirely unsuccessful in all of her efforts to seek and obtain employment. Annexure CER-3 to the wife’s affidavit in support of her Application in a Case[7] lists job applications she has made and the training that she has undertaken in the period from January to August 2014. The wife has deposed to making available for inspection copies of the job applications, responses and documents relating to the courses in which she has enrolled and completed.
[7] Affidavit of the wife filed 9 September 2014.
I am satisfied that the wife has complied with her undertaking provided through counsel on 30 April 2014 to conscientiously and continuously seek full time employment, and report to the husband through his legal practitioners any employment obtained.
I am not persuaded by the husband’s argument that an inference that the wife was not actively pursuing employment can be drawn from the fact that she did not make an application for the Newstart allowance until August 2014. The wife deposed to the difficulties that she encountered in completing the application because of the complexities of the financial circumstances of the Company and her lack of information about the Company. The financial affairs of the parties are complicated by the use of corporate structures.
I do not accept the husband’s complaint about the wife’s financial statement filed 4 April 2014 because the wife attributed some expenses under Part N, such as house repairs and household expenses to herself, and did not apportion an amount for the children. The wife has appropriately specified the other expenses for the children.
Counsel for the husband submitted that the wife’s failure to properly specify items in her financial statement has not established that $600 per week is appropriate for her needs. In particular he referred to the fact that she has not identified as income any interest from the amount of money held in her bank account from the inheritance she received post separation. The remainder of the inheritance was estimated at $25,047 on 3 April 2014.
The wife deposed that she received the inheritance of $108,732 from her late father’s estate on 25 November 2013. From this inheritance, the wife deposed that she repaid a personal loan of $25,000 obtained for the purpose of meeting her legal costs, and deposited an amount of $78,732 in her Commonwealth Bank Netbank Saver account. From this account the wife withdrew the sum of $2,226 each fortnight (which sum is equivalent to the salary payable to her by the husband through the Company under previous orders but which payments ceased in November 2013) to enable her to meet household and living expenses for herself and the children and pay the costs of maintenance and repairs to the home. This included the costs of sewerage connection, electrical work and roofing works.
The wife has also deposed that she funded an overseas holiday for herself and the children in April 2014 totalling approximately $5,000 from that inheritance.
Counsel for the husband also submitted that having regard to the fact that the wife was unemployed, the sum of $85 per week referred to in the wife’s financial statement for cleaning and pool maintenance was excessive. He also submitted that the amounts for house repairs, clothing, shoes, gardening and animals totalling $114 per week were excessive and there was no reliable evidence as to the expenditure of the wife.
The wife has sought an amount of $600 per week, which does not include those expenses complained of by the husband. The wife’s expenditure, excluding motor vehicle maintenance and petrol paid through the loan accounts from the Company amounts to $869 for holidays, pet expenses, pool maintenance and house cleaning. She is claiming only $600 per week. This amount is reasonable, particularly when compared with the husband’s weekly expenses of $845 under Part N of his recent financial statement.

The wife’s financial circumstances and reasonable needs

I find that the wife’s reasonable needs amount to $600 per week, based on the untested evidence before me.

Is the wife unable to support herself adequately?

In considering spousal maintenance, the wife must satisfy the threshold requirement contained in s 72 of the Act.
The husband argued that the wife does not meet the threshold test of being unable to support herself financially. He referred to her significant cash assets, and her ability to finance solar panels and maintenance on the W property.
In Mitchell & Mitchell (1995) FLC 92-601, the Full Court of the Family Court comprising Nicholson CJ, Fogarty and Jordan JJ stated in reference to spousal maintenance applications that the threshold question of whether the applicant “is unable to support himself/herself adequately” is not to be determined by any fixed or absolute standard but having regard to the matters in s 75(2) and particularly (a), (b) or (c) of that section. In that case the Full Court stated at 81,995 – 81,996 that:
The days are long gone when it is necessary for an applicant for maintenance to use up all of her assets and capital in order to satisfy the requirement that she is unable to support herself “adequately”. Where the line is to be drawn will depend upon the circumstances of individual cases.

Consideration of the s 75(2) factors

There is a disparity of income between the parties. The wife is 52 years of age and has no income for the reasons I have outlined previously. She received board of approximately $50 per week, since June 2014, from the husband’s cousin, who is staying in the garage of the home. He also contributes about one fifth of the weekly grocery bill. She receives child support from the husband referred to previously.
The husband is 49 years of age. He is engaged in full-time employment and has a salary from the Company amounting to a gross figure of $3,269 per week. He also controls the companies which are part of the Riley Group.
Counsel for the husband submitted that the wife’s inherited funds are not relevant for the purposes of periodic maintenance but is a matter for the final hearing.
The inheritance which has vested in the wife is a circumstance I have taken into account under s 75(2)(o) of the Act. The wife should not have to deplete her capital to pay living expenses. The husband relies on the fact that there is interest available to the wife from the inheritance but, given that her financial situation is uncertain, she must have immediate access to those funds and is not in a position to invest in term deposits. The interest would not be significant in circumstances where the inheritance is being depleted to pay household maintenance and living expenses.
Both parties have the physical and mental capacity to engage in appropriate and gainful employment but for the reasons I have outlined, the wife has not been in a position to find appropriate employment having regard to her responsibilities for the children under 18 years of age and the length of time she has been out of the paid workforce.
Under s75(2)(c) of the Act, the wife has the care and control of the two children of the marriage who have not yet attained the age of 18 years. The Child Support Agency has assessed her child-support cost percentage as 76 per cent for each of those children. The children also spend time with the husband. The wife’s support of Y, a child of the marriage over 18 years old, is also a consideration under s 75(2)(o) or s 75(2)(d)(ii) of the Act. The husband also makes contributions to the support of Y.
A significant matter for the husband is that he has been assessed to pay child support in the sum of $228 per week from November 2014 until 30 June 2015.[8] Thereafter he has been assessed to pay the lesser amount of $108 per week. The assessment is under review. He has continued to pay child support and paid arrears of $3,116.77 on 20 December 2013.
[8] Affidavit of the husband filed 17 September 2014, Annexure PJR-2.
I also take into account that the husband has expenses for the children when they spend time with him.
Annexure PJR-1 to the husband’s affidavit filed 17 September 2014 outlines the financial obligations arising from the interim consent orders.
The payments for which the husband is responsible and which are not paid through the parties’ loan accounts from the Company are spousal maintenance of $600 per week and the child support of $228 per week.
I am satisfied that the wife is unable to support herself adequately from her own resources by reason of having the care and control of two children who have not attained the age of 18 years and by reason of her lengthy period out of the paid workforce whilst she was undertaking her role as homemaker and child carer for three children of the marriage. The reality is that she has been unable to secure any employment, despite the attempts she has made over a considerable period of time. She is and will continue to be responsible for the support of the 18 year old adult child of the marriage, Y, who remains a dependent full time student completing VCE, even if Y were to obtain some casual employment.

The husband’s financial circumstances

The husband has filed two financial statements. Relying on his most recent financial statement filed 6 August 2014, the husband deposed that he does not have a reasonable capacity to pay spousal maintenance to the wife.
The husband’s average weekly income before tax is $3,269. He deposed that any estimated dividend for 2014/2015 financial year from N Pty Ltd is “not known”. The husband has necessary weekly living expenses and unavoidable commitments to be paid from his salary for “Taxation of $1028, child support of $206, life insurance of $82 and superannuation of $522.”
There is no explanation for the discrepancy between the husband’s income tax deposed to in his recent financial statement dated 6 August 2014 and his previous financial statement filed 3 April 2014, where his income is the same. His previous financial statement with the same income deposed to an average weekly amount of $658 for total income tax rather than $1,028.
In addition to his own weekly expenses, the husband deposed in his most recent financial statement in Part N to average weekly expenses of $3,025. This included educational expenses for the children. However the educational expenses for the children have been paid through the parties’ loans from the Company and not paid from his salary.
Excluding the children’s expenses, he deposed to a reasonable figure of $845 for his own average weekly expenses. These expenses are averaged over a year.
The husband also included in Part H, as a personal expense he pays for the benefit of others, $580 paid for the benefit of the wife, being mortgage repayments for W property and noted “(one half of expense posted to wife’s loan account)”. It is unclear what this means, but this amount is not a personal expense paid from his salary. The mortgage payments have been paid from the parties’ loan accounts from the Company.
The husband has not included any of the assets owned by the Company and has deposed that his financial resources include an interest in the Riley Property Trust, Riley Pastoral Trust and Riley Trading Trust of “not known” value. The husband has estimated his funds in the bank as $19,000.
The husband’s motor vehicle expenses estimated at $200 per week are paid by the Company. Riley Pastoral Pty Ltd also pays $15 per week for the husband’s private use component of utilities.
There is no explanation for the high weekly superannuation contribution made by the husband of $522 which is unreasonable and unnecessary. The husband has private health insurance expenses but these would appear to have been paid through the Company.
Taking into account the husband’s reasonable average weekly living expenses of $845 per week, if he reduced his superannuation contributions he would have a balance sufficient to pay spousal maintenance of $600 per week.

Capacity of the husband to pay spousal maintenance

Counsel for the wife submitted that both parties are contributing to the school fees and expenses, private health insurance, the W mortgage and the wife’s car and telephone expenses as the consent orders dated 30 April 2014 provided that they are paid through the parties’ loan accounts. She asserted that, as such, the issue as to capacity of the husband to pay must be limited to the spousal maintenance payment to the wife.
Counsel for the wife also argued that the husband’s capacity to pay cannot be seriously questioned given he conceded that capacity by consenting to the orders entered into on 30 April 2014 and by not deposing to any material change since that time in his financial statement filed 6 August 2014.
Counsel for the husband submitted that the Company’s circumstances have changed and referred to the evidence in the husband’s affidavit material. He also emphasised that the consent orders were made on the basis that they were interim orders limited until September 2014 and relied on the notations in those orders.
Counsel for the wife submitted that the husband’s motor vehicle expenses were paid through the Company. It was clear that he had other resources through the business, having regard to payments which had been recently made. She relied upon the following payments made by the husband:
·a holiday to New Zealand for Y at the end of 2014 costing approximately $8,000;
·a holiday to New Zealand for O at the end of September 2014;
·the pre-paid costs of O’s “schoolies” holiday at the conclusion of school in 2016; and
·a road trip to Adelaide for the husband and his partner to watch the football over the Father’s Day weekend.[9]
[9] Affidavit of the wife filed 9 September 2014 at paragraph 17.
I accept the submission of counsel for the wife that a comparison of the husband’s recent financial statement filed 6 August 2014 with his financial statement filed on 3 April 2014 reveals little difference in the husband’s financial circumstances.

Is the husband reasonably able to maintain the wife?

After payment of reasonable expenses, the husband would have a weekly surplus from which to pay the wife periodic spousal maintenance. The husband has the capacity to pay the wife periodic spousal maintenance of $600 per week.

Mortgage payments on the former matrimonial home and other payments sought by the wife through the loan accounts from the Company

There was no dispute that the parties’ respective loan accounts from the Company have paid the children’s private school fees at V School, the parties’ private health insurance, vehicle expenses and mobile telephone expenses. The mortgage payments on the W property have also been paid through the parties’ loan accounts from the Company.

It is the husband’s case that these loan accounts cannot continue to be utilised by the parties because the dividend declared by the company is “not reflective of a profit”.
Relying on Annexure PJR-1 to the husband’s affidavit filed 17 September 2014, counsel for the husband argued that there is an amount of $4,000 per week, after tax, required to pay spousal maintenance, child support and the other payments previously met through the loan accounts.
The figure is in fact $2,753 per week from the parties’ loan accounts from the Company, excluding payments made personally by the husband for spousal maintenance and child support. The child support is in fact $228 not $592.38. On the basis of the husband’s Annexure PJR-1, the sum of $2,753 per week is the real figure sought by the wife to be paid from joint funds.
The husband has deposed[10] that the operations of the Company have continued to diminish since April 2014 and that, because of substantial currency swings, predictions of profits are imprecise and unsafe. He anticipates a substantial taxation debt arising in the name of the Company following the investigations of M Accountants and is presently considering whether it is viable or financially prudent for the Company to continue to trade. He deposed that in the financial year, concluding on 30 June 2014, he arranged for dividends to be paid sufficient to discharge the parties’ loan accounts. This totalled approximately $480,000. He deposed that a continuation of the orders requiring the payments through the loan accounts of the Company “must be funded by capital debt raised from the bank”.
[10] Affidavit of the husband filed 17 September 2014 at paragraph 19.
The husband deposed to having reluctantly consented to the April 2014 orders because his obligations to support the wife would conclude no later than 22 September 2014 and because the wife would be placed under a formal obligation to actively seek full-time employment. The expenses of the payments on the W home loan, private health insurance for the wife as well as the payment of school fees and other school related expenses for the children would be equally met with the wife through Company loan accounts in their name. In addition, the wife had finally agreed to the sale of the holiday home, which would relieve the ongoing obligation to meet the mortgage on that property.
In his affidavit filed 29 July 2013, at paragraph 109, the husband deposed that the line of credit facility of the Company which permits the present volume of trade and turnover of the Company is $5 million. The husband deposed that it has been a continuing struggle to maintain that line of credit, which had only been possible because of the equity available to secure loans.
In the husband’s affidavit sworn 3 April 2014, at paragraph 5 and onwards, the husband deposed that he attempted to manage the business in a profitable and efficient manner, but that during the current financial year the industry has been experiencing very depressed trading conditions. The husband deposed that “many of the commodities traded by the business were at record or near record price levels, which had been exacerbated by a weakening of the Australian dollar against the US dollar.” He deposed that the monthly profits of the business had fallen significantly throughout the current financial year and were continuing to fall. He deposed that there has been a substantial decline in profit margins and the net profit for the nine months July 2012 to March 2013 compared to the period July 2013 to March 2014 shows a decline from approximately $624,700 to approximately $361,000. This is approximately 58 per cent.
In the husband’s affidavit sworn 6 August 2014 at paragraph 17, he deposed that trading has been very difficult and profitability was well down during the time that he attempted to sell the Company. In August 2014 he deposed that the net profit for Riley Trading Trust for the 2013/2014 financial year was estimated at approximately $141,721.

Conclusion about the other payments sought by the wife

Section 79 of the Act provides the power to alter the interests of the parties to the marriage in the property of the parties. Counsel for the wife submitted that the source of power to be exercised for an interim order directing the husband to make mortgage payments on the former matrimonial home and to make other payments, which were historically paid through the parties’ loan accounts from the Company, is found in s 80 of the Act. She submitted that such payments might be characterised as a part property settlement or spousal maintenance.
The general powers of the Court are outlined in s 80 of the Act. Amongst other things, under s 80(1)(h) of the Act, the Court may make an order pending the disposal of proceedings or until further order. Pursuant to s 80(1)(k) of the Act the Court may make any other order which it thinks is necessary to do justice.
In his Cross-application, the husband initially proposed that a further mortgage loan be negotiated upon the W property for about $50,000. He proposed that this be applied towards the mortgage payments, school fees and associated educational expenses of the children. The husband subsequently withdrew that application.
With the exception of spousal maintenance, all of the commitments which the wife seeks be met through the loan accounts from the Company have to date been met by that Company. Counsel for the husband conceded that the consent orders made previously for these payments to be made for a limited time were within power.
Whilst an order for the payment of the mortgage payments and motor vehicle expenses of the wife might be characterised as periodic interim part property orders, those payments would also comfortably sit within the definition of spousal maintenance.
The wife has no other residence and is not receiving any income from paid employment. Both parties agree that the wife should retain the W property as part of the final property settlement, although there is a disagreement about how any encumbrance might be treated. Without this accommodation for herself and the children, the wife would be incurring rental expenses.
The other payments for the benefit of the wife which have been historically paid through the parties’ loan accounts from the Company also have the character of spousal maintenance. These are private health insurance for the wife, the wife’s mobile phone charges and the lease costs, insurances, registration, fuel and maintenance of the Toyota LandCruiser.
Spousal maintenance is a contribution factor that can be taken into account for a final property settlement and be considered as part of any adjustment as between the parties in the trial.
The payment of school fees for the children of the marriage, tuition fees and other school-related expenses are payments in the nature of child support for which a specific application needs to be made. An interim order for payment of those fees could not be characterised as an interim property order or spousal maintenance.
On the evidence of the husband, in the 2013/2014 financial year, the Company controlled by the husband declared dividends of $480,000, which have been sufficient to discharge the loan accounts of the parties.
The husband has deposed to changed circumstances of the Company. In his affidavit sworn 6 August 2014 he deposed that trading has been very difficult and profitability “well down”. He deposed that the net profit for Riley Trading Trust for the 2013/2014 financial year is estimated at approximately $141,721 compared to $536,610 in the 2012/2013 financial year. There is no other evidence in support of this assertion and the profitability of the Company will be an issue in the trial.
The husband has not produced any accounting or financial material in support of his assertions and his financial statement refers to his salary from the Company as being his only income. At item 41 of his financial statement filed 6 August 2014, he has stated that the interest in the business operated by him is “not known”.
In his affidavit filed 6 August 2014, the husband has deposed that the gross value of the stock at hand on 30 June 2014 is $2.929 million.
The wife has satisfied me that the Company has the capacity, through the loan accounts of the parties, to meet the payments for the benefit of the wife. These would include the mortgage on the W property, the vehicle and petrol payments, her mobile phone charges and private health insurance on the basis of the following:
·There is no clear independent evidence of a change in the profitability of the Company;
·The Company has already funded these payments through the loan accounts of the parties;
·The Company is continuing to trade and has a line of credit through the bank of $5 million secured by real property;
·There has been no change in the husband’s financial circumstances since he agreed to those payments being made through the Company by way of the loan accounts of the parties;
·A payment of $200,000 was paid into the mortgage of the property registered to the Company (2 Z Street Suburb U) on 3 February 2014. The husband’s response to this was that the payments to the Westpac business loan account included monies realised from the sale of stock, and that Westpac required this payment. This does not provide any real explanation;
·Exhibit 2 on the face of it discloses that the husband is paying in excess of the minimum payments required for the loan on the mortgage of 4 Z Street Suburb U, which is registered to the husband. The husband’s evidence that the repayments made on 4 Z Street “are in accordance with the requirements of Westpac” do not explain the circumstances of those repayments;
·Between 31 January and 26 February 2014, $15,000 was paid into the farm loan account for the two properties in South Gippsland which are registered under Riley Pastoral Trust. The husband’s response to this payment was that “the deposits of the farm account were made from the business, but are debited to a loan account of [Riley] Pastoral with the business”. This is the property where the husband resides and he has the benefit of those payments through the business;
·The husband estimated that he has paid approximately $715,227 in billed legal costs and disbursements to date;[11]
·The husband has deposed that no further mortgage payments are being made for the holiday home, which is yet to be sold. The interest is being capitalised and will have to be paid from the sale proceeds. However, the amount of over $5,000 per month that the Riley Group of entities was paying in relation to that mortgage is no longer an expense; and
·Given that on the husband’s case, the wife is entitled to 50 per cent of the value of the parties’ property of the marriage at final property settlement, that the wife has no paid employment, that the parties propose that the wife retain the former matrimonial home as part of her property settlement and that the wife has no regular income for payment of the mortgage of the property in which she resides with the children of the marriage, it is appropriate to make interim orders by way of spousal maintenance for the payments sought by the wife with the exception of the children’s school fees and expenses.
[11] Exhibit A.
I am not satisfied that a case is made out for an injunction under s 114 of the Act, which was sought for the payment of school fees and other expenses related to the children from the parties’ loan accounts from the Company as per the previous orders. It is not appropriate to extend the orders because they are in the nature of child support.
Accordingly I propose to dismiss the wife’s application for the husband to cause drawings to be made from the Company by debiting in equal amounts to the loan accounts of each of the parties in order to pay the school fees, tuition fees and other school related expenses (as agreed in writing) for the children of the marriage.
The husband conceded that the payments made, other than child support and periodic spousal maintenance, through the loan accounts with the Company, are expenses paid jointly by the parties.[12] It is a matter for him how the payments for the mortgage, the private health insurance of the wife and the wife’s mobile phone charges, lease costs, insurances, registration, fuel and maintenance of the Toyota LandCruiser are to be paid. Any amount paid from loan accounts from the Company for these payments can be accounted for and considered by the trial Judge. Amounts paid by the husband to the wife by way of spousal maintenance can be considered for adjustment in the final property settlement.
[12] Affidavit of the husband filed 17 September 2014 at [7].
The husband has total control of the Company and I am satisfied that he has access to financial resources from which all of the payments (other than child support and periodic spousal maintenance) sought by the wife have been historically paid. The husband has the capacity in the financial resources of that Company from which to make the payments for the mortgage on the W property, the private health insurance for the wife and her mobile phone charges, lease costs, insurances, registration, fuel and maintenance of the Toyota LandCruiser, by way of spousal maintenance, in whatever way he chooses.
The Court is not empowered to make an order requiring the Company to make payments through the parties’ loan accounts, which are in the nature of spousal maintenance. As such the orders I make are against the husband.
Should he cause to make any of the payments, other than the periodic spousal maintenance and child support, through the loan accounts of the parties from the Company, any deductions should be made equally from the loan accounts.

The Toyota LandCruiser

The husband deposed that the Toyota LandCruiser, registered in the name of the Company, had an agreed valued of $70,000 in April 2004. The vehicle is subject to a chattel mortgage which has a current outstanding balance of approximately $30,000 expiring in 2015. It has a “written down” value of about $30,000, so that the company has a potential liability for capital gains tax on the sale.
The husband deposed to driving a Lexus motor vehicle which has travelled well in excess of 300,000 kilometres. It has an estimated value of about $12,000. The expenses for his motor vehicle are paid by the Company.
He deposed that in June 2014, the wife had proposed the sale of the LandCruiser because of the high fuel costs.
The wife requires a serviceable and reliable motor vehicle to transport herself and the children. If it were not for the high fuel costs of the LandCruiser, there would appear to be no reason to change the current arrangements. Both parties accept that the high fuel costs are a burden.
There appears to be no reason why the Company cannot sell both the Camry and the LandCruiser, discharge the chattel mortgage on the LandCruiser and purchase a new fuel-efficient motor vehicle for the use of the wife and children with the proceeds. The inevitable consequence will be that the Company must bear the costs of the capital gains tax on the sale of the LandCruiser.
However, given the litigious relationship between the parties there is likely to be further disagreement about the balance of any proceeds and the implementation of such an order which will no doubt involve additional legal costs for both parties.
In these circumstances, I am not satisfied that the husband has proven the necessity for the current arrangements to be changed. It would appear that the Company has the potential to raise additional funds from the sale of the Camry motor vehicle, which on the evidence of the husband is not subject to any finance arrangements and is not being used for any other purpose because it is available for the wife. The proceeds of this sale should assist with some of the expenses of the LandCruiser.
Accordingly I propose to dismiss the husband’s cross-application.
Neither party made any submission regarding costs and accordingly the costs of the parties are reserved.

I certify that the preceding one hundred and thirty-two (132) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thornton delivered on 7 November 2014

Associate:

Date: 7 November 2014

ANNEXURE A

Documents relied upon by the wife:

·Application in a Case filed 9 September 2014;
·Affidavit of the wife filed 9 September 2014;
·Affidavit of the wife filed 4 April 2014, paragraphs 69 – 77 and 84;
·Financial statement of the wife filed 4 April 2014; and
·Affidavit of the husband filed 6 August 2014.

Documents relied upon by the husband:

·Response to the wife’s Application in a Case filed 17 September 2014;
·Affidavit of the husband filed 17 September 2014;
·Affidavit of the husband filed 26 July 2013, paragraphs 94 – 11;
·Affidavit of the husband filed 3 April 2014, paragraphs 5 – 12;
·Affidavit of the husband filed 14 April 2014, paragraphs 18 – 21;
·Affidavit of the husband filed 6 August 2014, paragraphs 17 – 26; and
·Financial statement of the husband filed 6 August 2014.