WICKHAM & WICKHAM

[2016] FCCA 2823

FEDERAL CIRCUIT COURT OF AUSTRALIA

WICKHAM & WICKHAM [2016] FCCA 2823

Catchwords:
FAMILY LAW – Property – Spousal Maintenance – Urgent application by Wife for spousal maintenance for mortgage and outgoings on the former matrimonial house – Wife proposes the sale of one of the Husband’s units – Husband proposes the sale of the former matrimonial home or failing that the use of a joint redraw facility – Husbands current income is not sufficient to cover the costs until his pay is increased – Parties ordered to access line of credit of which the Wife may draw down $450.00 each week for her maintenance from that account until the Husband’s income has increased.

Legislation:

Family Law Act 1975 (Cth), s.72

Applicant: MS WICKHAM

Respondent: MR WICKHAM

File Number: SYC 1773 of 2016

Judgment of: Judge Henderson

Hearing date: 8 August 2016

Date of Last Submission: 8 August 2016

Delivered at: Sydney

Delivered on: 11 August 2016

REPRESENTATION

Counsel for the Applicant: Mr Cummings SC

Solicitors for the Applicant: Barkus Doolan

Counsel for the Respondent: Ms Eldershaw

Solicitors for the Respondent: Swaab Attorneys

ORDERS PENDING FURTHER ORDER and AMENDED UNDER THE SLIP RULE

1. Both parties do all acts and things necessary to cause the line of credit currently of $90,000 to be placed in an offset account.

2. The wife may draw down $450.00 each week for her maintenance, from that account commencing Friday 12 August 2016 and each Friday thereafter until the husband’s salary increase on 1 September 2016 and thereafter he to pay that sum to the wife. The line of credit account may be used to pay the mortgage on an interest only basis, electricity, council, rates, water rates and any gas bills in relation to the former matrimonial home.

3. In the event the parties are unable to facilitate Order 2 herein the husband is to forthwith place the Property A property on the market for sale by private treaty with an agent as agreed at a price as agreed and the net proceeds of sale to be placed in an offset account to pay the wife’s maintenance and outgoings and mortgage on an interest only basis in respect of the former matrimonial home at (omitted).

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 1773 of 2016

MS WICKHAM

Applicant

And

MR WICKHAM

Respondent

REASONS FOR JUDGMENT

1. The matter of Wickham & Wickham was an application for parenting, interim spousal maintenance and child support assessment departure.

2. Mr Cummings of Senior Counsel acted for the applicant wife, and Ms Eldershaw of Counsel for the husband. The parties agreed on the parenting and child support departure. The husband will pay child support as assessed and make other payments – family, health fund, medical gap for the children, day care cost, before and after school care fees when they attend school as non-agency payments.

Evidence

1. The evidence for the wife consisted of;

   a)A financial statement of 24 March 2016,

   b)Her amended initiating application of 24 June 2016, and

   c)Her affidavit of 23 June 2016 and 24 March 2016.

2. Evidence for the husband was;

   a)His affidavit of 4 August 2016,

   b)The husband’s amended response filed 27 May 2016

   c)His affidavit of 27 May 2016 and 2 May 2016, and

   d)A financial statement of 3 May 2016.

3. The matter came on urgently before me on 28 June 2016 and I made orders on that occasion on an urgent basis, which was that the husband was to pay to the wife, by way of urgent spousal maintenance, the sum of $450 per week, first payment to be made on 1 July 2016, together with outgoings in respect of outgoings of the former matrimonial home. The mortgage was significantly in arrears at that date. That mortgage was brought up to date by the parties accessing a joint line of credit they have, which stands at about $90,000 today, but again I am told is in arrears of some $5,000.

4. The wife says the husband can sell Property A which was purchased by the parties during the marriage and is unencumbered. He can put that money, being some $400-odd thousand he may realise from that sale, into an offset account, use that money to pay the mortgage, outgoings on the home where she and the children live, and a maintenance order for herself if the husband asserts that his income and resources are insufficient to pay those costs. The wife says this is the use that that money can be put to by sitting in the offset account and reduce the parties’ interest on their home loan.

5. The mortgage costs are, combined, about $1,000 per week over the two mortgages. The wife seeks $450 week spouse maintenance although her needs are some $850 a week on her financial statement. The outgoings, being the rates, taxes, electricity, costs and the like amount to $150 or $250 a week, on the wife’s evidence, depending if it is summer or winter.

6. The husband says that he does not want to sell this property, and that the wife should sell the former matrimonial home as that is their most valuable asset and has the highest debt levels against it. If not, the husband says they should use the $90,000 drawdown facility they have. He says it is a facility they each have access to, it can be used to pay the mortgage and that will give them breathing space to maybe resolve the matter or determine what we should do.

7. The husband says the wife has a capacity to support herself and that he does not have the income to pay for her needs.

8. The wife seeks to retain the former matrimonial home at (omitted) and her ultimate aim is that she will purchase out her husband’s interest in that home. It is worth in the vicinity of $1.2 million or thereabouts. It is clear on the evidence that the husband’s salary will by 1 September 2016 be at almost its pre-separation level of $172,500 per annum or net $2,575 a week. This income includes the rent he receives from the Property A property.

9. The husband suffered a drop in income from February down to some $90,000-odd per annum. It is clear on his own evidence that his income will be back up to $172,500 per annum on 1 September 2016.

10. Going now to the husband’s assertion of the wife’s capacity to earn an income. The wife is a (occupation omitted) and has worked in that capacity during the marriage and post-separation. For example, in January 2016 she worked for a week and in February/March 2016 she worked some days of training.

11. However, these are early days of the parties’ separation having only separated earlier this year. They have two children aged four and a half and two and a half. The wife is now, effectively, their sole carer and will be their sole carer until around December 2016 when the husband will finally have the children for a whole weekend. I accept the husband has agreed and will pay day care fees which will assist the wife to find work if she is able to. However, on an interim basis, I find the wife has a limited capacity to support herself, given her responsibilities to care for the children who are each under school age. The wife might have some limited capacity to work however it would not be sufficient to support herself effectively and I find she fulfils the threshold test under section 72 of the Act[1] on an interim basis as a spouse in need of maintenance.

    [1] Family Law Act 1975 (Cth) s.72

12. Going to the husband’s capacity. The husband says that he has made all the disclosures I can about the totality of his financial position. However, clearly, that is not correct because he has not completed, for example, the tax returns of the family trust and all he has been able to provide is a draft income tax return for that trust for 2015. There are many and several business interests that the husband has.

13. Paragraph 13 of the wife’s affidavit of 23 June 2016 says this:

    “On 29 May 2006, Mr Wickham entered into a Deed of Settlement establishing the (omitted trust) (“the trust”) Company A was trustee of the trust. The trustee was subsequently changed to Company B (“Company B”) on 20 October 2014. Mr Wickham is the appointer of the Trust and he and I are both Directors and shareholders of the Company B…

    … 14. I am aware that the trust has at least 4 assets;

    (a) a (omitted) bank account…

    (b) a 50 per cent share in an off-the-plan property at Property B…

    (c) An unencumbered property at Property A … and

    (d) a 17 % share in the Company C…”

14. The husband has various credit cards. The wife makes complaint of his expenditure on those credit cards and is not certain whether he does or does not have an interest in the (omitted) market shareholding. All of these assets are yet to be valued and there may be some concern by the wife how the husband is going to afford to purchase an off-the-plan property at Property B given what he says is his impecuniosity at this stage.

15. Company C is the company the husband works for. He agreed, he has sought an extension of time in which to lodge the income tax return for the trust. Thus the wife and Court do not know what that finalised income tax return will show.

16. Two of the trust assets are items of real estate and they underpin the true value of the trust. However, the husband’s 17 per cent share in the Company C is also yet to be valued.

17. At paragraph 17 of the husband’s affidavit of 4 August 2016, he sets out what he has been paying:

    “I am currently maintaining the private health insurance premiums for Ms Wickham and the children of $95 per week.”

18. At paragraph 13, the husband outlined his personal expenses;

    “(a)   Rent of $670 per week

    (b)Motor vehicle loan repayments for my vehicle of $77 a week,

    (c)Life and income protection of $65 per week,

    (d)Food, motor vehicle expenses, medical and pharmaceutical expenses and general living expenses of $250 per week. “

19. Neither of these parties are living an extravagant lifestyle. Their personal expenses are very modest. The husband says that after payment of those personal expenses he will have $1,513 to support him from 1 September 2016, which is only a matter of a couple of weeks. He will then pay child support assessed at $345 a week from that money. That leaves him with $1,168. He pays private health insurance for the wife and children and he will have $986 remaining then. If I include in his expenses the amount of $450 per week that he is to pay the wife this would give him some $510 a week net. From that amount he may need to make payment of pre-school fees, and alter after-school care fees.

20. The husband says he has been unable to make the maintenance payments from his own resources and has resorted to borrowing money from his father to make those payments. The husband says in his affidavit that he was struggling to make ends meet prior to the separation and it is impossible now and the (omitted) property should be sold.

21. The wife says they led a comfortable lifestyle prior to separation. They had an au pair. The children went to a day care centre at (omitted) College which have higher than usual day care fees. The husband was able to maintain mortgage payments amounting to $6,600 whilst the parties lived together, and he did that each month.

22. I accept the husband is now unable to pay from his current income, as disclosed, the expenses claimed by the wife. The question is, do I use the drawdown facility to effect these payments or sell Property A or sell (omitted).

23. The husband is averse to selling Property A and the wife is averse to selling (omitted). I have an obligation to protect matrimonial assets pending a determination by this Court of their division. Occasionally, to protect a matrimonial asset I cause an asset to be sold as otherwise there may be a continued reduction in the equity in that asset if left unsold. Drawing down from the line of credit that the parties have will ultimately increase the parties’ indebtedness there is no doubt about that. However, they are seized of two items of real estate, one in (omitted), and it may be that those items of real estate increase in value and make up such an increase in debt between now and whenever the parties resolve the matter or at final hearing. It is not certain, but such an outcome it is not beyond the realms of possibility.

24. Selling the Property A unit will decrease their capital and result in a capital gains tax debt. In circumstances where I find the wife has a clear need for maintenance, the totality and value of the parties’ assets is not known with any certainty at present, that when the husband and wife were together there was sufficient income to maintain the parties children and their assets solely by the husband, and that the only real addition in expenses since separation is the husband’s own rent of $670 a week, I find favour with the husband’s application that the parties use the line of credit to pay the mortgage on an interest-only basis on the matrimonial home at (omitted) and pay outgoings in respect of the matrimonial home. This then will leave the husband able to pay the wife’s spouse maintenance of $450 per week from 1 September 2016 leaving him with, as I said, $536 or so over and above his basic needs to fund day care costs for the children, as he has agreed to do.

25. Pending the husband’s increase in his salary, I will allow him to use the $90,000 line of credit to pay the wife’s maintenance of $450 per week until his salary increases on 1 September 2016.

I certify that the preceding twenty seven (27) paragraphs are a true copy of the reasons for judgment of Judge Henderson

Date:  2 November 2016