Simms and Simms

[2016] FamCA 51

FAMILY COURT OF AUSTRALIA

SIMMS & SIMMS [2016] FamCA 51

FAMILY LAW – SPOUSAL MAINTENANCE – interim – husband and wife still together and husband contributing weekly to household – no basis for interim order.

Family Law Act 1975 (Cth)

Redman and Redman [1987] FamCA 2; (1987) FLC 91-805; (1987) 11 Fam LR 411
Stein and Stein [2000] FamCA 102; (2000) FLC 93-004

APPLICANT: Ms Simms

RESPONDENT: Mr Simms

FILE NUMBER: MLC 131 of 2016

DATE DELIVERED: 10 February 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 3 February 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Swart

SOLICITOR FOR THE APPLICANT: Sam Law

COUNSEL FOR THE RESPONDENT: Mr Davis

SOLICITOR FOR THE RESPONDENT: Heinz & Partners

Orders

1. That the husband’s application for costs of these interim proceedings is dismissed.

2. That paragraphs 1 to 5, 9 to 13 and 15 to 16 of the wife’s interim orders contained in her application filed 8 January 2016 are withdrawn by leave of the Court.

3. That the interim orders in paragraphs 6 to 8 of the said application are dismissed.

4. That paragraph 14 of the said interim application is dismissed.

5. That the interim orders sought in the husband’s response (to be filed but handed up in court on 3 February 2016 and therefore treated as an oral application) are struck out.

6. That the applications for final orders of the wife filed 8 January 2016 and the final orders response of the husband are adjourned to a Registrar’s directions hearing at 10.00am on 23 March 2016.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Simms & Simms has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 131  of 2016

Ms Simms

Applicant

And

Mr Simms

Respondent

REASONS FOR JUDGMENT

1. There is only one issue to be determined in the interlocutory proceedings between Ms Simms (“the wife”) and Mr Simms (“the husband”).  That issue is the wife’s claim for spousal maintenance.

2. There is a preliminary issue of little substance as to whether the balance of the wife’s interim application should be withdrawn (by leave) or dismissed on its merits.  Counsel for the husband was concerned that if the relevant proceedings were simply withdrawn, there was nothing to stop the wife from bringing further applications.  In my view, there is nothing to prevent her from bringing those applications anyway providing she has some evidence of substance.  On that basis, there is little forensic disadvantage to the husband and the wife should be allowed to withdraw the proceedings.

3. The husband and wife married in 2001 and separated in August 2014.  Ironically, the proceedings before the Court which had only been issued on 8 January 2016 were about property issues but no substantive property division application was made by either party.  To the extent that it was necessary to have that for the wife to pursue the relief she was seeking, I permitted her counsel to make an oral application for a general property settlement.  As it turns out, that was unnecessary.

4. There are four children of the marriage aged between seven and 16 years and along with the parents, they all live together in the one house in Suburb A.  The wife does not work outside of the home but has cared for the children for a number of years without being in the paid workforce.  The husband conducts a business through a variety of entities of which he is the director and secretary.  It is that business and those entities that caused considerable argument as to exactly what the financial position is of the parties let alone the husband.

5. When the hearing began, counsel for the wife indicated that there were four issues requiring determination.  They were:

   (a)The sole occupation of the home insofar as the wife wanted the husband excluded;

   (b)Spousal maintenance which she sought in the sum of $2757 per week;

   (c)Litigation funding to conduct the litigation but on the basis that there be a “dollar for dollar” type of order; and

   (d)That a particular forensic accountant B Accounting be appointed as the single expert to “value” the specific companies and for the husband to pay the costs of that valuation.

6. In his response, the husband sought an identical order in relation to the sole occupancy but his counsel distanced himself from that on the basis that it would be odd to argue that there is nothing of substance in the wife’s evidence to support such an order yet the reverse be true in respect of his application.  That was therefore abandoned.

7. The husband’s position in respect of the fourth issue raised by the wife relating to the forensic accountant was not disputed.  The issue there related to the naming of the forensic accountant.

8. The husband also formally sought a residence order relating to the children and equal shared parental responsibility.  It is quite clear that the parenting issue is not in a position to proceed at this time either at interim level or on a final basis.  The parties are still together and even on the wife’s evidence, one of the children has begun to side with the husband.  In any event, neither party raised or pursued such orders.  That part of any application is therefore not dealt with other than to strike it out.

9. Considerable and frank discussion took place between bench and bar.  Ultimately after that, the wife’s counsel conceded that there was not sufficient evidence to justify an order for exclusive occupancy in favour of the wife nor enough evidence for the Court to make any litigation funding order by way of partial property settlement, costs or somehow using the spousal maintenance power.  Absent some ability on the part of the wife to fund the litigation, an order for the appointment of a forensic accountant also became pointless.  On the basis of those discussions, those three applications were withdrawn.

10. Attached to the husband’s affidavit were some “balance sheets” and a profit and loss statement up to 31 December 2015.  The accuracy of those documents remains uncertain and it is not necessary for me to deal with them other than for the purposes of determining the wife’s spousal maintenance claim.  Suffice to say, there are two companies in the group which have shareholder equity but only on the basis of the realisation of the assets and the payment of the liabilities.  It is difficult to discern exactly what that position is because there are inter-company loans.  More importantly, the Australian Taxation Office has stepped in apparently using the Division 7A provisions of the Income Tax Assessment Act (Cth) and there is a $1 million debt.  The parties have an unencumbered home subject obviously to the satisfying of the loans to which I have just referred.  Thus from a property perspective, it is very difficult to know exactly what the parties’ equity in assets is and accordingly, how any partial payment could be made.  I did suggest that for the purposes of litigation funding, both parties could jointly approach a lender, provide the house as security, borrow sufficient funds to meet both of their needs and use a further lump sum for the payment of the servicing of the debt.  No doubt the parties will give some consideration to that option.  It seems to me, on the evidence presented, there is little alternative. 

11. I turn then to the spousal maintenance case.  As I have indicated, the wife sought $2757.  That figure was arrived at on the basis that the wife had methodically undertaken an examination of the expenses of the household but of course, that included the four children.

12. For his part, the husband said that the wife had no need for maintenance because he is currently paying $800 per week into a household expenses account, providing a fully maintained motor car and giving the wife access to $7000 credit card per calendar month.  Counsel for the husband indicated that the husband did not intend to change that situation.

13. Counsel for the wife in discussion, suggested that perhaps that should be made by way of an order but the evidence does not support such a conclusion.  Counsel for the wife asserted that the wife had gone to the household account during the Christmas period only to find that there was not sufficient there to cover the $800 and she then accused the husband of having taken the money to spend on a holiday for himself.  Counsel for the husband responded by saying that indeed the money had been taken but it had been done so in error and there was no other indication of that sort of thing happening before.  There is some significance in that bearing in mind that the parties have been separated since August 2014.  One incident in that period of time would tend to suggest that the husband’s position is correct.

14. It is important to immediately observe that this hearing was in a busy duty list and at the end of a very long day where the matter was dealt with “on the papers” and without the parties’ respective evidence being tested.  I am not in a position to make any significant findings on the facts other than where I otherwise indicate below.  Having regard to the fact that the delay between now and final trial ought not be significant if the parties diligently prepared the dispute over the property, the interim position ought not be a problem.

15. The wife relied upon her financial statement showing that her only income was $125 per week by way of “personal allowance” paid by the husband.  Because she has not applied for any child support assessment, that is her only income stream.  As I pointed out, her expenses including the four children total $2428 per week averaged out over the year.  But out of that sum, she conceded that the sum of $422 per week was for her personal need.

16. Clearly, the wife has to provide for the support of the children but then, so does the husband.  In Redman and Redman [1987] FamCA 2; (1987) FLC 91-805; (1987) 11 Fam LR 411, the Full Court dealing with an interim hearing for spousal maintenance said it was not necessary at that stage to split off definitively the costs of the children. The Court went on to say that one should not lose sight of the fact that it was an interim arrangement which could be revisited. That is, the evidence need not be so extensive and findings not so precise. Having said that, in Stein and Stein [2000] FamCA 102; (2000) FLC 93-004, the Full Court (Kay, Holden and Dessau JJ) concluded that the trial judge had erred in determining a claim for interim spousal maintenance by reference to the expenses referrable to the claimant and the children of the marriage in her care. In that case, there was significant wealth unlike here.

17. The dilemma here is not so much the question of what it costs to maintain the wife and/or the household but rather whether the husband will also provide support for the children as he resides in the same house.  If the wife’s need is $422 per week, the Court might conclude that the husband’s indication that he will honour the payment to which I have earlier referred is sufficient.  If so, the wife does not need maintenance.

18. The husband asserted that the wife had the capacity for employment.  In my view, on an interim basis, that was an inappropriate statement bearing in mind what both parties had been happy to contend with over the last few years with the wife out of the workforce caring for the family.  Little credit can be given to the husband for those sorts of comments.  They certainly might be relevant in the long term but not on an interim basis. 

19. The most important piece of evidence however came from the husband who indicated that there are significant problems at the moment under which he cannot draw more money than he currently is from the company.  There is a very strong suggestion in the evidence, as well as arising from discussion with both counsel, that the parties have been able to engage in a tax arrangement whether by the wife being paid a salary or alternatively through distributions from a trust.  Nothing was said about just how that was done and counsel for the wife indicated that her client needed the assistance of a forensic accountant to work out the company’s financial position..

20. Section 74 of the Family Law Act 1975 (Cth) (“the Act”) says that in proceedings with respect to the maintenance of a party, the Court may make such order as it considers proper for the provision of maintenance in accordance with Part VIII. This is not an application for urgent maintenance.

21. Section 75(1) provides that in exercising the jurisdiction under s 74, the Court shall take into account only the matters referred to in s 75(2). 

22. Before dealing with those provisions however, one must turn to s 72 of the Act which provides that a party to a marriage is liable to maintain the other, 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 by reason of having the care and control of a child of the marriage who has not attained the age of 18 years or by reason of age, physical capacity or incapacity for appropriate gainful employment, or for any other adequate reason.

23. The wife’s evidence in this case was that she has not worked since 2000 having been caring for the home.  On an interim basis, I am satisfied that that is an adequate reason.  The question then becomes whether or not she is able to adequately support herself on what she currently has bearing in mind her claim which began at $2757, was reduced by her counsel to $422 per week.  In my view, on the basis of the evidence that the husband is going to continue to pay what he has been paying in the past (as assured by his counsel) I could not find that the wife is unable to support herself adequately.

24. In my view the wife’s application for spousal maintenance on the evidence before the Court fails.

25. Counsel for the husband also sought costs on the basis that the wife had been “wholly unsuccessful”.  The wife opposed the making of any order.  Whilst the wife’s income stream is certainly tenuous and she is entirely reliant upon the husband anyway, her capital position in the future may very well be different depending upon what it is that the parties ultimately have to divide.  Whilst as I earlier observed, there is an unencumbered home, just what there is ultimately to divide remains to be seen.  It is possible in this case that if the husband is right about the financial position, the home is going to have to be sold.

26. Section 117 of the Act provides that in proceedings under the Act, each party shall bear their own costs unless there are circumstances to justify a departure from that principle. If the Court is satisfied that there is such a circumstance, before making any order, it must contemplate the matters set out in s 117(2A) of the Act. In my view, this was a case that should have been sorted out before trial. The pleadings of each party indicated that the battle lines had been drawn. Whilst the wife has been largely unsuccessful because of the fact that her evidence did not support the sorts of orders she was seeking, the husband too had to come to court on the basis that he was seeking orders that were opposed by the wife. In my view, this was a fight that should not have taken place and there should have been some sensible discussions beforehand. In my view there are no circumstances here that justify a departure from the principle that each party pay their own costs. As the proceedings are very much in their early stages, the parties should attend before a registrar for the purposes of working out how they intend to conduct this litigation in the future. I propose to order that the matter be so adjourned. To the extent that there are parenting issues still alive, the registrar can determine with the assistance of the parties whether it should go to an interim hearing or whether some more sensible approach should take place.

I certify that the preceding Twenty Six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 10 February 2016.

Associate: 

Date:  10 February 2016