Shamon & Shamon (No 7)
[2023] FedCFamC1F 97
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Shamon & Shamon (No 7) [2023] FedCFamC1F 97
File number(s): SYC 2375 of 2021 Judgment of: CHRISTIE J Date of judgment: 24 February 2023 Catchwords: FAMILY LAW – SPOUSE MAINTENANCE – Where the husband seeks discharge of spouse maintenance orders – Where the evidence does not demonstrate there is a just cause for so doing.
FAMILY LAW – INTERIM PROCEEDINGS – Where the husband seeks that taxes owed by him to the Australian Taxation Office should be paid from controlled monies in the name of the parties - Where the parties disagree about the existence of arrears of school fees and the wife asserts the children’s enrolment in school will not be affected.
FAMILY LAW – PROCEDURE – Where the husband seeks to join the wife’s brother to the proceedings – Where there is no evidence of service of the application on the wife’s brother – application dismissed.
Legislation: Child Support (Registration and Collection) Act 1998 (Cth) s 72A
Family Law Act1975 (Cth) ss 79, 83, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 6.06(5), 12.06
Cases cited: Shamon & Shamon [2021] FamCA 417 Division: Division 1 First Instance Number of paragraphs: 74 Date of hearing: 21 February 2023 Place: Sydney The Applicant: Litigant in Person Solicitor for the Respondent: Mr Jacobs, LawBridge Lawyers & Consultants ORDERS
SYC 2375 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR SHAMON
Applicant
AND: MS SHAMON
Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
23 FEBRUARY 2023
THE COURT ORDERS THAT:
1.The husband’s application in a proceeding filed 23 December 2022 is dismissed.
2.The wife provide the husband with bank statements for the controlled monies account which show the names of the account holders within seven days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 the pseudonym Shamon & Shamon has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an interim application by the husband, Mr Shamon, seeking financial orders.
The respondent to the application is the wife, Ms Shamon.
There are many other parties to the litigation but as the interlocutory relief sought did not concern them, their attendance at this hearing was excused.
There is an existing order for spouse maintenance payable by the husband to the wife which was made in contested proceedings heard by McClelland DCJ on 22 June 2021.
The issues in the case are:
(a)Should the husband be permitted to obtain a partial property settlement to apply to child support arrears?
(b)Should the existing order for spouse maintenance payable by the husband to the wife be discharged?
(c)In the alternative, should the Court order that the husband receive a partial property settlement which he may then apply to spouse maintenance?
(d)Should the husband receive money from the controlled monies account to pay a tax debt and if so, how should that be treated?
(e)Should there be a release of funds from controlled monies to pay school fees and if so, how should those funds be treated?
(f)Should the wife’s brother be joined to the proceedings?
(g)Should the wife be ordered to make disclosure in respect of work undertaken to the D Street, Suburb F, New South Wales (“the Suburb F property”)?
(h)Should the wife be ordered to provide disclosure about monies received from family and applied to legal fees?
BACKGROUND
The parties married in early 2004 and separated on 30 June 2020. They have three children:
(a)X (born 2007) (aged 15);
(b)Y (born 2011) (aged 11); and
(c)Z (born 2018) (aged four).
The children live with their mother.
The relevant history is set out in Shamon & Shamon [2021] FamCA 417.
In early 2022 the parties sold the former matrimonial home and the net sale proceeds of over $550,000 were deposited into the trust account of the wife’s solicitors.
On 13 May 2022 orders were made which provided for the distribution of the proceeds of sale (Order 3) as follows:
(a)$250,000 into a controlled monies account held by the wife’s solicitors in the name of Ms G (the husband’s sister);
(b)$80,000 to the wife for litigation funding;
(c)$3,422.68 to the wife for litigation funding interest;
(d)$15,000 to the wife for legal costs; and
(e)$37,276.57 to the wife as arrears of spouse maintenance.
In mid-2022 the parties applied $22,000 from the controlled monies account to the costs of the single expert Dr RR.
In late 2022 $166,241.90 was placed in a controlled monies account in the name of the wife. In late 2022 the sum of $4,619.90 was paid to property valuers and the sum of $605 remains outstanding. A short time later, in 2022 a further sum of $4,455 was paid to the single expert Dr RR.
Orders for the husband to pay spouse maintenance to the wife were made by the Deputy Chief Justice on 21 June 2021.
Importantly, for this application his Honour McClelland DCJ found at [57] of his reasons for judgment:
It did not appear to be in dispute that the wife has not worked since, at least, the time of [Z’s] birth, who is now aged 2 years. The wife contends that her responsibilities for caring for the children, including [Z] who will not reach school age until 2024, has prevented her from returning to the workforce. I accept that the wife’s parental responsibilities are such that she is unable to return to the paid workforce at this point in time.
Notwithstanding the existence of the orders for spouse maintenance, it would appear, based on the history given by the husband in his affidavit material, he did not pay periodic spouse maintenance and accordingly, arears accrued which were met with the parties’ funds.
It would also appear from the husband’s affidavit material that child support payments which were to be paid by him for the support of his children were unpaid and accordingly, on 13 December 2022, Services Australia (Child Support) requested the outstanding sum of $20,968.75 for unpaid spouse maintenance and child support. That amount accrued in the period 20 May 2022 to 13 December 2022.
On 15 December 2022 Services Australia (Child Support) served a third party notice to pay pursuant to s 72A of the Child Support (Registration and Collection) Act 1998 (Cth) on TT Lawyers, the husband’s then solicitors, seeking payment of $20,968.75.
The husband says that after returning to work in late 2021 his gross weekly income has been in the sum of $615. He says that in those circumstances he has been unable to make payments of spouse maintenance or child support.
The husband does not explain anywhere in his affidavit material how it is that his income has been fixed in the sum of $615 weekly.
THE LAW
There is an existing order for interim spouse maintenance payable by the husband to the wife. A party seeking to vary an existing order for spouse maintenance must satisfy the provisions of s 83 of the Family Law Act1975 (Cth) (“the Act”). Section 83 provides:
(1) If there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of a party to a marriage:
(a) made by the court; or
(b) made by another court and registered in the first‑mentioned court in accordance with the applicable Rules of Court;
the court may, subject to section 111AA:
(c) discharge the order if there is any just cause for so doing;
(d) suspend its operation wholly or in part and either until further order or until a fixed time or the happening of some future event;
(e) revive wholly or in part an order suspended under paragraph (d); or
(f) subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner.
(1A) The court’s jurisdiction under subsection (1) may be exercised:
(a) in any case—in proceedings with respect to the maintenance of a party to the marriage; or
(b) if there is a bankrupt party to the marriage—on the application of the bankruptcy trustee; or
(c) if a party to the marriage is a debtor subject to a personal insolvency agreement—on the application of the trustee of the agreement.
(2) The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:
(a) that, since the order was made or last varied:
(i) the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);
(ii) the circumstances of the person liable to make payments under the order have so changed; or
(iii) in the case of an order that operates in favour of, or is binding on, a legal personal representative—the circumstances of the estate are such;
as to justify its so doing;
(b) that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;
(ba) in a case where the order was made by consent—that the amount ordered to be paid is not proper or adequate;
(c) that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.
(3) Subsection (2) does not prevent the court from making an order varying an order made before the date of commencement of this Act if the first‑mentioned order is made for the purpose of giving effect to this Part.
(4) In satisfying itself for the purposes of paragraph (2)(b), the court shall have regard to any changes that have occurred in the Consumer Price Index published by the Australian Statistician.
(5) The court shall not, in considering the variation of an order, have regard to a change in the cost of living unless at least 12 months have elapsed since the order was made or was last varied having regard to a change in the cost of living.
(5A) In satisfying itself for the purposes of paragraph (2)(ba), the court shall have regard to any payments, and any transfer or settlement of property, previously made by a party to the marriage, or by the bankruptcy trustee of a party to the marriage, to:
(a) the other party; or
(b) any other person for the benefit of the other party.
(6) An order decreasing the amount of a periodic sum payable under an order or discharging an order may be expressed to be retrospective to such date as the court considers appropriate.
(6A) Where, as provided by subsection (6), an order decreasing the amount of a periodic sum payable under an order is expressed to be retrospective to a specified date, any moneys paid under the second‑mentioned order since the specified date, being moneys that would not have been required to be paid under the second‑mentioned order as varied by the first‑mentioned order, may be recovered in a court having jurisdiction under this Act.
(6B) Where, as provided by subsection (6), an order discharging an order is expressed to be retrospective to a specified date, any moneys paid under the second‑mentioned order since the specified date may be recovered in a court having jurisdiction under this Act.
(7) For the purposes of this section, the court shall have regard to the provisions of sections 72 and 75.
(8) The discharge of an order does not affect the recovery of arrears due under the order at the time as at which the discharge takes effect.
A party seeking orders relating to spouse maintenance (or responding to orders concerning spouse maintenance) must file a Financial Statement (and Financial Questionnaire): r 6.06(5) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
The husband is seeking release of the parties’ funds to meet various expenses. They include a tax debt, school fees and child support.
As a general rule the interests of justice are best served by one exercise (rather than multiple exercises) of the s 79 power under the Act. In an appropriate case it is recognised that one or both of the parties may seek an order under s 79 of the Act at an interlocutory stage of proceedings.
A party does not have to demonstrate special circumstances in order to seek an interim order. However, it is necessary to demonstrate that:
(a)Such on order would be just and equitable;
(b)Such an order would not prejudice the relief of another party; and
(c)There are assets available to satisfy the order.
CONSIDERATION
The husband identifies the controlled monies account which contains the remainder of the parties’ funds from the sale of property as the source of funds from which he contends the various amounts should be paid.
The controlled monies account has a balance of approximately $166,242. The husband contends that the remaining assets of value are the Suburb F property worth $450,000 and subject to a mortgage of $65,407 and his superannuation of about $85,000. Accordingly, on the husband’s case the net assets and superannuation available for adjustment as between the husband and wife are about $635,835. This does not include what the husband contends are assets of the wife in Country UU (discussed below) or the husband’s 2021 tax debt.
The wife says the notional assets of the parties would include various other interests transferred by the husband in the period around separation and assets registered in the husband’s name which he contends are held on trust for others, the details of which were the subject of the decision referred to in [8] above. Accordingly, the pool of assets for which the wife will contend at final hearing is significantly larger.
The husband’s affidavit material says that the parties are yet to pay $7,700 due to Mr YY for single expert reports and various other single expert reports such that the figure the husband says will remain in the controlled monies account is about $147,277.66.
The Court made an order on 26 November 2021 as follows:
4. In the event the spousal maintenance payable to the Wife pursuant to the Orders of 22 June 2021 falls into arrears for 14 or more days, the Wife be at liberty to seek payment of those arrears from the controlled monies account …
On 26 November 2021 the husband sought to discharge the orders of McClelland DCJ including the order for spouse maintenance. That application was dismissed.
Accordingly, it may be the whole of any monies due to the wife, by way of spouse maintenance, will need to be sourced from the controlled monies account.
Since this matter will not be heard and determined until next year, the spouse maintenance may exceed $40,000.
Effectively the money available to be paid to either party from this source, pending final hearing, may on this accounting be about $100,000.
The husband was acting for himself on this application. He did not articulate the source of power under which he proposed I order the payments sought in his application. In the circumstances of this case the only source of power appears to be an exercise of s 79. Accordingly, I would have to be satisfied that it was just and equitable to make the orders the husband seeks.
Given these figures I have a genuine concern about making a further interim distribution to the husband in circumstances where so many of the factual controversies in this matter will have to be determined at a final hearing following cross-examination.
I accept the husband’s submission that if the wife is correct about the nature and identity of the assets then the distributions he seeks on an interim basis should not prejudice her final relief. The difficulty with that submission is that the husband will be seeking to persuade the Court at final hearing that the asset pool is extremely modest and, in those circumstances, the interim relief he proposes may prejudice the wife’s final relief. I could not be satisfied the making of the interim order under s 79 of the Act would be just and equitable.
There are slightly different considerations which arise for the different payments and I will deal with each of them in turn.
Tax Debt
The husband had a tax debt for the 2019/20 tax year in the sum of $41,870.30. The parties separated on 30 June 2020 so that debt relates to income earned by the husband in the year prior to separation.
The husband says he was aware of this debt and included it in his Financial Statement filed 12 May 2021.
The husband has requested that the wife consent to him meeting that tax debt from the monies which are in trust. The wife has declined to consent. The husband says he has no funds to make the payment.
The husband has previously asked the Court for an order to release funds to pay this debt. The Court has declined that application. The husband has not appealed.
It is not explained why it is that the husband’s tax debt accrued, although it is plain that it occurred in a period when the parties were still together. The wife would theoretically have had the benefit of the husband’s income during that period and their funds should probably be applied to the tax debt in circumstances where this debt is accruing penalties and interest.
Ordinarily I would be inclined to make an order providing that the husband’s tax debt be paid from the funds of the husband and wife. This is particularly the case since it is accruing penalties and interest. However, there are two factors which mitigate against the making of the order the husband seeks in this case:
(1)The failure on the part of the husband to explain why the significant funds to which he has had access in the relevant period - when the debt was accruing and after he had notice of it - have not been applied to this debt ahead of repayment to family members; and
(2)The need to resolve the significant factual controversies as between the parties relating to the husband’s disposal of assets in the period immediately prior to and following the parties’ separation.
At this stage of the litigation I could not be confident that it is not more appropriate, in the circumstances of this case, that the husband be responsible for the tax debt from his own resources as opposed to making both the husband and the wife meet that debt from the monies in the controlled monies account in their joint names.
School Fees
The parties’ two older children attend School QQ which charges fees. The husband says that the parties had an agreement about the payment of the school fees which included that they would pay half each, provided that he pay spouse maintenance. It is not clear whether or not that is an agreed position, that is, that the parties had such an agreement. I note that payment of spouse maintenance should not be considered a payment for the support of children. Any arrangements in respect of financial support of children need to be made separately from the amount needed to support the adult parties.
If the parties cannot afford to meet the outstanding school fees then the children will not be able to continue attending at the school.
The wife says she has made arrangements with the school in respect of the fees such that further payment is not required to retain the children’s place and she opposes release of funds for that purpose at this stage.
The husband has not taken me to any evidence which demonstrates that there is an outstanding amount due to the school or that the children’s attendance is jeopardised in 2023 and I decline to make an order for release of monies to pay school fees.
The payment of an outstanding invoice may be considered a debt of the parties or either of them but a prospective payment of future lump school fees must be characterised as a child support order. I do not have an application for child support departure before me and none of the requirements for this Court to hear such an application have been met.
Discharge or variation of spouse maintenance order
The husband seeks discharge of the order for spouse maintenance. He bears the onus to demonstrate that there has been a change of circumstances such as would cause the Court to revisit the existing order.
The husband is in the same employment as he was at the time of the original order. The husband cannot argue that his circumstances have changed as a consequence of the making of the orders for sale of the matrimonial home (and consequent discharge of the line of credit) since that change was at the heart of the application which led to the making of the orders of the Senior Judicial Registrar on 26 November 2021 which simultaneously dismissed the husband’s application to discharge the order for spouse maintenance.
The alternate relief sought by the husband (Order 3) is identical in effect to the existing order which allow the wife to meet spouse maintenance arrears from the controlled monies.
It remains the case there are significant factual controversies which will be resolved only by way of final determination and at this stage the husband’s disposition of assets at or around the time of separation requires adequate explanation.
Disclosure
Documents in respect of renovation of Suburb F
The husband says he needs documentation in respect of renovation work undertaken to the Suburb F property for the single expert valuer to complete the valuation. It is not apparent to me how the amount spent on renovations might be relevant to the assessment of the market value of the property.
The valuer will assess the value of the property having regard to what it might achieve in a sale on the open market.
In oral submissions the husband said that the disclosure he sought was relevant to his theory of case – which he explained was that the wife had funded the renovations herself with funds she had received from sale of real estate in Country UU. There is no evidence to support the submission.
The wife has given evidence that the work undertaken to the Suburb F property was undertaken by her relatives who neither charged her for it nor provided her with documentation in relation to it. She does not include any debt to them as a liability.
The husband is of course entitled to test the wife’s evidence but in order to move the Court to make an order requiring the wife to provide documents, the husband requires more than a theory, he requires admissible evidence. It is no answer to say that he lacks the documents because the wife has not provided them. He has failed to satisfy me that there are documents within the possession and control of the wife which are relevant to a fact in issue in the proceedings.
Source of funds for legal fees
Rule 12.06(2) and (6) of the Rules provide:
(2) Not less than 1 day before each court event, the lawyer for a party must give the party a written notice of: (a) the party’s actual costs, both paid and owing, up to and including the event; and
(b) the estimated future costs of the party up to and including each future court event; and
(c) any expenses paid or payable to an expert witness or, if those expenses are not known, an estimate of the expenses.
…
(6) In a financial proceeding, unless the court otherwise orders:
(a) a notice under subrule (2) or a statement under paragraph (3)(b) must specify the source of the funds for the costs paid or to be paid; and
(b) a party who makes a payment to a lawyer for costs or future costs must disclose to the lawyer the source of funds from which the payment is made.
The wife has filed Notices of Costs as required, as has the husband. The wife’s costs notice before me (exhibit 1) reads in part:
Type of cost
Amount
Source
Senior Counsel costs paid to date – Mr VV
$41,306.30 Incl GST
$7,150 from redraw of Mortgage
$2,475 paid by solicitor
Approx $2,000 paid from personal savings.
Balance from Family Members
The husband says that r 12.06 of the Rules requires the wife to name the family member. The wife’s solicitor submitted that the wife had complied with the rule by setting out the various sources of funds. It would appear from the costs notice that about $29,681.30 came from family members.
The husband said that he did not accept that the funds had come from family members and suggested from the bar table that the wife had used funds from the sale of property in Country UU to pay those legal fees which her costs notice stated came from family members.
The husband did not have any evidence to support his submission.
The wife’s costs notice complies with the Rules. It is important to understand the reason why costs notices are required. The usual rule in proceedings under the Act is that each party pays his or her own costs: s 117(1). In a situation where one party applies assets which would otherwise have been available for adjustment between the parties to the payment of their legal fees, this has the capacity to interfere with operation of the usual rule. Accordingly, it is useful to know the source of funds used to pay legal fees.
If the husband had evidence to suggest that the wife’s costs notice was untrue, the position may be different but, in the absence of evidence, he cannot demand that the wife provide information which his evidence does not establish as relevant to the Court’s inquiry.
Accordingly, I decline to make any order as to disclosure of the identity of the family members.
Joinder
The husband seeks to join the wife’s brother, Mr MM, to the proceedings.
Mr MM had not been served with the husband’s application or evidence when the matter came before me for hearing.
The husband told me from the bar table that the process server had experienced difficulties serving Mr MM but I was not provided with either an affidavit of service or an affidavit of attempted service and accordingly I could not proceed to consider the application.
The husband asserts that the wife has a beneficial interest in real estate in Country UU. The husband says that the parcels of land in Country UU, in which he says the wife has a beneficial interest, are registered in the name of her brother, and accordingly, it is necessary for him to be joined to the proceedings.
I agree that the husband has attached to his affidavit a document which purports to be an “Information Card of the Real Property” naming the wife’s brother as the owner of land in Country UU. The documents do not establish any connection between that land and the wife.
In his fourth amended Response to Initiating Application filed 29 December 2022, the husband seeks the following:
8. A declaration be made that […] units located at lot […] of [XX Real Estate], [Country UU] were and are held on trust by the 6th Respondent for the benefit of the Applicant.
Whilst it is appropriate that the wife’s brother be given notice of the fact that such a declaration is sought, unless there is ancillary relief sought, then he may or may not choose to participate in the proceedings.
At this stage, given both a lack of notice to the proposed respondent and a paucity of evidence to support the conclusion that the wife has any interest in property in Country UU, I will dismiss this aspect of the husband’s application.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 24 February 2023
0