Sheridan & Sheridan
[2021] FamCA 274
•6 May 2021
FAMILY COURT OF AUSTRALIA
Sheridan & Sheridan [2021] FamCA 274
File number(s): BRC 14575 of 2019 Judgment of: CAREW J Date of judgment: 6 May 2021 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Registrar – Review of decision – Where a registrar made an order requiring the husband to pay spousal maintenance and pay proceeds from the sale of a property to the wife’s solicitors – Where the registrar in determining spousal maintenance double counted some expenses and was mistaken as to the husband’s income – Where the registrar did not determine an oral application – Where the payment of the sale proceeds had been expended meaning the application for review in that respect is otiose – Review allowed in part.
FAMILY LAW – SPOUSAL MAINTENANCE – Interim – Where the wife alleges that her day to day living expenses are consistent with the standard of living throughout the marriage – Where the husband challenges the wife’s inability to support herself and alleges that the wife’s income is greater than disclosed – Where the husband has the capacity to pay spousal maintenance – Where the wife is responsible for three children and the wife’s current earning capacity is minimal – Where the wife has an independent source of income – Where the wife’s weekly expenses are adjusted to what is reasonable in the circumstances – Where the husband is to pay spousal maintenance in the sum of $1,410 per week and continue to pay the rates on the former matrimonial home.
FAMILY LAW – PROPERTY – Interim distribution – Whether an order should be made for a lump sum payment to be made to the husband to meet outstanding legal fees and a taxation liability – Whether monies are to be made available to the wife so that the children’s school fees are paid as and when required – Where an interim property payment is made to the husband to meet the taxation liability in part – Where an interim property payment is made to the wife for the purpose of the payment of the children’s school fees.
Legislation: Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)
Cases cited: Bevan & Bevan (1995) FLC 92-600
Gabel & Yardley (2008) FLC 93-386
Harris &Harris
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener)
Phillips & Hansford (No 2) [2015] FamCAFC 138
Kyriakos & Kyriakos (2013) FLC 93-528
Maurice & Barry [2019] FamCA 346
Stanford v Stanford (2012) 247 CLR 108
Stein v Stein (2000) FLC 93-004
Strahan & Strahan (interim property orders) (2011) FLC 93-466
Wilson and Wilson (1989) FLC 92-033
Zschokke and Zschokke (1996) FLC 92-693
Number of paragraphs: 53 Date of hearing: 26 March 2021 Place: Brisbane Counsel for the Applicant: Mr Kirk QC Solicitor for the Applicant: Mills Oakley Counsel for the Respondent: Mr Alexander Solicitor for the Respondent: Damien Greer Lawyers ORDERS
BRC14575/2019 BETWEEN: MS SHERIDAN
Applicant WifeAND: MR SHERIDAN
Respondent Husband
ORDER MADE BY:
CAREW J
DATE OF ORDER:
6 MAY 2021
THE COURT ORDERS THAT:
1.The review of paragraph 2 of the order made by registrar Hoult on 8 December 2020 be allowed.
2.Paragraph 2 of the order made on 8 December 2020 be set aside.
3.The husband pay periodic spousal maintenance to the wife in the sum of $1,410 per week with such order to date from 8 December 2020 and be paid weekly in advance into an account nominated by the wife. Any adjustments required to be made as a result of payments made by the husband in compliance with the order made 8 December 2020 be considered at trial.
4.The husband continue to pay the council rates levied against the former matrimonial home at Suburb F as and when they fall due.
5.Unless otherwise agreed, the husband and wife authorise Damien Greer Lawyers to release from the controlled monies the following sums:
(a)A sum sufficient to pay the anticipated capital gains tax liability arising from the sale of the property situated at B Street Suburb F (“the CGT liability”) with such sum to be paid to the Australia Taxation Office (“the ATO”);
(b)Sums sufficient to meet each child’s school fees as and when they fall due with such sums to be paid directly to each child’s school.
6.The review of paragraph 3 of the order made by registrar Hoult on 8 December 2020 be dismissed.
IT IS FURTHER ORDERED BY CONSENT
7.That within fourteen (14) days of the wife obtaining inter alia, the following documents, the wife provide the following to the husband:
(a)a written list of Trust assets and an income and expenses statement for the 2017, 2018, 2019 and 2020 financial years for the C Trust No. 2 and the D Trust No. 3 (established by the C Trust No. 3); and
(b)any financial statements for the 2017, 2018, 2019 and 2020 financial years for the C Trust No. 2 and the D Trust No. 3 (established by the C Trust No. 3); and
(c)unredacted copies of the Trust Deed/s and Variations to the Trust Deed/s for the C Trust No. 2 and the D Trust No. 3; and
(d)unredacted copies of all tax returns for the past 5 years including any revised returns for the C Trust No. 2 and the D Trust No. 3 and the Partnership and the 2020 tax returns once prepared.
8.In the event that the wife has not received the documents as set out in paragraph 7 within fourteen (14) days of the date of this Order, the wife:
(a)in her capacity as primary beneficiary of the C Trust No. 2 and the D Trust No. 3 (established by the C Trust No. 3) direct the Trustee of the C Trust No. 2 and the Trustee of the D Trust No. 3 (established by the C Trust No. 3) (the Trustees); and/or
(b)in her capacity as a limited partner of H Company;
(c)direct the Trustees and the Partnership to provide her and the Husband with the above named documents within seven (7) days.
IT IS FURTHER ORDERED
9.All outstanding applications for interim relief be 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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sheridan & Sheridan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J
The substantive proceedings between Ms Sheridan (“the wife”) and Mr Sheridan (“the husband”) were commenced by the wife on 29 November 2019 and concern financial and parenting matters.
On 8 December 2020 a registrar of this Honourable Court made an order providing, among other things, for the husband to pay spousal maintenance and requiring the husband to authorise 50 percent of the net proceeds of sale of an investment property situated at B Street Suburb F Queensland (“the controlled monies”) to be paid to the wife’s solicitors with the categorisation of that payment to be determined at a final hearing. In making the latter determination, the registrar relied upon the power to make an interim property order pursuant to ss 79 and 81 of the Family Law Act 1975 (Cth) (“the Act”). The husband seeks to review the registrar’s decision in relation to both the spousal maintenance and lump sum payment, although in circumstances where the payment of the lump sum to the wife has been expended, the application for review in this respect is otiose. The husband opposes any payment of spousal maintenance contending that the expenditure by the wife since the date of separation continues a history of profligate expenditure (despite his alleged persistent objections) and indicates greater access to money than previously disclosed by her. The husband nevertheless concedes a capacity to pay spousal maintenance of $1,500 per week.
In addition, the husband seeks a number of other orders including a payment to him of the balance of the controlled monies (approximately $281,227); to be released from an undertaking given by him on 9 December 2019 so as to enable him to raise funds from which to pay a taxation liability of $202,230.70, and for further and better disclosure by the wife.[1] The issue relating to disclosure has been resolved between the parties and an order will be made by consent in relation thereto.
[1] The precise terms of the order sought by the husband are set out in his amended Application in a Case filed 8 March 2021 although paragraphs 4, 7, 11 were abandoned; paragraphs 2 and 8 were conceded to be the same issue and paragraphs 12, 13 and 14 were the subject of a consent order.
While opposing the husband’s application for review and other orders, the wife seeks a variation of the order made by the registrar so as to increase the quantum of spousal maintenance payable to her from $2,548 per week plus all utilities and outgoings on the former matrimonial home to $3,446 per week plus rates and the wife seeks an additional order to permit the payment of the children’s school fees from the controlled monies.[2] In the wife’s affidavit filed 17 March 2021 at [98] the wife consents to “the taxation liability arising in respect of the capital gains tax being paid from the controlled monies account”. That concession did not seem to be ongoing during submissions, it being suggested that the husband could enter into a payment plan with the ATO in relation to all the taxation liabilities.
[2] The precise terms of the order sought by the wife are set out in her Response to the Application in a Case filed 17 March 2021. The increase to $3,446 and the additional order are set out in the Amended Outline x W filed 25.03.21 (page 2).
Before turning to consider the relief sought by each party it will be helpful to set out some background to the dispute.
BACKGROUND
The wife is 50 years of age and the husband is 52 years. Both parties were born in the United States. They commenced cohabitation in 1992, married in 1994 and separated on a final basis on 1 March 2018. There are three children of the marriage aged 11, 13 and 15 years, who live with the wife in the unencumbered former matrimonial home at Suburb F, Queensland. Currently the children spend time with the father each week from after school until 8.30pm on Fridays and from 11.00am to 3.00pm on Sundays.
The children all attend private schools and the fees associated with their attendance is $64,688 per annum.
The husband and wife relocated to Australia in 2000. Both parties are Australian citizens.
At the commencement of cohabitation the wife was a beneficiary of “a limited partnership/irrevocable trusts” established by her family and from which she contends she received no distribution until 2014. Since that time, the wife contends that she has received approximately US$3,000 per month from “H Company”. Currently the wife contends that she receives US$3,622.71 per month. The wife has a degree from G University. The wife has not utilised her degree in employment and had a very limited employment history before relocating to Australia. The wife has not been in employment since relocating to Australia save for two entertainment/commercial roles for which she received a net income of $500. She has been a full time homemaker and parent.
The husband is the Chief Executive Officer of K Company and receives a salary of $612,061.[3] Historically the husband has received bonuses from his employer although no bonus was paid for the last financial year and the husband contends there is no reasonable expectation for a bonus to be paid in the current economic climate.
[3]Husband’s affidavit filed 08.03.21 (at [57]) cf husband’s financial statement filed 08.03.21.
After separation the husband continued to meet various expenses associated with the wife’s occupation of the former matrimonial home with the children, and various living expenses. The husband met those expenses by paying to the wife $14,000 per month until April/May 2020 when he reduced his payments to $3,000 per month, but continued to make some payments in relation to the children’s school fees and health insurance premiums.
On 9 December 2019 the husband provided an undertaking not to sell, transfer, encumber or deal with the former matrimonial home in any way without the written consent of the wife. The husband seeks to be relieved of that undertaking so that he can to borrow funds to pay his personal income tax anticipated to be due on 5 June 2021 ($202,230.70 including capital gains tax).
The wife’s application for spousal maintenance and release of funds to meet legal expenses, filed on 20 May 2020, was heard on 21 October 2020 before a registrar. Judgment was delivered on 8 December 2020. Pursuant to the order made that day, the husband was required to pay periodic spouse maintenance of $2,548 per week and pay all utilities and outgoings on the former matrimonial home. In addition, one half of the controlled monies (a sum of $281,227.77) was required to be paid to the wife’s lawyers with the categorisation of that payment to be determined at trial. As already noted, the lump sum has been paid and fully expended as follows:
(a)Solicitor’s fees of $135,598.20
(b)Taxation liability of $91,986.95
(c)School fees of $14,985.50
(d)Senior Counsel’s fees of $9,680
(e)Queen’s Counsel’s fees of $23,397
(f)Unknown $8,250
Total: $283,897.65
The husband’s application for a stay of the 8 December 2020 order was dismissed on 28 January 2021.
It seems to be common ground that there will be a capital gains tax liability arising from the sale of the investment property and that it may well be due on 5 June 2021. It seems the capital gains component of the husband’s anticipated tax liability of $202,230.70 is about $105,000.
It is common ground that in relation to the spousal maintenance order made on 8 December 2020, there was a double counting in the order which provided for the payment of spousal maintenance in the sum of $2,548 plus utilities and outgoings, in that the wife’s weekly expenses of $2,548 already included the utilities and outgoings for the former matrimonial home. Further, it is common ground that the registrar was mistaken in finding that the husband’s weekly income was $16,000. The husband’s pre-tax weekly salary is $11,770. After tax his net weekly income is approximately $6,997. Additionally, it is common ground that the registrar overlooked making a decision in relation to the husband’s oral application for a payment to him from the controlled monies pursuant to an exercise of the power to make an interim property order.
The current child support assessment requires the husband to pay child support of $3,257 per month.
The identified assets of the parties (apart from the controlled monies) comprise the unencumbered former matrimonial home with an agreed estimate of value at $1,750,000, the husband’s 2,606,757 million shares in K Company estimated by the husband to be worth $388,878 (which the husband contends are not readily saleable in the current circumstances), and allegedly 5.1 million “share options” in K Company (yet to be valued), the husband’s other shareholdings of modest value, the wife’s US interests (suggested by the husband to be possibly worth several million dollars), the husband’s superannuation valued at about $500,000 and some furniture, cars and minimal savings in bank accounts.
The wife has paid total legal fees to her lawyers both in Australian and the US of $406,397 and has outstanding fees to her Australian lawyers of $22,813 and work in progress of $13,943. These fees do not include the fees associated with this review hearing.
The husband has paid total legal fees to his lawyers both in Australia and the US of $188,435.02 and has outstanding fees to his Australian lawyers of about $173,000. These fees do not include fees associated with this review hearing.
Despite the significant expenditure on legal fees and the fact that these proceedings have been on foot since November 2019, there is as yet no settled asset pool.
REVIEW APPLICATION
Section 37A of the Act empowers the Judges of the Family Court of Australia, or a majority of them, to make Rules of Court delegating to registrars all or any of the powers of the Court, subject to certain exceptions and limitations therein set out e.g. the power to make a maintenance order is limited to one made pending the disposal of the proceedings.[4]
[4] Family Law Act 1975 (Cth), s 37A(1)(f)(ii).
Rules 18.05 and 18.06 of the Family Law Rules 2004 (Cth) (“the Rules”) delegate a range of powers to registrars including the power to make an order under s 79 of the Act but, relevantly for present purposes, only if the order is made ‘until further order’.
It is not in contention that the orders made by the registrar were within his power.
Rule 18.08(2) of the Rules permits a party to apply for a review of an order made by a registrar within the time therein prescribed, relevantly, within 28 days after the registrar makes the order.
The husband’s review application was filed within the time prescribed.
Rule 18.10 of the Rules sets out the power of the Court on review and in particular:
Power of court on review
(1)A court must hear an application for review of an order of a Judicial Registrar, Registrar or Deputy Registrar as an original hearing.
Note: In an original hearing, the court rehears the whole matter and does not simply review the decision of the original court.
(2) The court may receive as evidence:
(a) Any affidavit or exhibit tendered in the first hearing;
(b) Any further affidavit or exhibit;
(c) The transcript (if any) of the first hearing; or
(d)If a transcript is not available, an affidavit about the evidence that was adduced at the first hearing, sworn by a person who was present at the first hearing.
I turn now to consider the competing applications as an original hearing.
SPOUSAL MAINTENANCE APPLICATION
Relevant principles
Pursuant to s 72 of the Act, the husband is liable to maintain the wife to the extent that he is reasonably able to do so, if, and only if, the wife is unable to support herself adequately whether by reason of having the care of a child under 18, or by reason of age or physical or mental incapacity for appropriate gainful employment (which is not relevant in this case), or for any other adequate reason.
A determination of an application for spousal maintenance involves:
(a)A threshold finding under s 72;
(b)Consideration of ss 74 and 75(2);
(c)No fettering principle that pre-separation standard of living must automatically be awarded where the respondent's means permit it; and
(d)A discretion exercised in accordance with the provisions of s 74, with reasonableness in the circumstances as the guiding principle. [5]
[5] Bevan & Bevan (1995) FLC 92-600 at 81,981 - 81,982 (“Bevan”).
Discussion
Apart from attempting to obtain a position of employment with the husband’s employer in 2018 (for which it seems the wife was likely to be successful, but for the husband’s tacit objection) the wife provides no evidence that any further attempts have been made to obtain employment since separation other than in the entertainment industry. As already noted, the wife has earned only $500 net from her entertainment pursuits.
While the husband challenges the wife’s inability to support herself in his affidavit and contends that she has a capacity to obtain employment, given that the three children are at school, I think it fair to observe that this was not really pressed during submissions. It may well be pressed more vigorously at a final hearing if the wife maintains a claim for ongoing spousal maintenance. However, at least at this stage of proceedings, in circumstances where the wife is almost solely responsible for the care of three children aged 11, 13 and 15 (notwithstanding their attendance at school during the day) and the fact that she has not been in employment since 2000, I am comfortably satisfied that on an interim basis the wife’s current earning capacity is minimal.
To the extent the husband invited a finding that the wife’s income is greater than that disclosed by her, I am not persuaded that such a finding can be made at an interim hearing in the absence of cross-examination and where there appears to be a significant dispute about the purpose of certain payments received by the wife e.g. the wife contends that some funds received by her were for the payment of tax. Further, there is significant dispute about the likelihood of ongoing payments to the wife from her US interests. In addition, the husband’s focus on what he maintains is the wife’s profligate expenditure includes a period prior to May 2020 when his financial contribution was substantially more. Each party has analysed various bank statements for the other to maintain their competing claims of unreasonable expenditure. Such issues may be appropriate for consideration at a final hearing.
The wife contends that her current income from her US interests is AUD$1,077 per week. The evidence as it stands does not cause me to reject the wife’s evidence on this point.
The wife claims that her reasonable weekly expenses (excluding the children’s expenses)[6] are as follows:
[6] Stein v Stein (2000) FLC 93-004 at 87,127-87,128 (“Stein”).
Item Wife Income tax $231 Compulsory third party car insurance $16 Health insurance $105 Home contents and building insurance $52 Car insurance $25 Credit card minimum payments $321 Food $205 Household supplies $68 House repairs $181 Electricity $121 Telephone $106 Petrol $60 Car Maintenance $232 Fares / car parking $87 Clothing and shoes $25 Medical, dental and optical (not including health insurance premiums) $232 Entertainment / hobbies $149 Holidays $108 Chemist / pharmaceutical $55 Gardening / lawn mowing $100 Cleaning (house/ pool) $231 Repairs – furnishings and appliances $75 Dry cleaning $151 Books and magazines $27 Gifts $22 Hairdressing, toiletries $362 Other ‘necessary commitments’
Home internet ($41)
Pest control ($10)
Carwash ($35)
Carpet cleaning ($10)Pet – Vet, food, supplies ($32)
Personal training ($395)Gym membership ($29)
Online subscriptions ($89)
Post office box ($3)Roadside assistance ($2)
Storage ($38)Accounting ($197)
Business expenses – headshots, building websites, maintaining subscriptions to networks/agency fees ($305)
$1,186 TOTAL
$4,533.00
While the wife contends she has made some reductions in expenditure since May 2020, she also contends that her spending towards personal items for herself and the children as well as their day to day living expenses, is “consistent with our standard of living throughout our marriage”. As already noted, neither party has a right to maintain the same standard of living after separation as before.[7] It comes down to what is reasonable in the circumstances.[8]
[7] Bevan (n 4); see also Wilson and Wilson (1989) FLC 92-033 at 77,453.
[8] Ibid.
On the evidence relied upon by the wife, I am not satisfied that the wife’s claimed expenses for the following items are reasonable in the circumstances:
Item Amount Finding Car maintenance
$232
The wife’s car is modest with a very high odometer reading (as is the husband’s) but even allowing for the anticipated high cost of service, the sum claimed is not substantiated and I propose to reduce it to $134 per week.
Fares / car parking
$87
There is no evidence from which I could conclude that this expense is reasonable and I propose to reduce it to $30 per week.
Medical, dental and optical (not including health insurance premiums)
$232
I have been unable to locate any evidence relied upon by the wife which indicates any medical, dental or optical problem that would justify the expenditure claimed and I propose to reduce it to $50 per week.
Chemist / pharmaceutical
$55
In the absence of evidence to support the unusually high quantum I propose to reduce it to $15 per week.
Gardening / lawn mowing
$100
There is no evidence from which I could conclude that this expense is reasonable in circumstances where the wife is not employed. I propose to reduce it to $50 per week.
Cleaning (house / pool)
$231
In circumstances where the wife is not employed the sum claimed appears unreasonable and I propose to reduce it to $50 per week.
Repairs – furnishings and appliances
$75
The evidence does not support the expense as claimed and I propose to reduce it to $20 per week.
Dry cleaning
$151
The sum claimed is not justified on the evidence and appears unreasonable. I propose to reduce the sum claimed to $10 per week.
Hairdressing and toiletries
$362
The sum claimed appears unreasonable despite the wife’s focus on obtaining employment in the entertainment industry. I propose to reduce the claimed expense to $50 per week.
Other ‘necessary expenses’
Carwash ($35)
Personal training ($395)
Gym membership ($29)
Business expenses ($305)
$853
The claimed expenses appear to be unreasonable given that the wife is not in employment and her endeavours to obtain employment in the entertainment industry has produced only $500 in several years. I propose to disallow them.
Online subscriptions ($89)
The sum claimed is not justified on the evidence and appears unreasonable. I propose to reduce the sum claimed to $20 per week.
Accounting
$197
While the wife no doubt requires assistance with the preparation of her tax returns given the complexity of her US interests the evidence does not justify fees of $10,244 per annum. I propose to reduce the sum claimed to $100 per week.
The wife’s adjusted expenses are as follows:
Item Wife Income tax $231 Compulsory third party car insurance $16 Health insurance $105 Home contents and building insurance $52 Car insurance $25 Credit card minimum payments $321 Food $205 Household supplies $68 House repairs $181 Electricity $121 Telephone $106 Petrol $60 Car Maintenance $134 Fares/ car parking $30 Clothing and shoes $25 Medical, dental and optical (not including health insurance premiums) $50 Entertainment/ hobbies $149 Holidays $108 Chemist/ pharmaceutical $15 Gardening/ lawn mowing $50 Cleaning (house/ pool) $50 Repairs – furnishings and appliances $20 Dry cleaning $10 Books and magazines $27 Gifts $22 Hairdressing, toiletries $50 Other ‘necessary commitments’
Home internet ($41)
Pest control ($10)Carpet cleaning ($10)
Pet – Vet, food, supplies ($32)
Post office box ($3)
Roadside assistance ($2)
Storage ($38)
Online subscriptions ($20)Accounting ($100)
$256 TOTAL
$2,487.00
I conclude that the wife’s reasonable weekly expenses should be reduced by $2,046 to $2,487 per week.
The husband’s net weekly income is $6,997. His claimed expenses are as follows:
Item Husband Rent $680 Rates* $144 Health insurance $105 Car registration $20 Child support assessment $752 Food $300 Household supplies $65 Electricity $85 Petrol $125 Car Maintenance $115 Fares/ car parking $10 Clothing and shoes $100 Medical, dental and optical (not including health insurance premiums) $120 Entertainment/ hobbies $150 Holidays $175 Chemist / pharmaceutical $40 Cleaning (house / pool) $75 Repairs – furnishings and appliances $15 Dry cleaning $50 Books and magazines $25 Gifts $25 Hairdressing, toiletries $50 Other necessary commitments (specify)
Internet - $25
Psychologist (1x $150 per fortnight) - $75
Family therapy (1x at $150 per fortnight) – $75 per week
Pay tv / streaming Foxtel, Netflix, Stan $75
Skin cancer removal/treatment (2x per year) - $12
Hot Water – $35
Gym membership - $25
Gym membership - $50 per week
Physiotherapist - $50
Swim club membership - $20
Storage - $75
Road tolls - $25
Accounting fees - $60
Post office box - $3Car wash - $20
$625 TOTAL
$3,851.00
*While the husband has not included the rates in his financial statement he contends that they are $144 per week and that he will continue to pay them.
Without making any adjustment to the husband’s claimed expenses, he has a surplus of $3,146 and therefore a capacity to pay spousal maintenance. I have assessed the wife’s reasonable weekly needs to be $2,487 and she admits receiving a weekly income from her US interests of AUD$1,077. Accordingly, an order will be made requiring the husband to pay $1,410 per week. In addition, the husband will continue to pay the rates which have been included in the table of his expenses above, taking his spousal maintenance obligation to $1,554 per week.
PAYMENT FROM CONTROLLED MONIES
I turn to consider whether an order should be made for a lump sum payment from the controlled monies to the husband to meet his outstanding legal fees and/or to meet his taxation liability. Further, whether the controlled monies should be available to the wife so that the children’s school fees are paid as and when required.
When considering whether a party should receive lump sum payments, it is necessary to identify the source of power relied upon to make such an order.[9] In the current case, each party relies upon the Court’s power to make an interim property order pursuant to ss 79 and 81 of the Act. I particularly note that the wife eschewed the suggestion that her application in relation to school fees appeared to be a child support application.
[9] Kyriakos & Kyriakos (2013) FLC 93-528 at 86,937, [37]; see also Strahan & Strahan (interim property orders) (2011) FLC 93 466 (“Strahan”) and Zschokke and Zschokke (1996) FLC 92-693.
The legal principles to be applied in making an order for interim property settlement are well settled.[10] In summary, those principles include:
(a)The discretion to make an interim property order must be exercised within the parameters of s 79, although not as thorough a consideration is required as would be if the Court were determining the matter on a final basis;
(b)It is preferable to make only one order (a final order) in the exercise of the s 79 discretion;
(c)The fact that it is an interim order requires a degree of caution;
(d)An applicant for an interim property order need not establish compelling circumstances;
(e)It is insufficient to establish merely that a property order of the type sought will be made at trial;
(f)A significant factor is whether or not any interim order is capable of reversal; and
(g)If made, an order need not limit the use to which the sum ordered may be put.
[10] Harris &Harris ; Strahan (n 9); Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) ; Stanford v Stanford (2012) 247 CLR 108 (“Stanford”).
Even though an order may be made pursuant to the Court’s property power in s 79, the Court may reconsider how any such payments should be treated at a final hearing.[11]
[11] Maurice & Barry [2019] FamCA 346 at [123]-[130] quoting Phillips & Hansford (No 2) [2015] FamCAFC 138; Gabel & Yardley (2008) FLC 93-386; and Strahan (n 9).
In considering whether or not to make an interim property order, I must be satisfied that it is just and equitable to make an order.[12] In relation to a final property order, neither the applicant nor respondent contend that it is not just and equitable to make an order. That position is understandable given that the applicant and respondent separated a number of years ago and “there is not and will not thereafter be the common use of property” by the parties.[13] Additionally, “the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the relationship”.[14] In such cases, the “just and equitable requirement is readily satisfied”.[15] However, the wife opposes the payment of the controlled monies to the husband at this time, in circumstances where she contends it will be needed for other purposes, namely, future legal costs and school fees.
[12] Stanford (n 10).
[13] Ibid at 122, [42].
[14] Stanford (n 10), at 122, [42].
[15] Ibid.
The wife is seeking to retain the former matrimonial home unencumbered, depending upon the value of the husband’s share interests and her US interests. The wife argues that while the husband’s lawyer has indicated he will not “carry” the husband to a five day trial, he has “carried” the husband to date and is now owed some $173,000. It is argued that this matter is a long way off a final hearing and accordingly the evidence does not permit a finding that the husband will be unrepresented if he does not pay his outstanding legal fees. Even if that were to be the case, the wife argues that it may be that both parties find themselves without legal representation given the apparent state of their finances.
It is common ground that the husband requires the approval of the board of K Company to sell his shares and the husband provides evidence as to why that is unlikely to be forthcoming at this time. It is also common ground that the husband would require ASX approval to the sale of his shares because of concerns about insider trading. The wife opposes the release of funds from controlled monies to the husband in circumstances where he has not made an application to the board to sell his shares. In essence, it is submitted that his application is premature.
While the husband contends that the wife’s interests in the US trusts/partnerships are likely to be valued at a significant sum, there is simply no way of knowing whether or not he is correct at this point in time.
The husband opposes the wife’s further access to the controlled monies to pay the children’s school fees contending, it seems, that the parties can no longer afford private school fees. I cannot be satisfied of that contention at an interim hearing, and having regard to the husband’s annual income I would be surprised if that were the case, but ultimately the husband may be correct. If he is correct, then any sum paid for future school fees from the controlled monies may be treated at a final hearing as a partial property settlement payment to the wife.
Where it is agreed that the CGT liability is a joint debt and the ability of the husband to pay that sum may assist him in applying to enter into a payment scheme with the ATO for the balance of his personal income tax, I propose to accede to the husband’s application to access the controlled monies but only for the purpose of paying what is anticipated to be the CGT liability of about $105,000.
I am also persuaded to make a further interim property settlement order to the wife for the purpose of the payment of the children’s school fees. There is no suggestion that the decision for the children to attend private schools was one made other than jointly. The husband’s contention that the children may not be able to continue to attend private schools is a recent one and dependent, it seems, on funds being available. The order I propose to make for interim spousal maintenance will decrease the husband’s current liability under the 8 December 2020 order but I am conscious of his current debt for legal fees. Accordingly, I consider a proper exercise of the discretion to make an interim property order would be to permit the controlled monies to be used for the school fees at this stage.
Any remaining application for interim relief will be dismissed.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 6 May 2021
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