Wikes and Wikes

[2009] FamCA 86

FAMILY COURT OF AUSTRALIA

WIKES & WIKES [2009] FamCA 86

FAMILY LAW – Spousal maintenance – Interim orders
FAMILY LAW- PROPERTY – Interim orders – Application for litigation funding

Family Law Act 1975 (Cth)

HUSBAND: Mr Wikes

WIFE: Ms Wikes

FILE NUMBER: MLC 122 of 2008

DATE DELIVERED: 13 January 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: 13 January, 2009

REPRESENTATION

COUNSEL FOR THE HUSBAND: Ms E.A. Benjamin

SOLICITOR FOR THE HUSBAND: David Wilkinson & Co

COUNSEL FOR THE WIFE: Dr R.S. Ingleby

SOLICITOR FOR THE WIFE: Kempsons Lawyers

Orders

1. That until further order the husband pay spousal maintenance for the wife as follows :

   (a)the sum of $500 per week, the first payment to be made on 16 January, 2009, and all payments to be made to ANZ account … in the name of the wife;  and

   (b)maintain Medibank Private Health insurance for the wife at the current level. 

2. That the parties do all things reasonably necessary to sell the Mercedes Benz car (registration number …) (“Mercedes”) in the wife’s possession and, until such sale, the wife have the use and possession of the Mercedes and the husband pay the monthly lease instalments on the Mercedes as and when they fall due. 

3. That on the sale of the Mercedes the husband pay to the solicitors for the wife the sum of $20,000 to be disbursed towards the purchase of a replacement motor vehicle for the wife and categorisation of that sum be in the discretion of the trial judge. 

4. That until further order the wife have the sole use and possession of the former matrimonial home at M.

5. That until further order the husband make all payments due in respect of all loans secured, in part or in whole, over the former matrimonial home and the categorisation of those sums be in the discretion of the trial judge. 

6. That as soon as practicable the husband redeem the AXA insurance policy in his name and sell the Asia Pacific shares in his name and apply the nett proceeds to CBA Overdraft account … and categorisation of that sum be in the discretion of the trial judge. 

7. That if the husband defaults in any obligation imposed by these orders and remains in default for fourteen (14) days then the luxury motor vehicle in his possession be transferred forthwith to the wife on a trust for sale and sold as soon as practicable thereafter and the balance remaining after the costs of sale and repayment of the loan presently secured against the car be paid to the solicitor for the wife and held on trust for the husband and wife to be disbursed as follows:

   (a)to pay any obligation imposed on the husband pursuant to these orders which remains unpaid fourteen (14) days after the due date;

   (b)as agreed by the parties in writing;  or

   (c)as ordered by the court.

IT IS FURTHER ORDERED BY CONSENT

1. That at 10:00 am. on 24 January, 2009 the wife will make available for collection at the former matrimonial home and the husband will collect the chattels described in sub-paragraph (7)(ii), (iii), (v), (vi), (x), (xi), (xiii), (xv), (xvi), (xvii), (xviii), (xxii), (xxiii), (xxv), (xxvi), (xxvii), (xxviii) subject to the indemnity referred to, (xxx) one painting only, (xxxiv), (xxxv) and (xxxx)of the affidavit sworn by the wife on 23 September, 2008, plus a Royal Doulton dinnerset which was purchased for the husband during his first marriage.

IT IS FURTHER ORDERED

1. That all interim applications be otherwise dismissed and the husband have leave to reinstate the application for the sale of the former matrimonial home on giving no less than twenty-one (21) days notice in writing to the wife. 

2. That the applications for final orders be placed in the pool of cases awaiting trial directions with the priority those applications would have had if placed in the pool at the conclusion of the second conciliation conference on 15 August, 2008. 

3. That both parties’ costs of this day be reserved. 

4. That the reasons for this day be transcribed and copies made available to the parties.

5. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  MLC 122 of 2008

MR WIKES

Husband

And

MS WIKES

Wife

REASONS FOR JUDGMENT

1. Proceedings commenced on 7 January 2008 when the husband filed an application for final and interim financial orders.  The wife responded to those applications on 13 March 2008.  The matter was listed a number of times in 2008 and a number of affidavits and financial statements were filed.

2. On 28 September 2008 the matter came before Watts J, and was adjourned, by consent, to today.  His Honour's order notes that the parties did not believe they were in a position to proceed before him and it was anticipated the matter would take at least three hours, which proved an accurate prediction.  The costs of the parties on that day were reserved. 

3. Watts J set out in his order the applications, and the supporting material relied on, which were adjourned to today.  In respect of the husband, he referred to paragraph (1) of the husband's amended application filed on 28 March and affidavits filed by the husband on 14 July 2008.  He foreshadowed reliance on an affidavit to be filed by the husband, responsive to the affidavit filed by the wife on 23 September.  It is probable the failure to refer to a financial statement filed in 2008 was inadvertent and no objection was taken to the husband relying on it.  The husband did file another affidavit on 5 January 2009 and was granted leave to rely on that.  He also relied on an affidavit of his solicitor, Andrew Bristow, sworn on 9 December 2008. 

4. Watts J referred to the wife's material as paragraphs (1) to (11) inclusive of her amended response filed on 23 September 2008, and affidavits she filed on 13 March, 14 July and 23 September 2008.  He also referred to a financial statement filed by her on 13 March 2008.

5. The wife also relied on an affidavit of Mr Michael Beswick, her legal practitioner, filed on 23 September, and a report of the single expert, Mr Y, dated 30 May 2008 which is annexed as exhibit RIWI to the affidavit of the husband filed on 14 July.  In addition, the wife relied on an updated statement of financial circumstances and a recently sworn affidavit, the latter relating to some surgery and to dealings with the Commonwealth Bank, and filed with leave today.

6. The husband is 59;  the wife 54.  They started living together in about September 1991 and married in December 1992.  It was a second marriage for both.  At the time of marriage the husband was in full-time employment in a professional practice through a service company, T Company, which owned the practice.  That practice is conducted from premises at B.

7. In the course of the marriage the wife was engaged in home duties.  It is the husband's submission that, on occasions, she also did some work for cash for her former husband.  The wife denies that she is doing that now;  I cannot say if she admits to doing that during the marriage.

8. The wife has four children from her first marriage, three of who presently live with her in the former matrimonial home, a large property, valued at $1.44 million.  The parties also own an investment property at N. In or about September this year the husband moved into that property, having rented since their separation on 27 June 2007.

9. It is clear that the parties enjoyed a very comfortable standard of living during the marriage.  They had a very comfortable home.  They were able to live well and could afford holidays and expensive recreational activities.  Each drove an expensive car.  At the time of separation the husband was driving (and continues to drive) a luxury vehicle.  His evidence is of buying that car for some $260,000 in 2004;  he said he rolled over debt on the vehicle he owned previously and, after trade-in, put in around $120,000 or $130,000.  The wife drove and continues to drive a 2006 model Mercedes, which is subject to lease.  It probably has a nil value or a negative value;  that is, there is no equity in it. 

10. The wife stayed in the former matrimonial home after separation.  Her older daughter, who is 25, lives there with her.  The wife’s daughter makes a very modest contribution through board;  the wife deposed to $30 a week.  She also deposed to her daughter paying quite significant bills, on occasions, on an ad hoc basis.

11. The wife’s son, 22, has been overseas but recently returned to Australia and is living with her.  Her evidence is that he is back at university.  When he is working, he makes an occasional contribution.  The wife’s 19-year-old daughter is working but on an unpaid basis, as part of a tertiary course.  It seems that none of the wife’s children are contributing in anything other than a marginal way to their own support, with the exception of the older daughter.

12. The application of the wife, whilst contained in 11 paragraphs, was deftly summarised by her counsel at the commencement of the case as falling into three broad categories.  First, she sought to retain sole use and occupation of the former matrimonial home, until further order.

13. That home secures a significant debt to the Commonwealth Bank.  The state of the various loans is set out in a letter from the CBA to the wife dated 8 January 2009, which is annexed to the affidavit filed by her today.  I will not read into the transcript the whole of that letter.  In discussion with counsel the court clarified the relevant securities and it is common ground that some $400,000 plus, is secured over the former matrimonial home.  Many of the CBA loans are presently in arrears. 

14. One account in arrears, referred to as the business overdraft, is an overdraft in the name of T Company Pty Ltd, being account 310….  When CBA wrote to the wife on 8 January, it stood at $63,172.  There is considerable evidence, and disagreement, about the circumstances in which the overdraft arose from around $16,000 at separation, to $45,000 by mid-2008 and to $55,000 in September 2008, when another $10,000 was drawn to pay for expert reports.  Since then the debt has grown and the bank is threatening to foreclose. 

15. A prerequisite to the wife being able to enjoy sole use and occupation of the former matrimonial home is payment of the minimum sums due on the various loans which are secured over that home.  The wife seeks an order the husband make those payments. 

16. The second application or rather, set of applications relates to spousal maintenance.  The wife sought $500 per week spousal maintenance, together with the costs of maintaining the Mercedes driven by her, her mobile phone, Medibank and rates and insurance on the home.  The lease on the Mercedes alone costs $2,029 a month.

17. On her case, the wife is not in receipt of any income from independent exertion.  The husband disputes that, referring to work for cash in her former husband's business.  I have assertions from each of them but that issue cannot properly be determined on mere assertions and I could not be satisfied one account is more probable than the other.   

18. When the husband filed his initiating application, he sought (as interim orders) that he pay the wife the sum of $500 a week by way of spousal maintenance, plus monthly instalments to DaimlerChrysler, for the Mercedes lease.  He also sought (this was in the context of putting the former matrimonial home on the market) that pending the sale, she have the right of occupation and that he pay the sums due on the various CBA loans, secured over the former matrimonial home and, in some cases, over the N property.

19. Whilst the husband has been criticised for his conduct, it must be said that it is not common to read an interim application in which the applicant offers to make those payments.  Further, absent orders, the husband did pay the wife $500 per week by way of spousal maintenance, until 9 June 2008.  He also paid $2,029 per month on the Mercedes until September, together with other expenses in respect of that car.  He continued to make payments to CBA in respect of the various loans, totalling $7,500 or $8,000 a month, until September. 

20. In June, the spousal maintenance payments stopped.  In September, the mortgage and car payments stopped.

21. The wife has herself paid between $8,000 and $10,000 to keep the lease on the car roughly up to date since separation.  Her evidence is of her daughter assisting in that respect.  In the course of negotiations between the parties, the wife suggested that the Mercedes be sold by the parties in an attempt to maximise its value, rather than allowing it to be repossessed and sold in a fire sale, with the potential to increase the shortfall, if any, between the amount owed on the lease and the amount realised.

22. The husband's case is that necessity forced him to stop meeting the payments he met voluntarily after separation.  His evidence is of a downturn in his practice.  He has deposed to stress resulting from the breakdown of a reasonably long marriage, and this litigation, and says that the practice, which in the past was able to maintain the family comfortably, is no longer able to do so. From his perspective the parties cannot afford to keep the former matrimonial home.  The wife should make an effort to obtain financial contributions from all her adult children who are resident in that home.  He believes she is still undertaking some cash work for her former husband and she should and could obtain additional paid employment.

23. For the wife it was argued that the husband has been able to afford to renovate the investment property, and has not disclosed the cost of the renovation or the source of funds outlaid.  Having moved into that property and renovated he can still afford to pay a $3,000 per annum golf membership and a couple of Melbourne Football Club Chairman’s Club memberships at $900 each a year.  He can afford to run the luxury vehicle, which is owned by the business.  He has been able, in recent times, to take on an employee. 

24. It is a long time since I was an employee but I note his evidence that he hoped the employee would take some stress away from him.  The employee would need to be rather more competent than many of us were at that stage for that aspiration to succeed.  The employee is or was a member of the public service and it may be envisaged he will be competent in that area and even bring in some work.  Nevertheless, as his employer the husband is obliged to play a supervisory role in respect of that employee.

25. When Mr Y valued the business, some seven and a half months ago at the end of May, his opinion was that its maintainable earnings, before interest and tax, was some $142,000.  He allowed for a commercial salary for the husband of about $110,000.  The practice goodwill was considered to be $32,000.  As I said to counsel in the course of discussions, it is difficult, particularly in an interim hearing, to get a real picture of the cash flow during a marriage and the cash flow after its demise and hard to assess what payments are real, rather than notional.  On the evidence adduced after A separation, the court may wonder how parties stayed afloat, but they often do stay afloat until the family breakdown intervenes.  Parties then must run two homes and where before there was co-operation and respect, there is suddenly suspicion and animosity. 

26. I should say that I was advised by counsel at the outset of the case that an aspect of this dispute relating to chattels has been settled and I will make orders in due course, implementing that settlement.  On reading the material, it is clear that the chattel dispute has been a thorn in the flesh;  a great deal of evidence is referable to it.  I appreciate chattels can be very important but it may be better to focus on sorting out a long-term financial solution rather than worrying about who has which dinner set.

27. The third leg of the wife's application was characterised by her counsel as an application for litigation funding.  This is referred to in paragraphs (6), (8) and (9) of her interim application.  There, a figure of $30,000 was advanced as a potential lump sum spousal maintenance payment (in which case it would not be available to fund litigation) or as capital to fund the litigation.  I note the affidavit from the wife’s solicitor.  The wife’s evidence is of already owing some $20,000 in legal fees.  There is no mention of a figure in her solicitor’s affidavit but I accept that to be the case.  His affidavit went to potential future legal costs.

28. Each of the parties was cross‑examined briefly.  I commend counsel for sticking to matters which are relevant and central to the applications before the court today.  The parties have attended two conciliation conferences and have not been able to resolve their differences.  Reading the material, there is a sense in correspondence annexed to affidavits, and the affidavits themselves, of increasing frustration as 2008 progressed and the case was not settled.  There was some strategic positioning by each and they then found themselves before Watts J. in September.  The adjournment effectively froze the litigation for a period.   

29. I should say that the order of Watts J. adjourned only paragraph (1) of the husband’s application to today.  That relates to personal belongings.  I accept that his counsel was discountenanced when she realised that the balance of his application was not referred to in Watts J's order.  It is not surprising that his Honour did not refer to paragraphs in the husband’s application relating to payment of the Mercedes lease and spousal maintenance, because those issues were part of the wife's application adjourned to today and thus they were before the court.

30. Similarly, so long as the wife remained in occupation of the home, she kept live the question of payment of the loans which secured the home, and those aspects that were part of her application. 

31. It may be that paragraph (2) of the husband’s application, in which he sought the sale of the former matrimonial home, was not seen by his Honour as warranting an urgent hearing, given the husband's own affidavit evidence of anticipating significant delays in achieving a sale and the worsening economic situation around September 2008.  Today the husband has given evidence of two properties in the same street which took about 12 months to find a buyer at a good price, having been put on the market two years ago.  It is unlikely the situation has improved in recent times.  Having said that, a willing and, indeed, enthusiastic buyer can emerge in adverse circumstances.  But Watts J. may have proceeded on the basis the wife should remain in the former matrimonial home pending trial, as it was unlikely to be sold by then if it were put on the market.

32. Although counsel have not articulated the final orders now sought by their respective clients, it is clear the wife seeks to retain the former matrimonial home, which is why she would resist the husband’s application, if it were pressed. 

33. A quick look of the evidence suggests net assets on a good day of about $1.8 million.  The former matrimonial home at $1.44 million is 80 per cent of that figure.  The professional practice was brought to the marriage by the husband.  He has an earning capacity.  The wife's earning capacity is contested but, on any basis, is more modest than that of the husband.  The wife’s health has not been good;  she has had bowel surgery recently and has problems with her back.  Weighting of s.75(2) factors will be important in the trial. 

34. I do not think it is useful for me to make comments about the range of potential outcomes, save to encourage the parties to be realistic unless they want to spend much of their lives engaged in costly litigation.

1. Very late in the piece, counsel for the husband summarised what I called an offer (not his word) to resolve the matter.  He put forward a bundle of potential orders.  His case is of an incapacity to juggle the various and competing financial obligations.  He proposed, through his counsel, to sell an insurance policy in his name and a small parcel of Asia-Pacific shares which, together, would realize around $14,000; and put that sum into the business overdraft.  These payments would bring the overdraft below $45,000.  If he can maintain it at that level, he can stave off the bank. 

2. It must be said that on present evidence, the bank is in a very safe position.  It is not a case where an equity is arguably insufficient to pay out bank obligations.  One would hope, in these circumstances, the bank will be realistic.  However, that is a matter for the bank.

3. The husband proposed that the parties sell the Mercedes, as proposed by the wife.  That would release them from an obligation to pay $2,000 a month.  The husband would give the balance of the borrowed $30,000 ($20,000) to the wife, to buy herself a replacement vehicle.  The husband also proposed that he recommence paying the sum of $500 per week by way of periodic spousal maintenance.  It was put through his counsel that he would terminate a part-time staff member, which would free up funds which he could use for that purpose.  That was put from the bar table.  I accept those are counsel’s instructions and his present intention, and I proceed on the basis he does not oppose an order for $500 spousal maintenance per week. 

4. The wife was quizzed, gently, about her financial circumstances.  I make it clear I find that she was cross-examined appropriately.  The parties have enjoyed a comfortable lifestyle.  Counsel sometimes spend a lot of time going through, with a fine toothcomb, various admitted expenses, cross-examining at length about sums expended on haircuts or shoe purchases or clothing repairs, in circumstances where the patterns of expenditure are those you would expect in people in their socio-economic circumstances.  

5. When determining the wife’s application for interim spousal maintenance, the court must take account of a standard of living that is appropriate in all the circumstances.  That does not mean the pre-separation standard of living must be maintained;  often that is impossible.  However, it must do its best to ensure that any drop in standard of living is not borne disproportionately by one party. 

6. With leave the wife filed a fresh financial statement today.  She deposed to some $675 in personal average weekly expenses in Part N, and another $235 for her adult children who, as is not uncommon, have returned to live with her.  The only other expenditure to which she deposed to in Part G was $93 per week by way of rates.  Her evidence was that the rates on the property in which she lives are due in February;  unsurprisingly, they are not insignificant.

7. Sensibly, it was conceded by counsel for the husband that, subject to her cross‑examination, issue was not taken with the wife’s need of maintenance.  The question was her client’s capacity to pay and also whether the wife had other funds available to her. 

8. As at today the wife has $26,256 standing in an ANZ account.  I note a reference to $40,000 but I am satisfied that reproduced the prior balance and that it has dropped to $26,000.  The wife also has a number of CommSec shares, for which she estimated a value of $10,000.  If she took that figure from an earlier document, as counsel for the husband conceded, their value is likely to be rather lower.

9. The wife’s submission was that those funds need to be earmarked to pay her solicitor the $20,000 in legal fees already owed, and the rates, which are due in February. 

10. Evidence about the husband's financial position is not as easily accessible.  He has been criticised for failing to make full financial disclosure.  It must be said it would have been a lot easier for the court if he had sworn an updating financial statement.  The only financial statement before the court was sworn by him on 7 January, 2008 and filed that day and, on its face, it is not very helpful.  It does include a net asset pool statement as the last page and it needs to be read in that light, but in terms of cash flow, income, outgoings, personal and business expenses, it is very sparse and invites criticism.

11. I have read Mr Y’s report which fills in some of the gaps in the husband’s financial statement.  I have read the affidavits on which he relies but they include many broad assertions and few details.  When this case goes to trial, if it must go to trial, the husband will have to remedy these defects.  What is missing is a coherent and cogent account of the fortunes of the legal practice, other than in the most general sense.

12. I do propose to order that the husband recommence paying the sum of $500 per week, by way of spousal maintenance.  The first payment is to be made on 16 January, 2009 and weekly thereafter.  I suggest payment into a bank account so the parties are not handing money between them and there will be record of what has been paid.  That order will remain in force until further order.  I make it on the basis the wife cannot adequately support herself and the order proposed by the husband must constitute an admission of capacity. 

13. As sought by the wife and endorsed by the husband, the Mercedes-Benz motor vehicle in the wife's possession will be sold.  Until that sale, she will have the use and possession of that vehicle and the husband is to pay the monthly lease instalments as they fall due.  I anticipate the immediate marketing of that car. 

14. On the sale of the Mercedes, the husband is to pay to the solicitors for the wife the sum of $20,000 to be disbursed by them towards the purchase of a replacement motor vehicle for the wife, as proposed by the husband.  Categorisation of that sum will be in the discretion of the trial judge. 

15. I am satisfied that until further order, the wife should have the sole use and possession of the former matrimonial home.  Until further order, the husband is to make all payments due in respect of all loans secured in part or in whole over the former matrimonial home;  I am satisfied he has the capacity to do so.  Again, the categorisation of those sums, including capital paid off the business overdraft, will be in the discretion of the trial judge.

16. The wife sought, in addition to periodic spousal maintenance and (at the time) lease payments on the Mercedes, payment by the husband of a number of other accounts, including her mobile phone bill, Medibank, the rates and insurance.  I propose to order, in the interim, that the husband continue to maintain the parties’ Medibank cover at its present rate.  By doing that he is making a continuing contribution but, given the wife's health, that expenditure is more important than the car she drives or her phone accounts.

17. As proposed by the husband, orders will provide that the AXA insurance policy and the Asia-Pacific shares be sold and those funds, too, paid into the business overdraft.

18. I appreciate the husband is keen to keep the luxury car.  He may be able to arrange his financial affairs, as envisaged, to do so.  However, if the husband defaults in payment of any of these obligations I have summarised, and remains in default for 14 days, then the luxury motor vehicle in his possession will be transferred to the wife on a trust for sale and sold as soon as practicable.  The balance remaining after payment of the costs of sale and the loan secured against the car will be paid to the solicitor for the wife and held on trust for the husband and wife to be disbursed to pay any obligation imposed on the husband by these orders which remains unpaid 14 days after the due date.  That includes spousal maintenance, mortgage and loan payments and the Medibank cover.  Otherwise, the funds can be disbursed as agreed by the parties, or by order of the court. 

19. I raised the potential for such an order with counsel for the husband.  The proposals put forward by the husband were advanced late in the case.  I act on the basis they are advanced in good faith and his intention is to act to implement them, if orders are made as proposed.  If I am wrong about that, ramifications will no doubt follow.

20. That brings me to the Barro application.  The wife sought $30,000 for litigation funding.  I have read the affidavit of the wife's solicitor.  It is commendably brief.   The sums of which he speaks do not seem reasonable. 

21. I have also heard the wife's evidence of owing her solicitor some $20,000.  Nobody knows better than the husband that solicitors are entitled to be paid.  Notwithstanding that, the court has to consider whether in all the circumstances of the case it is appropriate, at this stage, to order the sale of the luxury car (as opposed to the default condition foreshadowed) to fund a Barro order.  No doubt the wife is in a difficult position.  There is no evidence (and I commend her solicitor for this) that her solicitors are pressing for the unpaid fees.  It is she who seeks to remain in the home.  She does not want it put on the market, even if the state of the market means she would probably be able to occupy it for quite some time, until its sale. It is a valuable property. In those circumstances, and given the modest nest egg available to her, I am not satisfied it is appropriate to make a Barro order. 

22. I will dismiss all interim applications.  The husband will have leave to reinstate his application for the sale of the former matrimonial home.  That application has not been dealt with today;  it was not adjourned to today.  It was reasonable for the wife to take the view it would not be argued today.  By dismissing the interim applications the court moves the case towards a trial. 

23. The applications for final orders will be placed in the pool of cases awaiting trial directions with the priority they would have had if placed in that pool at the conclusion of the second conciliation conference.  I am satisfied that priority is appropriate.

24. I will certify for counsel.

I certify that the preceding
58  paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the           day of            2009.

…………………………………………
Associate.