TSOCAS & RILAK

[2014] FamCA 410

FAMILY COURT OF AUSTRALIA

TSOCAS & RILAK [2014] FamCA 410

FAMILY LAW – PROPERTY – Interim – Spouse Maintenance – Where the husband sought a variation or discharge of previous orders for urgent spousal maintenance pursuant to section 83 – Where the wife failed to make full and frank financial disclosure – Where there has been a deterioration in the husband’s financial circumstances – Where the parties have a four year old child – Where the wife is not in paid employment and has chosen not to seek employment – Where order made that the previous urgent spousal maintenance order be discharged as at 5 July 2014.

Family Law Act 1975 (Cth) s 83
Family Law Rules 2004 (Cth) r 13.04, 13.06

APPLICANT: Mr Tsocas

RESPONDENT: Ms Rilak

FILE NUMBER: SYC 2062 of 2010

DATE DELIVERED: 27 May 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 27 May 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Levy

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

SOLICITOR FOR THE RESPONDENT: Ms Rilak in person

Orders

1. The Order for urgent spousal maintenance made 24 April 2013 be discharged as at 5 July 2013.

2. If not before, that the husband bring the order up to date in light of that order within one month from today’s date.

3. Orders are made in the terms of paragraph 2 of the Minute of Order (Exhibit A dated 27 May 2014), as set out hereunder, but I note the wife is entitled to redact any detail on any document which would enable her residential address or the address or location of any day care or preschool institution attended by the child B, (“the child”).

   2.      That pursuant to the Wife's obligation to provide full and frank disclosure in these proceedings, the Wife shall within 14 days of the date of these orders provide to the Husband's lawyers, source documents and/or particulars, as follows:

   2.1Statements and/ or internet print outs for the ANZ Online Saver Account …09 for the period 18 February 2010 to date;

   2.2Statements and/ or internet print outs for the ANZ Online Saver Account …64 in [the child's] name for the period 18 August 2012 to date;

   2.3Statements and/ or internet print outs for the ANZ Access Select Account …38 for the period 27 June 2012 to date;

   2.4Statements and/ or internet print ours for any other bank account held in the Wife's name or in [the child’s] name from 1 January 2010 to date;

   2.5A copy of the Will of the Wife's late father;

   2.6A copy of the Wife's curriculum vitae;

   2.7Particulars of all premises in which the Wife and [the child] have resided from 9 February 2010 to date, including the names and contact details of all real estate agents, and copies of all rental applications and tenancy/lease agreements;

   2.8The name and address of [the child’s] current day care, preschool or school and the date she was first enrolled in that institution;

   2.9How many days per week [the child] has attended day care, preschool or school since she commenced attending;

   2.10Particulars of, and source documents supporting, the Wife's asserted personal loan of $4,000 from her sister, as disclosed in the Financial Statement filed by the Wife on 8 February 2013;

   2.11Particulars of, and source documents supporting, the Wife's asserted personal loan of $16,000, as disclosed in the application of the Wife to the Child Support Agency for a change of assessment dated 31 January 2014;

   2.12Particulars of, and source documents verifying, the Wife's interest in the [Country A] property, including but not limited to:

   2.12.1the address of the property; 

   2.12.2the title to the property, noting that the wife has referred to a letter from a [Country A] notary in relation to the title of the property in her affidavits filed in these proceedings;

   2.12.3whether the property is tenanted. If so, please provide a copy of the tenancy/lease agreement and details of the rental income received by the Wife;

   2.12.4a current valuation of the property (converted into Australian dollars).

4. Unless the Court otherwise orders or the parties otherwise agree the husband is to respond within 14 days to any written request for specific documents sought by the wife.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2062 of 2010

Mr Tsocas

Applicant

And

Ms Rilak

Respondent

REASONS FOR JUDGMENT

1. These are proceedings for a variation or discharge of an order for urgent spousal maintenance made on 24 April 2013.  The Application is an Application in a Case, filed by the husband on 14 May 2014.  The husband is represented, the wife is not.  The matter was listed for hearing today.

2. I explained the procedure to the parties for the benefit of the respondent wife and, although these are summary, interlocutory proceedings, the wife wanted to ask some questions of the husband in the witness box, and Mr Levy, on behalf of the husband, asked some questions of her.  It is often the case that in summary or interlocutory proceedings the Court is not in a position to make findings of fact on contested issues.  A little bit of cross-examination is not necessarily going to put the Court in any better position.  The Court being not much further advanced than it would be in relation to proceedings conducted on the papers.

3. The proceedings are expressly proceedings under section 83. Counsel made a manful effort at trying to explain to me that they were also proceedings for something else, but that is what they are expressed to be, and it would be a denial of natural justice to hear the case on any other basis. It is worth noting that the matter has been listed for hearing very quickly after the Application was filed.

4. Relevantly, section 83 says that:

   The Court shall not make an order increasing or decreasing an amount ordered unless it is satisfied:

   (a)      that, since the order was made or last varied:

   In summary:

   (i) the circumstances of the payee have changed in such a way, or

   (ii)the circumstances of the payer have changed in such a way;

   as to justify that increase or decrease.

5. But the section goes on:

   (b)that, since the order was made, or last varied, the cost of living has changed to an extent justifying it.

   and, relevantly:

   (c)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false. 

6. In the context of this case it falls to the husband to demonstrate that the wife’s circumstances have changed, that his circumstances have changed, or that evidence was withheld or has proved false.  There are other criteria, but they do not apply here.  Unless one of those things is established, then there is no basis for changing the order.

7. Reference has been made to the Reasons for Judgment of Fowler J.  There is a copy of the judgment on the Court record.  The reasons are very brief, as one would expect in relation to urgent maintenance.  In effect, his Honour was satisfied that after ignoring her income tested benefits, the wife could not adequately support herself, and although he had a shortfall of income over outgoings, the husband had property in which there was an equity of more than $200,000.  The husband’s mortgage was in credit, and it is clear that that credit was the basis on which his Honour made the order.

8. There is no longer any credit.  The husband’s evidence is that he was ahead on his mortgage payments.  In particular, he was trying to keep ahead of the mortgage instalments for that reason alone and he was trying to make provision for an expected dental expense.  It is his evidence that he could not maintain the mortgage payments, and he refinanced the whole debt.  There is no longer the facility that Fowler J identified as the basis on which the payments were made.

9. I should record that it was put to me that his Honour was not at liberty to make the order he did on the basis of the husband’s borrowing capacity.  I respectfully do not agree.

10. As to the level of financial disclosure, each of the parties alleges the other has failed to disclose their finances.

11. The wife acts on her own account.  She has not met her obligations of disclosure.

12. The combination of the Rules of Court and the forms require that parties to financial proceedings file up to date Financial Statements.  When a party executes a Financial Statement, they adopt the relevant Rules of Court.  For example, Rule 13.04, in relation to financial disclosure.  Rule 13.06, for example, says:

    If a party’s financial circumstances have changed significantly from the information set out in the Financial Statement, the party must, within 21 days after the change of circumstances, file a new Financial Statement.

13. There is an option for filing an affidavit if the change is minor.

14. The wife did not rely on a Financial Statement at all for the purpose of this hearing.  After I drew that to her attention, she asked me to read a Financial Statement from February last year.  It was wrong, in some ways, on the day it was filed, and it substantially no longer reflects what the wife says are her circumstances.

15. I suspect it is not correct in relation to any part of her income.  Certainly, the figure for child support being paid is incorrect.  The evidence is that at the time she swore the document, 8 February 2013, she was paying $174 a week in rent.  That is demonstrated from bank statements.  However her Financial Statement has her paying $370 a week rent.  She was asked about that, and her explanation was that she signed a lease or an agreement at $370 a week, but she then received some subsidies and she reported only the greater figure.  What she was obliged to do in the Financial Statement was to provide, as best she could, a weekly estimate of the cost and her Statement at that time was inaccurate.

16. She included $400 a week in credit card payments.  She conceded in the witness box that some part of the Part N disclosure was duplicated in that figure.  So by reporting at paragraph 30 she paid $400 a week in credit card payments, and by reporting at paragraph 32 that she paid $1,180 a week, she duplicated some payments.  Whether that was the entire $400 or not, it is impossible to discern.  While it was apparently correct at the time, the disclosed moneys in the bank are no longer correct as at today’s date.

17. It was the wife’s evidence today that whereas she owed $4,000 in debt to her sister, she now owes an additional $16,000 or $17,000 in debts to her sister and to her mother.  There is no detail about that and no other evidence about it. 

18. There was a substantial failure by the wife to comply with the Rules of Court in relation to her financial disclosure. It is clear from his Honour’s reasons that none of those issues were put before him. Indeed, some of them could not be put before him and, in my view, the provisions of s 83(2)(c) are triggered.

19. In addition to that, there is evidence that the financial circumstances of the husband have changed.  He gives some evidence of a deteriorating position.  I have referred, importantly, to the change in the fundamental basis on which his Honour made the order, and that was the availability of a credit sum in the facility secured on the husband’s home.  It is a difficult thing, I think, for the Court to be satisfied that that was absolutely necessary for the husband to refinance the debt.  I think on balance, without the proposition being put to him in cross-examination, I cannot find to the contrary.  That is, I cannot find that he has contrived this situation for the purposes of these proceedings.

20. There are imponderables about the financial situation the parties find themselves in, and it may be that those circumstances will be investigated to some greater extent at a final hearing.  But it seems, for the purposes of today, I can be satisfied that there has been deterioration in the husband’s circumstances.  There is some evidence about a loss of clients.  Those are matters that might be tested again in some more detail at a final hearing.  It was not tested here.  Again, I note that the wife is acting on her own account, but that does not mean I can make assumptions or findings that the evidence does not support.

21. So it seems to me that the s 83 threshold is achieved and I can consider making changes to the orders. As I said to the parties earlier, maintenance is an obligation that arises because of their former relationship. If one of them cannot adequately support herself, in this case, by reason of having care and control of a child who has not attained 18, by reason of age or physical or mental incapacity, for appropriate gainful employment, or for any other adequate reason the other can be required to provide support to a reasonable extent.

22. The evidence of the wife about her lack of paid employment was that: She wanted to be available to the parties’ daughter.  Secondly, she had commitments associated with these and other proceedings, preparation for hearings etc – and I think this is something that both parties rely on – the demands of preparation for various aspects of their litigation.  Finally, the wife said on a couple of occasions that she chooses not to work.  By that I understood her to mean, chooses not to take up paid employment.

23. She was taken through qualifications or experience she has in a clerical field, in a personal services role and in an education role.  She may be qualified in the personal services role.  There is no evidence that she has ever performed that role.  Her education role experience amounted to one session teaching people about software.  However, as to the clerical field, she did work before the parties’ relationship and subsequently in various aspects of that field.

24. She was asked during cross-examination whether she was able to do any of that work from home, and she said, no.  She was asked whether she had ever done it from home, and she said, no.  She was asked whether it was possible to do the work from home, and she said, no, to the effect “because I choose not to”.

25. The test in relation to maintenance is, whether a party is unable to support himself or herself adequately for any adequate reason.  The child B, (“the child”) is four.  She is, in fact, attending day care, perhaps a facility in the style of a preschool.  As long as a year ago, the child attended three days a week.  The times have differed.  She has not often spent eight hours a day, but she has spent four or five hours a day, and a few times, eight hours.  The wife elected to place the child in day care.  I am not being critical.  That is the expectation, I think, for children in the years immediately before they are due to start school that they would have a level of socialisation, and so on.  It is the rule, not the exception, that children of the child’s age would attend kindergarten or a preschool, and that is what in fact has been happening.  It is the wife’s case that she has not sought work, not that she is not able to secure paid employment.  So it is not a question of work not being available.  She has made an election not to seek it. 

26. Given that there is a child without special needs and a physically and mentally able mother I am not sure that it would be an adequate reason for not seeking employment that the child was home with the wife in any event, but that is not the wife’s case.  Assuming that the mother was able to make a case for the need for spouse maintenance I turn to the capacity of the father.

27. The question is, what is he reasonably able to do, and it seems to me that that test imports has some limits about what is expected.  Perhaps he is not required, for example, to change careers, perhaps he does not need to take a second job.  There is an element of taking the payer as one finds the payer, I think, in that legislative provision.

28. It might be that this is just because the right questions were not asked, and the wife was not able to establish, through records or through testing of oral evidence, the proposition she wanted to establish, but I am not satisfied that there is an ongoing capacity in the husband to provide this support. 

29. There has been a change in the husband’s circumstances.  There is no evidence that it was a change conspired by him for the purposes of these proceedings.  There is a concern raised by the wife in relation to a business that turns over more than $100,000 a year, but only generates a taxable income from the husband of some $34,000, I think, a year, but that suspicion is not enough.

30. Yes, running an enterprise through a business structure means that some ambiguous expenses can be attributed to the business rather than as personal expenses.  In that way perhaps the husband’s income should be seen as something, in reality, more than shown.  That must be the case, otherwise, in my view, the husband would be crazy to continue running his business.  On the face of it, the person he employs to do bookkeeping work earns nearly the same taxable income as he does, but I cannot make the case that the wife wants made.  I cannot find that the business turnover is the husband’s income or that some substantial proportion of the $116,000 that was turned over in one year, can be called his income.  It just does not work that way.

31. The husband was not challenged about any particular item in his weekly outgoings.  He did not concede that any aspect of his disclosure about the drawings he makes, his rental income were incorrect.  I should have said, each of the parties declare income tested benefits.  I am obliged to ignore them for the purposes of these proceedings.  A thing like an allowance for depreciation is not something that you can eat or pay maintenance with.  In relation to outgoings, again, the husband was not successfully challenged in relation to any particular payment.

32. He has a property, but it is heavily encumbered, he says it is worth $750,000 and that he owes $352,600.  There is no evidence, as the wife would have it, that the property is worth a lot more.  Even if it was, there is a question about whether it is reasonable for the husband to be expected to further encumber the property.  There is no evidence that he can encumber the property further and, indeed, he would have it that he made some inquiries and was able, on the basis of those inquiries, to refinance the mortgage just to get himself in the position that he is in.

33. He does not have any other significant assets that can be sold.  There is money owing between him and the company, but the company does not have any value.  So that debt is not a source of funds.  He has negligible superannuation.

34. He has borrowed some money under an agreement with his mother, and that is for a specific purpose, not for general purposes.  Again, the wife would impugn that agreement.  There was no testing of it.  The wife has her suspicions about the arrangements; but they are not evidence.

35. It seems to me that the Application should succeed.  I made a suggestion to the husband’s counsel that the order be discharged in a month’s time.  He did not receive it with any enthusiasm but I do not think he said I was not able to make such an order.  It is one thing to say that a party has not taken up opportunities to work, and it is another thing to find that it is possible.  We do not live in times of full employment.  There is not work available for everybody who wants work.  The reality is there might not be work available for the wife, but it seems to me that at least she should have some opportunity to try and put her affairs in better order before, albeit in arrears, what is a very significant support to her is pulled out from under her.

I certify that the preceding thirty five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 27 May 2014.

Associate: 

Date:  17 June 2014