WOODS & WOODS

[2012] FamCA 217

FAMILY COURT OF AUSTRALIA

WOODS & WOODS [2012] FamCA 217

FAMILY LAW - SPOUSAL MAINTENANCE - Interim

FAMILY LAW - CHILD SUPPORT - Application for departure - Child over 18 years

Child Support (Assessment )Act 1989 (Cth)
Family Law Act 1975 (Cth)

Gamble & Gamble (1978) FLC 90-452
Mitchell & Mitchell (1995) FLC 92-601
Redman & Redman (1987) FLC 91-805
Stein & Stein (2000) FLC 93-004
Williamson & Williamson (1978) FLC 90-505

APPLICANT: Ms Woods

RESPONDENT: Mr M Woods

INDEPENDENT CHILDREN’S LAWYER: Schetzer Constantinou

FILE NUMBER: MLC 11055 of 2010

DATE DELIVERED: 5 April 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 19 & 20 March 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Martin Bartfeld QC with Mr Stum

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT: Mr St John SC

SOLICITOR FOR THE RESPONDENT: Berry Family Law

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Mr James

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Schetzer Constantinou

UNTIL FURTHER ORDER IT IS ORDERED THAT

1. As and from 20 March 2012 the husband pay to the wife by way of spousal maintenance the sum of $520 per week to be paid by the husband to an account nominated by the wife.

2. As and from 20 March 2012 the husband pay to the wife by way of adult child maintenance for Mr D Woods born … March 1988 the sum of $250 per week to be paid by the husband to an account nominated by the wife.

3. Pursuant to s124(1) of the Child Support (Assessment) Act 1989 (Cth), the husband pay by way of non-periodic child support for J born … December 2002 all tuition fees for the said child at S School as and when they fall due and including any fees currently outstanding for the current academic year, such non-periodic payments to be in addition to the periodic payments of child support payable by the husband pursuant to any Child Support Assessment.

IT IS FURTHER ORDERED BY CONSENT THAT

1. Within fourteen (14) days, the Husband provide to the solicitors for the Wife:

   (a)An accounting of all cheques drawn to “cash” from Commonwealth Bank of Australia account numbers …186 and …314 for the period 1 January to date;

   (b)Particulars of the purpose of the cheque drawn in favour of the Mr M Woods Super Fund from Commonwealth Bank of Australia account number …314 on 30 June 2011 and bank statements showing the account into which the monies were deposited;

   (c)Statements for the American Express credit card (if any) issued by the Westpac Banking Corporation or any other financial institution in the name of the Husband from the opening of the account to date;

   (d)Itineraries, airline ticket receipts, accommodation receipts and any other documents relating to the cost of the Husband’s trip to French Noumea in December 2011 and January 2012;

(e)In the event that the Husband travelled to French Noumea in December 2011 and January 2012 with any other person, airline ticket receipts, accommodation receipts and any other documents relating to expenses paid for the said person by the Husband;

(f)Bank statements that evidence how the deposit relating to the sale of … C Street, Suburb B (approximately $63,000) and the proceeds of sale of … K Street, Suburb H ($627,380) were applied;

(g)       Statements for all accounts in the name of:

(i)The Husband;

(ii)Z Pty Ltd;

(iii)F  Pty Ltd;

(iv)E Pty Ltd;

(v)Z Discretionary Trust;

(vi)The Mr M Woods Superannuation Fund;

(vii)The Woods Family Trust Number 3;

(viii)The Woods Family Trust; and

(ix)Woods Family Property Investor Trust

for the period 1 November 2011 to 20 March 2012.

1. Within seven (7) days, the Wife provide to the solicitors for the Husband copies of any correspondence to the Australian Taxation Office in relation to her taxation returns, and any response thereto, for the years ended 30 June 2007, 30 June 2008, 30 June 2009 and 30 June 2010.

2. Within seven (7) days of signing a Contract of Employment, Partnership Deed or similar documents with Business P, a business practice or any other entity, the Husband provide a copy of the applicable document to the solicitors for the Wife.

3. In the event the Financial Statements and Taxation Returns of the Husband or an entity referred to in paragraph 4(g) are completed or lodged with the Australian Taxation Office, the Husband provide a copy of the aforesaid Financial Statements and Taxation Returns to the solicitors for the Wife within seven (7) days of completion or lodgement with the Australian Taxation Office.

4. In event the Wife lodges her personal Taxation Return for the year end 30 June 2011, the Wife provide a copy of the aforesaid Taxation Returns to the solicitors for the Husband within seven (7) days of lodgement with the Australian Taxation Office.

5. On or before 15 June 2012 the Husband provide to the solicitors for the Wife statements for all accounts in the name of the Husband and the entities referred to in paragraph 4(g) hereof for the period 21 March to 7 June 2012.

6. On or before 15 June 2012 the Wife provide to the solicitors for the Husband statements for all accounts in the name of the Wife for the period 20 February 2012 to 7 June 2012

IT IS FURTHER ORDERED THAT

1. All applications for final orders be adjourned for hearing before Justice Macmillan at 10.00am on 9 July 2012 as an 8 day matter.

2. By no later than 4:00pm on 4 June 2012 the respondent file and serve upon all other parties details of the objections to material filed.

3. By no later than 4:00pm on 25 June 2012 the applicant file and serve upon all other parties brief submissions in relation to objections of the respondent which are not conceded.

4. That the parties, the child J and any other persons requested attend upon Dr N as may be required by Dr N for the purposes of the further therapeutic REPORTABLE counselling with the Husband at first instance to pay the cost of such counselling and reports and the Wife to reimburse him one half thereof from her property settlement and such report be prepared by Dr N and released to the parties by no later than 4.00pm on 15 June 2012.

5. The Independent Children’s Lawyer cause a copy of the Report referred to in paragraph 14 hereof to be filed as soon as practicable after its release.

6. Each party provide to the Court at the commencement of the hearing, a statement setting out the costs incurred to that date and from what source those funds have been paid and what costs are expected to be incurred until the completion of the hearing.

7. The practitioners for the parties file and serve electronically to … by 4.00pm on 4 July 2012:

   (a)       a concise set of the orders sought if different from those already filed;

   (b)a list of applications and affidavits to be read and, if not the whole     affidavit, the relevant paragraphs relied upon;

   (c)       a list of assets and liabilities; and

   (d)       a bullet point summary of argument in relation to the issues in dispute.

8. That the costs of all parties including the Independent Children’s Lawyer be reserved.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel including Senior Counsel.

AND IT IS NOTED THAT

A. Paragraphs 4 to 10 herein are in addition to the parties’ general duty of disclosure which continues notwithstanding the compliance with the said orders, and includes disclosure relating to the winding up of Business V and realisation of the Husband’s interest.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11055  of 2010

Ms Woods

Applicant

And

Mr M Woods

Respondent

REASONS FOR JUDGMENT  

1. This matter was listed before me for final hearing commencing 19 March 2012. The matter, for reasons which I will not go into, has been adjourned for final hearing before me commencing on 9 July 2012, estimated by Mr St John SC, Counsel for the husband, to take eight days. It is the wife’s case that she is now devoid of the necessary funds to support herself and the children of the marriage pending that final hearing and she seeks interim orders for spousal maintenance, adult child maintenance and a departure from the assessment of child support to provide for the payment of school fees. The interim proceedings were heard over two days, based upon the trial affidavits of the parties, their updating affidavits, their financial statements and the submissions made by their respective Senior Counsel. The wife also relied upon the affidavit of Dr W filed 22 February 2012 and the affidavit of Mr Y, an accountant engaged by the wife to review and analyse documents related to her expenditure, filed 15 March 2012. Due to the nature of the hearing, being an interim hearing, the evidence was not tested. Mr James appearing on behalf of the Independent Children’s Lawyer was excused from this part of the proceedings. 

2. This is a hard fought case with a great deal of mistrust between not only the husband and the wife but also the children, in particular between the adult children and the husband, as evidenced by the fact that even this application, which was limited to what if any orders should be made pending the trial in July, itself took one and half days of court time.  The affidavit material suggests that there could be some tension between the husband’s willingness to provide financial assistance for his adult children and the fact that he is required to do so in circumstances where his relationship with those children has broken down and he has little knowledge or involvement in their day-to-day lives. However, as submitted by Mr Bartfeld QC on behalf of the wife, referring me to the decision of Fogarty J in Gamble & Gamble (1978) FLC 90-452, the nature of the relationship between the child or children seeking adult child maintenance and the parent, in this case the husband, from whom they are seeking that maintenance is not relevant to the determination of that application. To his credit, notwithstanding the obvious tension in his relationship with the adult children, this was not a point taken by the husband.

Background

1. The husband and the wife were married in December 1982 and separated on 26 November 2009. The parties were divorced by Order of the Federal Magistrates’ Court of Australia which took effect in February 2011.

2. There are five children of the marriage namely:   

   Mr JJ and Mr D Woods  (now 24 years of age);

   Mr BB and Mr RR Woods  (now 19 years of age); and

   J  (now 9 years of age)

3. All five children live with the wife, albeit that Mr D Woods has spent significant periods, and is presently an inpatient, at the Melbourne Clinic. Dr W, in his report dated 11 November 2011, said as follows:

   The prognosis is not favourable, in the sense that the best that can be obtained is that he will always need some psychiatric support over the next ten or fifteen years….Whilst academically he has the capacity, I would have thought, to be at the top of his field, his psychiatric difficulties could well totally prevent him from ever being able to hold a job.

   It is common ground that Mr D Woods has limited contact with the husband and, as a result, whether at home or in the Melbourne Clinic, he is largely dependent upon the wife.

4. The wife is employed in the education field at S School. Her work rate has been 0.85 since 2006 which she says allows her to take J to her various activities and to spend time with her after school and to visit Mr D Woods when he is in the Melbourne Clinic. The wife deposes that she earns $976 net per week. The wife’s expenses are set out in her financial statement filed 24 October 2011 and thereafter analysed and summarised in the affidavit of Mr Y filed 15 March 2012. The wife claims personal expenses of $2150 and expenses for the five children of $3302, although in his aide memoire setting out what he said was the wife’s shortfall, Mr Bartfeld QC did not include the expenses of the child J. I will analyse those expenses in more detail later in these reasons. The wife’s evidence is that she had depleted all her capital, save and except for approximately $30,000 which is included in the list of her assets and liabilities prepared on her behalf for the trial. Mr St John SC was highly critical of the wife’s level of expenditure, however, although he submitted that I should have reservations about the wife’s evidence because of issues as to her credit, he did not challenge in any real sense that she is now left with capital of only $30,000 or thereabouts.   

5. According to the wife’s evidence, Mr JJ Wods has completed his Honours degree and is intending to apply for entry to a doctorate of philosophy commencing in 2013. Mr JJ Woods is presently undertaking work with a view to enhancing his application to the Ph.D programme. The wife does not seek adult child maintenance with respect to Mr JJ Woods.

6. Mr D Woods has had long standing and serious psychiatric issues. The wife relies upon the affidavit of Dr W in relation to Mr D Woods’ mental health issues. Mr D Woods was admitted to the Melbourne Clinic on 24 October 2011 and was discharged on 6 February 2012. He was re-admitted on 16 February 2012. On 28 February 2012 he was taken to St Vincent’s Hospital following an overdose of antihistamine tablets but has since returned to the Melbourne Clinic where he remains as an in-patient. I do not have any evidence before me as to how long he will remain in the Melbourne Clinic on this occasion.

7. It is conceded by the husband for the purposes of this application that Mr D Woods has significant psychiatric issues and, although it is the husband’s case that he presently pays him $150 per week, arguably an acknowledgement by the husband that Mr D Woods needs support, he disputes that he requires the financial support sought by the wife by way of adult child maintenance.

8. Mr RR Woods completed his VCE at S School in 2010. The wife’s evidence is that he had some difficulty completing his VCE but that on 17 January 2011 he was offered and accepted a place at Deakin University studying for a degree, which he deferred. During 2011 he worked in sales five days per week earning, the wife says, between $250 and $350 per week. He also worked as a coach during this period. He currently earns between $12 and $15 per hour and works between 10 and 12 hours each week coaching and is paid at the end of each season. The hours he spends coaching will be reduced once the football season commences and there are clashes between his football commitments and the other sport matches. He also coaches at S School each Monday and Wednesday during the school term for a couple of hours each day for $20 per hour.

9. The wife in her trial affidavit deposed that although Mr RR Woods’ current degree is not in his ideal area of study, he hopes that it will be a pathway to his desired degree. According to the wife’s evidence, Mr RR Woods commenced his degree during the week of 5 March 2012.

10. Mr BB Woods completed his VCE at G School in 2010. It is the wife’s evidence that he, like Mr RR Woods, had some difficulty completing his VCE. He developed depression during his VCE. He obtained an Australian Tertiary Admission Rank of 66 and was not able to get into his preferred course of tertiary study. In mid January 2011 Mr BB Woods received an offer to study a Bachelor of Arts, which he accepted and deferred to enable him to repeat his VCE at I School. The wife deposes that in April 2011 she was advised by him that he could not keep up with the demands of his VCE at I School and that he expressed concern that his depression was getting worse. For the remainder of 2011 he undertook a 20 week fitness industry course and worked on a casual basis in the hospitality industry.  In her recent affidavit the wife deposes that Mr BB Woods has told her that he intends to commence his Arts Degree on a part time basis in Semester 1 of 2012 and that this will enable him to complete his fitness industry course. The wife further deposes that she has been told by him that he is no longer working in the hospitality industry but that he is looking for other casual employment.

11. J is a full time student at S School. According to the wife, the husband pays child support for J as assessed in the sum of $253.03 per week. The husband’s financial statement discloses child support payments of $277 per week. The wife does not seek to vary the periodic payment. She does however seek a departure from the assessment on the basis that the husband be required to pay the fees for J at S School pending the hearing. There are outstanding fees with respect to the adult children and the school requires payment of the fees for J for this academic year to be brought up to date if she is to attend the school on an ongoing basis. It is not in dispute that J should continue her education at S School, the dispute relates solely to the question of who should be responsible for the payment of her fees, and in what proportion, pending the final hearing in July.

12. It was submitted by Mr Bartfeld QC that in interim proceedings such as these the court has a greater degree of flexibility than in final hearings. He referred me to Redman & Redman (1987) FLC 91-805 where the Full Court said at 76,081 as follows:

    …,the very fact that the order is limited in time imports certain different considerations. One of these is that such an order is intended to be reconsidered, quite apart from a variation under sec. 83 … Another consequence is that on an application for interim maintenance the court conducts “not as final or exhaustive a hearing as would be the case if one were hearing the matter finally”: Williamson and Williamson (1978) FLC 90-505 … per Fogarty J. The evidence need not be so extensive and the findings not so precise. Having regard to those factors, and the general injunction of sec 97(3), the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period and can only be varied under sec. 83.

13. Bearing in mind that the orders sought by the wife in this case are sought for the period between now and 8 July 2012, it is on that basis that I propose to deal with this matter.

Spousal Maintenance

1. S 72 provides that a party to a marriage is liable to support the other party to the extent that that party is reasonably able to do so if, and only if, the other party is unable to support himself or herself adequately by reason of having the care and control of a child of the marriage who has not attained the age of 18 years, by reason of age, physical or mental incapacity for appropriate gainful employment or any other adequate reason, having regard to any relevant matter referred to in s 75(2).

2. Mr St John SC submitted that the wife was a lady with a “track record” in that she had had two secret accounts that she had failed to disclose and which he said told against her general credibility. It is common ground that the wife did not initially disclose the two Swiss accounts, however it is her evidence that the husband was at all times aware of those accounts. Whilst I have regard to the fact that the wife failed to disclose those two accounts, I am not, in this case, where the evidence has not been tested, in a position to make any findings as to credit generally or in relation to specific aspects of the evidence. For the purposes of this application I have relied upon the parties’ respective financial statements, and, in the wife’s case, the evidence of Mr Y, and have drawn conclusions on the basis of that evidence. 

3. The wife seeks the sum of $1500 per week by way of spousal maintenance. She earns $976 net per week. The wife’s income was not disputed by the husband. The wife’s expenses as set out in the report of Mr Y are $2,150 per week. Although Mr Y is unable to account for each and every transaction, his affidavit contains a detailed analysis of the wife’s credit card, cheque account and cash expenditure. As part of that analysis Mr Y apportions various of the household expenses between the wife and the children of the marriage.

1. Mr St John SC was highly critical of the manner in which some of the expenses were apportioned between the wife and the children. He made particular reference to the amounts attributed to Mr D Woods as part of the household expenses in light of his ongoing in-patient treatment at the Melbourne Clinic.

2. If Mr St John SC is correct, and the apportionment of these expenses is not an appropriate basis for a claim for adult child maintenance, the corollary is that it is more than likely that the wife’s expenses may be correspondingly greater than otherwise estimated, thus increasing her claim for spousal maintenance.

3. In Stein & Stein (2000) FLC 93-004 at 87,129 the wife was cross-examined and made some concessions about her expenses. The Full Court, referring to her evidence, said at 87,129:

   Even though the wife made concessions in cross-examination concerning the division of household expenditure on a per capita basis between herself and the children, we view those concessions as being based on a false premise. Such an approach does not equate with reality. It is unlikely that the cost of heating or lighting the wife’s house would be reduced by 80% if the children were not at home. It is unlikely that the food and household supplies bill could be similarly apportioned. As set out in Redman above the apportionment of general household expenditure between members of the household is a difficult task which cannot be precisely undertaken. Whilst some differentiation is needed between the claimant wife’s needs and those of the children, a strict arithmetical approach on a per capita basis will not necessarily adequately reflect the reasonable needs of the claimant.

4. Mr St John SC also submitted that the wife’s level of spending is profligate. It was his submission that because the wife has spent the amount she claims to have spent it does not follow that she needs that amount or that her expenditure is necessarily the appropriate basis for a claim for maintenance, be that spousal maintenance or adult child maintenance. However it also does not follow that she does not have a legitimate claim for maintenance, albeit not equivalent to her level of expenditure, on the basis of what are her reasonable expenses. 

5. Mr St John SC referred me to a number of examples of what he said was the wife’s profligate expenditure. Mr St John SC on occasions referred me to annual expenditure, however for consistency, where he has done so, I have used weekly amounts. These examples of alleged ‘profligate expenditure’ included an amount of $154 per week for a housekeeper, the wife’s share of that expense being $26 per week (noting that the wife’s mother pays the balance of the cost of the housekeeper), $168 per week for restaurants and take-away food (wife’s share $47 per week), $290 per week for clothing (wife’s share $109 per week), and medical, dental and optical expenses of $483 per week (wife’s share $204). The wife also claimed $33 per week for appointments with a psychologist, her share of that being $30 per week. All the evidence of this expenditure will need to be tested at the final hearing of this matter.

6. One of the matters relevant to my determination is the standard of living of the parties during the marriage. It was submitted by the husband that the parties lived a comfortable but not luxurious lifestyle during the marriage. However he also submitted that during the marriage the parties’ expenditure significantly exceeded their income and that the shortfall of approximately $200,000 per annum was met from capital. Whilst the husband would now suggest that this shortfall was caused by the wife’s expenditure, this remains to be tested. I do not accept that, in circumstances where the wife is working 0.85 of a full time job, running a home, caring in varying degrees for four adult children, one of whom has significant psychiatric issues, and a nine year old, that firstly, as it is suggested by the husband, she should be expected to work full time to allay some of her expenses or, secondly, that is unreasonable for her to, for example, employ a housekeeper for 20 hours per week. This is particularly so in circumstances where the wife now has almost sole responsibility for the adult children and primary responsibility for J, and given that the parties employed a housekeeper during the marriage. The wife now lives in what was the family home, a large home suitable for two adults and five children. All of the children have continued to live in the home and it was not submitted by the husband that they should not do so or that that would not have been the case had the marriage continued. The wife then continues to maintain, in that home, what would appear to be the lifestyle anticipated by the parties.

7. In the context of what is the more limited enquiry of an interim hearing, none of these expenses claimed by the wife struck me as unreasonable.

8. Mr St John SC also referred me to a number of items of expenditure which he not only suggested were excessive, but as he submitted, are also not necessarily expenses that the wife will incur between now and the hearing. They included an amount of $26 per week for house repairs and $249 per week for repairs and replacements.  As is commonly the case, the wife, and equally it would appear the husband, have based their projected expenditure on their past expenditure. However until the evidence is tested I have no way of knowing what if any of these expenses are likely to be incurred on an ongoing basis between now and the final hearing. I am however mindful of the fact that even if there is some ongoing expenditure, it may not be at the same level as has historically been the case to date. It is issues such as these in interim hearings which highlight the need for some flexibility. I have, however, for the purposes of this hearing, disregarded the sum of $710 per week the wife has allowed for professional fees, which, on the basis of the evidence I have, appears to be her legal fees. The husband does not in his weekly expenditure make any allowance for legal fees.   

9. Deducting these professional fees from the wife’s expenses leaves the wife with expenses of approximately $1440 and a shortfall of approximately $464 per week.

10. The wife has the primary responsibility for J. Although she does not work full time, I am satisfied that that is reasonable in all of the circumstances of this case. The adult children of the marriage continue to live with the wife and J in the former matrimonial home, which is, with the high cost of living, an increasingly common arrangement for young adults. The wife also has primary responsibility for Mr D Woods, who suffers from a serious mental illness. For these reasons I am satisfied that the wife is not able to support herself adequately.

11. This is not a strict mathematical exercise and, taking into account Mr St John SC’s point in relation to the equal apportionment of the household expenses, the fact that the wife may not have the ongoing cost of household repairs and replacements and having regard to the matters in s75(2) of the Act, I am satisfied that $1500 per week would be a reasonable amount for the wife’s expenses. The wife therefore has a shortfall of approximately $524.

Adult Child Maintenance

1. In this case the wife seeks adult child maintenance for three of the four adult children of the marriage. Section 66L provides that the court must not make an order for the maintenance of a child who is over the age of 18 unless it is satisfied that maintenance is necessary for that adult child either to enable that child to complete his or her education or because that child has a mental or physical disability.

2. It is the wife’s case that the husband should pay the sum of $500 per week for Mr D Woods together with registration fees, comprehensive insurance for his motor vehicle, private health insurance premiums at the current level, all non–rebatable hospital, medical, dental orthodontic, ambulance and prescribed pharmaceutical expenses, mobile telephone expenses at the rate of $80 per month and gymnasium membership. The wife’s evidence is that Mr D Woods’ health and fitness expenses are $9 per week. I do not have any evidence of the cost of the registration or comprehensive insurance for Mr D Woods’ motor vehicle. The wife’s evidence, based upon the affidavit of the accountant, is that his medical, dental and like expenses are $101 per week and his pharmaceutical expenses are $10 per week. His medical expenses which are met by the wife include a non-rebateable fee of $500 every time he is admitted to the Melbourne Clinic.

3. Mr St John SC confirmed that the husband has paid the private health insurance, so I have proceeded on the basis that the wife does not require this order with respect to Mr D Woods.

4. There was a notation to the orders made on 26 May 2011 that, without any admission as to the necessity for same, the husband would pay Mr D Woods $150 per week. It is the wife’s evidence that Mr D Woods uses the money he receives to meet his psychologist’s fees and to pay for petrol.  

5. Mr St John SC was highly critical of the expenses claimed by the wife for Mr D Woods both on the basis of their necessity and reasonableness and on the basis that Mr D Woods is spending significant periods as an in-patient at the Melbourne Clinic, as a result of which Mr St John SC submitted that Mr D Woods would not be incurring the expenses attributed to him by the wife. He was particularly critical of the wife’s claim for Mr D Woods’ gymnasium membership, although I note that it was the husband’s own evidence at paragraph 134 of his affidavit filed 16 November 2011 that as part of his proposed financial arrangements following separation he would pay gym expenses for the children of $2,000. It was also part of that proposal that he would pay for registration and insurance and petrol for Mr JJ and Mr D Woods’ motor vehicles.

6. Whilst I agree with Mr St John SC that there might be less spent on Mr D Woods by way of food and household supplies during the periods when he is an in-patient at the Melbourne Clinic, it does not follow that, just because he is not at home, the household expenses will be significantly reduced. It is also the case that some of the expenses claimed by the wife with respect to him, such as registration and insurance for his motor vehicle, gym membership, medical and like expenses and mobile phone expenses, are likely to be incurred irrespective of whether or not he is in the Melbourne Clinic.

7. Allowing for the fact that I have attributed to the wife, for the purposes of determining her needs, some of the household expenses that Mr Y attributed to Mr D Woods, I am in all of the circumstances satisfied that maintenance is necessary for him because of his mental health issues and that the amount needed for his support is approximately $250.  I have determined that on an interim basis that amount will be inclusive of any allowances for the payment of motor vehicle registration fees, comprehensive motor vehicle insurance premiums, motor vehicle maintenance, any non-rebatable hospital, medical, dental, orthodontic, ambulance, and prescribed pharmaceutical expenses, mobile telephone expenses and gymnasium membership for Mr D Woods.

8. I have already found that the wife is not able to meet her own reasonable needs and, in those circumstances, she is not in a position to contribute to Mr D Woods’ expenses.

9. The wife claims adult child maintenance of $200 per week for both Mr BB and Mr RR Woods on the basis that it is necessary to enable them to complete their education. According to the wife’s evidence, and that of the accountant, Mr BB Woods’ expenses are $811 per week and Mr RR Woods’ expenses are $606 per week. Mr BB Woods’ medical, dental and like expenses are significantly more than Mr RR Woods’, as are his health and fitness expenses.

10. Neither Mr RR nor Mr BB Woods is on affidavit and the wife seeks to rely upon their statements to her about their educational requirements and financial circumstances. Although it was conceded by Mr St John SC that the hearsay evidence of the wife is admissible for the purposes of this interim hearing, subject to what weight I may give to that evidence, he maintains his objection to that evidence for the purposes of the final hearing. Although I have not yet determined that issue for the purposes of the final hearing, even if I were to accede to the wife’s position, which is that the proceedings for adult child maintenance fall within the provisions of Division 12A and that accordingly the provisions of the Evidence Act 1995 (Cth) in so far as they apply to hearsay evidence do not apply, I am conscious of the fact that a determination of whether maintenance is necessary requires a consideration of many issues and that evidence is required in relation to those issues. The court will not necessarily accept that because a child is enrolled in a particular tertiary course that it follows that maintenance should be paid to enable that child to complete that particular course. There are cases in which the court has determined that a tertiary education or a particular course is not necessarily desirable for the child in question.

11. There is also the question of the adult child’s ability to contribute to his or her own support. This will in many cases depend upon the requirements of the particular course of study and what opportunities are available to the particular child to earn income within the time constraints of the particular course of study.

12. Although these are interim proceedings and as such the enquiry is more limited, I am not satisfied that on the basis of the evidence I have before me that I can find that adult child maintenance is necessary for Mr BB or Mr RR Woods to complete their education. The evidence I do have itself raises questions about the courses Mr BB and Mr RR Woods are undertaking, there is little or no evidence about their course requirements, save and except that I am aware that Mr BB Woods is only studying part time, and I do not have sufficient evidence in relation to their capacity to earn income to determine whether maintenance is necessary. 

Child Support Departure

1. The wife seeks an order that, pending the final hearing, the husband pay the school fees for J at S School. The fees for that period excluding the arrears are two payments of $3917.00, one which is currently outstanding. The first instalment is now due and payable. The husband agrees that there should be a departure from the assessment, but it is his case that he should only be required to pay half of the fees. He relies upon the fact that the wife has approximately $30,000 in the bank.

2. J has always attended S School and both parties agree that she should continue at S School, the issue in dispute is who should pay the fees. J is being educated in the manner that her parents intended and on that basis I am satisfied that there are grounds for a departure from the assessment.

3. It was submitted by Mr Bartfeld QC that the wife already makes a contribution to the school fees by virtue of her employment at the school and the discount they receive on the fees as a result of her employment, and that in the circumstances of this case she should not be required to call on the small amount of capital she has in order to pay school fees for J. He referred me to the decision of Mitchell & Mitchell (1995) FLC 92-601

4. I have already found that the wife does not have sufficient income to adequately meet her reasonable needs and in those circumstances she does not have any capacity to meet the school fees from income, nor should she in my view be required in all of the circumstances of this case to use the limited capital she has to do so.

The Husband’s Capacity

1. Having found that the wife has a shortfall of approximately $524.00, that adult child maintenance is necessary for Mr D Woods and that the wife does not have the capacity to meet the cost of J’s school fees, the question is then what capacity the husband has to contribute to their support and to pay the school fees.

2. The husband is a partner at Business V. According to his Financial Statement filed 16 November 2011 his weekly income from the practice, excluding any rental income he receives, is estimated to be $8461 per week, upon which, according to that same document, he pays tax of $1800, leaving him with a net figure of $6661 per week. In his affidavit filed 15 March 2012 the husband deposes that, as a result of the arrangements proposed by Business P if he is to join the business, for the 13 months from 1 June 2012 to 30 June 2013 he would receive a base salary of $300,000 together with a one off “signing on payment” of $130,000. The husband also deposed that the MM Trust has been audited by the ATO and it is his evidence that, although there is as yet no formal notice, the income of the trust will be reduced from 40 to 10 per cent of the income of the partnership, with a corresponding increase in the income of the partnership. The result of this is that the husband deposes he will be required to pay additional tax of approximately $90,000 for the 2011 financial year and $35,000 in respect of the current year. Even if I were to accept the husband’s evidence there is no evidence as to the likely time frame for any further taxation payments that might be required or, significantly, whether that is likely to occur prior to the hearing of this matter in July.

3. Whilst the husband’s income may change during the period pending the final hearing, I cannot speculate on what that change will be. One possibility is that he will agree to the arrangements proposed by Business P and, in those circumstances, his income for the relevant period would not change dramatically. I also cannot be satisfied on the basis of the evidence before me that he will be required to make any payment to the ATO prior to the final hearing. 

4. The husband’s expenses are also set out in his financial statement filed 16 November 2011. During the marriage the parties acquired a number of negatively geared properties. That negative gearing accounts for the fact that the husband’s tax, calculated on a weekly basis on his evidence, is only $1800 per week. On 26 May 2011 orders were made by consent which provided that the rental income from the various investment properties be paid into an account set up pursuant to the orders (“Rentals Account”) and that monies in the Rentals Account be applied to the payment of the mortgages and other outgoings with respect to those properties. Paragraph 6 of the orders provided that any shortfall in the Rentals Account be met from the offset account. Accordingly, whilst the tax paid by the husband reflects the negative gearing, the husband is not presently required to meet any shortfall using the income generated by his practice. Accordingly, in assessing the husband’s capacity to contribute to the support of the wife and/or the children, I have not included the rental income or any excess of expenditure over that rental income.

5. It was put to me by Mr St John SC, on instructions, that the offset account would be depleted by April and that the parties would need to either borrow the funds necessary to meet that shortfall or sell one or more of the properties.  Mr St John SC also made the point on a number of occasions that the wife has not been prepared to consent to the sale of any of the investment properties.  However I was also told by Mr Bartfeld QC that he had requested a written proposal from the husband for the wife’s consideration with respect to the possible refinancing or sale of assets. Once again I cannot speculate as to whether or not the husband will, pending the final hearing, be required to meet any shortfall of expenses for the investment properties from the income generated by his practice.

6. On the basis of his financial statement, excluding the rental income and the expenses relating to the investment properties, the husband’s expenses total approximately $3631 together with the $2350 set out in Part N of his financial statement, a total of $5981. This includes child support of $277 for J, the sum of $150 the husband pays to Mr D Woods, the lease payments and registration for the wife’s car, an amount of $436 per week for the children and $40 per week for other adults.

1. It also includes an amount of $1,858 for that part of the National Australia Bank mortgage over the properties which relates to the KK Street property, which was purchased after separation for approximately $1.8 million. It was submitted by Mr Bartfeld QC that the husband, having purchased the KK Street property when there were other investment properties he could have lived in, cannot now come to Court and submit that he cannot afford to pay maintenance, be that spousal maintenance, child support or adult child maintenance, because of his mortgage commitments in relation to that property. In reply it was submitted that, even if the Court did not take into account all of the mortgage payments the husband is required to make in respect of the KK Street property, there would have to be some provision for his accommodation. I agree that there would have to be some provision for the husband’s accommodation, however I accept Mr Bartfeld QC’s submission that the husband’s obligation to make mortgage payments on the KK Street property should not take priority, particularly in the limited time frame of these orders, over his obligations to support the wife and the children of his marriage in so far as I find that he has an obligation to do so. 

2. The husband’s financial statement also includes amounts for house repairs of $120 per week, of which he attributed $10 to the children, $180 per week for the purchase of furniture and household goods, of which he attributed $30 to the children and $200 per week for accounting and bookkeeping. It was submitted by Mr St John SC that some of the wife’s expenses were not relevant for the purposes of an order made pending the final hearing. If I were to accept that this is the case, logically the same argument would apply to some of the husband’s expenses. I also note that paragraph 5(d) of the order made 26 May 2011 provided that expenses incidental to the proper administration and accounting of the Woods Family Property Investor Trust, the Woods Family Trust Number 3, the Z Discretionary Trust and the Woods Family Trust are to be paid from the Rentals Account established pursuant to those orders, which would suggest that the amount attributed by the husband to accounting and bookkeeping may be being met from the Rentals Account or the offset account and not from the husband’s income.

3. Based upon the husband’s financial statement, without making any adjustment in relation to the husband’s expenses, and even allowing for the whole of the mortgage payment for KK Street, the husband’s current income exceeds his expenses by approximately $680 per week.  

4. In my view, even on the basis of this limited enquiry, some adjustment should be made for the accounting expenses of $200 per week and the KK Street expenses. Whilst Mr St John SC did not make any submissions with respect to what provision I should make for the husband’s accommodation, I am satisfied that for the period pending the final hearing the husband has the capacity to pay the wife the sum of $520 per week, that he has the capacity to pay the sum of $250 per week for Mr D Woods and the school fees at S School for J.  

5. As Mr D Woods is spending significant periods in the Melbourne Clinic, the payment of $250 will include the amount of $150 the husband now pays for him. I have also taken into account the other payments the husband makes for the benefit of the wife and the children in calculating his expenses and the orders I propose to make are made on the basis of those payments continuing pending the hearing. I will not make orders with respect to the amounts already being paid by the husband unless either party requests that I do so.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 5 April 2012.

Associate: 

Date:  5 April 2012