Tomaras & Tomaras & Anor (No.2)
[2019] FCCA 2830
•8 October 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TOMARAS & TOMARAS & ANOR (No.2) | [2019] FCCA 2830 |
| Catchwords: FAMILY LAW – SPOUSAL MAINTENANCE – Wife fails to establish need for maintenance. |
| Legislation: Family Law Act 1975 (Cth), ss.4(1), 72, 74, 79(1), 79(2), 79(4) Life Insurance Act 1995 (Cth), ss.9A(3), 200 Bankruptcy Act 1966 (Cth), s.19(1) |
| Cases cited: Commissioner of Taxation v Tomaras & Ors [2018] HCA 62 Baghti & Baghti [2013] FamCAFC 7 |
| Applicant: | MS TOMARAS |
| Respondent: | MR TOMARAS |
| Second Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY |
| Intervenor: | COMMISSIONER OF TAXATION |
| File Number: | BRC 11325 of 2013 |
| Judgment of: | Judge Purdon-Sully |
| Hearing dates: | 9 & 10 July 2015, 7 December 2015, 26 August 2016, 21 February 2019 |
| Date of Last Submission: | 29 May 2019 |
| Delivered at: | Brisbane |
| Delivered on: | 8 October 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Carew QC |
| Solicitors for the Applicant: | Hartnett Lawyers |
| Counsel for the Respondent: | Mr Hodges |
| Solicitors for the Respondent: | Self-represented |
ORDERS
That all previous orders be discharged.
That the wife’s Application for Final orders filed 20 December 2013 as amended with leave on 9 July 2015 be dismissed.
That any submissions with respect to costs be filed and served by 4.00pm on 8 November 2019.
IT IS NOTED that publication of this judgment under the pseudonym Tomaras & Tomaras & Anor (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 11325 of 2013
| MS TOMARAS |
Applicant
And
| MR TOMARAS |
Respondent
REASONS FOR JUDGMENT
Introduction
Part VIII of the Family Law Act 1975 (“the Act”) deals with inter alia the property of the parties to a marriage and spouse maintenance.
Section 79 of the Act provides for a Court exercising jurisdiction under the Act to make an order altering the interests of parties to a marriage in property to which one or both of those parties is or are entitled.
Section 72 of the Act sets out the obligation on a party to support a spouse in particular circumstances.
The determinative issues in this case are broadly two-fold:
(1)Is there property to be adjusted between the parties, the wife asserting firstly, that payments received by the husband under an income protection policy are “property” which can be assigned to her and secondly, that the husband has an interest in a group of entities known as Q from which he has benefited; and
(2)If the Court concludes that there is no property to be divided between the parties whether the wife is unable to support herself and whether the husband has the capacity to pay her spouse maintenance.
These reasons will ultimately show that:
(1)an order cannot be made under s.79 of the Act as there is no property to be divided between the parties; and
(2)the wife has not demonstrated a need for spouse maintenance, and if the Court is wrong in so concluding, the husband does not have a capacity to meet her needs if demonstrated.
To explain these conclusions it is necessary to detail the relevant facts and the course of these proceedings which have had a long history in this and other Courts. As such, these reasons should be read in conjunction with the decision of the High Court of Australia in Commissioner of Taxation v Tomaras & Ors. [2018] HCA 62 (“Tomaras”) and following the handing down of that decision this Court’s reasons delivered on 30 April 2019.
The relevant applications before the Court detailing the orders sought by the parties will also be identified.
Facts and course of proceedings
The wife was born in 1967 (age 52). She is an unemployed student. She is in a relationship with Mr A, a professional.
The wife’s living arrangements are in dispute, the husband asserting that she lives with Mr A at his residence at Suburb B in Brisbane and the wife asserting that she has no home and moves between the residences of Mr A, the Town C home of her former sister-in-law (Ms D) and the homes of various friends.
The husband was born in 1972 (age 47). He resides in rented premises at Suburb E on the Region F. He is a trained health care worker however as a result of injury he has not worked in that capacity since 2002. At trial he was a part-time allied health worker and full-time student at G University.
The husband has been in a relationship with Ms H since 2009. She resides in Country J. She is an allied health worker.
The parties commenced to cohabit in 1991, married in 1992 and separated on 15 July 2009. The duration of their cohabitation was 18 years and 6 months.
They have 3 children: Ms K born in 1992, Mr L born in 1993 and Ms M born in 1995.
The children live independently of the parties. At trial the husband was contributing $69 per week towards the support of Ms M.
During the marriage the husband was primarily responsible for the financial support for the family. The wife who worked in the husband’s businesses was the primary carer of the children. It is unchallenged that both made varied contributions over the course of their marriage.
In 1997 the husband took out an income protection insurance and a Total and Permanent Disability Policy with an insurance company now known as FF Insurance.
It is unchallenged that the premiums were paid from monies earned during the marriage.
In 1997 the husband injured his wrist in an accident. He thereafter received intermittent payments under his income protection insurance policy as a result of the impacts of his injury on his ability to work.
From 2002 he has been permanently in receipt of income protection payments from the “own occupation” policy which pays income of up to $150,000 per annum with CPI increases for so long as the husband is permanently disabled from returning to his occupation as a health care worker up to age 65 years.
In 2008 the husband received $709,201 under his Total and Permanent Disability Policy (“the insurance payout”).
At the time the husband had tax debts of over $700,000 and the wife tax debts of about $130,000 as a result of an audit conducted by the Australian Tax Office in 2005. That audit related to the husband’s earnings from 1997 onwards and the wife’s earnings from 1998 to 2002.
The husband accepted that he did not then or later apply any funds from the payout or otherwise to meet these liabilities.
From the payout the husband withdrew $550,000 from his bank account, the funds then placed in the freezer (“the freezer money”) at the former matrimonial home. On his evidence this was because of “the global financial crash”.
On his evidence from the freezer money he paid $220,000 to Mr N and $100,000 to his mother, the latter in repayment of investment loans taken out in 2002 and assumed by his mother which loans had been called in as a result of the Global Financial Crisis and which on the evidence of the husband he could not pay.
The husband contends that the money to Mr N was a loan which was repaid over the ensuing three years. He produced no documentation to corroborate his evidence in this regard.
The husband’s expenditure of the funds received is detailed at [49]-[56] of his affidavit filed 10 June 2015, being inter alia on the children’s private education expenses, the parties’ living expenses, holidays, travel expenses including those of the children, the payment of leases on vehicles, credit card debts and in the repayment of family loans. It is unchallenged that following separation the parties’ children resided with both parties for periods of time at least up until the end of 2014 when they were not boarding at school in the case of the girls or living independently in the case of Mr L.
At the dated of separation in 2009 the wife was residing in rented accommodation at a farm house in Town O, Queensland.
At the date of separation the husband who was in the USA with Mr L, remained overseas for a number of months at which time he spent $30,000 on attending a course in City P and on living expenses.
On his evidence he left funds in a joint bank account to support the wife and children by way of the payment of rent and the payment of the children’s boarding school fees in Brisbane and extra-curricular activities funded from the insurance payout and income protections payments. On his evidence he returned to Australia in December 2019 to assist the wife and children to relocate to rented accommodation in Brisbane.
In 2009 the husband formed his relationship with Ms H whilst in Country J. He thereafter travelled regularly to visit her. Between 2009 and 2014 he travelled overseas on eighteen occasions, on each occasion taking $8,000 to $10,000 in cash then used by him on gambling and living expenses. Only once, on his evidence, did he return to Australia with a small amount of money.
On the husband’s evidence he had a longstanding gambling problem and between 2009 and 2011 and possibly for a period of time thereafter he lost considerable funds gambling on horses and cards.
Between 2014 and 2015 the husband travelled overseas on a further six occasions.
From 2011 a number of businesses under the flagship “Q” were established in Brisbane and the Region F, businesses owned and operated by the husband’s step-father, Mr S and friends of the husband, Ms T and Ms U. The wife asserts that Q was a type of business that had been a long-time dream of the husband.
The husband conceded that he had some involvement in the establishment of Q but denies contributing any money to the enterprise or having a beneficial interest in the business.
The husband was declared bankrupt on 5 November 2013 with debts of over $1,000,000, mainly unpaid tax. On his evidence he had no choice other than to apply for bankruptcy.
Whilst the wife also had an unpaid tax debt accruing penalties and interest she did not declare herself bankrupt and interest and penalties continued to accrue on her debt.
On 20 December 2013 the wife commenced proceedings seeking orders for property and spousal maintenance.
The wife sought by Orders 8 and 9 the following:
8.That the respondent be responsible for all income tax assessed on income received or deemed to have been received by the applicant for the income tax year ending 30 June 2009 to the date of payment under Order 2.
9.The respondent shall do all acts and things and sign all documents as necessary to release the applicant from and indemnify the applicant against any liability present or contingent including tax and bank liabilities, in respect of the respondent or a related party of the respondent.
On 20 February 2014 the parties were ordered to attend a Conciliation Conference on 7 March 2014. In preparation for that Conference the wife was required to provide the husband with the names of 3 Court experts for the purpose of the preparation of a valuation of any disputed property. Notwithstanding the wife asserting the husband’s income protection payments were property no valuation was prepared.
On 24 March 2014 the husband consented to an order that he pay $900 per week to the wife by way of interim spouse maintenance, an obligation that continues and one funded by him from his monthly income protection insurance payment.
On 9 and 10 July 2015 the matter proceeded to a final hearing, subject to receipt of any further evidence to be admitted from FF Insurance, the husband reserving his position in that regard and the matter listed for oral submissions on 7 December 2019.
The husband’s Trustee in Bankruptcy, although a party and second respondent, elected to take no part in the proceedings.
On 14 August 2015 a further order was made, inter alia, in relation to an approach to be made by the husband and wife to FF Insurance in relation to an assignment to the wife of the husband’s Income Protection Policy and whether FF Insurance would register such assignment. The order afforded the second respondent Trustee the opportunity to be heard in relation to the proposed approach to FF Insurance.
On 14 September 2015 FF Insurance responded in the following terms (“FF Insurance email”):
I refer to order 3 of the orders made by Purdon-Sully J on 14 August 2015. The First Respondent has requested that FF Insurance provides its response directly to the Court.
I am instructed that FF Insurance will record the transfer of ownership of Policy Number ... from the First Respondent to the Applicant, subject to the following documents being provided to FF Insurance:
1. A Memorandum of Transfer of Ownership completed and signed by both parties (form attached);
2. The original policy document;
3. If the original policy document is not available, a Statutory Declaration For Lost Policy (form attached) and a cheque in the amount of $50 payable to FF Insurance to pay for the cost of advertising the lost policy; and
4. A certified copy of the Applicant’s and First Respondent’s drivers licence or other photo identification.
I have copied the Applicant and First Respondent’s solicitor to this email. Unfortunately, I do not have contact details for the Second Respondent and I respectfully request that the parties provide a copy of this email to the representative for the Second Respondent.
Should you have any queries, please do not hesitate to contact me on my number below or by return email.
As proposed by the wife in final written submissions filed 20 October 2015 and without challenge by the husband, FF Insurance’s response was admitted into evidence and marked as Exhibit 18 as was further evidence from the wife with respect to her compliance with the order of 14 September 2015.
By letter dated 20 October 2015 from the wife’s solicitors to the Commissioner of Taxation (“the Commissioner”) the Commissioner was made aware of the property proceedings and the orders sought by the wife.
On 7 December 2015 the Commissioner appeared and with the consent of the parties was granted leave to intervene in the proceedings. Counsel for the wife informed the Court that the wife had made application to the Commissioner that her tax debt not be pursued on the grounds of hardship. Oral submissions were taken pending a determination of the Commissioner that day.
Following the receipt of final submissions however and on standing the matter down the Court was informed that the wife’s application to the Commissioner had been rejected. By consent the matter was adjourned to enable the making of further directions to be agreed.
On 26 August 2016, on application by the Commissioner a case stated was made to the Full Court of the Family Court of Australia.
On 13 October 2017 the Full Court held, in summary, that the Court had power to make an order substituting the husband for the wife in relation to a debt owed to the Commissioner.
On 23 March 2018 the High Court granted the Commissioner special leave to appeal the decision of the Full Court.
On 13 December 2018 the High Court dismissed the appeal.
On 29 January 2019 the proceedings were listed for directions in this Court. The husband and the Commissioner sought that the wife’s application for the making of substitution orders as relevant to her taxation liabilities be dismissed, that the matter be determined as a preliminary question as based on Tomaras the order for substitution sought by the wife could not be made.
The matter proceeded to a hearing on 21 February 2019.
On 30 April 2019 the wife’s application for substitution orders was dismissed.
The parties were directed to be filed any further submissions by 4.00pm on 28 May 2019. The wife filed further submissions at 8.31pm on 28 May 2019. The husband did not file submissions however by email dated 29 May 2019 inter alia raised complaint about the wife’s failure to comply with the Court ordered timetable.
Throughout the proceedings the wife was legally represented by her brother, a solicitor. The husband self-acted save when represented by Counsel by direct brief at the trial in July 2015 and at a further hearing on 21 February 2019.
Applications and evidence
The wife seeks the orders detailed at pages 23 and 24 of the written submissions filed on her behalf on 20 October 2015 which inter alia provide for her to receive by way of property adjustment 80% of the proceeds of the husband’s Income Protection Policy together with the Motor Vehicle 1 (see also further submissions filed 28 May 2019).
She otherwise particularises how that transfer or assignment is to be effected.
In the alternative she seeks that the husband cause his interest in the policy to be paid to her.
In the event that the policy is not assigned to her the wife then in the alternative seeks that the husband pay spouse maintenance in the weekly sum of $1,476.
She also seeks a costs order.
The husband seeks that the wife’s application for property and spouse maintenance be dismissed with costs.
I have considered the material relied upon by the parties at trial together with the written submissions made and any corrections to written submissions as made on 7 December 2015 during the course of taking oral submissions.
With respect to the wife’s further written submissions filed 28 May 2019 if the wife was of the view that the administration of justice required a re-opening of the evidence given the time lapse between the taking of oral evidence and delivery of judgment then it was open to her to file an application for leave properly supported by evidence. She did not do so. It is not the Court’s role to conduct her case. Nor is it the Court’s role to attempt to fix the quantum of an order for spouse maintenance in favour of the wife “for such higher amount as the Court deems appropriate having regard to all the circumstances” (at [43]).
The attempt on behalf of the wife to rely in further submissions upon assertions unsupported by evidence with respect to which no leave has been granted inter alia to do with the wife’s mental health and alleged deteriorating financial position is unfair and improper. The impropriety of that is heightened by wife’s knowledge of the unrepresented status of the husband save for direct brief representation on a few occasions and the wife’s further knowledge that objection had been taken by Counsel for the husband on 21 February 2019 with respect to an attempt by the wife to introduce evidence from the bar table.
Further, orders 8 and 9 of the final orders sought by the wife, as amended were dismissed on 30 April 2019. There is no basis for a reconsideration of issues to do with that matter, if the wife is in fact seeking to renew her application with respect to tax matters as dealt with at [86] –[88] of submissions filed 20 October 2015.
Whilst the husband objects to the late receipt of the wife’s further submissions filed on 28 May 2019 and whilst the Court has some sympathy for the husband’s position given the trajectory of this litigation, one that on his case as submitted has involved, inter alia, prior non-compliance with Court directions, attempts to delay, the late introduction of evidence and/or late amendment of the wife’s case, having dealt above with particular matters that arise from the wife’s further submissions, I am not satisfied that there is a significant prejudice to the husband by allowing the further submissions. Whilst the further submissions raise points of law not raised previously in written submissions filed on behalf of the wife by Senior Counsel on 20 October 2015, the husband did not seek further time to respond and on balance and notwithstanding that he self-acts I have determined that the better course is to allow the submissions which were not filed significantly late and determine the outstanding matters in this long running dispute. That course aligns with the husband’s submissions with respect to concerns about further delay.
In reaching a decision I do not propose to respond to each and every submission made however in reaching a decision I have considered all submissions (Baghti & Baghti [2015] FamCAFC 7).
Any findings on credit will be made during the course of my discussion of the evidence.
Property
Section 79(1) of the Act provides that:
(1) In property settlement proceedings, the Court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the Court determines.
Section 79(2) provides that:
The Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make an order.
The relevant legal principles with respect to an adjustment of property interests under s.79 of the Act were discussed by the High Court in Stanford v Stanford [2012] HCA 52.
Relevantly the High Court (French, CJ, Hayne, Heydon, Kiefel and Bell JJ) said at [35] – [40]:
35. It will be recalled that s 79(2) provides that “[t]he Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the Court that, in all the circumstances, it is just and equitable to make the order.
37. The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the Court is satisfied that it is just and equitable to make a property settlement order.
38. Second, although s 79 confers a broad power on a Court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs "as [the judge] thinks fit", in any question between husband and wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:
"The judge called upon to decide proceedings of that kind is not entitled to do what has been described as 'palm tree justice'. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down".
39. Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law". Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses". The question presented by s 79 is whether those rights and interests should be altered.
40. Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
An issue in this case is whether there is property to divide between the parties as an order under s.79 can only be made where a party has a present or future interest in property (Crapp & Crapp (No 2) (1979) FLC 90-615 (“Crapp”); see also W & W (1980) FLC 90-872 Marlowe-Dawson & Dawson (No 2) [2014] Fam CA 599).
It is the wife’s case that the husband’s Income Protection Policy is property and that the husband’s rights under the property are capable of assignment to her. It is her further contention that the husband has an interest in Q.
For the reasons to be given the Court is unable to conclude that the husband’s Income Protection Policy is property capable of being assigned to the wife or that according to the requisite standard of proof (Briginshaw v Briginshaw (1938) 60 CLR 336) the evidence enables the Court to conclude that the husband has an interest in Q or is likely to receive an interest in the future in Q when discharged from his bankruptcy or that he receives benefits from that source above a wage working as an allied health worker.
There is no other property of any significance available to be adjusted between the parties.
At the taking of tested evidence in July 2015 the husband was an undischarged bankrupt.
Neither party disclosed any property of significance in their filed Financial Statements.
The Motor Vehicle 1 was sold in 2011. There is no evidence that the husband owned the vehicle at the date of its sale.
The husband’s motor cycle was sold in 2011. The occasional use of that vehicle thereafter by the husband does not permit a finding of ownership.
There is no persuasive evidence that the husband maintains an interest in any horses or that the horses that the parties did own at separation had any significant value.
The FF Insurance policy
It is contended on behalf of the wife that the husband’s entitlement to income protection payments under his policy of insurance is “property” within the meaning of the Act and capable of assignment under the relevant legislation such that the husband’s rights under the policy may be adjusted between the parties as to 80% to the wife and 20% to the husband.
The wife’s submissions are detailed in particular at [47] to [66] of written submissions filed 20 October 2015 and at [7] to [43] of further written submissions filed 28 May 2019.
The wife’s contention that the husband’s insurance benefit is property is rejected.
For present purposes, the term “property” is defined in s 4(1) of the Act as follows:
“property” means:
(a) in relation to the parties to a marriage or either of them – means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; …
Whilst the term “property” has been generally given a wide meaning (Jones v Skinner (1835) 5 LJ Ch 87 per Lord Langdale MR at page 90; Duff and Duff (1977) FLC 90-217 at p 76,131; Kennon & Spry (2008) 238 CLR 366 at [54] ), as the Full Court (Nicholson CJ, Fogarty and Purvis JJ) observed in Perrett & Perrett (1990) FLC 92-101 at p 77,659:
The question of whether a particular right or entitlement can or should be characterised as property has been one of continual difficulty which has troubled Courts on many occasions both under the Family Law Act and its predecessor and otherwise.
In order to determine the question, it is necessary in each case to first examine and carefully identify the precise nature of the particular entitlement in question.
The husband’s Income Protection Policy has no surrender or cash value. The wife has never sought to value it.
The husband does not have a right to commute the payments.
Its primary purpose of the policy is to provide financial protection in the event of disability caused by injury or illness.[1]
[1] Exhibit 4
It is a right to receive income described as “disability income insurance”, income disclosed as such in the husband’s income tax return, on which he is assessed for income tax purposes.[2]
[2] Exhibit 3
It is a “right” to receive payments contingent on the husband meeting certain obligations under the policy whilst the insurer remains of the view that the husband is disabled within the meaning of the policy. If he is not so disabled then the payment ceases.
It is an entitlement capable of being reduced or terminated at the insurer’s option, the husband’s payments regulated by the insurer dependent on the medical evidence presented by him, the husband required to complete regular progress forms[3] and his employability assessed by the insurer monthly with a medical assessment undertaken by him every three months.
[3] Exhibit 4
“Property” for the purpose of the Act does not include contingent interests. In Crapp at 78,176, Fogarty J said as follows:
An order can only be made… under s 79 where a party has a present or future interest in a particular item of property. Clearly where a party has a present interest no difficulties arise, and by “future interest” in the above sense, I take it to mean a situation where a party has an established interest in an item of property but the date of receipt is postponed to some future time. That is different from the case where a party may become entitled to an interest in property in the future, provided that certain events occur and/or that certain disqualifying events do not occur in the meantime...
In Marchant & Marchant [2012] FamCAFC 181 (May, Ainslie-Wallace & Kent J) the Court said at [58]
58. In Perrett, the Full Court determined that the husband’s entitlement to a defence force pension was no more than an entitlement to receive a series of fortnightly pension payments for the rest of his life, and that it is impossible to characterise that entitlement as a chose in action referable to some notional capitalised figure… also it would be wrong to treat a notional lump sum as “property’ for the purpose of the Act.
At [72] the Court went on to say:
72. We also highlight that the opening words to the definitions in s 4, recorded above, are important. Section 79, by subsection (4)(e), cross-references subsection 75(2) of the Act. Section 75(2)(b) identifies, “the income, property and financial resources of each of the parties…” understood as meaning present and future income where, “…income…” is there referred to, it is difficult to see how, as a matter of statutory interpretation, prospective or contingent income could be capable of being treated as “property” for the purposes of s 79.
In Raine & Creed (2013) FamCA 362 in dealing with a FF Insurance Income Protection Policy that paid a benefit to the husband, a policy like the present case where the insurer could at any time reduce or terminate the payment if it concluded that the husband was either partially or no longer disabled and capable of returning to work, the Court determined that the husband’s weekly disability payment was neither property nor a financial resource, the evidence in that case being that the benefits under the policy were not transferrable.
For the reasons given the Court is unable to conclude that the policy is “property” under the Act.
Given that finding, it is not necessary to consider the question of whether the policy is capable of assignment as permitted under s.200 of the Life Insurance Act 1995 (Cth) (“LIA”), although a conclusion that the policy is not assignable can be an important contra-indicator that the policy is “property”.
The Court accepts however that the policy is not assignable by reason of its exclusion under s.9A(3) of the LIA in that the policy cannot be said to be a “continuous disability policy” within the meaning of the LIA.
Section 200 of the LIA provides a statutory right of assignment of a policy of insurance regulated by the LIA.
Section 8 of the LIA and the Schedule defines ‘policy’ to mean a ‘life policy’.
Section 9(1)(e) of the LIA defines ‘life policy’ as including
Life Policy
(1)Subject to subsection (2), each of the following constitutes a life policy for the purposes of this Act:
…
(e)A continuous disability policy;
(2)A contract that provides for the payment of money on the death of a person is not a life policy if:
(e)by the terms of the contract, the duration of the contract is to be not more than one year; and
(f)payment is only to be made in the event of:
(i)death by accident; or
(ii)death resulting from a specified sickness.
A continuous disability policy is relevantly defined in section 9A as follows:
Continuous disability policy
(1)Subject to this section, a continuous disability policy is a contract of insurance;
(a)that is, by its terms, to be of more than 3 years’ duration; and
(b)under which a benefit is payable in the event of:
(i)the death, by accident or by some other cause stated in the contract of the person whose life is insured (the insured); or
(ii)injury to, or disability of, the insured as a result of accident or sickness; or
(iii)the insured being found to have a stated condition or disease.
(3)A contract of insurance is not a continuous disability policy if the terms of the contract permit alteration, at the instance of the life company concerned, of the benefits provided for by the contract or the premiums payable under the contract.
There appears to be no challenge that the policy is an insurance policy of greater than 3 years duration which insures the husband against injury and disability as referred to in s.9A(1) of the LIA.
The issue is whether the policy is a “continuous disability policy” as defined, the wife’s contention being that it is because there is no discretionary element, the parties having agreed in advance that the ongoing entitlement to payment is conditional upon evidence that the injury is ongoing.
However the Court accepts the submissions on behalf of the husband that the FF Insurance policy cannot be characterised as a “continuous disability policy” given that the insurer is able to alter the policy by either reducing or terminating it at any time based on medical evidence that the husband as policy owner is required to provide on an on-going basis.
No authority was advanced on behalf of the wife where a policy similar to that held by the husband was found to be a life policy and assignable pursuant to s.200 of the LIA.
Particular reference was made on behalf of the wife to the decision in Hoare v Mercantile Mutual [2000] NSWSC 1026 where Rolfe J discussed the words “at the instance of” in the context of a discretionary element.
The facts of that case were that the plaintiff had entered into a contract of insurance which provided, inter alia, for income protection with the defendant insurer with a monthly benefit of $5,000. The plaintiff made a claim. The defendant subsequently reduced payments on the basis that the plaintiff was not totally disabled and had made misrepresentations in entering into the policy.
Clause 6 of the policy provided for benefit reductions in the event that the plaintiff received monies from other sources whilst totally disabled and in consequence of that disablement. Thus in those circumstances the policy topped up the difference between the monies received from either worker’s compensation payments or various forms of welfare payments or any payments made under any other disability, injury or sickness policy to $5,000.
Rolfe J concluded that upon a proper construction of the relevant policy there was an agreement between the plaintiff and the defendant for the reductions, which were not stated to be discretionary reductions in the events contemplated by that condition, and that accordingly the reduction did not take place “at the instance of” the defendant but pursuant to the contractual terms.
It is understandable why His Honour so concluded where whilst it was permissible for the insurer to change the benefit it was not a discretionary reduction with respect to any of the payments specified in terms of clause 6 of the policy.
However in the present case payment of the disability benefit in the form of a monthly income in the event of disability is subject to “proof” of the husband’s entitlement “in such manner as (the insurer) may reasonable request” and the insurer has “the right to require from time to time proof of the husband’s continuing entitlement to the benefit and to reduce or terminate payment if the Policy owner is no longer entitled to the benefit under this policy” (page 10 of the policy “Claim Information”).[4] The husband is required to undergo any medical examination or examinations which the insurer may require and the insurer “may reduce or decline to pay benefits during any period or periods of Disability” caused by a failure to follow medical advice or treatment (page 11 of the policy “Medical Advice and Treatment”).[5]
[4] Exhibit 4
[5] Exhibit 4
In either case the decision of the insurer may be challenged by the insured as to the reasonableness of the decision. The wife’s submission at [65] of written submissions filed 20 October 2015 acknowledges the husband’s right to do so and that he had in fact successfully done so in 2006 as a result of the insurer’s exercise of discretion to unilaterally change the benefit.[6]
[6] Affidavit of wife filed 14 February 2018 at [58]
The Court is not otherwise persuaded by the further submissions advanced on behalf of the wife filed on 28 May 2019 as to the husband’s rights constituting an assignable chose in action at law and in equity and that those rights answer the description of property under the Act for the reasons earlier given. Even if the right is capable of being assigned under Federal or State legislation that does mean it is “property” under the Act.
The Court accepts the submissions on behalf of the husband with respect to the weight to be attached to the response of FF Insurance on 14 September 2015 to “record the transfer of ownership”. It is a response that does not confirm that the policy can be assigned, rather one that confirms that FF Insurance will comply with a Court order and register the assignment if the Court finds that the policy can be assigned.
Q
The wife contends that the husband has not only contributed capital to the establishment of Q but that he has also continued to receive benefits including cash and in kind benefits since its establishment and that it is his alter ego and the current ownership arrangement a sham.
The wife’s submissions with respect to Q are not accepted, the Court unable to conclude that:
(1)The husband has an interest legal or beneficial in Q or otherwise has received benefits from Q other than for services rendered as an allied health care worker.
(2)The husband has assets that have been transferred to third parties in Australia or overseas to avoid those assets being paid to the wife or to creditors.
(3)The husband has additional financial resources available to him apart from the benefits received under his income protection policy.
The basis of the Court’s conclusions in this regard are as follows.
The husband denies he has an interest in Q. Questions between the husband and wife as to the ownership of property are required to be decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses (Stanford at [39]).
It is acknowledged prior to separation the husband received $709,201 under his Total and Permanent Disability Policy. Neither the husband nor the wife appeared to view the payment of tax arising from the conduct of their joint business activity as a priority. Whilst the wife asserts that she was unaware of her tax liability until 2 weeks after separation, she was aware prior to separation that there were tax concerns, not only from what the husband told her on her evidence. There is no evidence for example to suggest that the wife was not made aware by the Commissioner that she was being audited and that that occurred without her knowledge from 1998 to 2002 when conducted or that she was otherwise unaware that the husband was also being audited including with respect to earnings from the jointly operated business.
No funds from the insurance payout of which the husband had eventual control were applied by him towards the payment of the parties’ tax liabilities, the husband on his evidence at trial, at the time “quite unhinged,” spending money, inter alia, on business expenses, travel and his gambling pursuits. It appears that the wife’s expectation, as a result of questions put to the husband under cross-examination, was that at separation $150,000 of the freezer money would be used for her benefit with no evidence to suggest she was seeking that those funds be applied to tax.
Nor in the circumstances did the wife feel it prudent to retain the insurance payout when the opportunity presented, when on her evidence in her affidavit filed 14 February 2014 she had control of the monies as beneficiary under the policy, she, instead, signing the funds over to the husband notwithstanding having been informed by him they had tax problems and notwithstanding her longstanding asserted concerns with regard to his financial secrecy and dubious business practices.
It is acknowledged that the husband was involved in the Q endeavour, including negotiating with real estate agents about potential space, introducing Ms U to Mr S with the intention of Mr S contributing capital, using his personal contacts to obtain finance and in so doing representing himself as an owner, using his alleged reputation to entice others to join the group by representing himself as an owner, permitting himself to be represented as an owner of the business in advertising material and speaking at seminars on behalf of the business.
However notwithstanding the evidence of his involvement and the form of his promotion, having an enthusiastic interest in something and taking steps to bring it to fruition on behalf of a family member who has an investment in the enterprise and using a personal relationship to do that does not in the circumstances of this case prove that the husband has an interest, legal or beneficial in Q.
Similarly having an ambition to have an interest at some future time (on the evidence of the husband at trial) or undertaking some financial calculations or accepting benefits in the form of rent free accommodation from a director of Q or accommodation owned by a Q entity or receiving payments made to him by Q to perform initially specific tasks and then by way of a modest weekly stipend does not permit a conclusion of ownership in the circumstances of this case.
Nor does the husband’s receipt of payments for a short period when he was overseas, the husband informing the Court of this in an affidavit filed on 16 January 2014, on his oral evidence payments made in error.
Nor does the unusual evidence with respect to Mr N and the placement of monies in a freezer, permit a finding that the insurance payout found its way into Q or that the husband received any money from his alleged interest in that enterprise when considered in the context of the husband’s history of idiosyncratic behaviours.
How much the husband’s action had its genesis in concerns about the global financial crisis (on his evidence) or concerns about a response by the Commissioner or by reason of the husband’s idiosyncratic behaviour, or a combination thereof, is not open to precise finding on the evidence.
Notwithstanding some discrepancies between his sworn and oral evidence, the husband presented as an overall witness of truth. He was prepared to give evidence against credit. He presented himself in an unvarnished manner.
Prone to grandiosity and hyperbole, his history suggests an optimistic enthusiasm for a variety of interests, be it futures trading, horseracing, wine tasting and exercise classes, amongst others, the husband accepting as a “reasonable portrayal” a history of interests pursued and often abandoned.
He did not however present as commercially astute. Nor did any of his interests when pursued for commercial venture suggest profitable outcome. The husband’s mother, for example, was called upon to provide the parties with a financial life line when V Pty Ltd went into receivership and the parties left in debt.
Despite their inattention to their taxation obligations the parties’ access to gross income did not suggest financial advancement.
The husband’s horse racing interests proved unprofitable exceeding his pocketbook.
His casual leasing arrangement of a filly called W and the stallion X - a horse on his evidence that had 136 owners - was unsuccessful.
The horse Y proved a poor breeding mare, given to a third party because the husband could not meet her expenses.
There is no persuasive evidence to suggest that post-separation the husband’s continued interest in horseracing turned a profit.
His expenditure of funds to become an allied health worker, an occupation unlikely to provide an acceptable commercial return on investment on his own acknowledgment at trial, and his potential goal to work as a professional for an organisation unlikely to pay him for his services were other examples which supported the Court’s conclusion as to his commercial understanding.
It is probable that the husband’s healthy ego, on his own estimation, including a preparedness to flatter, embellish the facts and exaggerate his own importance and/or achievements - his reference to ownership of an exercise studio as the “Taj Mahal of exercise studios” being but one example in Annexures to the wife’s affidavit filed 9 July 2015 – could lead to a false impression that he was a person of financial consequence or otherwise give rise to a false impression with regard to his capacities and the nature of his involvement with Q such as to suggest an interest in the venture.
The Court adopts the wife’s view of the husband as recounted by her to Mr Z as being a man who had always been “exceptionally skilled at creating stories, or narratives, that fitted with his understanding of the world and with his own goals and beliefs, that were easily believed by others and that (the husband) came to believe himself”.[7]
[7] Exhibit 2
In the circumstances as outlined the evidence of false representations in the husband’s dealings with third parties with respect to his role with Q including that he was a director of Q do not lead to a finding with respect to Q being his alter ego.
Nor does the evidence that it was the husband who significantly benefited from the insurance payout permit a conclusion of beneficial ownership in Q and a funnelling of funds away from creditors to that group.
The weight of the evidence supports a finding that the money was likely spent in the manner asserted by the husband, including on gambling,[8] the husband continuing the peripatetic lifestyle described by the wife on her evidence and in her account to Mr Z, albeit one amplified post-separation by the husband who, in funds from the insurance payout, travelled the globe, pursuing Ms H, skiing, attending horse racing events and gambling in City P, USA, amongst other endeavours.
[8] Evidence of the husband’s gambling also supported by what Mr L told his mother following separation, namely that his father was in City P USA, gambling.
The husband’s evidence at trial that he suffered from a longstanding gambling problem, one that pre-dated separation, was not challenged under cross-examination. No evidence was adduced as to whether the husband had an ability to control his gambling and how, if at all, that may impact upon any findings the Court may be called upon to make with respect to the husband’s use of the insurance payout.
Whilst the husband benefited from the insurance payout, he did not benefit to the exclusion of the family. His evidence in that regard is before the Court. On the evidence of the wife at [112] of her affidavit filed 14 February 2014 by way of example her income following separation consisted of amounts paid to her by the husband which included rent and a weekly sum, albeit the regularity of payment in dispute and the source of the funds unclear.
The wife informed Mr Z that the husband had set Mr L up in independent accommodation and the girls were “having a good time with Dad’s money”. In her affidavit filed 17 November 2014 at [29] she deposes to the husband having deposited $10,000 into each of the accounts of Ms K and Ms M, although the husband’s account of the source and purpose of these funds differs to that of the wife.
Relevantly, with respect to the husband’s asserted interest in Q, the wife who was legally represented throughout the proceedings, did not issue relevant subpoenae notwithstanding being granted leave on 24 June 2015 to issue more than 5 subpoenas to Mr N and the Q entities and those the wife asserted were involved in a sham arrangement.
Neither Mr N, Mr S, Ms T nor Ms U were subpoenaed to give evidence at trial. No application was made to join Q as a party to the proceedings.
The oral submissions on behalf of the wife as to why this did not occur, namely that she was not in a position to join all of the parties cannot be accepted in circumstances where the wife sought and was granted an order to do so some two weeks before trial.
Finally and relevantly, there is no evidence from the Trustee to suggest that the husband has an interest in Q or that he has hidden or transferred assets to Q or otherwise or that Q is a financial resource of the husband. The husband’s Trustee in Bankruptcy who elected to take no part in the proceedings forwarded a letter to the Court to the effect that “the bankrupt currently holds no assets that could be realised for the benefit of creditors in his estate”. [9]
[9] Exhibit 1
It is evidence to which the Court accords weight given the duties of the Trustee under s.19(1) of the Bankruptcy Act 1966 (Cth).[10]
[10] See for example s.19(1)(b), (e) and (f)
In reaching this conclusion the Court has considered the submissions on behalf of the wife at [67] – [68] of written submissions filed 20 October 2015 with respect to the husband’s failure to provide full and frank disclosure and its consequences. The Court’s findings both respect to the issues of property and spouse maintenance however are not ultimately impacted by the submissions on behalf of the wife with respect to disclosure, both parties failing to meet their obligation to provide full and frank disclosure on a timely basis, the wife the only party legally represented throughout the proceedings.
Nor does the husband’s failure to produce documents with regard to overseas bank accounts including possibly the Country AA, some of the accounts (if in existence) established years before separation with the knowledge of the wife with no evidence that suggests the holding of any significant funds.
Whilst the wife has been dogged in her pursuit of the husband, firm in the belief that there is property to be transferred to her, it is not only the conduct of the husband that requires scrutiny. Prior to the receipt of the insurance payout the parties owned no property of any significance. As earlier noted, both benefited from the receipt of gross income during the course of the marriage, income that likely assisted their ability to travel abroad including on an extended working holiday to Country BB in 2004 and 2005. Notwithstanding the wife’s evidence that she was aware in 2005 that the husband had tax issues necessitating a move to a farmhouse in Town CC and that he was also having problems with his insurer, the wife’s antennae was not alerted when he withdrew substantial monies from the bank later placed in the boot of a car and a freezer. She accepts no responsibility for her contribution to the parties’ circumstances. Had the insurance money been fully applied towards the parties’ liabilities there would have been no substantive property to be divided between the parties at separation and it is likely given the extent of their indebtedness the husband would have still filed for bankruptcy. In that circumstance the best outcome for her was an order for spouse maintenance given the husband’s receipt of income protection payments providing her with an opportunity to retrain with a view to supporting herself, an outcome she told the Court she sought. The reason why the wife chose not to also file for bankruptcy in 2009 remains unclear. On her own case she had no means to meet the debt, the Commissioner obtaining default judgment against her. In the context of her asserted stress in dealing with the husband and an asserted desire to resolve the matter, the wife choose to prosecute these proceedings in the manner she did, pressing for a substitution order notwithstanding the obvious hurdle ultimately presented by the decision in Tomaras, her stance necessitating a further hearing on 21 February, 2019, when the interests of justice required finality and not a continuation of this dispute.
Nor do the interests of justice demand the order agitated by the wife that the husband indemnify her with respect to present and future bank and tax liabilities of the husband or a related party of the husband, an order which on the wife’s case was sought to include the wife’s tax liability, a liability as at 7 December 2019 the subject of an unsuccessful hardship application by her. As Senior Counsel for the wife submitted on 7 December 2015 if the Court found against the wife on the property issue, the tax issue did not arise because the ability to bind the third party Commissioner arises under s.90AE of the Act a provision which only comes into play when making an order under s.79.
Conclusion on property
As observed in R v Watson; Ex Parte Armstrong (1976) 136 CLR 248 at [257] (per Barwick CJ, Gibbs, Stephen and Masson JJ) with respect to proceedings for maintenance and property settlement and cited with approval in Stanford at [38]
“The judge called upon to decide proceedings of that kind is not entitled to do what has been described as ‘palm tree justice’. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down.”
By reference to the principles which the Act lays down as authoritatively considered, the wife’s case fails because she cannot demonstrate that there are existing legal and equitable interests of the parties in property such that having regard to those existing interests the Court can be satisfied that it is just and equitable to make a property order. No orders are sought against any other entity or person to bring property owned by others to the pool for division between the parties.
The wife’s application for orders 1 to 4 of the Final Orders sought in the written submissions filed 20 October 2015 is accordingly dismissed.
Spouse Maintenance
In the event the Court found against the wife on the issue of property the wife seeks an order for spouse maintenance.
Section 72 of the Act sets out the obligation on a party to support a spouse in particular circumstances as follows:
(1) A part to a marriage is liable to maintain the either 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 whether:
(a) By reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) By reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)For any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Section 74 empowers a Court to make such order as it considers proper for the maintenance of a party in accordance with Part VIII of the Act.
Section 75(2) provides that in exercising jurisdiction under section 74, the Court shall take into account the matters referred to in subsection (2) as may be relevant.
In Bevan and Bevan (1995) FLC 92-600 at 81,981 – 81,982, the Full Court set out the process for assessing a maintenance claim as:
Taken together then, we would state the law as being that an award of spousal maintenance requires:
a. a threshold finding under s 72 [now s 72(1)];
b. consideration of s 74 and s 75(2);
c. no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit; and
d. discretion exercised in accordance with the provisions of s 74, with ‘reasonableness in the circumstances’ as the guiding principle.
The wife contends that she has no current ability to support herself adequately. She contends that her current needs are $1,176 per week.[11] This includes a weekly board component of $150 however upon obtaining rental accommodation she contends that this sum is likely to increase to $350 to $400 per week. She accordingly seeks an award of $1,476 per week in her favour. The wife’s alternative order as sought at [43] of the written submissions filed 28 May 2019 namely an order for spouse maintenance “for such higher amount as the Court deems appropriate having regard to all the circumstances” CPI adjusted was referred to earlier.
[11] The costs asserted by the wife with respect to running a small vehicle for private purposes that appear at [43] of further submissions filed 28 May 2019 are not in evidence and otherwise contradict the wife’s evidence at Part G and N of her Financial Statement filed 8 July 2015 and her evidence at [53] of her affidavit filed 25 November 2014, affidavits relied upon trial. The wife’s Financial Statement filed 24 February 2017 part of her response documents filed with respect to the husband’s Application in a Case to discharge the interim order for spouse maintenance was not sought to be relied upon by the wife as part of the final property proceedings.
The wife’s financial circumstances are before the Court. The Court accepts on the evidence that at trial she evidenced no significant property or superannuation; that she was unemployed and that her income is derived from a share of the husband’s income protection payments. She has a debt to the Commissioner which continues to increase with interest and penalties.
The wife does not evidence any paid legal fees or outstanding liability for legal fees. The evidence supports a finding that the wife’s brother has been a significant financial resource with respect to the provision of her legal services without charge including the payment of Counsel. The wife accepted that she did not pay for the services of Mr Shoebridge on three occasions, Ms Oakley on one occasion and Ms Carew, Senior Counsel at trial.
She asserted a lack of knowledge with respect to the financial arrangements her brother had put in place with regard to briefing Senior Counsel for the trial other than Counsel was “expensive”. Whether this was because of her relationship with her brother (“We don’t have communication…..I know it sounds weird… it’s a weird relationship.”) or a further example of a lack of forthrightness with the Court matters not, the evidence supporting a finding that it is unlikely that the wife would be required to repay her brother or on her evidence the entity which performed the legal services on her behalf.
The Court assesses the wife’s reasonable weekly needs at $857. The Court is unable to conclude that the wife is required to reasonably meet the expenses claimed by her for household supplies, electricity, gardening and lawn mowing, board or storage fees.
The Court does not accept that the wife will require other rental accommodation as asserted or the payment of storage fees given that the Court finds she is living with Mr A with no persuasive evidence to suggest that her belongings cannot be stored at his home.
It is a relationship which, on the evidence of the wife at trial, had become more permanent in 2015, the wife staying at Mr A’s home from January 2015, a relationship where Mr A was prepared to assist her financially, where they had holidayed together, where there was a sharing of expenses notwithstanding the wife’s evidence to the contrary and where the wife chose to use Mr A’s residence as her mailing address. Mr Z in his report referred to Mr A as the wife’s partner, that information likely provided by the wife.
In short, notwithstanding the wife’s attempt to portray herself as largely homeless and moving between the residences of Mr A and friends, the Court finds that the wife is residing with Mr A at his residence at Suburb B and that they are sharing expenses, the nature and extent of his financial support unknown on the evidence, the wife neither frank in the giving of her evidence about the nature of her relationship with Mr A nor the financial circumstances of their cohabitation.
Whilst the wife attempted where possible to portray the financial and other arrangements of her residence with Mr A as similar to and/or mirroring that with her ex-sister in law, Ms D, and other friends, her evidence in that regard was not credible. No persuasive explanation was advanced as to why the wife would need to move in and out of Mr A’s home when he had the room to accommodate her living with him and Ms D, for example, did not. The wife’s frequent visits with Ms D in Town C were a probable consequence of their close relationship as opposed to her need for accommodation. The wife’s dentist is also in Town C if her evidence is accepted, Town C a town where the family once resided.
The wife’s response to questions with respect to what Mr A did for a living was likewise confusing and ultimately unhelpful. Other than holding a degree, being unemployed at some point and undertaking some sessional work at Employer DD, the wife was vague about Mr A’s work arrangements. The Court is unable to accept that the wife would not have a more fulsome understanding of the occupation and work arrangements of a person with whom she has an intimate relationship and be able to assist the Court in that regard.
Neither Mr A nor Ms D or the wife’s friends were called to give evidence to support the wife’s contention as to the nature of their living circumstances or their financial arrangements including her asserted payment of board, evidence unsupported by the wife’s bank statements.
Given the fact of the wife’s legal representation and the relevance of the financial circumstances of the wife’s cohabitation with Mr A (identified in written submissions of Senior Counsel on behalf of the wife) and given the Court’s findings on the wife’s credit, the absence of evidence from Mr A and other corroborative evidence from the friends with whom the wife asserts she lives and to whose household she asserts she made a financial contribution sounds against the wife. The Court is entitled to infer in the circumstances that their evidence would not have supported her case.
The wife’s evidence with respect to her university study was similarly unsatisfactory.
The wife has been studying to obtain formal tertiary qualifications since at least 2009, the purpose of doing so on her evidence to obtain a professional qualification to assist employability.
Notwithstanding the wife being in receipt of financial support from the husband since 2009, affording her the opportunity to engage in her study unfettered by the demands of any employment she had not completed her studies at trial.
She was unable to assist the Court in understanding the number of subjects she had completed. On her evidence it would have been at least five subjects and could have been ten. This is notwithstanding her evidence in her affidavit filed 14 February 2014 at [121] that she was completing five university subjects a year.
The late receipt of Mr Z’s report on the morning of trial notwithstanding, a report obtained by the wife for the purposes of this litigation and not a report of a treating doctor or therapeutic mental health practitioner, the evidence does not afford a persuasive explanation as to why within a six year time period the wife was unable to at least complete her degree if she did not pursue other studies, given her evidence with respect to her proposed area of employment, or why she has not been able to focus her energies more resolutely on finishing her studies to enable her to enhance her employability or why she was unable to obtain some employment in the area of administration while pursuing part-time study or during periods of interrupted study. On the wife’s evidence she had not made one job application. Nor, is there persuasive evidence to suggest a date when she is likely to complete her studies to enable the Court to consider the reasonableness of affording her a further period of time to do so.
The Court accepts the submission on behalf of the husband that it is not unreasonable for the wife to have made some attempt to obtain employment and/or complete her degree within a reasonable time frame since separation or adequately explain why she could not do so where a criticism by the wife of the husband, for example, was that he had taken more than five years to re-educate or re-train himself.[12]
[12] Affidavit of wife filed 25 November 2014 at [34]
Given the wife’s concerns about her age, employability and lack of formal qualifications it would be expected that completing her tertiary studies and entering the work force would be a priority for her. The evidence suggests a lack of motivation and purposeful endeavour.
Mr Z records the wife as having informed him that she likes to “work hard” and keep herself busy. She viewed herself as being “smart”, the wife’s acceptance into a course of tertiary study and her ability to pass exams supporting that self-assessment.
Notwithstanding Mr Z’s opinion with respect to the wife’s maturity and sophistication, the wife’s presentation under cross-examination suggested a person who was not without intelligence or a person unable to deal with potential difficulties. She was able to comfortably advocate a position viewed by her as favourable to her case. She did not wilt under the pressure of cross-examination.
The onus lies on the wife to establish that she is unable to support herself adequately.
Whilst the Court accepts that it is open to Mr Z to express an opinion about the wife’s presentation in his interview with him, his evidence as to the wife’s capacity to be employed is not supported by the evidence at trial, the factual matters upon which he based his opinion as to the value the wife would bring to an employer not established on the evidence (Ramsay v Watson (1961) 106 CLR 642 at [7]). Further, Mr Z was not provided with the parties’ sworn material to trial. The sources of information made available to him at the time of his interview, two days before the trial, as detailed in his report were not attached to his report or otherwise in evidence, a further letter of instruction and engagement dated the day following his interview with the wife likewise not in evidence.
The wife who undertook employment during the relationship both in Australia and overseas has evidenced the cognitive and logistical resources to pursue vocational education that would enable her to work gainfully. She appears to be passing the exams she has undertaken.
Whilst Mr Z refers to the wife’s “diffuse and uncommon pattern of psychological distress characterised by many physical symptoms” the wife adduced no medical evidence to suggest that her physical health would preclude her from employment, for example, in an administrative capacity.
In her affidavit filed 20 December 2013 at [123] she deposed to good physical health. Notwithstanding the order of 24 June 2015 that enabled her to file a medical report from her general practitioner she did not do so.
The wife does not have a diagnosable mental illness which in the opinion of Mr Z would prohibit her from being gainfully employed. As earlier noted, since the trial, and as earlier noted, the wife has not made any application to the Court supported by evidence seeking leave to adduce further evidence with respect to her physical or mental health and employability.
At trial the wife evidenced interests. She was able to travel. She had proven a loyal friend to Ms D assisting her when called upon to do so, including in interstate travel. She informed Mr Z that she had a network of supportive friends. She had partner support. She had the support of her brother in these proceedings.
The wife has previously worked in an administrative capacity in the husband’s business, on the submissions made on her behalf a joint enterprise, not one that suggested the nominal and insignificant involvement as suggested by her to Mr Z.
On her evidence she supported the husband when he was studying to become a health care worker by working as a retail assistant and waitressing. She has assisted Ms D in the care of children. On her evidence she worked when she and the husband resided in Country BB.
Whilst the wife may have issues to do with managing the stressors in her life including these proceedings, there is no persuasive evidence to suggest that further psychological counselling to address asserted issues of self-esteem which she viewed as helpful and the resolution of these proceedings would not assist her stress nor her pre-disposition to self-doubt or otherwise not assist her in building work skills.
It was the wife’s evidence at [51] of her affidavit filed 17 November 2014 that with appropriate counselling and the stability of final orders she would be able to resume her studies with a view to up skilling to provide her with an opportunity for employment in the future.
In summary, notwithstanding the evidence of Mr Z, there is no persuasive evidence to suggest that the wife’s difficulties as asserted by her are long term, will not resolve sufficiently to enable her to re-enter the workforce or bring something of value to an employer as she has in the past and notwithstanding her lack of work history since separation during a period of extended study.
Relevantly on the sworn evidence of the wife,[13] confirmed at trial, it is her intention to complete her studies and apply for work.
[13] See affidavits filed 14 February 2014 and 25 November 2014
The Court’s discretion to order spouse maintenance must be exercised in accordance with the provisions of s.74 of the Act with “reasonableness in the circumstances” as the guiding principle.
Taking into account the matters identified the Court is unable to conclude that the wife has demonstrated that she is unable to support herself adequately.
The wife’s application for maintenance is dismissed.
If however the Court is wrong in concluding that the wife has not discharged the burden of proving that she meets the threshold condition in s.72 of the Act then the Court finds that the husband does not evidence a capacity to meet the wife’s needs.
At trial the husband was an undischarged bankrupt. He was not due to be discharged from his bankruptcy before 5 November 2016.
He was then a full-time student at G University. Even on discharge of his bankruptcy he did not expect to complete his studies before 2017 depending on whether he chose to continue with full-time study and the number of subjects studied. Whether he intended to work in his area of studies appeared moot on his evidence at trial.
Provided he remains disabled within the terms of his policy of insurance he will continue to have a conditional entitlement to receive income from his insurance of about $149,257 (CPI adjusted) less his income contribution liability to his trustee in bankruptcy (“ASFA contribution”) until discharge, which at trial was $23,000.
His 2015 income tax return evidencing an income of $175,000 was an anomaly as a result of the receipt of an extra month’s payment in the financial year. The husband was also receiving payments from Q in that financial year conducting exercise classes.
What income however he is able to earn from exercise instruction must be viewed in the context of his full-time university study. On his evidence he ceased exercise instruction as a consequence of his studies.
If he ceased his studies, having deferred on two previous occasions, or ceased receiving his income protection payments he would have the capacity to earn income as a full-time exercise instructor, however that is unlikely to exceed about $40,000 per annum. Further, putting aside the husband’s evidence that he did not wish to manage a health care practice there is no evidence to suggest that any income he could earn from employment in a managerial capacity or otherwise would exceed his current income from all sources.
If he continues to receive income protection payments into the future, on his evidence any additional income earned by him would reduce his income protection payments. Whilst it is submitted on behalf of the wife there is no evidence to that effect, if the husband’s evidence is correct then the receipt of any significant additional income from personal exertion is an unlikely motivator given the terms of his income protection policy.
The husband has significant arrears of tax. His election to enter into a repayment plan for unpaid tax and provisional tax cannot be criticised given his history and the Commissioner’s attitude. Whether he would be able to successfully vary the amount paid downwards in the event of a spouse maintenance award is open to speculation in light of that history.
The husband’s trial affidavit reveals a gross weekly income of $2,427.84 (inclusive of his ASFA contribution) which after deducting his expenses of $2,469.16, expenses which were unchallenged, exceed his income by $41.32 a week. His weekly expenses include a payment of $450 per week towards his tax arrears in the sum of $35,566 for the financial year ended 2015 a debt which on his evidence had increased by trial to $46,000. It was a weekly expense that did not include payment of his provisional tax of $916 per week which he has not been paying because of his spouse maintenance obligation. There is no persuasive evidence to suggest that the husband should not meet tax obligations in full.
On discharge from his bankruptcy the husband’s ASFA contribution would cease however that does not alter an assessment of his capacity given his tax obligations and an unpaid debt of $15,950 for barrister’s fees, attracting interest at 14% and payable on 30 June 2017 unless otherwise agreed.[14] It is a liability not reflected in his list of weekly expenses at [108] of his trial affidavit. On 21 February 2019 the husband was again represented by Counsel with no evidence to suggest that was undertaken on a pro bono basis.
[14] Exhibit 8
The husband has not demonstrated a capacity to pay the wife spouse maintenance. It is not proper to make an order in favour of the wife. There is no evidence that the husband’s proposal at trial to pay the wife the weekly sum of $500 for thirteen weeks from September 2016 at which time he anticipated he would have settled his tax arrears with the Commissioner, was accepted.
What resource the husband has in his partner Ms H, which appears to extend to the costs of travel to Country J and what other resources he may have in the form of family and friends does not alter the Court’s conclusion on capacity.
I certify that the preceding two hundred and fifteen (215) paragraphs are a true copy of the reasons for judgment of Judge Purdon-Sully
Associate:
Date: 8 October 2019
Key Legal Topics
Areas of Law
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Family Law
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Insolvency
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