Vailes and Vailes
[2010] FMCAfam 391
•27 April 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VAILES & VAILES | [2010] FMCAfam 391 |
| FAMILY LAW – Property – variation of spousal maintenance. |
| Family Law Act 1975, ss.72, 75, 83 |
| Applicant: | MR VAILES |
| Respondent: | MS VAILES |
| File Number: | SYM 7539 of 2003 |
| Judgment of: | Altobelli FM |
| Hearing date: | 8 April 2010 |
| Date of Last Submission: | 8 April 2010 |
| Delivered at: | Sydney |
| Delivered on: | 27 April 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Gillies |
| Solicitors for the Applicant: | Konstan Lawyers |
| The Respondent appeared in person |
ORDERS
The wife’s application for variation of spousal maintenance is dismissed.
The husband’s Reply filed 4 February 2010 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Vailes & Vailes is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYM 7539 of 2003
| MR VAILES |
Applicant
And
| MS VAILES |
Respondent
REASONS FOR JUDGMENT
Introduction and background
Both the applicant husband and the respondent wife bring competing applications under section 83 Family Law Act 1975 to vary orders for spouse maintenance made by consent on 2 October 2004. Both assert that circumstances have so changed that the order should be varied. The husband says his obligation to pay to the wife spousal maintenance in the sum of $1000 per week until the age of 60 should be discharged. The wife says it should be increased by reference to the Consumer Price Index and also by $1000 per calendar month. The wife has also sought an adjournment of these proceedings, an order for capitalised lump sum spouse maintenance, and an order for security for payment of the maintenance. I declined to grant an adjournment, and dismissed her other applications, for reasons that I provided ex tempore. It is common ground that the order for the payment of maintenance has been and continues to be complied with.
The husband is 48 years old and is a [occupation omitted]. The wife is 53 years old and is unemployed. The husband says she has not worked since 1986. There is no evidence to dispute this. They married in 1982, separated in 2003 after cohabitating for about 11 years, and divorced in 2004. They have 4 children aged 24, 21, 19 and 12. At present they are all dependent on the husband in whole or in part. The youngest lives with the husband. The wife asserts, and the evidence confirms, that the husband has been and remains a good father to his children. Indeed the evidence indicates that he has been extraordinarily generous towards his children.
The husband remarried in 2007. His new wife has 3 children aged 18, 13 and 11.
The impression formed from reading the affidavits, and observing the conduct of these proceedings over several years, as well as seeing the demeanour of the parties, is that they had a tumultuous relationship and separation. The level of conflict between them is very high. The parenting proceedings between the parties was determined in the absence of the wife on 4 May 2009. I ordered the husband to have shared parental responsibility, the children to live with him, and for contact to be as agreed, and taking into account the views of the only minor child at the time.
The mother represented herself at all relevant times. She was very excitable, erratic and incoherent at times. In the husband’s affidavit of 23 June 2009 he refers to an assertion that the wife suffers from mental instability and had been admitted to the Mental Health Unit at [omitted] Hospital. I can place no weight on this evidence to support a finding that the wife suffers a mental condition. There is no medical evidence to this effect. Her demeanour and conduct before me is, however, consistent with a person experiencing psychological and possibly psychiatric health issues.
The evidence consisted of extensive affidavits relied upon by the husband, and substantial material relating to his financial affairs. It was difficult to ascertain what material the wife was relying on so, to be fair to her, I read all of the material she has filed in these proceedings. The wife did not file a financial statement. It is not disputed that the wife is bankrupt and became so no later than February 2010. She advised me that her trustee in bankruptcy was aware of the present proceedings.
The applicable law
There are competing applications under s.83 of the Act. The relevant provisions are:
(1) If there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of a party to a marriage:
(a) made by the court; or
(b) made by another court and registered in the first‑mentioned court in accordance with the applicable Rules of Court;
the court may, subject to section 111AA:
(c) discharge the order if there is any just cause for so doing;
(d) suspend its operation wholly or in part and either until further order or until a fixed time or the happening of some future event;
(e) revive wholly or in part an order suspended under paragraph (d); or
(f) subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner.
(1A) The court's jurisdiction under subsection (1) may be exercised:
(a) in any case--in proceedings with respect to the maintenance of a party to the marriage; or
(b) if there is a bankrupt party to the marriage--on the application of the bankruptcy trustee; or
(c) if a party to the marriage is a debtor subject to a personal insolvency agreement--on the application of the trustee of the agreement.
(2) The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:
(a) that, since the order was made or last varied:
(i) the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);
(ii) the circumstances of the person liable to make payments under the order have so changed; or
(iii) in the case of an order that operates in favour of, or is binding on, a legal personal representative--the circumstances of the estate are such;
as to justify its so doing;
(b) that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;
(ba) in a case where the order was made by consent--that the amount ordered to be paid is not proper or adequate;
(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.
(3) Subsection (2) does not prevent the court from making an order varying an order made before the date of commencement of this Act if the first‑mentioned order is made for the purpose of giving effect to this Part.
(4) In satisfying itself for the purposes of paragraph (2)(b), the court shall have regard to any changes that have occurred in the Consumer Price Index published by the Australian Statistician.
(5) The court shall not, in considering the variation of an order, have regard to a change in the cost of living unless at least 12 months have elapsed since the order was made or was last varied having regard to a change in the cost of living.
(5A) In satisfying itself for the purposes of paragraph (2)(ba), the court shall have regard to any payments, and any transfer or settlement of property, previously made by a party to the marriage, or by the bankruptcy trustee of a party to the marriage, to:
(a) the other party; or
(b) any other person for the benefit of the other party.
(7) For the purposes of this section, the court shall have regard to the provisions of sections 72 and 75.
Sub-section (7) incorporates ss.72 and 75 of Act. Section 72 explains where a spouse has a right to spouse maintenance:
(1) A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately 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).
The matters relevant to the exercise of discretion in s.72 are set out in s.75(2):
(2) The matters to be so taken into account are:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(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; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
On the facts of this case paragraphs (a) and (b) of s.83(2) seem to be the most relevant. The focus of these paragraphs is change. I need to consider how circumstances of the parties have changed since the date the order was made in October 2004. This means considering the evidence about their circumstances now, then, and in between. The change in question needs to be primarily, but not exclusively, financial or economic. Section 75(2) also refers to a number of non-financial circumstances, thus broadening the enquiry.
It is important to note that change per se does not trigger a variation of a maintenance order. Sub-paragraphs (i) and (ii) of s.83(2)(a) use the words “so changed” thus importing a qualitative or quantative element. The nature of the change must be so great, or so significant in the context of this case, that a variation is warranted.
In any event s.83(1) and (2) are clearly discretionary provisions. Even if change is present, the section does not mandate a variation of the order in question.
Section 83(7) is an important contextual provision. By referring back to s.72 it establishes an important contextual framework for the s.83 enquiry - it is about spouse maintenance. Section 83 is not about child support. It is not about property settlement. The context is spouse maintenance. True it is that s.75(2) refers to both child support and property settlement as relevant considerations, but these matters do not set the agenda so to speak for the s.83(2) enquiry.
The original order
The order in question was a consent order dated 10 November 2004 made by a Deputy Registrar of the Family Court of Australia. The evidence indicates that it remains current. The spouse maintenance order is order 9.
The rest of the order deals with property settlement. The wife retained properties at [T] and [C], subject to mortgages. The husband retained properties at [W] and at [B] subject to mortgages. The wife resigned from and transferred all of her interest in [D] Pty Ltd to the husband subject to the usual indemnities. Notation C records that the husband was paying to the wife $1000 per week by way of child support, all school fees for the children and the cost of private health insurance for them. There are a number of other ancillary provisions that are not relevant in the present context.
In evidence there was a copy of the Form 11 Application of Consent Orders filed 12 October 2004. This is signed by both parties who provide the usual affidavits. It is clear from this document that, at the relevant time:
a)The three minor children were living with the wife
b)Child support in the sum of $1000 per week was being paid by the husband
c)The wife was receiving net assets of $1,690,000 and the husband $287,000
d)The proposed percentage division of property including superannuation was 77% to the wife, 23% to the husband
The evidence before me left me with no doubt that this is what the husband and wife agreed to at the relevant time. The wife was receiving real estate which they agreed was worth $2,410,000 subject to mortgages of $742,000. The wife asserted in cross-examination that she had not obtained valuations of the assets in question. This was not challenged, but in the present context is irrelevant.
Events after the order
In the five year plus period since the orders were made, the evidence leads me to find that:
a)All of the children came to live with their father and became totally dependent on him
b)The wife appears at present to have no assets left at all apart from her superannuation
c)The wife sold her assets at considerably less than the values attributed to them in the form 11, in circumstances not in evidence before the court
d)The wife entered into imprudent financial commitments to purchase expensive motor vehicles, in circumstances not in evidence before the court
e)The husband provided financial support to the wife well beyond his legal commitment to do so, but at all times acting voluntarily
f)The wife incurred debt in circumstances where it is highly doubtful that she had the capacity to pay the same
g)The wife became bankrupt
h)The husband inherited from the estate of his late mother in 2008 the sum of $1,400,000
It is important however, to separately deal with the evidence about the changes to the husband’s financial circumstances in the relevant period. In evidence were the personal tax returns of the husband for the financial years 2004-2008 inclusive. The company tax returns for 2004-2008 were also available as were the company’s last four business activity statements.
In 2004 the husband’s personal taxable income was $30,540. In 2008 it was $36,906. In the relevant five year period there was only one year when he earned less than in 2004 – in 2007 he earned $27,805.
In 2004 the company had a profit of $117,336. In 2008 it was $172,076. The company’s profit never went below 2004 levels.
The BAS documents for the four quarters from 1 July 2009 to 30 June 2010 indicate total sales of $606,413 which is the second highest gross sales figure in the documents provided to the court in the period 2004 to date. The company’s total income in 2004 as $496,388.
The husband’s current financial statement deposes to a weekly income from all sources of $5,000 per week, and expenses of $6,230 per week.
It was very hard to make sense of this evidence in the light of all of the other evidence the husband produced and which is summarised above. For example it is highly unlikely that he could be earning a net after tax weekly income of $4,450 as per his financial statement, or $231,400 per annum, when his taxable income for the period 2004-2008 never exceeded $50,571. Even though the wife did not cross-examine the husband, and indeed I would be surprised if she had the capacity to do so, it does not mean I must accept his evidence without qualification. Indeed it is his own evidence by way of tax returns and business activity statements that leads me to have reservations about the reliability of his financial evidence.
It should be acknowledged that the husband’s non-financial circumstances also changed during the relevant period. He became solely responsible for the care of the children, but to off-set the costs of this he also ceased to pay child support of $1,000 weekly. There were three children at school in 2004, but only one today.
The husband remarried and became responsible for his new wife, and to some extent her dependent children. He has been very generous in the provision of support for his actual children, some of whom clearly have special needs.
There is much more that could be said about the period since the date of the orders. I am satisfied, however, that the points referred to above are the most relevant ones in the present context.
Change of circumstances for Section 83(2) purposes
Having regard to this factual matrix has either party satisfied the court to the requisite standard?
The wife’s case can be dealt with briefly. Her failure to provide a financial statement makes it almost impossible to decide in her favour. Her oral evidence suggests that the $1,000 per week tax free spousal maintenance is her only income, and that her only assets are an old car and superannuation. She pays rental in an unspecified amount. Even on her own evidence she would have had substantial money from the net sale proceeds of the properties she received in 2004. But, interestingly, it was not part of the husband’s case that she retained any of these monies. Indeed his case was conducted on the basis that she had, in effect, squandered what she had. She is bankrupt. The evidence indicates that she has borrowed money from her own children.
In these circumstances she has not established that her circumstances have so changed, or that the cost of living has changed to such an extent, that the court should make the order sought by her. Indeed one would have thought that a reasonably prudent woman who was in the wife’s financial situation in 2004, who is no longer responsible for caring for children, and who has disposed on both her properties and liabilities, would still be in a stronger financial position than she was in 2004. Her application for variation of spouse maintenance is dismissed.
The same results must follow in the husband’s case. Indeed his case was, perhaps, inadequately though and through. Even if one ignores the obvious irreconcilable inconsistencies between his financial statement and his other financial evidence, and if even if one ignores that he received an inheritance of $1.4 million during the relevant period, the assumption of additional responsibilities is not enough in a situation where he has such a strong capacity to pay. The husband did assume the primary care of the children, but his child support obligation ceased. Over time his legal obligations, for example to pay school fees, became moral obligations to support his adult children. Even the wife agrees he is a good father in this regard. He voluntarily paid extra money to the wife over and above his legal obligation, thus acknowledging her need. However the assumption of a voluntary moral obligation cannot be used in the circumstances of this case to reduce his legal obligation to the wife.
I am not satisfied that the circumstances of the husband have so changed, that the court should vary the order for spouse maintenance. Even, if however, it were possible to construct an argument that his financial circumstances have changed, I would not be prepared to exercise my discretion in his favour. It is clear that he is in a vastly superior financial position to that of the wife.
I am not satisfied that the circumstances of the wife have so changed, that the court should vary the order for spousal maintenance as proposed by the husband. Her need for spousal maintenance, recognised as it was in 2004, seems just as great today. Indeed it is arguably at least as great given her bankruptcy and the loss of all her assets save for superannuation and a car. The fact that she no longer cares for the children does not go to the issue of spouse maintenance in a case where it was never put to the wife that she could, and should, be working. Even if it were so put, I would not accept it. She has been out of the work force since 1986 and is 53 years old. She may well suffer from an undiagnosed, or undisclosed, psychological or psychiatric condition. Whilst that is my observation, I make no finding to this effect, and the same ultimate conclusion would be reached ignoring my hypothesis. I reject the assertion implied in the husband’s case that the $1,000 per week maintenance was intended to cover the mortgage liabilities attached to the properties received by the wife in the property settlement. There is no evidence to support this. The wife flatly rejected it. But even if it were true, the discharge of these liabilities does not automatically result in a change of circumstances warranting a variation to the spouse maintenance order.
I dismiss the husband’s application.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
Date: 27 April 2010
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