SUVARI & SUVARI

[2019] FamCA 434

FAMILY COURT OF AUSTRALIA

SUVARI & SUVARI [2019] FamCA 434

FAMILY LAW – FINANCIAL – Where the parties owned and operated two businesses during the marriage – Where following separation, the wife moved substantial funds from the businesses into the mortgage account without the consent of the husband – Where the husband contends those transfers will be treated as income and attract tax accordingly – Order made for the funds to be returned to the businesses, to be used by agreement of the husband and the wife jointly – Application for spousal maintenance – Where the husband pays the mortgage, child maintenance and school fees – Where the husband agrees to pay $600 a week for spousal maintenance – Where there is no evidence that he can afford more than $600 a week – Order made.

APPLICANT: Ms Suvari

RESPONDENT: Mr Suvari

FILE NUMBER: SYC 544 of 2019

DATE DELIVERED: 5 July 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 2 July 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Spain

SOLICITOR FOR THE APPLICANT: Newnhams Solicitors

COUNSEL FOR THE RESPONDENT: Mr Watkins

SOLICITOR FOR THE RESPONDENT: MCK Lawyers

Orders

IT IS ORDERED

1. That the husband pay to the wife by way of spousal maintenance the sum of $600 per week.

2. That the husband, in addition to the amount in Order 1, pay the following amounts as they fall due:

   (a)Mortgage instalments of principal and interest in relation to account …08 with the ANZ Bank;           

   (b)      Health insurance premiums;

   (c)      Strata levies, water rates and council rates.

3. That the husband indemnify the wife in relation to any liability for tax incurred as a result of the sum of $600 per week being paid to her as a distribution from the family trust or as income in any other form.

4. That the husband and the wife cause the funds paid into the mortgage account …08, between November 2018 and May 2019, being $332,000, be transferred from the mortgage account to an account in the name of the entity from which the funds came.

5. That for the purpose of Order 4, the accounts in the name of each entity be a separate account from the existing trading accounts of those entities and be an account in the name of the entity which can be operated only on the signatures of the husband and the wife jointly.

6. That in relation to the funds held in the accounts referred to in Orders 4 and 5, the funds in those accounts can be used as agreed by the husband and the wife jointly.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 544 of 2019

Ms Suvari

Applicant

And

Mr Suvari

Respondent

REASONS FOR JUDGMENT

1. Ms Suvari (“the wife”) and Mr Suvari (“the husband”) were married in 2000. The husband contends they separated in July 2018, the wife in December 2018. They have two children, aged 15 years and 12 years who live with the wife.

2. During the marriage, the parties operated two businesses. Both parties were involved in the business.

3. One of the businesses was operated by B Pty Limited. The other was operated by C Pty Limited as trustee of the Suvari Family Trust.

4. After separation, the wife continued to play a role in the management of the business until the end of January 2019 when her access to the records and accounts was withdrawn.

5. The parties own a home at Suburb D which is subject to a mortgage. After separation, the wife caused substantial money from the accounts of the business to be paid into the mortgage account.

6. The husband deposed that between September 2018 and January 2019, the wife transferred substantial funds into the mortgage account from the businesses without his consent. The husband deposed in his affidavit of 1 July 2019 to nine transfers between 26 September 2018 and 25 January 2019 amounting to $457,000.

7. This figure varies from his affidavit of 12 March 2019, which provides for $482,000 transferred, with dates that vary from the subsequent affidavit.

8. Both figures provided by the husband differ from the home loan bank statement, which was tendered but not in full.

9. The wife provided no evidence as to how much she transferred into the mortgage account. She proffered that such transfers were common while they were married.

10. There was no consensus between parties about the amount transferred. There is no consensus about when the parties separated, or when the wife commenced these transfers without the husband’s consent. The only evidence to assist the Court was a bank statement of the mortgage account between 23 November 2018 and 14 May 2019. Findings can only be made for this period. It was from approximately this period that both parties agree they were separated and the wife was no longer in a position to be moving joint funds without the consent of the husband.  

11. Therefore, for the purposes of these proceedings, I propose to deal only with the $332,000 which was transferred from the accounts of B Pty Limited and C Pty Limited to the mortgage account.

12. On 29 January 2019, $400,000 was drawn down from the mortgage account. $350,000 was returned to the account on 19 March 2019. The mortgage balance is now about $82,000.

13. The accountant for the businesses has advised that the amounts paid into the mortgage account must be treated as a distribution to the parties and will attract tax.

14. Until separation, whatever money was available from the business was divided equally between the parties for tax purposes. In the year ended 30 June 2018, they each had a taxable income of $112,900.

15. The wife now seeks an order for spousal maintenance in the sum of $1,508 per week together with private health insurance premiums for herself and the children; payment of the lease on her car and its registration, maintenance and insurance; home and contents insurance; strata fees and levies; water and council rates and the payment of mortgage payments.

16. She also seeks an order that the husband pay the children’s private school fees. Although there are no proceedings on foot in relation to child support and there is no power to make that order, it is accepted as between the parties that the husband will pay the school fees.

17. The husband, in response, seeks an order that he pay spousal maintenance of $600 per week, to be paid as a distribution. He also proposes that he should indemnify the wife in relation to any tax consequences of the payments being by way of distribution.

18. Of the sum paid by way of spousal maintenance the husband proposes that $466 be credited as child support. The logic of that explanation was not explained. There is no application before the Court in relation to variation of child support which has been assessed. No orders will be made which affect the child support assessment.

19. The husband proposes that he will pay mortgage instalments as they fall due, private school fees for the children and health insurance premiums.

20. He further seeks an order that, from the mortgage account, certain sums be paid to the Australian Taxation office (“ATO”) on account of personal income tax for himself and the wife, $160,000 be repaid to C Pty Limited and $100,000 be repaid to B Pty Limited. He also seeks payment of the fees of the single expert accountant. 

21. The wife opposes the husband’s application for the payment of money from the mortgage account.

SPOUSAL MAINTENANCE

1. The wife, until January 2019, was involved in the management of the businesses. She has not worked outside the family businesses since the birth of their first child. She has not sought employment since January 2019.

2. Although it was submitted on behalf of the husband that she has a capacity for employment during school hours in the hospitality industry, I am not satisfied that such employment is actually available to her. I accept that she is unable to support herself from her earnings.

3. The wife’s claimed expenses are $1,466 per week. There was no real challenge to the reasonableness of that claim.

4. The real issue is the husband’s ability to pay.

5. In submissions in reply, the wife tendered a bank statement for C Pty Limited for the month of February 2019. The statement showed total deposits of $386,443 and total withdrawals of $348,719. Counsel for the wife submitted that, where the bank statement showed “Card Withdrawals” at a bank branch, it should be assumed that this represented cash withdrawals for the benefit of the husband.

6. That submission was disputed by the husband who said, through his counsel, that certain payments made to staff and suppliers for the business were made in cash. The state of the evidence does not allow me to find, even on the balance of probabilities, that those withdrawals were funds retained by the husband.

7. For the purpose of this application, I propose to treat the income of the husband as being $225,000 per annum being the parties combined taxable income from the previous financial year. If, as was submitted on behalf of the wife, the husband receives benefits by way of travel and the like paid for by the business, I must assume, for the purpose of this application, that they are brought to account in calculating his taxable income.

8. From that amount, he will be required to pay fixed expenses.

9. The husband deposed that his tax assessed in the 2018 financial year was $31,131 on an income of $112,900. Since, for the purpose of this application, I have treated the income as being distributed only to the husband, I will assume the tax to be $62,250. This might be an injustice to the husband but there is no other evidence.

10. The husband will pay the following:

    ·    Tax  $62,250

    ·    School fees  $57,000

    ·    Mortgage payments ($1,084 weekly)  $56,368

    ·    Child Support ($1,864.43 monthly)  $22,373

    ·    Health insurance ($8 weekly)  $416

    ·    Rates and levies ($71 weekly)  $3,692

    ·    Total  $202,099

11. On that basis the husband has a disposable income of $23,000 per annum.

12. The husband, in his response, proposes that he pay spousal maintenance of $600 per week. I am unable to find, on the evidence before me, that he can pay more.

$332,000 PAID INTO THE MORTGAGE ACCOUNT

1. Although $332,000 was paid to the mortgage, $50,000 of that sum was withdrawn. It appears to be common ground that this money was used, in part, to fund the interim property settlement which each of the parties received. No submissions were addressed by counsel to that issue.  

2. Although there is little evidence of the precise source of the funds, it is contended in the affidavits sworn by the husband, that the substantial funds were transferred from both B Pty Limited and C Pty Limited.

3. I accept that, if the money is withdrawn from the businesses, and paid for the benefit of the husband and the wife, then those funds will be treated as income in their hands and tax will have to be paid on that income.

4. I also accept that, in the past, both the husband and the wife have treated the money in the accounts of B Pty Limited and C Pty Limited as their own with scant regard to the fact that the companies are separate legal entities.

5. However, they are now separated and cannot agree on how the money in the company accounts should be treated. In those circumstances, the money should be returned to the entity from which it was taken and held there. From thence, the funds can be used for whatever purpose is agreed by the parties, provided that they both agree.

6. Because of the lack of evidence about the precise source of each payment, I will make orders that provide for the sums to be returned to the entity from which they came.

7. The husband asks the Court to order that certain sums, totalling about $62,500 be paid to the ATO. There is no evidence of the amounts which are owed and there is no agreement that the amounts asserted by the husband to be owed are accurate. That order will not be made. However, the parties may agree to make the payments if an assessment issues, or has already issued.

8. The funds which are returned to B Pty Limited and C Pty Limited will be held, in each instance, in a separate account in the name of each entity, that account to be accessed only on the joint signatures of the husband and the wife.  

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 5 July 2019.

Associate:

Date:  5 July 2019