Sarban & Rai
[2024] FedCFamC2F 897
•3 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Sarban & Rai [2024] FedCFamC2F 897
File number(s): MLC 8677 of 2023 Judgment of: JUDGE O'SHANNESSY Date of judgment: 3 July 2024 Catchwords: FAMILY LAW – interim spousal maintenance – respondent husband’s financial circumstances opaque – parties assets in chaos – whether Hall & Hall inference is able to be drawn – what are reasonable needs – party may need to borrow to fund maintenance order – whether order should be from date of application – when payment “clock” starts – order to operate from after delivery of reasons Legislation: Evidence Act 1995 (Cth) section 128
Family Law Act 1975 (Cth) section 72 & section 75
Cases cited: Badir & Badir (2022) 65 Fam LR 166
Hall v Hall (2016) 257 CLR 490
Hopkins & Elliott [2023] FedCFamC1F 167
Maroney & Maroney [2009] FamCAFC 45
Mitchell (1995) 19 Fam LR 44
Ying & Qigang [2023] FedCFamC2F 111
Division: Division 2 Family Law Number of paragraphs: 67 Date of last submission/s: 20 May 2024 Date of hearing: 20 May 2024 Place: Melbourne Counsel for the Applicant: Dr Ingleby Solicitor for the Applicant: Vadarlis & Associates Counsel for the Respondent: Mr Foo Solicitor for the Respondent: Cohrssen Partners Pty Ltd ORDERS
MLC 8677 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS SARBAN
Applicant
AND: MR RAI
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
3 JULY 2024
THE COURT ORDERS THAT:
1.Commencing with first payment on Wednesday 10 July 2024, and then weekly thereafter, by direct payment to such bank account of the Wife as she nominates in writing by text message or email to the Husband, the Husband pay spousal maintenance in the sum of $1,000 each week to the Wife.
2.The application seeking interim spousal maintenance be and is otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE O’SHANNESSY:
These are the settled reasons of an oral judgment delivered some time after the hearing. These reasons were delivered orally. These settled reasons have been corrected from the transcript where appropriate to correct grammatical errors, to add citations, passages of authorities and evidence, and to attempt to make the orally delivered reasons easier to read. The substance is unchanged.
Cross examination on interim hearing permitted.
These are reasons in regard to an application for spousal maintenance that I heard on 20 May 2024. I permitted counsel for both parties to cross-examine the parties. Cross-examination on an interim spousal hearing is unusual, but I was satisfied that there were very unusual circumstances in this case. Those unusual circumstances related to the opaque nature of the financial circumstances of the respondent husband, and also, but to a lesser extent, to the opaque nature of the assets and liabilities of the applicant wife. In the end, I was assisted by counsel's cross-examination of each of the parties. The cross-examination was concise, and of assistance to me.
The hearing concluded late in the day, and because of the nature of the affidavit material, I wished to review that material in addition to reviewing a transcript.
Section 128 certificate
Somewhat unusually on an application for interim spousal maintenance, during the husband's cross-examination, he objected to answering questions, and sought and obtained a section 128 certificate pursuant to section 128 of the Evidence Act 1995 (Cth).
BACKGROUND
In this case, the applicant wife, Ms Sarban (‘the Wife’), is 36 years old, and the husband, Mr Rai (‘the Husband’) is 44 years old. The Wife is employed casually as a hospitality worker usually five hours each week on a Sunday, and sometimes a couple of hours more. The Husband works as a sales representative. The parties married in 2016. They separated under the one roof in 2019, and later the Wife left that home. The proceedings in this Court were commenced by the Wife on 2 August 2023. In her initiating application, the Wife sought the following interlocutory orders:
1. That the Husband within 21 days or such other time as the court determines make financial disclosure of the following documents for the period 1 January 2015 to date (“Period”) or for such other period as the court determines is reasonable:
a. His personal bank statements credit card statements and all other banking records;
b. His payslips or similar;
c. His Financial Statements, Balance Sheets, BAS returns and ATO assessments;
d. His Income Tax Returns and assessments;
e. All documents relating to any assets owned or controlled by the Husband;
f. All documents relating to his superannuation;
g. All: i. Solicitor’s or similar files; and
ii. Documents relating to the acquisition, maintenance and sale (if any) relating to the following real estate properties:
A. [B Street, Suburb C], VIC
B. [1 D Street, Suburb C], VIC
C. [2 D Street, Suburb C], VIC
D. [3 D Street, Suburb C], VIC
E. [E Street, Suburb C], VIC
F. [1 F Street, Suburb G], VIC
G. [2 F Street, Suburb G], VIC
Collectively “Properties”
B.All documents and without limitation including Secretarial Folders, Minutes of Meeting of Directors, Minutes of Meeting of Trustee, applications for finance, bank or like correspondence, banking records, financial statements an Income Tax Returns including but not limited relating to the Properties and any and all of the following entities:
i. [H Pty Ltd];
ii. [J Pty Ltd];
iii. [The Sarban and Rai Trust]
collectively “Entities”
2. All applications for finance or similar and correspondence with the financier/s relating to the Properties and Entities.
3.All loan or mortgage or any other type of banking record or statement relating to the Properties and Entities.
4. All correspondence and documents passing between him and [Mr K] or persons on his behalf.
5. That the Husband pay to the Wife by way of interim spousal maintenance the sum of $2,000 per week.
6. That the Husband pay to the Wife the sum of $50,000 by way of litigation funding.
7. The Husband pay the wife’s costs on such basis as the court determines.
Section 277 of the Country L Civil Code
The matter ultimately came before me on 20 May after having been listed before a Judicial Registrar, and then a Senior Judicial Registrar. When the matter came before the Senior Judicial Registrar, a party sought an adjournment to be able to provide further evidence. But because of the provisions of section 277 of the Country L Civil Code[1], a person cannot lawfully give evidence from Country L. Hence, I do not have that further evidence.
[1] As to section 277 of the Country L Civil Code see Ying & Qigang [2023] FedCFamC2F 111 at paragraph [4]
Care and education of the child
There is one child of the marriage, X, born in 2016. The parties do not have parenting orders, but they currently have in place an agreed arrangement whereby X lives with the Wife and spends time with the Husband on a weekly basis on weekends, and until recently, from when the Husband's work obligations finished of a Saturday until Sunday evening. In recent times, I am satisfied that that has, at least on occasions, moved to two nights. X attends a relatively expensive private school and is in grade 2. It is common ground that the Husband does not pay child support but pays all of the very substantial school fees for X, which I am satisfied are in the order of up to $39,000 per annum or $750 per week.
What the parties seek
The matter came before me on 20 May 2024, and the Wife sought (as detailed in her outline of case):
1.The husband pay to the wife the sum of $2000 per week (or such other sum as the court may order) by way of spousal maintenance.
2.The payments in paragraph 1 be backdated to the date of the application and continue at the rate of $2,000 per week.
3.That the payments in paragraph 2 above be made to an account to be nominated by the wife by the conclusion of the hearing on 20 May 2024.
The Wife’s case was that her expenses for herself and X in terms of discretional expenditure were in the order of $1884 per week, being $1157 for herself, and $727 for X. In addition, the Wife deposed to having fixed expenses in the order of $73 for car insurance, and $16 for car registration. I do not propose to include her credit card payments as a separate expense, as I infer that that is the manner in which she pays the expenses that are otherwise listed in her part N summary of expenditure.
The Husband, in early affidavits, was very critical of the Wife’s expenditure during the relationship. On his case, she was a spendthrift. Nonetheless, in the case before me, the Wife's actual expenses for herself and/or for the child were not questioned.
Relevant law
I now turn to the legal principles in determining this interim case. The starting point is section 72 of the Family Law Act 1975 (Cth) (‘the Act’), which provides as follows:
Section 72 Right of spouse to maintenance
(1)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).
…
(emphasis added)
The powers of the Court in regard to spousal maintenance were not questioned, and hence it is unnecessary to recite section 74 of the Act. Section 75 provides a shopping list of extensive matters to be taken into account, which are as follows:
Section 75Matters to be taken into consideration in relation to spousal maintenance
(1)In exercising jurisdiction under section 74, the court shall take into account only the matters referred to in subsection (2).
(2) The matters to be so taken into account are:
(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)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
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; 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
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; 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
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); 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; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
…
I will turn now to some of the authorities that assist determine this matter, and I am assisted by the helpful summary of the well-known decision in the case of Mitchell (1995) 19 Fam LR 44: From the headnote:
(v)The question of whether the applicant for spousal maintenance could support herself adequately was to be determined having regard to the matters referred to in s 75(2). There is no fixed or absolute standard to be applied. Nor was the question to be determined upon a “subsistence” level. The property order in favour of the wife was relatively modest and should not disentitle her to spousal maintenance…
In Badir & Badir (2022) 65 Fam LR 166 McClelland DCJ observed as follows at paragraph 20:
The appropriate process to follow in considering an application for spousal maintenance is the four-step process as set out in Saxena & Saxena (2006) FLC 93-268; [2006] FamCA 588 per Coleman J:
(1)To what extent can the applicant support him/herself?
(2)What are the applicant’s reasonable needs?
(3)What capacity does the respondent have to meet an order?
(4)If steps 1-3 favour the applicant, what order is reasonable having regard to s 75(2)?
I am satisfied that that is an appropriate methodology to follow, and I will attempt to follow it.
In this case, there is a real issue as to what the Husband's income, financial resources, assets, and extent of debts serviced actually is. However, I am satisfied that the observations at [29] of Badir applying the settled authority of Maroney & Maroney FamCAFC 45 as follows:
In Maroney and Maroney [2009] FamCAFC 45 at [56], the Full Court confirmed that, in determining the “capacity” of a party to satisfy an order for interim spousal maintenance, the Court is not confined to considering only that party’s income, but rather:
Once a party…establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse’s reasonable needs, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or borrowings against capital assets.
(emphasis added)
In Maroney & Maroney, the Full Court confirmed that in determining the capacity of a party to satisfy an order for interim spousal maintenance, the Court is not confined to considering only that party's income. Rather, once a party establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse's reasonable needs, an order may be made notwithstanding the liable spouse could not satisfy the order from income without resource to capital or borrowings against capital assets.
I acknowledge the authority in regard to the matter of Hopkins & Elliott [2023] FedCFamC1F 167, where Austin J observed on a review of spousal maintenance that the respondent husband in that case did not have the capacity to pay spousal maintenance because that capacity was exhausted in servicing debt. In that case, the wife received workers compensation payments, had no dependents, and the Court determined that she could likely subsist until the property settlement dispute was resolved. I am satisfied that the circumstances of this case do not fit with, nor should they be guided by the observations made in that case. I refer to Hopkins & Elliott because the husband's obligation, or at least intention, to service very substantial mortgage debt is a significant part of why he says he cannot pay spousal maintenance, and doesn't have the capacity to do so.
The material the parties relied upon
Despite the extensive list of documents in the outline of case, ultimately the Husband relied upon his most recent affidavit, and recent financial statement. The Wife relied upon a swag of affidavits, and ultimately there was complaint, but no objection or submission that she should not be permitted to rely upon them. The principal affidavit was filed 1 March 2024. Thereafter, to clarify a matter that had arisen in regard to the estate of her late father, the Wife filed a further very short affidavit on 5 March. The Wife filed a further affidavit on 15 May 2024 that dealt with the correction of what she said were some errors in her financial material.
The primary affidavit that the Husband relied upon was his affidavit of 28 February 2024. Helpfully, that affidavit went into very considerable detail in a very careful response to the allegations that the Wife had made in her first affidavit filed 2 August 2023. The substance of that affidavit was almost identical to the affidavit of August 2023, and hence those parts of the early affidavit that the Husband carefully admitted or denied are of significant assistance to me.
The Husband’s case
The gist of the Husband's case was threefold. His case was that:
(1)the Wife can support herself;
(2)the Wife has not made sufficient effort to support herself; and
(3)in any event, he does not have the capacity from income to support any further obligations.
I do not regard the Husband as ungenerous to the family of the Wife and the child. Without order, he pays the child's school fees, by agreement, at the relatively expensive private school that the child attends and has attended all his school life. He is currently in grade 2. The Husband and the Wife have many disagreements about a whole range of matters, but one thing they agree upon, and work reasonably co-operatively towards is the importance of that particular school education for their particular child.
The Wife’s case
The child has special needs and has had a diagnosis of autism spectrum disorder. However, the extent to which that impacts upon the Wife's ability to earn income is, I infer, in dispute. The Wife's case is that by reason of having the care and control of the child, as well as her limited opportunity for employment following that, she is unable to adequately support herself.
The Wife sets out the expenses which I have referred to above. I make some adjustments to the otherwise unchallenged expenses of the Wife. The Wife owns a modest rental property that she opines would have a value of some $500,000, and the Husband opines would have a value of some $575,000. It is not disputed that for a time the property was on the market and did not sell. I am not informed of what the marketed price was. It is undisputed that the property was on the market, did not sell, and then following that, rather than have the place empty with a significant mortgage debt on it, the Wife rented that property out. The effect of the Wife renting that property out is that (at least as interests rates were at the time of her March 2024 financial statement) the rent almost covered the mortgage debt (and interest) secured upon the property.
Having read the Wife's affidavits, and considered those parts challenged – albeit there was a limited opportunity for cross-examination (and further matters may well be challenged at final hearing), I am satisfied at the moment that there is a degree of naivety about what the Wife sees as necessary to financially support herself, and her own assets and liabilities, notwithstanding that she has a relevant degree.
One matter is sufficiently common ground that it stands out. It is common ground that it is important the child attend that particular private school. Further the Wife asserts that the child suffers autism spectrum disorder. The Wife's case is that the circumstances of the distance where she lives from school, the need to be available to drop off and collect the child from school, and then take him to and from his many activities each evening mean that she only has the time when the child is with the Husband to be available to work. The Wife has previously worked as a hospitality worker, but was unable to maintain that employment. She gave oral evidence as follows:
THE WIFE:I had a job. And it was working really hard for me. And I am always late for pick up, and [X] – it take me six months to tell him why I am two minutes late for pick up, because my work delay, traffic is bad, because he wouldn’t understand. And give him a really hard. Give me a very hard time. And we were both very struggling, mentally, just because I can’t make it on time. I – but – meantime, I was still working. And then I just stopped working because it is impossible. It’s too far away. We moved too far away. And – yes.[2]
…
HIS HONOUR: You told me that you were working somewhere, and it got too busy and you stopped?---Yes.
Where were you working?---I was working in [Suburb M].
Okay. I think I’ve read about that. [Hospitality], yes?---[Hospitality]. Yes. [3]
Yes. And what were you paid?---I was paying – I think, $25 per hour, very casually. I have to leave early before school finish.
[2] Transcript page 23.
[3] Transcript page 38.
I accept that evidence for the purposes of this interim hearing. The circumstances where the Wife works part time in very modestly paid casual employment is a matter that I take into account as to whether or not she is making sufficient effort to support herself.
Wife renounces estate
The circumstance that the Wife issued proceedings on 2 August 2023, but in mid-2023 signed documents whereby she renounced any potential inheritance from her late father's estate unsurprisingly caught the attention of the Husband's counsel. That matter was explored in cross-examination, however that matter must be considered against the further evidence.
The parts of the Wife's affidavit of 2 August 2023 to which, in his affidavit of 28 February 2024, the Husband has agreed or not taken issue are as follows:
12. When we commenced our relationship in 2015 I lived in my mother's house at [1 D Street, Suburb C]. The Husband at that time and I did not live together full time, he lived with his brother in [Suburb G] and visited me.
13. Prior to [X] being born in 2016 the Husband and I did not live together on a full-time basis as I have deposed earlier, the Husband lived in [Suburb G] and visited me.
14. Once I fell pregnant with [X] in 2015 the Husband commenced to spend more time with me at [1 D Street].
15. When [X] was born in 2016, the Husband and I commenced living together at my [Suburb N] apartment. We lived there for about 6 months.
16. The [Suburb N property] was too small for the three of us. At the time, the Husband was running a [business] in [Suburb O]. We moved to a [house] in [Suburb P] area in approximately [mid] 2016 and the Husband stopped running the [business] and rented an office in [Suburb P]. I don't exactly know what work the Husband was doing at his office, I did visit the office and noticed he had a desk and a computer and it was just himself there.
17. We married [in] 2016. After about a year in the [Suburb P property], we moved out and rented another [home] in [Suburb P]. The Husband paid the rent and all the bills.
18. [In early] 2019, we moved to [B Street, Suburb C], a property owned by [H] Pty Ltd, as company owned and controlled by the Husband as trustee of a family discretionary trust as I depose later in this affidavit.
19. We separated on 1 February 2019 and we continued living under the same roof at this house. Even though we had separated I did not move out. In the following month, [X] was diagnosed with autism spectrum disorder and I felt it was better not to move out and to support [X] as much as possible by not making any living changes.
…
26. I discussed matters with my father while I was in [Country L], he knew we had separated, the Husband had already told him and I asked my father for money so [X] and I could move out into our own place.
27. My father gave me AUD$100,000.00, the money was transferred to my CBA account #[...84] in two batches in [early] 2022 and as soon as I came back, I started organising to move out.
…
32. [X] lives with me and usually spends time with the Husband on a weekly basis, from Saturday afternoon to after dinner on a Sunday. We don't have fixed times, the Husband usually commences his time with [X] after his work commitments end on a Saturday until the evening of the following day.
…
34. At the time of separation, I was engaged in casual work, as [a customer service officer] and as a casual [hospitality worker]. I am currently employed as a casual employee working on Sundays at a [hospitality venue] in [Suburb Q], I usually work 5-7 hours.
…
38. I was born in [Country L] and arrived in Melbourne with my parents and brother in 2010, when I was aged 24 in order for me to study. My parents stayed in Australia for about close to 2 years and my brother went back to [Country L] and then visited from time to time. I studied at University between the years 2010-2013 and 2018. I graduated with [professional qualifications] after [X] was born, in 2018. The reason I studied this course was to work with in my father's business which never eventuated.
39. My parents returned to [Country L] in early 2013. My mother fell seriously ill and passed away in 2014 in [Country L]. My father passed away in [Country L] [in] 2023 after a lengthy illness. He had suffered from [a medical condition] and died of this […]. I have no other family in Australia. I consider Australia as my permanent home.
40.I have three adult siblings, two of which live in [Country L] and one in the United States.
41. During our relationship, and after [X] was born, I looked after [X] dob […] 2016 and I earned little by way of casual work. The Husband paid all of the bills and would give me some living money on an irregular basis.
42. We regularly shopped [for groceries] and the Husband paid for those purchases. My late father gave me money from time to time for living expenses but that stopped when he died.
…
80. My parents purchased a residential property at [1 D Street, Suburb C] in early 2012 for us to live in. The property was registered in my mother's name [Ms R]. My parents and myself lived in this property. My mother became seriously ill and my parents returned to [Country L] in early 2013. I continued living in that house on my own. After I purchased my [Suburb N] apartment, I went backwards and forwards from time to time between the two properties.
81. My mother died in 2014 in [Country L]. From that time on, my father often travelled to Australia and visited me and he stayed at [1 D Street].
82. From approximately 2019 this property has been rented out. For approximately 18 months from that date the tenants paid the rent to the Husband and later the husband transferred money to our joint CBA account #[...22], which I used for living expenses.
…
84. Recently I became aware that the State Revenue Office, Victoria issued a Complaint in [early] 2023 for unpaid land tax for this property for the 2019‑2022 years totalling $215,820.00. The STO has also advised that earlier this year judgment was entered against my mother on the Complaint. It remains unpaid.
Does the Hall & Hall inference apply?
The gist of the Wife's case was that she will not be able to obtain assets from her father's estate in Country L. Exactly what the Wife's position is in regard to the property that she currently resides in, which remains registered in the name of her deceased mother, is unclear. Although in the Wife's opinion, her father became entitled to her mother's assets upon her mother's passing, and the Wife asserts that upon her father's passing he left no will. The Husband disputes that, however, and there are other passages of the Husband's evidence which assist me in determining whether or not inferences should be drawn, as were drawn in the matter of Hall v Hall (2016) 257 CLR 490 (‘Hall & Hall’) in the High Court.
Hall & Hall was unusually an interim maintenance case that made its way to the High Court of Australia. The trial judge had ordered the husband to pay maintenance to the wife who worked in a professional capacity, but part time because of the obligation to care for primary age school children. In that case, it was asserted that the obligation rested on the wife to get in all the available assets and income that she could. That was a controversial proposition with the matter being dealt with on an interim basis, however in that case, the terms of the wife's deceased father's will were known, and the late father’s estate was of not insubstantial wealth.
In that case, the High Court approved the Full Court of the Family Court of Australia drawing inferences from the available evidence. In the circumstances where the wife was on good terms with the executors of her late father’s will, and had been on good terms with her father, and the executors of the will had provided generously to her in terms of motor cars, the Full Court drew the inference that if the wife asked for it, she would likely obtain the income that had been referred to in her late father's will and hence did not need spousal maintenance. In this case, I don't have a will, though there is a controversy about it.
The Husband's case – certainly as to the property aspect – is that there are assets that the Wife would be entitled to in Country L were she to chase them up. The difficulty with applying that concept to remove the Wife's need for spousal maintenance is twofold. Firstly, the Wife asserts that there is nothing available to her, and that has not, at this interim hearing, been demonstrated to be incorrect.
Further, the gist of part of the Husband's affidavit demonstrates that when it comes to financial matters, on the Husband's case, the Wife and her siblings, and her late father (when he was alive) were not on good terms:
62. During the relationship [Ms Sarban] spent hundreds of thousands of dollars on luxury items, including designer handbags, clothing and shoes and jewellery and watches. I recall [Ms Sarban] once spent approximately $4,000 on a pair of shoes and then gave them away after only wearing them a few times. This was a nom1al occurrence for [Ms Sarban] and something she did often. [Ms Sarban] has not made any disclosure as to her wardrobe and the same will need to be valued.
63. During the relationship [Ms Sarban] had conflict with her Father, [Mr K] brothers and myself in relation to financial matters. [Ms Sarban] demanded that we support her and her lifestyle and refused to cut back on her spending regardless of the concerns raised by myself and her family. [Ms Sarban]’s spending was in excess of $10,000 per week. [Ms Sarban] would spend the money on fine dining and luxury items. Prior to her father’s passing, [Ms Sarban] was removed from her father's funding, and he told me this was a result of her wasteful and excessive spending habits. Thereafter she made greater demands on me for money which was a major source of the marriage breakdown. [Ms Sarban] even travelled to [Country L] following separation to attempt to obtain money from family.
64. [Mr K], funded most of the deposit for purchasing the four properties (being [2 D Street], [E Street], [B Street] and [3 D Street]) and I obtained the mortgages for the balance of the purchases. [Mr K] expressed to me that he wanted to help us buy the properties so that our family would have assets in Australia. Further, he did not want to give us cash because the Applicant has spending issues, especially on luxury items.
65. [Mr K] and I paid the mortgage repayments, rates, and other costs together until the end of 2017. I understand that [Mr K] stopped contributing as he was suffering from memory loss and mental health issues. I did not raise this with him from a place of respect and not wanting to insult time. I began to carry the financial load alone which has led to the current predicament where I cannot afford to sustain all of the mortgages.
Hence, there is no material from which I can draw an inference that the Wife has not chased up assets available to her.
Wife has come to live in
In this case, since January of this year, the Wife has resided in the property that is still registered in the name of her mother, and for which she says legal title has passed to her father. It is a substantial property. For the time being at least, it is able to provide appropriate accommodation to the Wife and the parties' son, however the Wife makes no payment in regard to the mortgage debt that is said to be secured over it. She does not seek maintenance so that she can pay that debt at least at this time. I am satisfied that the Wife is not herself clear as to what her legal entitlement would be, however on this interim application, I am satisfied that the Wife is not able in the immediate future to sell that property so as to turn the equity in it into funds available for her support. At final hearing, if the Wife is entitled to the equity in that property, and that equity is able to be ascertained, that would be a significant matter to be taken into account in regard to her application for property settlement and/or maintenance.
Parties assets in chaos
As can be ascertained from the parts of the Wife's affidavit that the Husband agrees with, the financial circumstances of the Husband and Wife are in some chaos. The Husband has helpfully put forward the following table of assets and liabilities:[4]
[4] At page 3 of the Husband’s outline of case filed 13 May 2024.
Property interests, superannuation and financial resources Description Ownership Applicant’s value Respondent’s value ASSETS 1 S STREET, SUBURB N VIC WIFE $570,000 $570,000 2 1 F STREET, SUBURB G VIC J PTY LTD $1,400,000 $1,400,000 3 2 F STREET, SUBURB G VIC HUSBAND $1,450,000 $1,450,000 4 2 D STREET, SUBURB C VIC H PTY LTD $3,500,000 $3,500,000 5 E STREET, SUBURB C VIC H PTY LTD $2,300,000 $2,300,000 6 1 D STREET, SUBURB C VIC E$2,500,000 unencumbered 7 The Respondent’s 2% interest in the property City T, Country L The Respondent’s parents own 98% of this property and the Respondent owns 2% of this property E$30,000 8 U BANK ACCOUNT HUSBAND ENegligible 9 MOTOR VEHICLE 1 HUSBAND E$30,000 10 CBA ACCOUNT ENDING …40 WIFE E$9,888 E$9,888 11 CBA ACCOUNT ENDING …84 WIFE E$1,164 E$1,164 12 MOTOR VEHICLE 2 WIFE E$47,000 E$85,000 13 HOUSEHOLD CONTENTS WIFE E$3,000 E$3,000 14 PERSONAL CHATTELS AND JEWELLERY WIFE E$12,000 E$ currently unknown – no less than $60,000 15 COUNTRY L BANK ACCOUNT ENDING …68 WIFE E$12,000 E$12,000 ASSETS SUBTOTAL E$11,951,052 LIABILITIES 16 ANZ, NAB AND V BANK E$5,100,000 17 CBA Mortgage WIFE E$427,616 E$427,616 18 TOTAL INCOME TAX ASSESSED AND UNPAID UP TO THE LAST FINANCIAL YEAR E$450,000 19 LIQUIDATOR FEES E$355,000 20 LAND TAX AND VACANCY TAX OUTSTANDING E$70,000 21 LOAN FROM MR W E$900,000 22 LOAN FROM MS Z E$200,000 23 VISA CREDIT CARD HUSBAND E$3,000 24 PERSONAL LOAN MR Y HUSBAND E$50,000 25 PERSONAL LOAN MR AA E$50,000 26 PERSONAL LOAN FROM MR BB HUSBAND E$50,000 27 PERSONAL LOAN WIFE E$147,693 E$147,693 28 PERSONAL LOAN MS CC WIFE E$6,000 E$6,000 29 PERSONAL LOAN MR DD WIFE E$20,000 E$20,000 30 PERSONAL LOAN MR EE WIFE E$20,000 E$20,000 31 CBA MASTERCARD WIFE E$1,494 E$1,494 Liabilities subtotal E$8,100,803 SUPERANNUATION Name of Fund Type of Interest Member Applicant’s value Respondent’s value 32 SUPER FUND 1 HUSBAND E$75,145 33 SUPER FUND 2 WIFE E$3,433 E$3,746 Superannuation subtotal $78,891 TOTAL (assets – liabilities) E$4,650,249 TOTAL (assets – liabilities + superannuation) E$4,729,410 FINANCIAL RESOURCES 34 The Wife may be entitled to an inheritance from her late father’s estate. Not yet disclosed E$unknown Financial resources subtotal E$unknown TOTAL (assets – liabilities + superannuation + financial resources + other) E$4,729,140
On the face of that outline of assets, the Husband asserts, including all liabilities that he alleges, which are not necessarily accepted by the Wife, that the parties have in assets and liabilities, including about only $79,000 of superannuation, total assets and liabilities of $4,729,000, and without superannuation, assets of $4,650,000. However, there is some arithmetic error in that document. The assets that the husband refers to total $11,951,052, and the liabilities, he asserts, total $8,100,803, which would provide equity or a remainder of only $3,850,249.
Properties in chaos
Two of the key asset-holding entities are in chaos. The property known as 1 F Street is owned by a company called J Pty Ltd, and the Husband was the sole director and shareholder of that company. That company was de-registered in mid-2023. The properties known as 2 D Street, Suburb C, and E Street, Suburb C are registered in the name of H Pty Ltd. As can be seen from the parts of the evidence that is not disputed, H Pty Ltd is currently in liquidation. Exhibit H6 tendered on 20 May 2024 shows that one of the properties, B Street previously owned by that entity was sold in early 2024, and at one point the liquidator held the sum of $225,009 against the various liabilities.
Nonetheless, it is clear on anyone's account that there is a substantial bundle of properties that are very valuable, albeit they are encumbered by significant debt. I am satisfied that if all of the liabilities relating to all of the properties were regularly paid as they should be, or all of the Husband's available income was applied to those properties, that there would be nothing left. It is simply not clear to me what and when liabilities relating to those properties are paid.
The Husband’s finances
It is the Husband's case that he has borrowed substantial funds. The Wife accepts that he has received substantial funds but is not satisfied that they are genuine borrowings. The Wife's case includes the allegations that the Husband has lied in his affidavit material and lied in his evidence in cross-examination about his assets, liabilities, loans, and income.
I am not prepared at this interim hearing to find that the Husband has lied about his affairs, however for the purpose of this interim hearing, I do not accept all of the Husband's evidence. I accept that the Husband is employed as a sales representative, and I refer to the table of what his gross income, tax liable on that income, losses in regard to rental property, and net income with and without the rental property was over the 2021, 2022, and 2023 years as detailed in the bundle of tax returns tendered and exhibited as H1 in these proceedings.[5]
[5] The table is my extraction of the income information described in H1.
Financial Year Ending Rental income/loss deducted Taxable income Assessed tax payable Income net of tax 2021 (5,575) 119,471 (37,352) $82,119 2022 (3,135) 227,021 (78,261) $148,760 2023 (28,178) $71,956 (15,494) $56,462
The Husband's income according to his tax returns tendered in the bundle of documents H1 before me indicate that the Husband had a substantial income in 2022 financial year-end, but less in financial year-end 2023. The significant document is the FF Company[6] payslip that records his income until 31 March 2024. That shows that the Husband received total funds of $161,000, and had tax deducted of a further $57,000. Some of those payments to a modest degree were allowance for mobile phone, and allowance for motor vehicle. I do not propose to treat those amounts as income to the Husband, as he would actually have those expenses.
[6] Where the husband works as a sales representative.
Without taking those into account, to the end of March, the Husband had earned in his occupation as a sales representative, according to the FF Company records, the sum of $156,441, and had deducted taxation of $57,040, leaving net of tax and identified expenses at $99,401, which is the equivalent of $11,044 per month, or pro rata $132,500 per annum rounded. It did not appear controversial that the Husband had an obligation to pay the school fees in the sum of either $577 as recited at part N of his financial statement, or $750 as asserted at part G of his financial statement. I will take into account the higher figure as it accords with common experience that expensive private school fees are usually higher rather than lower. Hence, from that available income, the Husband has pro rata private school fees that he pays in the sum of roughly $39,000 per annum, leaving, before other personal expenses of his, or payment of any mortgages, the sum of $93,534 per annum pro rata, or just on $1800 per week.
The Husband’s disclosure
The Husband has been able to borrow substantial sums in recent times. He has borrowed in connection to a company known as GG Company two $100,000 sums. It is part of the Wife's case that the Husband has not provided full and frank disclosure of his financial circumstances, and that he has done that deceitfully. I am not satisfied at this point that the Husband has failed to provide documents deceitfully. It may be that he is simply in a muddle both in terms of paperwork, reconciliation of income against expenses, filing of tax returns, and a proper understanding of his own position. The Husband has only recently prepared and filed his taxation return for his personal income for the year ending 2021, 2022, and 2023.
It is common ground that the Husband has not provided the documents relating to the H Pty Ltd documents, or of financial affairs. H Pty Ltd is a company whereby the Husband was the sole director and sole shareholder and was the trustee of a trust of which the Husband was the beneficiary. It is quite clear that, sensibly and without deceit, the Husband concedes that the bundle of entities for which H Pty Ltd is trustee, and the family trust of which that company is the trustee are effectively his alter ego. This is the company that has been put into liquidation in circumstances where land tax was not paid. In addition, substantial rates are outstanding. It is the Husband's position that after the death of the Wife's father who had been financially assisting the family of he and the Wife, he was simply unable to continue to support those companies from his own financial resources. That may be so.
Responsibility for chaos
On this interim hearing, I do not make any findings about who bears responsibility for the chaos of the financial circumstances of the Husband and Wife. On the Husband's and the Wife's account, there may well be good reason why the equity in the 1 D Street property – being the property where the Wife currently resides, and is still registered in her deceased mother's name, and is alleged on the Husband's account to be worth $2,500,000 – has not been converted to assets or liquid assets that would support the Wife.
When the Husband's statement of assets and liabilities contained in his outline of case is corrected, the figure of assets and liabilities in total is $3,850,000. If it is correct, and I am not convinced of the same at this point, then the Wife effectively does not, and will not, end up with the property at 1 D Street as the Husband asserts she will[7], that would leave, on the Husband's account, assets and liabilities of about $1,350,000.
[7] The Husband asserts that 1 D Street has a value of $2,500,000 and is unencumbered
Non disclosure
I am satisfied, from the manner in which the loan agreement was produced during the Husband's cross-examination (that was undertaken, on its face, in December 2023), that the document had not previously been disclosed. The Wife's solicitors had been nagging and protesting about the failure of the Husband to disclose all relevant documents to his financial affairs for months, yet somehow, that important document available since last December, and available to the Husband on his phone where he was able during cross-examination to send it to all the lawyers concerned, was not provided.
“Country L” property
Another curious aspect to the Husband's evidence relates to the application in late 2015 that he made for finance. He made the application to the National Australia Bank. That application at that time refers to the known property at 2 F Street[8] then said to have a value of $1.2 million, and also refers to accounts in credit, being the U Bank, in the sum of $461,000, and with the Commonwealth Bank of Australia of $212,000.
[8] Item 3 of the Husband’s list of assets and liabilities
In addition to those listed assets, there is the opaque reference to a property with the address of, in handwriting, “Country L”, but asserted to have a value of $3 million. When asked about what he had asserted in that document way back in late 2015, the Husband took privilege, and obtained a section 128 certificate against self-incrimination. He then gave the following evidence before me under cross-examination from counsel for the Wife:[9]
[9] At page 56 of the transcript.
DR INGLEBY: Thank you. You told NAB that you owned a property in [Country L] worth $3 million, didn’t you?---I didn’t.
Sorry?---I didn’t. It was the broker who prepared the whole document. A broker prepared the whole document, so he prepared .....
HIS HONOUR: No, that’s – he’s answered the question.
DR INGLEBY: Okay.
HIS HONOUR: He says, I didn’t, it was the broker who prepared it.
DR INGLEBY: And the broker prepared the document on your instructions?---No.
…
The gist of that evidence was that there was no such property, but that the broker had falsely completed the document on his behalf to enable him to obtain a loan, and he had simply adopted someone else's error or dishonesty. One difficulty with that account is that unsurprisingly the Wife's solicitors had already asked questions of the Husband's solicitors in regard to that very property. The property is known as the ‘City T property’ in Country L, and by letter of 21 February 2024[10], the Husband's account was that his parents had transferred 2 per cent of the property to him so that he could assist with managing the property in Country L. It was said that this was a nominal percentile, as it was not supposed to signify an interest in the property. The letter went on to say that the Husband's understanding was that the property was valued at $1.5 million, and that there was a signed agreement between his parents, and that he would provide a copy of that once he received a copy. The copy of the agreement is not in evidence.
[10] From the Husbands then solicitors
The reference in the NAB document is under the heading of “Home/Investment Properties”. In the letter to the Husband's solicitors, that was described as “principle home” referred to in his NAB home loan application dated late 2015 with a value of $3 million. That letter went on to state as follows.
Our client believes this may be a reference to [the City T property, Country L].[11]
[11] That being the property referred to where, on one account, the Husband holds two per cent for the purpose of managing the property of his parents.
The account in the Husband’s solicitor’s letter of 21 February 2024 does not sit at all comfortably with the Husband's evidence given in cross-examination about the property. I was urged to find that the Husband had been dishonest with the Wife and with the court, and I repeat that I am not prepared to make that finding on the evidence I have. Nonetheless, it is an aspect of the Husband's evidence that is simply opaque and that I do not understand.
The Husband’s income
I also refer to the table set out above of the Husband's nett and gross income and taxation paid that I have sourced from his recently completed taxation returns. When cross-examined about his actual income recorded in his payslip, the Husband asserted that that was not his income at all, and gave the following evidence:[12]
[12] At page 48-49 of the transcript.
HIS HONOUR: Nine months’ worth. Yes, Dr Ingleby.
DR INGLEBY: So in three quarters of the year, you earned 161-odd thousand dollars. Correct?---No. I can explain this if you want.
Sorry?---I can explain this.
No, no. I’m not asking you to explain anything?---I don’t have the money – the full amount of money. Or can explain if you want, because my job asked me to pay lot of money on behalf of the client. So we deduct money from our income. I can prove my evidence if you want. Wait pay for some of the client’s money which is enormous – could be 3000 each, could be 5000 each. So I don’t have the full – even lost last payment.
HIS HONOUR: I will just stop you there?---Sorry.
Because I’m just trying to understand what you’re saying?---Yes.
You say you didn’t earn $161,000?---That was my entire commission.
Your entire commission?---Was my entire commission.
And you then went on to say from that you pay a lot - - -?---A lot of money to – on behalf of my client. We pay for their marketing. We pay for their maintenance to get the business.
Yes, okay?---It’s a very competitive business. So I don’t – I’m entitled to those commissions, but I don’t get the full amount. If you want I can provide evidence.
The circumstances where the Husband had recently not recorded any such deductions against his income in regard to the marketing or any other expense to which he referred, save for deductions of $300, was drawn to his attention. In this case, I am persuaded that the usual principle of human nature of, “always back self-interest, at least you know it is trying”,[13] informs me in this case.
[13] Quote originating from former Prime Minister, Mr Keating.
I am unable to ascertain any reason or explanation as to why, if the Husband had paid such marketing expenses, they were not recorded in tax returns previously or in any other document that the Husband was able to produce for the current year. It may be that there is some ambiguity that the Husband's evidence as to the expenses paid only related to his current employment and not his past employment. However, no document recordings any such expense had been provided to the Wife, and the documents that the Wife has in regard to the Husband's payslip do not record any such expense. I am unable to find any plausible explanation for why there would not be a document recording such expense if it was actually paid by the Husband.
GG Company
The evidence in regard to the Husband's loan from GG Company is also opaque. Until very recently, the Husband was the sole director and shareholder of that company. He had sworn an earlier financial statement in 2023 whilst he was still a director and shareholder and had not made any reference to the company. Subsequently, he resigned or was removed as a director and shareholder. I do not have available to me any satisfactory explanation.
Husband’s financial circumstances are opaque
Taking all those matters together, the Husband's financial circumstances are opaque. I do take into account that an unconvincing denial of having other income, assets, or financial resources is not evidence that he actually does have other assets, income, and financial resources. However an unconvincing denial does mean that other evidence pointing to other income, financial resources would carry more weight. In this case, I am satisfied that the Husband has been able to organise very substantial loans in recent times when required.
It may well be that the Husband is under financial stress, however I am satisfied at this point in time that the Wife is unable to support herself adequately. It may well be that the Husband will need to borrow at least in part to fund the spousal maintenance obligation that I am going to impose upon him.
No child support assessment
I impose that obligation on the basis that the entire circumstances of the Wife's household, including the expenses of the parties' child, have been taken into account. I also take into account that there is no current child support assessment. If there was to be one, it is not my intention that the Husband would pay child support as assessed on his taxable income in addition to the spousal maintenance that I am going to set, and in addition to the very substantial school fees that he pays.
Reasonable needs
I turn now to the Wife's reasonable needs. The Wife's unquestioned expenditure was in the sum of $884 per week on discretionary expenditure, and another $89 in regard to motor car fixed expenses. Further, I do not take into account the $120 per week budgeted or claimed for holiday expenses on this interim hearing. In the circumstances of the uncertainty of the parties' financial circumstances, I am not satisfied that an appropriate and proper expense to take into account on this interim spousal maintenance application, future expenditure on holidays of $120 per week as the Wife claims. That would leave $1562 of her part N expenditure plus another $89 of her expenses (not including as an expense her credit card payment) the sum of $1651 per week. I am satisfied that the Wife earns about $300 per week, which would mean in her current circumstances of not actually paying for her accommodation, her reasonable needs are in the order of $1350.
The circumstance that I place some weight on is the part of the Wife's earlier affidavit, not disputed, which showed that for a time over about six months, the Husband made irregular payments to the Wife in addition to paying the school fees that total, when averaged, about $1400 per week.
59.During our relationship, and after [X] was born, I looked after [X] dob […] 2016 and I earned little by little by way of casual work. The Husband paid all of the bills and would give me some living money on an irregular basis.
60.We regularly shopped [for groceries] and the Husband paid for those purchases. My late father game me money from time to time for living expenses but that stopped when he died.
I do not find that the Husband is able to continue to pay or borrow to fund, that amount ongoing. I do place significant weight on the circumstance that the Husband's own discretionary expenditure is, on his account, (when school fees are omitted from that) in the order of $775 per week. The Wife's expenditure on those discretionary expenses is substantially more, and I take into account that she supports herself and the child. Nonetheless, I am not satisfied that the Wife's expenditure is unreasonable.
Decision
However, I am satisfied, when comparing the Husband's day-to-day living expenses and the Wife's, that the Wife would be able to make some economies. Whether those economies are made in regard to some of the child's many extracurricular activities or the Wife's own expenses, I am unable to say. However, some economy will be needed. It is in those circumstances that I am satisfied that a proper spousal maintenance amount, taking into account all of the evidence, including the opaque parts and the unreliability of some of the evidence of the Husband's financial affairs, that a periodic spousal maintenance order in the sum of $1000 is appropriate. I do not propose that that order be backdated to the date of the application. That will create an immediate substantial sum of arrears and, on the evidence I have, I am not satisfied that the Husband will have the funds available to pay it, without further borrowing.
I am satisfied that the spousal maintenance clock or obligation to pay should commence from next Wednesday, 10 July 2024. The order will be commencing with first payment on Wednesday, 10 July 2024, and then weekly thereafter, by direct payment to such bank account of the Wife as she nominates in writing by text message or email to the Husband, the Husband pays spousal maintenance in the sum of $1000 each week to the Wife. The Wife's application seeking interim spousal maintenance is otherwise dismissed.
Those are my reasons, and I am grateful to the parties for their patience in listening to the oral reasons recited this afternoon. I have delivered oral reasons rather than a written judgment, as I was concerned at the delay in deciding the matter and, were I to provide a written judgment in the usual form, further delay would be necessitated. Thank you.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 27 August 2024
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