Ritchie & Ritchie
[2007] FMCAfam 327
•25 May 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RITCHIE & RITCHIE | [2007] FMCAfam 327 |
| FAMILY LAW – Interim property orders – spousal maintenance – use of joint funds for legal fees – release of joint funds. INTERIM PARENTING – Shared parental responsibility – extension of time spent with children. |
| Family Law Act 1975, ss.61DA, 74, 79(1), 80(1)(h) , 114, 117(2) |
| Goode and Goode [2006] FamCA 1346 Zschokke [1996] FLC 92-693 Paris King Investments Pty Ltd v Ray Hill [2006] NSWSC 578 |
| Applicant: | MR RITCHIE |
| Respondent: | MS RITCHIE |
| File Number: | SYC 773 of 2007 |
| Judgment of: | Altobelli FM |
| Hearing date: | 18 May 2007 |
| Date of Last Submission: | 18 May 2007 |
| Delivered at: | Sydney |
| Delivered on: | 25 May 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr Campton |
| Solicitors for the Applicant: | Karras Partners Lawyers |
| Counsel for the Respondent: | Mr Kearney |
| Solicitors for the Respondent: | Matthews Dooley Gibson |
ORDERS
That the parents have shared parental responsibility of C born in 1997 and S born in 2002.
That the Orders of the Court made 14 March 2007 be varied to provide as follows:
(a)In Orders 1.1 and 1.2 the words “from 6.30pm” be deleted and the words “from the conclusion of pre-school/school” inserted in lieu thereof; and,
(b)In Order 1.1 the words “until 6.00pm Sunday” be deleted and the words “until the commencement of school on Monday for C and 9.00am on Monday for S” be inserted in lieu thereof; and,
(c)In Order 1.2 the words “the completion of school sport on the” be deleted and the words “4.00pm” be inserted in lieu thereof.
That within seven days of the date of this Order the wife make available for collection by the husband’s nominee from Property C:
(a)The husband’s clothing, shoes and sporting apparel;
(b)The husband’s golf clubs, tennis gear, ski gear, fishing gear, tools and bicycle;
(c)Saxophone;
(d)The husband’s personal jewellery of watches, rings and cufflinks;
(e)All documents, taxation records, group certificates, and other documentation relating to the D property and any other financial documents relating to the financial affairs of the Husband.
That the husband forthwith do all such things as may be necessary to cause the funds in Westpac Bank Account number [X] held in New Zealand to be applied in the following manner:
(a)In payment of the sum of $30,000.00 to the solicitors for the wife to be applied by the solicitors for the wife in payment of the costs and disbursements incurred, or to be incurred, by the wife in the conduct of these proceedings.
(b)In payment of a further $20,000.00 out of the remaining balance to the wife for the same purpose as referred to above, as and when it becomes necessary to the wife.
(c)In payment of $20,000.00 to the husband to be applied by him in payment of costs and disbursements incurred in the conduct of these proceedings as and when they become due.
That the Federal Magistrate at the trial of the substantive application determine the nature and character of the payments referred to in these orders, as to whether such payments received by or on behalf of either party are by way of maintenance or interim property orders.
That the husband pay as, and when, they fall due:
(a)The mortgage payments, council & water rates, building and contents insurance in relation to the former matrimonial home at Property C.
(b)All payments of registration and insurance for the Pajero motor vehicle driven by the wife;
(c)The private health insurance such as to cover the wife to the same level as it stood immediately prior to separation.
IT IS NOTED that publication of this judgment under the pseudonym Ritchie & Ritchie is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 773 of 2007
| MR RITCHIE |
Applicant
And
| MS RITCHIE |
Respondent
REASONS FOR JUDGMENT
Introduction and Background
In this application both the husband and the wife sought interim orders. The husband sought orders in accordance with a minute of order that was provided to me at the hearing of the application. That minute of order is Annexure A to these reasons and was Exhibit H1. These orders referred to parenting arrangements and return of personal property of the husband. I was advised that orders 2.1 and 2.3 in the husband’s minute of order are to be made by consent. The orders sought by the wife are orders 7 to 17 in her response filed 12 March 2007. In the alternate, the wife sought orders in accordance with the alternate minute of order filed in Court. That alternate minute of order is Annexure B, to these reasons and was Exhibit H1. A further document was provided to me on behalf of the wife which represents the wife’s understanding of the payments that the husband has made to date. That document is Annexure C and was Exhibit W2. The effect of the orders sought by the wife in her response included an order for spousal maintenance in the sum of $1,000.00 per week, and an order for interim costs. The issues in this case were, therefore, some parenting orders, return of personal property, spousal maintenance, and interim costs.
The wife is 39 years old, and, other than conducting a part-time business from the former matrimonial home, she is engaged in caring for the children. The husband is 39 years old and he is a sales service director. The parties married in March 1996 and separated in September 2006. There are two children, C who is ten years old and S who is 6 years old. The children live with their mother in the former matrimonial home. On 14 March 2007 orders were made by consent by Sexton FM, primarily dealing with parenting matters. Clearly, the parenting matters before me were unresolved as they were adjourned for interim hearing before me, together with the other outstanding issues of a financial nature.
Outstanding Parenting issues
The first order sought by the husband was an order for equal shared parental responsibility in relation to the children. There is nothing in the evidence that would indicate to the contrary insofar as the suitability of making this order is concerned. No serious submission was put by counsel for the mother as to why it ought not to be made. This is a case where the presumption of equal shared parental responsibility contained in s.61DA applies and accordingly I will make an order for equal shared parental responsibility in terms of that sought by the husband.
As invited by the parties, I will make orders by consent in terms of orders 2.1. and 2.3 of the husband’s minute of order.
The effect of order 2.2 would be to extend the period when the children live with their father from the conclusion of pre-school/school on Thursday, beyond the existing 6.00pm Sunday referred to in the consent orders, through to the commencement of school on Monday for C, and 9.00 am for S. The children live with their father on the above basis each alternate weekend. However, order 1.2 provides for C to live with his father in the other week on Thursday through to Saturday or Sunday, depending on whether or not C has school sport.
Having had the benefit of reading the affidavits filed by both parents, and having regard to the consent orders they entered into on 14 March 2007, it is clear that the mother has no real concerns about the capacity of the father to care for the children, or the nature and extent of their relationship with him. Indeed, at one point in the mother’s affidavit she acknowledges that the father has, for example, a stronger relationship with C than with S.
What is apparent to me from reading this material, however, is that a high level of conflict exists between these parents. It is the experience of this Court, and experience that is well documented in the social science literature, that children are adversely affected by the conflict experienced by their parents, even if they don’t directly witness or participate in it. One of the traditional flashpoints in shared care arrangements such as this one is at the point when children go from one parent to another. Whilst there is no specific evidence of any concerns in this regard, having regard to the matters set out above, and having regard to the clear legislative scheme contained in part VII of the Family Law Act that encourages shared parenting (see in this regard Goode and Goode [2006] FamCA 1346 at paragraph 72), I think it is appropriate to make the orders sought by the husband order 2.2.
As I am dealing with the orders sought by the husband in his minute of order, I note that order 3 is one that requires the wife to make available for collection by the husband’s nominee various personal effects and documents. No submissions were made in relation to this order but it seems appropriate and will facilitate both the conduct of the litigation and the parties moving on in their lives. For the husband, it will mean the minimisation of further expense as regards replacing these items and that provides indirect benefits for the wife. Accordingly I make orders in terms of order 3 of the husband’s minute of order.
The Interim Costs Issue
The wife’s application for interim costs is advanced in a number of different ways. The first alternative order is one which simply requires the husband to pay to the wife’s solicitors $30,000.00. The second alternative is for an order that requires that, in effect, the husband pay to the wife’s solicitor’s precisely the same amount that he himself pays to his solicitors. The third alternative, being the one contained in Annexure A is one that requires the husband to use funds in a Westpac Bank trust account in New Zealand firstly in payment of $30,000.00 to the wife’s solicitors, and thereafter with the balance equally divided between the parties. This is the wife’s preferred position.
Mr Campton, counsel for the wife, advanced her case for interim costs on the basis that all it did was to create a level playing field which disadvantages no one. He submits than on the basis of the evidence, the husband was using the parties’ funds to finance his case, but the wife was not. I was informed from the bar table by Mr Campton that neither he nor his instructing solicitor would be able to continue to represent the wife unless they were paid. In this limited circumstance, I believe it was appropriate to accept this evidence from the bar table. Mr Kearney, counsel for the husband, quite properly conceded that the evidence indicates that joint funds were used by the husband to pay his legal fees. Of the $32,600.00 paid by the husband in legal fees to date, $27,000.00 came from the joint funds and the rest from post-separation income.
As those joint funds were no longer in existence (being sale proceeds of shares referred to at paragraph 4 of the husband’s affidavit) the only other funds that could be used to source the payment of the wife’s costs would be the funds described in the husband’s financial statement filed 4 May 2007 as “Westpac Trust New Zealand (Trust for Children)” with a balance of $105,000.00. I was informed by the husband’s counsel that the $105,000.00 was New Zealand dollars, not Australian dollars. Whereas the husband has the benefit of a post-separation earning capacity that enables him to pay at least part of his own legal fees, the wife does not. Apart from funding his legal fees from his post separation earnings, even the husband’s only source to pay legal fees from joint funds would be the New Zealand trust account, so that narrows considerably the options in terms of the source of the funds.
The issue I need to determine is whether it is appropriate to make an order for interim costs. As the Full Court of the Family Court of Australia indicated in Zschokke [1996] FLC 92-693 there are a number of alternate sources of power including s.117(2), ss.79(1) and 80(1)(h) and possibly ss.114 and 74. I am satisfied that in this case an order is justified by reference to either ss.117(2), 79(1), 80(1)(h) or 74. The Full Court in that case also indicated the other matters than needed to be considered including the following:
a)Whether there is a disparity in financial circumstances such that the respondent is in a position of relative financial strength compared to the applicant. That is clearly the case in this matter as is apparent from a comparison of the financial statements and the evidence of the husband and the wife.
b)That the Respondent has the capacity to meet his own costs that the Applicant does not. As discussed above, the husband has had the benefit of using his post-separation earnings as well as joint funds to pay for his legal fees, whereas the wife has not.
c)That the applicant has an arguable case. It may well be that the property order sought by the wife in her Response filed 12 March 2007 is somewhat of an ambit claim, but her evidence does allude to allegations of non-disclosure on the part of the husband. Nonetheless, reading the affidavit material as I have, there is no doubt in my mind that her claim is an arguable one.
d)Evidence as to anticipated and incurred costs and disbursements. That evidence is set out in the wife’s affidavit to which was annexed the costs agreement of both her solicitor and counsel.
Other matters I need to take into account include the complexity of the proceedings; the stage in the proceedings at which the issue was raised; the applicant’s inability to fund her legal costs in the absence of such an order; the comparative financial circumstances of the parties; whether there exists a fund out of which the order may be satisfied; the relevant factors under s.117(2) (a) of the Family Law Act 1975; evidence of the inquiries made for alternative financing and funds, and realistic cost estimates.
Whilst dealing with all of these issues in broad brush fashion, I’m satisfied that the evidence indicates that this is a genuine claim that was raised at an appropriate stage of the proceedings by the applicant wife in a situation where she really had no alternative but to lodge the claim and it is apparent that her financial circumstances are inferior to that of the husband. It is clear that the husband has used joint assets to fund a substantial part of his legal proceedings to date. There exists a fund out of which the fees can be paid. Whilst the husband in his evidence describes it as a trust fund, this is denied by the wife. If it is a trust fund, it is a trust fund for the benefit of their children. Once I am able to make a proper finding as to the characterisation of these funds, at final hearing, if it is a trust fund it can be reinstated using other assets.
I am indebted to Mr Kearney for referring me to the very useful discussion about interim costs in the judgment of Brereton J in Paris King Investments Pty Ltd v Ray Hill [2006] NSWSC 578 at paragraphs 29-33 and 37. I am satisfied that on the facts of this case, the matters raised by Brereton J have been satisfied.
I think in all the circumstances it is appropriate to make an interim costs order using the New Zealand funds for that purpose. However, it is not appropriate to release the entire remaining funds for the use and benefit of each spouse, after the wife receives the first $30,000.00. This is because I am unsure about the proper characterisation of these funds at the final hearing or that more than $50,000.00 is in fact needed by the parties. I intend to release $30,000.00 to the wife, and thereafter to allow each spouse to draw down another $20,000.00 in the expectation that this will fund the matter through to a hearing, if it becomes necessary.
Maintenance
The remaining issue is the wife’s claim for spousal maintenance. Her claim is governed, of course, by s.72 of the Family Law Act 1975. In very simple terms, the wife needs to establish what is often described as the threshold issue i.e. that she is unable to support herself adequately. If she is able to establish this, then her needs must be quantified, and I must then be satisfied that the respondent husband has the means to pay. Having regard to all of the evidence, I am satisfied that the wife has crossed the threshold and demonstrated that she is unable to support herself adequately, because of the need to care for the two children of the marriage.
The task of quantifying the wife’s needs is quite difficult. Firstly the evidence that she gives in relation to her needs is far from clear, and, secondly, the evidence that both parties give about the support already provided by the husband by way of payments that could be characterised as spousal maintenance payments, is also unclear.
In her financial statement filed 12 March 2007, the wife claims total personal expenditure of $1,996.00 per week. At part N of the said financial statement she asserts that $1494.00 is attributable to her. The claim she makes for $330.00 for food for herself only is excessive and I am prepared to allow $200.00. Her claim for clothing and shoes is also excessive and is inconsistent with the position of financial difficulty that she presents to the court and I allow $20.00. In relation to the children’s activities, the evidence to support a claim of $52.00 is unspecific. If it is the costs of the children, then that is a matter properly raised in another context. I disallow this in its entirety. It is apparent that the majority of the education expenses claimed at $348.00 per week have been paid by the husband but I accept there might be a component still borne by the wife. I will allow $48.00 per week. The wife claims mortgage payments of $350.00 per week, but it is apparent that the husband is paying this. Likewise, it is apparent the husband is paying health insurance as well as insurances in relation to the vehicle that the wife drives. Once all of these expenses are removed from the wife’s claim for personal expenditure in her financial statement, the inevitable result is that provided the husband continues to make the payments that he claims he has been making, the wife has not established need, even disregarding the Family Payment received by the wife.
Moreover she asserts she only earns $100.00 per week from her business, I am sceptical about this having regard to both her evidence and that of the husband. On an interim basis I make no findings about it.
Looking at the expenditure claimed by the husband in his financial statement filed 4 May 2007, he claims that he is paying the mortgage on the former matrimonial home at $341.00 per week, the rates and taxes on the former matrimonial home at $49.00 per week, the building and contents insurance on the former matrimonial home at $17.00 per week, the registration on the Pajero motor vehicle driven by the wife at $19 per week, the insurance on the Pajero at $14.00 per week, private health insurance at the family rate at $71.00 per week. That amounts to a total of $511.00.
It is apparent from the other evidence that he has had access to joint funds, some of which were used to pre-pay school fees.
I intend to order the husband to continue to make these payments. It was argued on his behalf that he did not have the capacity to continue to make these payments and that he was, in effect, living beyond his means. I do not accept this. It is inconsistent with the evidence adduced on his own behalf. It is clear he has had access to joint funds which have been used, in part, to pay some of the expenses which he then claims in, for example, part N of his financial statement. I accept the submission of Mr Campton, on behalf of the wife, in this regard, to the effect that instead of using income to pay his living expenses, he has used jointly owned assets. The husband may well have suffered a reduction in his income as a result of changes to his remuneration package. It may well be the case that the impact of the separation has taken its toll on his ability to do his work and generate commissions. None of that, in my opinion, is reflected in his financial affairs. Indeed, I was informed by his counsel from the bar table that out of the $32,600.00 paid in legal fees, $27,000.00 was derived from joint funds, and thus $5,600.00 came from his post separation income. Curiously, however, I could find no reference to the payment of legal fees in his financial statement. I find that the husband has the capacity to continue to make the payments I refer to above. To the extent that legal fees are a burden, the order for interim costs I have made adequately makes provisions for this.
There is a potential capital gains tax liability arising out of the sale of shares by the husband. I have not ignored that. It can be dealt with at the final hearing which will be no later than 11 February 2008 and probably earlier than that. There was no evidence before me as to when this liability was due.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Lisa Molloy
Date: 23 May 2007
Annexure A : Husband’s Minute of Order, Pending Further Order
That the parties have equal shared parental responsibility for the children of the marriage C born in 1997 (“C”) and S born in 2002 (“S”).
That the Orders of the Court on 14 March 2007 be varied to provide as follows:
2.1 In Orders 1.1 and 1.2 the words “from 7.30pm” be deleted and the words “from the conclusion of pre-school/school” be inserted in lieu therefore; and,
2.2 In Order 1.1 the words “until 6.00pm Sunday” be deleted and the words “until the commencing of school Monday for C and 9.00am Monday for S” be inserted in lieu thereof.
2.3 In Order 1.2 the words “the completion of school sport on the” be deleted and the words “12.00 noon” be inserted in lieu thereof.
That within seven days of the date of Order the wife make available for collection by the husband’s nominee from 4 Property C, Property C:
3.1 The husband’s clothing, shoes, and sporting apparel;
3.2 The husband’s golf clubs, tennis gear, ski gear, fishing gear, tools and push bike;
3.3 Saxophone;
3.4 The husband’s personal jewellery of watches, rings, cuff links;
3.5 All documents, taxation records, group certificates, documentation relating to the D property and any other financial documents relating to the financial affairs of the husband.
Annexure B: Alternate Minute of Order as Sought by the Wife, Pending Further Order
That the Husband forthwith do all such things as may be necessary to cause the balance of funds in Westpac Bank Account No. [X] in New Zealand be applied in the following priority:
(a)In payments of the sum of $30,000.00 to the solicitors for the wife on the terms as provided for in order sought No 8-11 inclusive of the Response of the Wife filed on 12 March 2007.
(b)In payment of 50% of the balance then remaining to the Wife.
(c)In payment of the balance to the husband.
That the Federal Magistrate at the trial of the substantive Applications determine the nature and character of the payments referred to in Order 1 above, as to whether such payments received by or on behalf of the Wife by way of maintenance for the Wife or by way of interim property orders.
Annexure C
That the husband pay as and when they fall due:
i) All payments of principal and interest in respect of the mortgage secured upon the property at Property C.
ii) The current instalments due in respect of the current private family health cover and otherwise do all things to ensure the continuation of such cover.
iii) All rates, taxes and insurance premiums in respect of the property at Property C.
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