SINKINS & SINKINS

[2009] FamCA 900

FAMILY COURT OF AUSTRALIA

SINKINS & SINKINS [2009] FamCA 900

FAMILY LAW – SPOUSAL MAINTENANCE

Family Law Act 1975 (Cth) ss 72(1), 75(2)

APPLICANT: Ms Sinkins

RESPONDENT: Mr Sinkins

FILE NUMBER: SYC 5526 of 2008

DATE DELIVERED: 18 September 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston JR

HEARING DATE: 17 June 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Foster

SOLICITOR FOR THE APPLICANT: Harris Freidman Hyde Page

COUNSEL FOR THE RESPONDENT: Ms Hanna

SOLICITOR FOR THE RESPONDENT: Remington & Co

Orders

1. That the order for spouse maintenance made on 13 February 2009 be varied so that as from 17 June 2009 the husband pay to the wife the sum of $1000 per week spousal maintenance pending further order.

2. That all other interim applications be adjourned to the hearing of the substantive proceedings.

IT IS NOTED that publication of this judgment under the pseudonym Sinkins & Sinkins is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5526 of 2008

MS SINKINS

Applicant

And

MR SINKINS

Respondent

REASONS FOR JUDGMENT

Introduction and applications

1. The parties in these proceedings are Ms Sinkins and Mr Sinkins.  For convenience I shall refer to them as “the wife” and “the husband” respectively.

2. The wife is seeking orders to the effect that the husband pay to her the sum of $2500 per week by way of spousal maintenance.

3. The wife is also seeking orders that the husband transfer to her his interest in two companies, B Services Pty Limited and M Pty Limited.  The wife would like to be able to operate these companies for the purpose of producing income for herself and the children.

4. The husband is asking the Court to dismiss the wife’s application.

Background

1. The husband was born in 1966 and the wife was born in 1969.  The parties married in 1995 and they separated on 20 December 2005 when the husband left the former matrimonial home.  There are three children of the marriage C who was born in October 1996, N who was born in January 1999 and D who was born in May 2003.  The children are therefore 12, 10 and 6 years of age respectively.

2. The children are residing with each of their parents in a shared parenting arrangement.

3. Following the parties’ separation, the husband continued to pay the mortgage repayments on the former matrimonial home at H as well as the sum of $2500 per week for living expenses.

4. The parties sold a boat and made a $60 000 payment to each of them from the net proceeds of sale.

5. In December 2006 the parties sold the former matrimonial home at E for $5 300 000.  But the mortgage was in excess of $4 000 000.  The proceeds of sale of $1 156 777 were paid to the husband who paid the following :

   -$2 400 000 NAB mortgage;

   -$955 000 NAB market rate fund;

   -$615 537 NAB overdraft;

   -$87 450 agent’s commission;

   -$7900 to G Real Estate;

   -$330 000 to the wife’s mother in repayment of a loan;

   -$106 097 to the Australian Taxation Office;

   -$140 000 husband’s personal tax penalty;

   -$370 000 to S Services Pty Limited;

   -$35 000 for wife’s credit cards;

   -$25 000 for a family skiing holiday

   The balance of the available funds has been spent.

6. On 1 January 2007 the wife and children moved into a unit at V.  The husband arranged for payment of the rent of $1804 per week until June 2008.

7. The husband continued to pay the wife the $2500 per week throughout 2007 and until May 2008.

8. In approximately April 2008 the husband’s father loaned the husband $80 000 to be used in the business.  The husband said this loan remains outstanding.

9. In approximately July 2008 the husband commenced receiving $20 000 per month disability insurance payments from the insurer Asteron.  The husband had made a claim based on a diagnosis that he was unfit for work because he was suffering from depression.

10. In mid 2008 the company S Pty Limited was placed into voluntary liquidation.  S Services Pty Limited purchased the assets of S Pty Limited and this company continues to trade.  At approximately this time the wife made an application for administrative assessment of child support.  But the husband has been assessed to have a child support liability of Nil.

11. In November 2008 the husband’s driving licence was suspended following conviction of an alcohol related driving offence.  The husband commenced hiring a professional chauffeur to drive him and the children.

12. In January 2009 the husband and the children had a holiday on the central coast.  The husband said that he paid less than market rate because he had hired the holiday house there on several occasions previously.

13. On 13 February 2009 this Court made an order by consent and without admissions that pending further order the husband pay to the wife $1300 per week spousal maintenance.

14. At approximately this time the wife and children moved from their rented home and commenced living with the wife’s mother in her home in inner Sydney.

The applicable law

1. Sub-section 72(1) of the Family Law Act 1975 (“the Act”) provides in effect that 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 for one of the reasons set out in the sub-section. Such reasons include 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 or physical or mental incapacity for appropriate gainful employment or for any other adequate reason having regard to any relevant matter set out in s 75(2) of the Act. Sub-section 75(2) of the Act sets out the matters to be taken into account in relation to applications for spousal maintenance and includes many factors including age and state of health of the parties, their capacity for appropriate gainful employment, whether they have care of children and the very numerous other matters set out in the sub-section.

2. The wife’s case in relation to this threshold requirement is that she only worked as a teacher until 2001 after the birth of the parties’ second child.  It is submitted on behalf of the wife that since then the wife has been full-time mother until commencing work recently as a casual teacher.  The wife has been doing casual / part-time teaching work.  She has worked on average two days work per week for which she receives $260.58 per day after tax, a total of approximately $520 per week.

3. In my view, the wife is able to establish the threshold matter of being unable to support herself adequately despite her income from her part-time work.  In my view it would be unreasonable, at least at this interim stage, to make the threshold finding against the wife.  After all the parties arranged their responsibilities during the marriage, at least from 2001 onwards so that the wife was able to stay at home and attend to the needs of the family and the home as her priority.  I am not persuaded that this should change with the consequence that the wife would have to endeavour to obtain full-time employment in circumstances where at least she says she is the children’s primary parent and provides considerable assistance to the husband in terms of parenting the children during times that he has their care and has to balance the needs of work and home.  It might be the case that this Court has quite a different view when it comes to consider the longer term arrangements of responsibilities between the parties and their respective capacities for full-time work.

The wife’s needs

1. In her financial statement sworn on 18 September 2008 the wife estimated that her personal needs came to a total of $4270 per week.  The wife swore an updating affidavit on 6 May 2009 in which she indicated that she was no longer having to meet the $1900 per week rent on her former home because out of financial necessity she had moved with the children to live with her mother as I have indicated above.  That $1900 per week rent had been paid by the wife’s mother since the husband stopped paying it in June 2008 as I have said.  Accordingly, if I adjust the wife’s estimates of personal expenditure included in her financial statement by deducting the $1900 previously paid in rent then the wife’s estimate of her own weekly needs would be $2370.  This figure is arrived at on the basis that the wife estimates at Part N of her financial statement a total of weekly expenditure of $2114.  Her estimates for her own expenses are $295 per week.  But in addition the wife estimates that the children’s expenses cost her $1327 per week.  At first glance I wondered about the appropriateness of the wife including estimated children’s expenditure as part of her own expenditure rather than expenditure which it would be appropriate to consider in the context of child support liability.  However, it is clear that the husband has been assessed to pay $nil child support.  So that the consequence of this is that the wife is unable to look to the husband for any contribution to the children’s weekly expenditure when they are living with her on the shared basis that I referred to above.  Accordingly, in my view it is reasonable that the expenditure of the children be regarded as that of the wife for the purposes of determining whether a spouse maintenance order is appropriate. 

2. Having said all this in my view some of the estimates of expenditure on the children by the wife are somewhat exaggerated.  I do not propose to go through the detailed exercise of substituting different amounts for those estimates but in my view reductions in respect of children’s food and household supplies, clothing and shoes, entertainment / hobbies and gifts should be reduced.  I have a similar view in relation to petrol, children’s activities, holidays and a few other minor estimates which have been included by the wife in Part N of her financial statement.  I also say in passing in relation to the wife’s estimate of the children’s education expenses that the wife agreed that she would not include such expenditure on the basis that the husband, in recent times, has arrived at some arrangement with the children’s school O College, to pay their school fees. 

3. I would accept that the appropriate costs of the wife, bearing in mind the children’s costs to her on a weekly basis, are $1200.  But of course this does not include any amount for rent.  The wife said that in her view it would cost her approximately $900 per week for modest accommodation in the eastern suburbs within reasonable proximity to the children’s school.  On this basis the wife’s weekly needs would be $2100. 

4. As I have said the wife’s income after tax consists of approximately $520 per week.  But I presume that the wife is unable to obtain work during the school holidays.  Accordingly, averaging out the wife’s income over the whole year would provide her with approximately $20 800 per year which is $400 per week.  Subtracting this from the $2100 per week results in a need of $1700 per week.  However, some income tax would be payable on this which would obviously reduce the amount available to the wife.  In addition the wife has been receiving Centrelink payments of approximately $290 per week.  However, the Court is to disregard such payments for the purpose of determining what amount of spousal maintenance is appropriate. 

The husband’s capacity to pay

1. It was submitted on behalf of the husband that the wife’s application for spousal maintenance should be dismissed.  This is on the basis that it is submitted that the husband has no current capacity to pay any spousal maintenance to the wife. 

2. In any event it is said that between January 2006 and January 2009 distributions to the wife by the various companies controlled by the husband have amounted to more than $811 217 the inference being that the wife has managed the money which has been made available to her poorly.  It was also submitted on behalf of the husband that both parties lived an extremely high lifestyle and by June 2006 it was clear that they could not maintain the lifestyle so that the former matrimonial home had to be sold to pay their indebtedness.

3. In his financial statement sworn in May 2009 the husband declared that his total average weekly income is $4684.  This was said to be from his disability insurance payment from Asteron of $4615 and benefits to him from the company in respect of payment of utilities of $69 per week.  In his financial statement the husband said that his total personal expenditure is $8819.23 per week.  This would be a deficiency of $4135 per week. 

4. The husband said that his fixed weekly personal expenditure consists of income tax of $1873.60 per week, insurance premiums to a total of $343.10 excluding insurance for the motor bike plus $461.53 visa and mastercard credit card liabilities plus $250 American Express credit card minimum payment.  The total of these would be $2928.23.  This does not include any amount for rent which I shall come back to.  In his financial statement the husband estimated the average weekly expenses for himself and the children as being a total of $3134.  I have a similar view to these estimates as I did with those of the wife and in my view some of the items are exaggerated.  I regard the estimates for food and household supplies, petrol, fares / car parking, clothing and shoes, children’s activities, medical dental and optical including health insurance costs, entertainment / hobbies, holidays, chemist / pharmaceutical, cleaning, books and magazines, gifts, hairdressing / toiletries and other necessary commitments as requiring reduction.  I do not propose to set these out individually.  Suffice it to say that in my view the appropriate weekly costs for the children are $1350 and $500 per week for the husband.  On this basis the total amount of the husband’s and children’s weekly living costs excluding rent would be $4778.  But this amount would allow nothing to the husband for his rent so I propose to add $900 to this which is the equivalent amount that I regard as appropriate for the wife’s rent.  On this basis the husband’s and children’s weekly living costs including tax would come to a total of $5678.  Clearly there is a deficiency and the deficiency would be arrived at by subtracting these costs from the income paid by Asteron of $4615 per week.  This is because the $69 per week which the husband took account of to arrive at the total income per week of $4684 was attributed to telephone, electricity and gas but the husband has not claimed any of these in his average weekly expenses.  Accordingly, the deficiency is $1063 per week ($4615 - $5678 = a deficiency of $1063 per week).

5. There is a level of complexity about the husband’s financial affairs.  He has an interest in the following trusts:

   ·B Trust of which he is the appointor;

   ·K Unit Trust;

   ·S Services Unit Trust;

   ·Sinkins Family Trust – this Trust has never operated.

6. The husband has an interest in the following companies:

   ·B Services Pty Limited which is a corporate Trustee of the B Trust.  The husband is the sole director and owner of the company although he says he does not hold the shares beneficially.

   ·L Company Pty Limited which is the Trustee for L Family Trust.  This company has never traded.

   ·K Pty Limited which is the Trustee of the K Unit Trust.  The husband owns all the shares but not beneficially.

   ·M Pty Limited.  This company has never traded.

   ·Y Pty Limited of which the parties are equal shareholders.  The husband is the only director.  This company provided the husband’s services as a consultant to all entities in the group.

   ·Sinkins Family Company Pty Limited which is the Trustee of Sinkins Family Trust.  This company has never traded.

   ·S Services Pty Limited which is the Trustee of the S Unit Trust – the husband is the sole director and owner of all shares but not beneficially.

   ·UCompany Pty Limited.  This company has never traded.

   ·Sinkins Holdings Pty Limited – this company has never traded.

7. It was submitted on behalf of the wife that the husband has ample capacity to enable payment of a proper order of the Court.  This was submitted on several bases.  Firstly it was submitted that the disability insurance payment which is received by the husband should be available to meet an order in favour of the wife.  This was on the basis that it is unlikely that the husband will have to pay any tax in respect of this income received, his estimate in his financial statement for such taxation being $1873.60 per week as referred to above.  It was submitted that this was more likely to be the case than not because the husband has not paid any income tax for the financial years ended 30 June 2004, 2005, 2006, 2007 and 2008.  For this reason it is submitted that the Court should infer that any tax to be paid by the husband would be offset by likely losses of the various businesses over the years carried forward as tax credits.  In any event it was suggested that the husband has been able to draw down from the B Trust and the K Trust in the last six months cash drawings of $30 450.  It was submitted that an examination of his cheque butts shows that he has been able to write various cash cheques in multiple thousands of dollars including $15 000 paid for legal costs, barrister’s fees of $3750 in respect of certain driving charges and various other substantial amounts.  In addition to this matter the accounts for the Trusts show that the husband has been able to draw down funds against his loan account and in any event the accounts for the B Trust demonstrate that the Trust made a net profit for the financial year ending 30 June 2009 of $62 682. 

Conclusion

1. As indicated above the wife clearly has a need for spouse maintenance.  The difficulty is that I am not in a position to be able to make findings of fact and there is a significant dispute between the parties about the correct state of the husband’s financial affairs.  Clearly he has been in some difficulty otherwise he would not be able to receive the disability insurance.

2. But these are interim proceedings and the Court will take a fairly broad approach to the matters before it.  In this regard I accept to some extent the broad thrust of the submissions by learned counsel for the wife.  Clearly there is a fund part of which can be used to fulfil an order of the Court and that is the disability insurance payment.  The husband has not addressed the submission to the effect that it is more likely than not that he will pay a modest, if any amount of tax in respect of those monies on the basis of likely taxation credits from his businesses in past financial years.  But I must say that I propose to exercise some caution so far as this matter is concerned.  The husband, on current indications, ought to be able to continue to enjoy some profitability from the B Trust.  This was not disclosed by him in his financial statement.  The rate of profit should be sufficient to meet the deficiency of $1063 per week referred to by me above. 

3. As I say the wife has a legitimate need, although I am not entirely persuaded that it is reasonable to make an order against the husband in the full amount of that need.  In any event there would appear to be some reality about the submission that these parties are unlikely to be able to continue the very high level of spending which they engaged in for some years in more recent times.  On what I can see of the financial history, it would appear that capital gain on the home and their ability to be able to persuade banks and family members to provide ongoing financial support appears to be the source of much of the funding for that lifestyle.  That no longer appears to be available.  In all the circumstances, in my view it will probably be necessary for the wife to exercise some further capacity for income earning employment and it appears that she has some capacity to increase her commitment in that regard.  This is because in my view her needs are greater than the husband has a reasonable capacity to provide for at least at the present time.

1. Doing the best that I can in somewhat unsatisfactory circumstances, in my view there should be a spouse maintenance order in the amount of $1000 per week and this should be made retrospective to the day of the hearing namely 17 June 2009. 

Transfer of businesses

1. As indicated above, the wife also seeks an order to the effect that the husband transfer to her his interest in the companies B Services Pty Limited and M Pty Limited.  As I also indicated above the wife would like to be able to operate these companies with a view to endeavouring to produce income.

2. The parties have little in the way of property apart from whatever value there might be in the various companies and trusts.  In my view, the orders sought by the wife in this latter regard would be more appropriately considered in the context of final property proceedings.  I do not propose to determine these matters in these interlocutory proceedings.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the Reasons for Judgment of Judicial Registrar W P Johnston.

Associate:     

Date:              18 September 2009