Tomson and Tomson and Ors

[2011] FamCA 1071

FAMILY COURT OF AUSTRALIA

TOMSON & TOMSON & ORS [2011] FamCA 1071

FAMILY LAW – PROPERTY SETTLEMENT – INTERIM ORDERS – Whether the Wife is entitled to receive the Husband’s rental income where the Husband is a bankrupt – Where the Wife is in poor health with commensurate medical expenses – Where the rental income is small in proportion to the Husband’s debts – Where the trustee in bankruptcy seeks that half the rental income be applied to the Husband’s debts – Order for the Wife to receive the entirety of the rental proceeds made.

Family Law Act 1975 (Cth)

APPLICANT: Ms Tomson

1st RESPONDENT: Mr Tomson

2nd RESPONDENT: Mr Spencer

3rd RESPONDENT: G Pty Ltd

FILE NUMBER: SYC 4684 of 2011

DATE DELIVERED: 2 November 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Kent J

HEARING DATE: 2 November 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Bridger

SOLICITOR FOR THE APPLICANT: Steven Stefanou & Co

SOLICITOR FOR THE 1ST RESPONDENT: No appearance for or on behalf of 1^st Respondent

SOLICITOR FOR THE 2ND RESPONDENT: Matthews Folbigg Pty Ltd

SOLICITOR FOR THE 3RD RESPONDENT: No appearance for or on behalf of 3^rd Respondent

Orders

1. Until further Order, the Wife receive one-half of the net rent and profits received in respect of the lease of the property B Street, Suburb C.

2. Until further Order, the Wife receive one-third of the net rent and profits received in respect of the lease of the property D Street, Suburb E.

3. The Applicant’s and Second Respondent’s costs of and incidental to this proceeding are reserved to the trial Judge.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4684 of 2011

Ms Tomson

Applicant

And

Mr Tomson

First Respondent

And

Mr Spencer

Second Respondent

And

G Pty Ltd

Third Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. By Application filed on 4 August 2011, Ms Tomson (“the Wife”) sought a number of Orders by way of property settlement, but also some interim Orders with respect to spousal maintenance and other Orders.

2. The matter came before His Honour Fowler J on 15 September 2011. At that stage the Respondent Husband was self-represented and appeared. His Honour then made Orders for the Husband to file and serve a Response and Financial Statement and any affidavit material upon which he intended to rely within twenty-one (21) days of that date; an order for the Wife to serve any further affidavit material within a further fourteen(14) days after that; for the Husband to produce to the court within twenty-one (21) days of that date certain documents listed in the Notice to Produce dated 24 August 2011; and any documents the Second Respondent wished to rely upon to be served within forty-two (42) days.

3. The husband has not complied with any of those Orders; that is, he has not filed a Response and Financial Statement, nor any affidavit material, nor, as I understand it, has he produced to the Court documents the subject of the Notice to Produce.

4. In the absence of those documents, the Wife has filed some further material, namely a further affidavit sworn by her on 1 November 2011, and an affidavit of Mr F, sworn 1 November 2011.

5. Before me also, apart from the affidavit material, are some documents that were tendered on subpoena. In summary, the subpoenaed material, or at least those parts that were tendered before me, relate to two properties in which the Respondent Husband is a part-owner. In one of them, he is a one-third owner, and in the other one, a half owner. The evidence before me establishes that with respect to the Suburb E property of which the Husband is a one-third owner, the net monthly rentals are a total of $9823.93, so that the Husband’s one-third interest is $3,275.00. With respect to the Suburb C property in which the Husband is a half owner, the monthly rentals are approximately $3,000.00 per month, meaning that the Husband’s half share is about $1,500.00 per month. Thus, the Husband’s share of the properties, so far as the rentals are concerned, would be a monthly total of about $4,775.00.

6. In the end, on the Application before me, the only Order the Wife seeks is with respect to the payment of the rental income from the properties referred to. The trustee in bankruptcy of the Husband suggests that there ought be an Order whereby the rentals from those properties are shared as between the trustee on behalf of the Husband’s creditors and the Wife equally. It is the Wife’s position that she ought receive the full amount of the monthly rental.

7. The Wife’s claim is framed as a spousal maintenance claim pursuant to s 72 of the Family Law Act 1975 (Cth) (“the Act”). It is necessary, under that section, for the Wife to establish a threshold requirement of need for maintenance. That she does on the uncontested evidence before me. On her Financial Statement, the Wife deposes to weekly needs for herself totalling $1,375.00, and needs with respect to the children who live with the Wife of $1,050.00, so a total of $3,705.00. I must of course focus upon the needs of the wife herself so far as an application for spousal maintenance is concerned, but of course, under s 75(2), under which a spousal maintenance application is decided, one of the considerations for the Court is not just the age and state of health of each party, but also, whether either party has the care and control of a child of the marriage who is under eighteen years. That is so in this case in that there is living with the Wife one of the children who is under the age of eighteen years.

8. I am also obliged under s 75(2) to have regard to the commitment by the party to enable the party to support themself and also any child or other person that the party has a duty to maintain. On the evidence before me, there is no child support being paid by the Husband, and in circumstances where he is an undischarged bankrupt, there is no realistic prospect of an assessment of child support being made in favour of the Wife. To that may be added the feature that the Wife, apart from her claimed needs, is in unfortunate health in circumstances where last year she was diagnosed as suffering from a brain tumour, which is under the control of Dr H and may require further treatment and involve unexpected expenses, I can infer. She is also in need of a knee replacement following a previous arthroscopy of her knee.

9. Under s 72, I am required to look at the matters referred to in s 75(2) of the Act, which includes subsection (ha), “the effect of any proposed Order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant.”

10. That particular provision of s 75(2) was implemented as a result of the 2005 amendments to the Act. Relevantly, prior to those amendments, the debts of both secured creditors and also unsecured creditors were somewhat sacrosanct so far as family law proceedings were concerned because the interests of those creditors were effectively given priority over the legitimate claims of parties to a marriage. The amendments changed that position so that there was no priority position as between creditors, particularly unsecured creditors, and a spouse.

11. In this case, it is relevant to note that the parties married in 1984 and separated on 4 April 2008, after almost twenty-four years of marriage. There are three children of the marriage, Ms I, born in 1988 and thus now aged 22, Mr F born in 1991 and thus aged 20, J, born in 1995 and aged 16 years.

12. Part of the maelstrom of the parties’ financial affairs includes a claim by a secured creditor to take possession of the former matrimonial home in which the Wife lives as does the youngest child. The Wife has, by her Counsel, tendered before me Exhibits, namely her defence and cross-claim with respect to the claim for possession of that property. It goes without saying that the funding of that kind of litigation in the Supreme Court of New South Wales can be exorbitantly expensive. That this is part of the overall financial affairs between these parties and creditors cannot be doubted. It seems to me that that is a relevant matter I need to take into account in determining the claim before me.

13. In the result, I am satisfied that in the circumstances that the Wife presently faces, fairness dictates that the available funds via the rental proceeds ought be received by the Wife in whole. They will not, in whole, meet her reasonable needs as described and as listed in the financial statement. I am making that determination, keenly aware of the provision of s 75(2)(ha) in terms of the effect of any proposed order on a creditor in terms of the creditor’s ability to recover the debt, but in circumstances where the total rental payments are $4,775.00 a month, such that if I acceded to the trustee’s claim, there would be only a modest sum made available to the trustee and creditors in respect of debts totalling some $2,975,000.00, that in terms of relativity, the Wife’s overwhelming needs and the relatively modest sum under discussion, leads me to conclude that I ought, as an interim Order, make an Order in favour of the Wife to receive the full amount of the proceeds.

14. I am also aware that it may well be that in the course of the Husband’s bankruptcy, a sale of the subject properties will be forced in any event, such that the interim nature of the Order may be brought to an end by the trustee acting to sell the properties in any event. I make no determination about the final Orders that are to be made by this Court as to any contest between the Wife and the trustee in bankruptcy as to the final Orders that might be made or regarding the final Orders the Husband might seek with respect to exempt property, or any excess of property over and above the legitimate claims of the trustee and creditors.

15. I therefore, for those reasons, make the Orders set out at the commencement of these reasons.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 2 November 2011.

Associate: 

Date: 20 March 2012