Varris and Chomenko
[2009] FamCAFC 203
•11 November 2009
FAMILY COURT OF AUSTRALIA
| VARRIS & CHOMENKO | [2009] FamCAFC 203 |
| FAMILY LAW - APPEAL – LEAVE TO APPEAL – FROM A DECISION OF A FEDERAL MAGISTRATE – Application for leave to appeal interim spousal maintenance orders – whether the Federal Magistrate applied the principles applicable to the making of an interim or partial property settlement rather than the principles applicable to a spousal maintenance application – where there is no error of principle – where the decision does not work a substantial injustice to the appellant – where there is no issue of general importance – application for leave to appeal dismissed – where there is no merit in the proposed grounds of appeal had leave to appeal been granted. |
| Family Law Act 1975 (Cth) ss 72, 74, 75, 77, 79 & 80 |
| Rutherford and Rutherford (1991) FLC 92-255 |
| APPELLANT: | Mr VARRIS |
| RESPONDENT: | Ms CHOMENKO |
| FILE NUMBER: | ADC | 727 | of | 2009 |
| APPEAL NUMBER: | SA | 58 | of | 2009 |
| DATE DELIVERED: | 11 November 2009 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 18 September 2009 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 2 June 2009 |
| LOWER COURT MNC: | [2009] FMCAfam 615 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Berman |
| SOLICITOR FOR THE APPELLANT: | Caldicott & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Jordan |
| SOLICITOR FOR THE RESPONDENT: | Howe Martin & Associates |
Orders
That the Notice of Appeal seeking leave to appeal filed on 19 June 2009 be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Varris & Chomenko is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SA 58 of 2009
File Number: ADC 727 of 2009
| Mr VARRIS |
Appellant
And
| Ms CHOMENKO |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for leave to appeal, and if leave is granted, an appeal by Mr Varris (“the husband”) against interim orders made by Federal Magistrate Lindsay on 2 June 2009 with respect to spousal maintenance to be paid to Ms Chomenko (“the wife”) pending a trial as to property settlement.
Those orders provide that:
(1) Pending trial, the husband do pay to the wife by way of spousal maintenance the following:
(a)the sum of SEVEN HUNDRED DOLLARS ($700.00) per fortnight;
(b)the sum of ONE THOUSAND DOLLARS ($1,000.00) per month;
(c)all instalments of principal and interest pursuant to Memorandum of Mortgage Number […] to Westpac Banking Corporation registered over the property at [H] and, within twenty-eight (28) days of today’s date, all arrears accrued thereon.
(2) The wife’s application for spousal maintenance do otherwise stand dismissed.
…
This appeal is being determined by me as a single Judge, following a direction by the Chief Justice pursuant to s 94AAA(3) of the Family Law Act 1975 (Cth) (‘the Act’).
By his Notice of Appeal filed on 19 June 2009 the husband sought leave to appeal all orders of the Federal Magistrate, however, the husband in fact seeks only that paragraph (1)(c) of the orders be set aside. Paragraphs 1(a) and 1(b) were the subject of a consent order made on 3 April 2009, and at the invitation of the parties the Federal Magistrate continued these orders on 2 June 2009. Despite what was in the Notice of Appeal, there is no challenge to these orders.
The wife opposes the application for leave to appeal, and in the event leave is granted, seeks that the appeal be dismissed.
Background
The husband is aged 54 years and the wife is aged 53 years.
The parties commenced cohabitation in December 2002. At this time the wife was living in rented premises at L and the husband was living at M. From December 2002, the husband spent most of his time residing with the wife at L (approximately 10 days per fortnight), but would reside at his home in M on the days he spent time with his children from a previous relationship.
At the time the parties met and during most of the relationship, the wife was employed as a sales agent. The husband is the proprietor, through a corporate structure, of a business.
In February 2003 the wife moved back to a property owned by her at H. The parties’ living arrangements as outlined above continued, except for the period from September 2004 to December 2005 when both parties apparently resided at the H property full time.
The parties married in March 2006.
The parties separated in June 2007. The husband moved out of the H property.
In mid 2008 the husband returned to live at the H property. According to the husband, whilst overseas in the middle of 2008 the parties had agreed to live together again. The wife maintains, however, that the parties’ marriage had irretrievably broken down at this time and there was no prospect of reconciliation. They resided in the H property but remained separated.
On 26 February 2009 the wife filed an Initiating Application in the Federal Magistrates Court seeking final orders with respect to property settlement. The wife also sought the following interim orders:
1. That the wife do have the sole use and occupation of the home at [H] and that the husband do forthwith vacate that home.
2. That the husband thereafter be restrained and an injunction be granted restraining him from entering upon or remaining in the vicinity of the property at [H].
3. That the husband be restrained and an injunction be granted restraining him from removing any items of furniture or household effects from the [H] home, without the express written consent of the wife.
4. That by way of interim spousal maintenance pending resolution of these proceedings the husband do pay or cause to be paid: -
4.1All instalments of principal and interest pursuant to Memorandum of Mortgage No. […] to Westpac Banking Corporation registered over the property at [H].
4.2All premiums to Mutual Community on the current top table for the wife.
4.3The sum of $1,500 per week, or such other sum as shall be deemed just and equitable by this Honourable Court.
5. That, in the alternative, and by way of urgent maintenance pursuant to section 77 of the Family Law Act, the husband do pay or cause to be paid the sums sought in paragraph 4 of this Application.
6. That this Application be heard urgently.
7. That the husband do pay the costs of and incidental to this Application.
It was this application which was before the Federal Magistrate for determination, although the husband vacated the H property shortly after the wife filed her application.
The wife’s application for urgent spousal maintenance pursuant to s 77 of the Act was heard on 2 April 2009.
On 3 April 2009 the following interim orders were made by Lindsay FM by consent:
4. During the period of the adjournment, the husband to pay the wife:
(a)the sum of SEVEN HUNDRED DOLLARS ($700.00) per fortnight, the first payment to be made forthwith; and
(b)the sum of ONE THOUSAND DOLLARS ($1,000.00) per month, the first payment to be made forthwith.
The wife’s application for interim spousal maintenance was adjourned to 11 May 2009.
On 11 May 2009 the Federal Magistrate heard the wife’s application for interim spousal maintenance. Both parties were cross-examined, and his Honour reserved judgment.
On 2 June 2009 the Federal Magistrate delivered his reasons for judgment. His Honour made orders for the husband to pay the wife spousal maintenance pending trial in the terms outlined above at paragraph 2 and otherwise dismissed the wife’s application for spousal maintenance.
To repeat, the husband filed a Notice of Appeal seeking leave to appeal on 19 June 2009.
Relevant legal principles – leave to appeal
The principles applicable to an application for leave to appeal from an interlocutory order are well known. In Rutherford and Rutherford (1991) FLC 92-255, the Full Court had regard to the principles established by the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, where Gibbs CJ, Aickin, Wilson and Brennan JJ said at 177:
“An interlocutory order for an injunction is a matter of practice and procedure. See McHarg v. Universal Stock Exchange Ltd. [[1895] 2 QB 81 at 82]; Minister for The Army v. Parbury Henty and Co. Pty. Ltd. [(1945) 70 CLR 459 at 489]; White v. White [[1947] VLR 434 at 438].
Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v. Electronic Industries Ltd. [[1978] VR 431 at 440]; on the other hand, De Mestre v. A.D. Hunter Pty. Ltd. [(1952) 77 WN (NSW) 143 at 146]. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F.B. Gilbert (dec.) [(1946) 46 SR (NSW) 318 at 323]:
‘... I am of the opinion that,... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.’
See also Brambles Holdings Ltd. v. Trade Practices Commission [(1979) 28 ALR 191 at 193]; Dougherty v. Chandler [(1946) 46 SR (NSW) 370 at 374]. It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration.”
The Full Court in Rutherford (supra) agreed with the High Court that it was “unnecessary and indeed unwise to lay down rigid and exhaustive criteria”.
An applicant seeking leave to appeal an interlocutory order therefore needs to establish that there is an error of principle and that the decision appealed from works a substantial injustice to one of the parties. It has been suggested that leave may be granted where there is an issue of general importance (see Aaron and Knowles (1995) FLC 92-627 and Alfasi and The Alfasi Group (2006) FLC 93-271). It has been noted, however, that there is some “divergence” of opinion on this issue, and that the matter is academic in cases, such as this, where the application for leave to appeal and the appeal were heard together (see the discussion in Kiesinger and Paget [2008] FamCAFC 23 at [10] – [11]).
Leave to appeal
The Notice of Appeal was poorly drafted. I have referred already to the issue of the orders to be the subject of the proposed appeal. There is also no discrete basis identified in the Notice of Appeal for the application for leave to appeal. Despite there being different principles that apply all that is stated in the relevant section of the notice is “Refer Grounds of Appeal”.
Grounds of Proposed Appeal and Order Sought
The husband proposed the following grounds of appeal in the event he was granted leave to appeal:
1. That as to paragraph 1(c) of this order made 2nd June 2009:
1.1the learned Federal Magistrate erred in ordering the husband to pay instalments of principal and interest on the wife’s mortgage to Westpac Banking Corporation together with all arrears accrued thereon;
1.2the learned Federal Magistrate gave insufficient weight to the financial circumstances of the husband and his ability to comply with the said order and his income and in circumstances where the wife may not have any entitlement to a settlement of property or alteration of property interest pursuant to the Family Law Act;
1.3the learned Federal Magistrate erred in that the subject order requiring the mortgage to be paid in circumstances where the wife may not be able to retain the said premises;
The order that the husband proposed to seek was that paragraph 1(c) of the orders made 2 June 2009 be discharged.
With the grounds of the proposed appeal, in my view they are of little or no assistance, as was conceded by counsel for the applicant. Ground 1.1 had some semblance of relevance to the application, but there was no specificity provided. Grounds 1.2 and 1.3 were simply not to the point, and that is borne out by the circumstance that although the written outline of argument purports to address these grounds, in fact it does not, and further, they were not argued before me at the hearing. As became apparent during oral argument the thrust of the complaint by the applicant was that the Federal Magistrate applied principles applicable to the making of an interim or partial property settlement order rather than the principles applicable to an application for spousal maintenance, which was the only application before the Federal Magistrate.
However, in my view a close analysis of the Federal Magistrate’s reasons demonstrate that his Honour applied the correct principles.
The Federal Magistrate recorded that the wife sought orders “essentially for a sum of money required to meet what might be described as orthodox living expenditure” and also to enable mortgage instalments to be met with respect to the wife’s home in which the parties had to a significant extent resided during their relationship.
His Honour briefly outlined the history of the parties’ relationship. His Honour did not understand there to be any controversy that following separation the wife was given an amount of cash per fortnight and an amount of money on a monthly basis to meet her ordinary living expenses, and that this arrangement was reflected in the consent orders made by the Court on 3 April 2009.
The Federal Magistrate recorded that the mortgage was also met, and that it appeared that a lump sum of money was made available by the husband to the wife in about September 2008 which covered the mortgage payments for four or five months. His Honour recorded that when that sum expired in January 2009, the husband indicated his unwillingness to continue to service the mortgage, and that this was the “spur” for the institution of the proceedings.
His Honour correctly identified that the application was for an interim order for spousal maintenance in the context of property settlement proceedings. His Honour also correctly identified the relevant sections of the Act that applied, namely ss 72, 74, 75 and 80 (allowing him to make orders for lump sum payments).
His Honour then, again correctly in my view, addressed the wife’s ability to engage in gainful employment and her need for spousal maintenance. In fact though there was no controversy about either of these issues and there was no challenge to his Honour’s findings in relation thereto. There was no “ambiguity” as his Honour described it that the wife was “presently unable to engage at all in gainful employment, certainly in employment in which she has been habitually engaged for many years now.” Then, in terms of her needs, again there was no controversy that she had a need for spousal maintenance, the issue was though the extent of that need.
On these bases his Honour found that the wife had satisfied the threshold test in s 72, namely that she was unable to support herself adequately. Again, there was no challenge to that finding before me.
The Federal Magistrate then turned to consider the “magnitude” of the wife’s needs, which his Honour commented was an “altogether more complicated circumstance”.
The Federal Magistrate identified that the wife had three categories of “pressing need”.
Firstly, there was the wife’s general day to day living expenses. In this respect, the Federal Magistrate considered that the arrangements reached between the parties by consent were an indication of the appropriate level of household expenditure. His Honour considered that the amount of $700 per fortnight and $1000 per month was an “appropriate measure” of the wife’s recurring living expenditure. His Honour was not prepared, nor was he invited, to analyse that expenditure, and decided to adopt the parties’ measure of that expenditure.
The next category of expenditure was the mortgage in the amount of $4000 per month, which had not been met since earlier in the year. His Honour took judicial notice that the wife was now susceptible or liable for proceedings to be instituted, if they had not already been, under the Law of Property Act in the immediate future.
The third category identified was the minimum repayments on the wife’s credit card debt of approximately $150,000, which were about $4500 per month.
The Federal Magistrate turned to briefly consider how that debt had been incurred. His Honour said he did not have the opportunity to undertake a detailed analysis of the issue, but that it was plain on the material before him that both prior to and during the relationship, and for some time following separation, the wife had been living beyond her means. His Honour did not consider this observation to be controversial.
The Federal Magistrate acknowledged that since the husband ceased making mortgage repayments the wife had been required to use credit cards to meet her living expenditure, and that an element of the $150,000 debt therefore related to expenditure for which the wife could not be criticised. His Honour also found that there was an element of the debt that was unrelated to the wife’s general living expenditure, and the matter therefore became a “delicate issue”.
The Federal Magistrate recorded that the credit card debt was unsecured, but nevertheless had the potential to “financially embarrass” the wife.
Next, his Honour, yet again correctly in my view, turned his attention to whether the husband had the ability to meet the orders over the short term that it was proposed that they operate. He found that there was “no doubt about that on the evidence”, but the question was “whether in the circumstances it is reasonable for him to meet that expenditure”.
It was at this point that the Federal Magistrate made certain comments in his reasons which raise the issue that the applicant complains about. His Honour said that he was “surprised” that the parties had not been able to reach some arrangement given the availability of an early trial date, noting that it was possible for the husband to make a sum of money available to meet the wife’s mortgage and credit card debt, on the basis that the characterisation of that “capital payment” could be left until trial. His Honour noted in this regard that there was sufficient equity in the wife’s property to ensure that any payment by the husband which turned out to be “unrequired according to s.79 criteria” could have been returned. His Honour drew the inference that the “raison d’être” for the proceedings and the difficulties with the conduct of the trial were “tactical considerations”.
Now, in my view these comments were made very much “en passant” and I do not accept that his Honour was changing the focus of his reasons from the principles applicable to a spousal maintenance claim to those applicable to an interim or partial property settlement claim. This is also quite apparent from the transcript of the hearings that I was referred to during oral argument, and particularly the transcript of the hearing on 11 May 2009 where his Honour said this,
“But the other order is really an order that is focusing upon the preservation of property. It’s a question of whether the wife will be given the opportunity to preserve property while her section 79 entitlement is crystallised. That’s what I really see the application to be about, rightly or wrongly. It seems to me that there is a mechanism available for that.
Insofar as the parties’ positions today overlap, I can make an order pending trial for a sum of approximately $3800 per month. But any sum that is required to service the mortgage pending disposal of the property proceedings could surely be made upon the basis that the aggregate of the payments are secured by a charge over the wife’s interest in her property and are repayable in any event following the outcome of the property proceedings.
I don’t know whether that is a spousal maintenance order. It might be. I recognise the wife is asking for more than that. That’s one of the difficulties. She’s asking for a sum of money that would also enable her to make some other payments, or at least partially pay some of her other debts. But, leaving that aside for one moment, I’m just wondering why that’s not an accommodation they might not have tried to reach. Do either of you want to respond to that?
In other words, there would be a payment of the sum that’s agreed pending trial. There would be a payment of the mortgage until such time as the property proceedings were concluded. But, whatever happens at the property proceedings, that sum would be secured by a charge over the wife’s interest in the home. If neither of you want to respond to that you don’t have to, because I don’t want you to think you’re prejudicing the positions you’ve put to me, and I might have a think about it overnight and decide to abandon this. But it seems to me to be a practical solution. Do either of you want to respond?”
Now neither counsel chose to respond. However, it is quite clear that his Honour was there exploring options and ruminating about an appropriate way to resolve the dispute. It was not taken up by either counsel though.
His Honour did then pursue the issue in the context of s 75(2)(o) of the Act, but again in a way that he was permitted to do.
His Honour found that under s 75(2)(o) he could take into account “the relatively short duration of the order and the circumstance that the failure to make an order which provides the wife with an opportunity of servicing a mortgage is capable of having consequences out of all proportion to the loss that that would be experienced by the husband in making the payment.” Now, I note that there is no challenge per se to this finding and in my view there could not be.
However, his Honour then makes further comments in paragraphs 41, 42 and 43 of his reasons which the appellant submits highlight the alleged error on the part of the Federal Magistrate. In those paragraphs his Honour said as follows:
“41. As I have indicated, I think the wife passes the threshold in terms of need, the inability to support herself. The extent to which the court will expect the husband to meet such expenditure as is required by her to maintain her occupation of the property is a matter to which the court would have to return, of course, in the light of the outcome of the property proceedings. If the outcome of the property proceedings is such that the wife’s continued occupation of that property is not possible, then her occupation is not going to be artificially extended by a s.72 order.
42. What is reasonable in the context of a s.72 order will have to be examined again in the light of the s.79 order, and whilst there is so much uncertainty associated with what is the wife’s s.79 entitlement, if any – and I do not make any observation on that; certain of the matters relating to that were canvassed in the cross-examination of the parties – the wife has a s.79 claim which has yet to be determined. She may or may not receive a sum of money. It may or may not be a significant sum of money, but whatever it is, there would have to be some reality checking, to use the vernacular, by the wife in the light of that order.
43. It cannot be in the case that if she does not have a capital sum that is going to enable her to discharge the credit card liability and hence put her in a position to meet the mortgage liability that the court will sustain her in unrealistic arrangements.”
It is perhaps unfortunate that his Honour framed these comments in the way that he did, but nevertheless I consider that he was entitled to do so and they do not indicate that his Honour was confusing the principles applicable to a spousal maintenance application with those applicable to an application for interim or partial property settlement.
In my view it was open to his Honour to refer to and take into account the context of the application that was before him, namely as an application pending the finalisation of property settlement proceedings. His Honour was saying nothing more than it will become relevant in those property settlement proceedings to re-examine what is reasonable by way of ongoing payments in the circumstances applying at that time. His Honour clearly makes that point in paragraph 44 of his reasons where his Honour said this:
“44. What is reasonable in the circumstances would have to be re-examined in the light of the outcome of the s.79 proceedings, but at this stage I am firstly satisfied of the wife’s need in terms of crossing the threshold. I am satisfied of the husband’s ability to make the payment of the orders that I am proposing to make, and on account of the short-term nature of the order, that is, the fact that the order will operate to a period presumably approximating the end of the year, that being my expectation as to when a trial date will be made available, I am satisfied that, having regard to the various s.75 criteria, the order sought by the wife is appropriate.”
Conclusion
There is no error of principle here, the decision does not work a substantial injustice to the husband, and, if it is an option, there is no issue of general importance. Thus, there is no basis for leave to appeal to be granted, and the application should be dismissed. I add though that even if leave had been granted I find that there is no merit in any of the grounds of the proposed appeal.
I certify that the preceding 50 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 11 November 2009.
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