Ross and Kelso (No.2)

[2013] FCCA 1425

FEDERAL CIRCUIT COURT OF AUSTRALIA

ROSS & KELSO (No.2) [2013] FCCA 1425

Catchwords:
FAMILY LAW – Spousal Maintenance – short de facto relationship – IVF (and authority “to deal with” frozen embryos) – de facto wife’s ill-health due to breast cancer and negative impact of chemotherapy and radiation therapy treatment – evidence of de facto wife’s treating medical specialist – de facto husband’s capacity to pay.

Legislation:

Family Law Act 1975, ss.4, 90MT(4), 90RD, 90SE, 90SF(1)-(4)

Social Security Act 1991, s.23(1)

Bevan & Bevan (1995) FLC 92-600
Brown & Brown (2007) FLC 93-316

Jonah & White (2012) FLC 93-522

Applicant: MS ROSS

Respondent: MR KELSO

File Number: CAC 1710 of 2012

Judgment of: Judge Neville

Hearing date: By written submissions

Date of Last Submission:

5 July 2013

(last submission received 28 August 2013)

Delivered at: Canberra

Delivered on: 20 September 2013

REPRESENTATION

Solicitor/Advocate for the Applicant: Mrs A Northcote

Solicitors for the Applicant: Farrar Gesini Dunn, Canberra

Solicitor/Advocate for the Respondent: Mr J Nicholl

Solicitors for the Respondent: Nicholl & Co, Canberra (between 3 July and 9 September 2013)

ORDERS

1. From 10^th May 2013 until 1^st February 2014, the Respondent is to pay to the Applicant the sum of $250.00 per week.

2. The Applicant is to notify the Respondent within 7 days of obtaining employment, and the Respondent is thereby entitled to seek a review of this spousal maintenance order.

3. The Respondent is to prepare and file all outstanding income tax returns.

4. The parties are to attend a conciliation conference with a Registrar of the Court on 20 November 2013 at 9:30am;

5. The matter is otherwise adjourned for further directions/mention on 10 December 2013 at 10:00am.

IT IS NOTED that publication of this judgment under the pseudonym Ross & Kelso (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CANBERRA

CAC 1710 of 2012

MS ROSS

Applicant

And

MR KELSO

Respondent

REASONS FOR JUDGMENT

Introduction

1. The initiating application filed by Ms Ross on 2^nd November 2012 sought final orders in relation to an unspecified sum for spousal maintenance (pursuant to s.90SE of the Family Law Act1975 (“the Act”) and property division in relation to the non-superannuation assets in percentage terms there specified – 25% to the Applicant and 75% to the Respondent.

2. Subject always to evidence and submissions, given the very modest length of the relationship (perhaps, at best, 3½ years), and the jurisprudence regarding short relationships which, broadly speaking, would usually put a percentage division in the general range of 3-12%, the division sought here may be something of an ambit claim.  This is an observation only, not an “indication” or pre-judgment.

3. In relation to two nominated superannuation funds ((omitted) Superannuation Fund and (omitted) Superannuation Fund), the Applicant sought orders, pursuant to s.90MT(4) of the Act, for allocated base amounts (a splitting order), respectively, of $62,441.15 and $15,000.

4. The Respondent sought orders dismissing the Application, or in the event that the Court found that a de facto relationship existed, only that each party should retain the items [currently] in their possession or name.

5. Both parties sought costs orders against the other.

6. An Amended Application was filed on 2^nd May 2013.  The substantive final orders sought are the same as per the original application.  However, in addition, certain final orders are sought in relation to authority from the Respondent to the Applicant regarding the use of stored frozen embryos.

7. In the Amended Application, interim orders were sought in relation to spousal maintenance of $458.00 per week and in relation to specific disclosure of certain financial records by the Respondent.

8. In the event, the Court fixed for separate and preliminary determination on 10^th May 2013 the issue of whether a de facto relationship existed between the parties. On that day, pursuant to s.90RD of the Act, and following some ‘indication’ from the Court (and ultimately a concession by the Respondent), the Court made a declaration that a de facto relationship existed between the parties.[1]

   [1] Generally, see Jonah & White (2012) FLC ¶93-522 regarding considerations in relation to the making of a declaration of the existence of a de facto relationship.

9. On 24^th May, the Court made a costs order in favour of the Applicant.  Reasons were provided in relation to that order.[2]  In the course of those reasons I noted (as I have done here again) that, at its highest, the relationship was only of some 3½ years.  Similar comments were made in the course of the hearing on 10^th May.  The comments then made included observations about the utility or risks associated with property proceedings in the best of circumstances (e.g. how any single piece of evidence may ultimately be viewed, the particular risk of cost orders, etc), but the even greater risks that potentially arise in so-called “short-relationship” cases because of the range of discretionary issues involved, particularly in relation to matters of contribution.

   [2] Ross & Kelso [2013] FCCA 330.

10. Now, with the matter still unresolved, the issue currently before the Court is the de facto Wife’s interim application for spousal maintenance.  This is to be determined according to the material filed and written submissions.

11. I repeat my earlier expressed concerns in relation to the costs that have been, and continue to be, incurred by both parties.  I fear that they are, even now, significantly disproportionate to the matters that remain in dispute.

12. I should also note that, until quite recently, the Respondent has been legally represented.  Between early July and mid-August, Mr Kelso had no legal representation.  On 3^rd July, he filed detailed written submissions on his own behalf.  In the course of them he sought leave of the Court to secure further legal representation, access to various material produced under subpoena, and further time to provide a ‘response’ to the application.

13. The Court advised him that (a) he does not require the leave of the Court to obtain new legal representation, (b) there is no objection to him viewing the material produced under subpoena, and (c) he has provided extensive submissions in answer to the current application, and he has also had more than one month to put on any other material.  In such circumstances the Court advised him that the matter would be dealt with on the material and submissions filed.

14. Then, on 13^th August, new solicitors contacted the Court to advise that they now acted for Mr Kelso.  They sought leave to file further submissions on the Respondent’s behalf.  On that date, the leave sought was granted with submissions to be filed within 5 days, as well as the Applicant having an opportunity to respond to the new submissions.  Further submissions were filed by the Respondent’s new solicitors on 23^rd August, although arguably they were out of time (even allowing for an earlier version of them having been filed on 22^nd August).  Submissions in reply on behalf of the Applicant were filed on 28^th August.

15. In very late-breaking news, as from 9^th September 2013, the Respondent is again self-represented.

Applicant’s Submissions

1. Among other documents relied upon by the Applicant are, most relevantly, an updated financial statement, an up-dating affidavit (filed 3^rd June 2013), and a medical report from her treating breast-cancer surgeon, Dr C (filed 5^th June 2013).

2. By way of summary, the affidavit of 3^rd June outlined Ms Ross’ employment (full-time for approximately 6 weeks from February 2013), and her unsuccessful attempts to secure part-time employment since then.  She also outlined her health problems (exhaustion and memory loss), which matters are confirmed by her specialist, Dr C.

3. Dr C opines that, in her view, Ms Ross should be able to resume full-time employment in approximately February 2014, which would be some two years after the conclusion of her radiotherapy. This would also be subject to her future health, remaining disease free, and any other recommendations from the ACT genetics clinic, which is conducting other medical tests of the Applicant.

4. Dr C also confirmed that a side-effect of Ms Ross’ on-going treatment is fatigue, and that a side-effect of chemo-therapy is the difficulty in maintaining concentration.

5. The Applicant’s written submissions themselves focus on the power of the Court to make an order for spousal maintenance in relation to de facto couples (s.90SE), and the matters which the Court, in the circumstances of a de facto relationship, is required to take into account in such applications (s.90SF).

6. The most relevant factors, as submitted by the Applicant here, are those set out in s.90SF(3)(a), (b), (d), (g) and (r). The Applicant submitted also that s.90SF(4) is relevant, which section provides that in exercising its jurisdiction under s.90SE, “a court must disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance, or benefit.” In relation to each of the matters said to be relevant, the Applicant submitted as follows.

7. First, in relation to income and property, the Applicant says that she is in receipt of a Newstart Allowance, which is a relevant benefit under s.23(1) of the Social Security Act 1991 (Cth).[3]  Otherwise, her only ‘asset’ or property consists of a motor vehicle.  She currently lives with her parents, as she has done for some little time.

   [3] See also the definition of “income tested pension, allowance or benefit” in s.4 of the Family Law Act.

8. In relation to her capacity to work, I have already detailed the advice from her treating specialist.  In my view, that evidence is sufficient for the current application to succeed.

9. I accept the submission made on behalf of Ms Ross that, in the event she is able to secure part-time employment, she is required to notify the Respondent who is, thereby, at liberty to seek to vary any spousal maintenance order.

10. In relation to the Applicant’s financial commitments, she submitted that her weekly expenses are $329.  Because of concessions made in her submissions, this figure should be reduced to $310 per week.  Next, the Applicant provided material about rental costs (in circumstances where there is no legal obligation on her parents to provide accommodation).  Those current rental costs range from $360 per week for a single bedroom apartment, to $195 for a shared house arrangement.  These figures are for properties in Canberra.  Other rental costs are provided for (omitted).

11. The Applicant is seeking an order for spousal maintenance back-dated to the date of the application; this is on the basis that the Respondent conceded the existence of the de facto relationship only on the day of the hearing on 10^th May.

12. The Applicant then dealt with the Respondent’s capacity to pay spousal maintenance.  She noted that his gross monthly income for February 2013 was $13,486.78; in March, it was $13,533.61; and in April 2013 it was $14,830.34.  Taking into account tax deducted and superannuation, the average of the three months referred to shows a net income of $8,246.37 per month.  I need not record the modest combined dividend and interest earned.

13. Further, the Applicant submitted that the Respondent received $470 per week rental income.  Leaving aside some other minor matters set out in the submissions, the Applicant said that the Respondent had net weekly income of $2696.00.  I do not necessarily accept, nor for the purposes of the current application do I need to deal with, the Applicant’s further submissions about the Respondent having the capacity to rent out part of his (omitted) property to earn more income.

14. The Applicant accepts a range of financial commitments of the Respondent, which are outlined at paragraphs 19-29 of her submissions.  I need not repeat or outline them here except to note that it seems un-challenged that the Respondent has not filed a tax return since 2004.  It may be (but it remains necessarily speculative) that the Respondent is owed a significant tax refund.  Of course, the converse might be true also, and that he owes a significant sum to the Australian Tax Office.  In these circumstances the Applicant also seeks an order requiring the Respondent to file all outstanding tax returns.  That order should be made.

15. By way of summary, the Applicant submitted that the Respondent had weekly net income of $2396.76 and expenses of $1723.00.  On this basis, the Applicant submitted that there was significant capacity for the Respondent to meet the application for spousal maintenance of $458 per week.

16. In all of the circumstances, the Applicant submitted that the relevant “need” under the Act had been satisfied, as had the Respondent’s capacity to pay. Accordingly an order for [interim] spousal maintenance had been made out and should be made in the sum sought.

Respondent’s Submissions

1. The first part of the Respondent’s (primary) submissions re-tells a range of matters that were traversed in earlier material that related specifically to whether a de facto relationship existed.  In the course of this narrative, the Respondent outlines efforts he made to assist the Applicant to obtain employment, such as by preparing a CV for her and advice he gave her about taking leave, rather than resigning from a job with (omitted) in November 2011.  In my view, such matters have no relevance to the current application.

2. The Respondent also gives instances of the Applicant’s travel (to (omitted) and on another occasion, to (omitted)) which he contended indicate that the fatigue of which she complains was not evident on those occasions.

3. From paragraph 20 and following, the Respondent gives an account of the Applicant’s work history.  He suggests that there are a range of jobs, such as in (omitted), which would be much less taxing on the Applicant.

4. From paragraph 23, the Respondent provides information from various websites, such as the Cancer Council of NSW, and Breast Cancer Care (omitted), which he uses to challenge the evidence of Dr C, particularly in relation to the Applicant’s contentions regarding her levels of fatigue.

5. The Respondent also submitted that (a) the Applicant’s separate holidays to (omitted) and to (omitted), and (b) her job applications, all indicate that she is capable of work and that the reality is that she has simply been unsuccessful in her attempts to secure gainful employment.

6. The Respondent noted certain areas where the Applicant, in his view, could or should put her efforts in relation to finding work and the difficulties posed by the Applicant’s lack of formal qualifications.

7. These matters, says the Respondent, disentitle the Applicant to any spousal maintenance.

8. As earlier noted, supplementary submissions were filed by Mr Kelso’s new solicitors on 22^nd August.  Briefly stated, those submissions noted the following.

9. First, the Respondent relies heavily on the evidence of Ms Ross’ general practitioner (Dr H) to support a contention of the Applicant’s improving health and therefore her capacity for work.

10. However, as the Applicant’s solicitors point out in their reply submissions (filed on 28^th August), there is a significant distinction between the evidence of a general practitioner and a specialist.  In my view, the evidence of the latter (Dr C) must take precedence in the current circumstances.

11. Secondly, the Respondent says that the Applicant’s trips to (omitted) “and the like” suggest a capacity to work.  Respectfully, in my view, an occasional trip interstate (or even further afield) is a rather different beast (so to speak) compared to the ‘test’ regarding capacity to work.  To repeat: Dr C’s evidence in this regard is primary and not relevantly challenged.

12. Thirdly, the Respondent contends that his credit card expenses are genuine and that the Court ought (or must) accept the debts there claimed – absent any testing of the evidence.

13. Fourthly, in relation to “need”, the Respondent challenges the Applicant’s claim for ‘future need’ in relation to rent and should limit the consideration to current need.  The Respondent also submits that on his figures there is no capacity to pay any spousal maintenance.

14. Fifthly, the Respondent submits that (a) neither party has any obligation to support financially any other person, (b) the ‘standard of living’ issue is not a significant factor in the current, interim circumstances, and (c) the duration of the relationship and the direct financial contributions of each of the parties are matters that favour the Respondent.

15. Sixthly, and contrary to the Respondent’s submissions, the duration of the relationship is of no relevance to the current application.

16. In response submissions (filed 28^th August), among other things, the Applicant (a) pointed out that the Respondent’s supplementary submissions seemed to be predicated upon the wrong financial statement, (b) highlighted the evidence of Dr C, (c) noted that despite regular attempts to secure employment, she has not been successful and therefore remains ‘unable to support herself’ in accordance with the Act and (d) provided copies of all job applications by the Applicant (which had been provided to the Respondent’s previous solicitors).

Consideration and Resolution

1. The first observation to make is that, notwithstanding the earnest endeavours of the Respondent (and more recently those of his newly-retained solicitors) and helpful material he (and they) puts before the Court in relation to recovery from breast cancer, all of it is in general terms, as opposed to the specific evidence from Ms Ross’ treating specialist.  I accept Dr C’s evidence.  As previously indicated, the expert opinion of Dr C takes precedence over the opinion of the Applicant’s general practitioner.

2. Secondly, in Bevan & Bevan, the Full Court outlined the process to determine an application for spousal maintenance. Although detailed in the context of “spousal” maintenance, in my view the same process should apply to de facto couples. Thus, the process is to make a threshold finding under s.90SF(1), secondly, to consider ss.90SE(1) and 90SF(3), thirdly, to have regard to the no fettering principle that pre-separation standard of living must automatically be awarded where the Respondent’s means permit and finally, the Court’s discretion must be exercised in accordance with s.90SF(1), “with reasonableness in the circumstances as the guiding principle.”[4]

   [4] See Bevan & Bevan (1995) FLC ¶92-600 at p.81,982.

3. In my view, the Applicant has established, to the requisite standard, her need for spousal maintenance.  Particularly on the basis of Dr C’s evidence, I am satisfied that Ms Ross is unable to support herself “adequately” by reasons of “physical incapacity for gainful employment.”

4. What is “adequate” is well-settled.  In Brown & Brown, the Full Court (Kay, Warnick & Boland JJ) detailed what is comprehended by “adequate”.  At [161], the Court said:

   ·   The word “adequately” is not to be determined according to any fixed or absolute standard.

   ·   The idea that “adequate” means a subsistence level has been firmly rejected.

   ·   Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.

   ·   In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.

   ·   It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.

   ·   However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.

5. Curiously, in no submission received by the Court was there any reference to any relevant case law, such as the cases to which I have just referred.

1. In all of the circumstances, I am satisfied that an order for spousal maintenance should be granted in the Applicant’s favour.  In the light of Dr C’s evidence, and having regard to the Full Court’s comments in Bevan and in Brown, particularly “with reasonableness in the circumstances as the guiding principle”, for a period from the date of the declaration made on 10^th May 2013 until 1^st February 2014 the Respondent is to pay the Applicant the sum of $250 per week by way of spousal maintenance.

2. Orders should also be made, as indicated in relation to the Respondent filing all outstanding tax returns, and that, upon the Applicant becoming employed, she is to advise the Respondent, who may then approach the Court to seek to have varied or discharged the order for spousal maintenance.

3. One further order should be made: the parties are to attend another conciliation conference with a view to attempting to resolve the matter without it going to trial.  The date for that conference is set out in the orders, together with other relevant procedural orders.

4. The Court so orders.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Judge Neville

Date:  20 September 2013