WOODS & WOODS

[2011] FamCA 237

FAMILY COURT OF AUSTRALIA

WOODS & WOODS [2011] FamCA 237

FAMILY LAW – Urgent spousal maintenance; Section 77 Family Law Act 1975 (Cth); immediate financial need to be shown; issue arises in affluent family where weekly expense is high for wife and five children, four of whom are over 18 years of age.
FAMILY LAW – Discovery; importance of disclosure but not necessarily copying.

Family Law Act 1975 (Cth)

APPLICANT: Ms Woods

RESPONDENT: Mr Woods

FILE NUMBER: MLC 11055 of 2010

DATE DELIVERED: 6 April 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 4 April 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Strum

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT: Mr St John SC

SOLICITOR FOR THE RESPONDENT: Berry Family Law

Orders

1. That of the wife’s application filed 15 February 2011, the requests for orders for spousal maintenance under s 77 of the Family Law Act 1975 (Cth) (“the Act”) and for the provision of documents by way of disclosure are dismissed.

2. That the wife’s oral application for spousal maintenance under s 74 of the Act together with all other outstanding interim issues set out in the wife’s application filed 15 February 2011 and the husband’s response thereto filed 4 April 2011 are adjourned to 18 May 2011 in the Senior Registrar’s list of cases.

3. That in the event that the matter settles or cannot proceed for any reason solicitors are to immediately advise the Assistant to the Senior Registrar.

4. That the parties are to have a telephone link with the Senior Registrar on Wednesday 11 May 2011 at 10.00 a.m. to confirm readiness to proceed and that all documents relied upon have been filed and served.

5. That there will be liberty to all parties to list the matter for mention before the Senior Registrar on 24 hours notice.

6. That each of the parties prepare file and serve on the other party an Outline of Case Document in bullet point form and minute of orders sought by no later than 4.00 p.m. on the 17 May 2011.

IT IS NOTED that publication of this judgment under the pseudonym Woods & Woods is approved 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 Woods

Respondent

REASONS FOR JUDGMENT

1. Ms Woods (“the wife”) sought urgent orders for financial support for herself and the five children of the marriage from Mr Woods (“the husband”) in an application that I heard in the Judicial Duty List on 4 April 2011.  I reserved my determination on that day but now propose to dismiss the urgent application and adjourn the proceedings to a further interim hearing where comprehensive material can be prepared and filed.

2. The wife is a 49 year professional whose gross income is $68,500 with a net income of $44,000.  The husband is a 53 year professional whose earnings are conceded to be about $440,000 per annum. 

3. The parties were married in 1982 and separated in November 2009.  A divorce was granted in January 2011.

4. There are five children of this marriage four of whom are over 18 years of age and J who is 8 years of age.  The four children over 18 years of age comprise two sets of twins.

5. On 15 February 2011, the wife filed her application seeking an urgent hearing.  A registrar directed that the application be served as soon as practicable and listed it for hearing in the first available Judicial Duty List.  The wife sought a variety of orders but those pursued on the return date were:

   (a)an order for $1500 per week pursuant to s 77 of the Family Law Act 1975 (Cth) (“the Act”);

   (b)the payment by the husband of the mortgage loan to the National Australia Bank;

   (c)the wife’s car payment;

   (d)private health cover; and

   (e)the refund to the wife of all of the non-rebatable expenses relating to the medical treatment for the children.

6. In relation to the four of the children over 18 years of age, there is an extant application under s 66L of the Act for their maintenance. In seeking the order under s 77, the wife proposed to cover the immediate expenses of the children globally.

7. On 4 April 2011 notwithstanding he had had the wife’s material for some weeks, the husband filed a response.  He sought a variety of parenting orders in relation to the child J along with the sale of various real properties and also the sale of the wife’s motor car.

8. The two issues that each counsel addressed related to the urgent financial support and an argument about whether the husband had made appropriate discovery and if not, what he should be providing immediately.

9. Counsel for the wife also made an oral application for spousal maintenance under s 74 of the Act. I do not propose to deal with that application today but rather to adjourn the proceedings to a further hearing. It was part of the wife’s application to adjourn the proceedings because of the late filing of the husband’s material. That late filing associated with the pursuit of orders for parenting matters, required the wife to address new issues.

10. I propose to dismiss the wife’s application for urgent maintenance under s 77 of the Act and to decline to deal with the discovery issue at this stage for the reasons that follow.

11. Dealing initially with the s 77 application, I am not satisfied on the evidence albeit untested, there is any basis to find that the wife is in urgent need.

12. The power to make any maintenance order at all lies in s 80. 

13. Section 80(1)(h) provides for the making of a permanent order or an order pending the disposal of proceedings or until further order.

14. The distinction between a maintenance order under s 74 and s 77 lies in the hearing procedure. Under s 74, an applicant would be expected to provide expansive evidence to satisfy s 72 and s 75 and the respondent should be given the opportunity to test that evidence. Section 80(1)(h) provides for a comprehensive hearing even though the life of the spousal maintenance order might be limited.

15. In an urgent application, the Court is not expected to do more than conduct a summary hearing without the evidence being tested.  That is, where the Court is satisfied that the applicant meets the threshold test and is satisfied about the respondent’s capacity, there is a basis for the Court to put in place a temporary maintenance measure.

16. Counsel for the husband and wife referred me to various authorities all of which are of long-standing.  In this case, those authorities are of assistance.

17. In Williamson and Williamson (1978) FLC 90-575, the Full Court described the urgent procedure as a “rather pragmatic basis without any real hearing on the merits”. In this case, there has been an examination of the untested evidence of both parties.

18. In Chapman and Chapman (1979) FLC 90-671, the Full Court described the procedures as “somewhat ad hoc” which provided a court with a wide discretion not otherwise fettered by the evidentiary requirements of a normal spousal maintenance application. Whilst the discretion might be wider and the demand for evidence less so, there is still a need to establish the fundamentals of s 74.

19. In Redman and Redman (1987) FLC 91-805 the Full Court said that although s 74 applied, the very fact that the order was intended to be limited in time meant that different considerations applied; that is, anything that needed to be undone could be so later undone without the strict requirements of a variation under s 83 being fulfilled. It is that latter distinction that makes a final order different from a temporary order but that again is different from an urgent order under s 77.

20. The circumstances under which the Court has previously delineated between urgent and normal spousal maintenance have varied.  In Martyns and Martyns (2007) FamCA 892, Mullane J described the situation thus:

    Even though the provision in s 77 for urgent spouse maintenance is designed to address situations where the Court is not able to be precise about the need or the extent of the needs or resources of the parties, but is convinced that a person is in immediate need of financial assistance, it still is subject to s 72 – the hurdle of having to establish the reason for someone’s inability to support himself or herself. (emphasis mine)

21. Thus, the wife needs to establish a requirement to meet her daily needs pending a comprehensive examination by the Court of the financial circumstances of both her household and that of the husband.  The financial statement of both parties which reflects their respective lifestyles is not entirely helpful having regard to the averaging concept that each party has used to take into account annual holidays, hobbies and the matters to which I shall refer below.  What the Court must contemplate is the individual circumstances of both parties and ascertain whether or not the applicant will have significant difficulty fulfilling genuine immediate and regular needs but also whether the respondent has the capacity to satisfy those needs.  This approach takes into consideration the provisions of s 75(2)(d), (g), (k) and (o).  In making the assessment however, it is important to take into account the standard of living that the parties enjoyed particularly if there is a continuation of that standard by the respondent.  The first test however is the question of the need.

22. In her application, the wife relied upon a financial statement prepared pursuant to Chapter 13 of the Rules. She said that there had been no maintenance provided to her household subsequent to November 2010. Counsel for the wife pointed to three discrete periods of time as indicative of the husband’s approach to the support of the family. The first was the period immediately after separation where financial support went on much as it had done in the latter part of the marriage. The second period was from July 2010 until November 2010 where the husband curtailed his financial contribution. The third was the period subsequent to November 2010 where although the wife said no payments were made, there was a concession by counsel that some (perhaps less important) payments were made such as gym memberships and AFL memberships for the sons.

23. The wife’s financial statement also showed that there were no other members of the household who had income but the husband asserted and it was not denied by the wife, that at least two of the four sons have work of one sort or another and one of the sons has taken time out of university studies to go to interstate.

24. An examination of the wife’s financial statement filed in February 2011 showed that her expenditure amounted to $6819 per week using the averaging concept.  However, that included the expenses of herself and the five children.  The averaging concept however meant that she included house repairs, $210 per week for petrol, $300 per week for the maintenance of her vehicle, $565 per week for clothing and shoes, $200 to children’s activities, $400 for holidays, $390 for a cleaner, $102 for replacements of household effects, $180 for gifts and $160 for hairdressing.  Those alone total about $2500 per week.  Clearly in an urgent situation even factoring in the affluent lifestyle of the parties, it is hard to imagine the amount of that expense being seen to be reasonable.

25. In her affidavit, the wife comprehensively set out the background of the family.  It could only be concluded that the parties lived an affluent lifestyle.  The wife and the five children currently live in a two-storey home that has six bedrooms plus a study.  It is situated on a double block of land with a triple garage and an artificial grass tennis court and extensive garden.  Prior to separation, the parties had contemplated spending between $90,000 and $100,000 for the installation of a swimming pool along with landscaping. 

26. Along with affluent lifestyle however came debt to accumulate other assets.  The parties have investment properties, trusts and superannuation.  The husband has an interest in a business and has been involved in residential property developments.

27. At the time the parties separated, there were extensive assets but the full extent of the equity in those assets remains to be ascertained.

28. In the first of the three periods to which I have referred, the wife and children maintained the lifestyle which included significant amounts of cash together with access to credit card facilities which enabled all of the expenses of an affluent lifestyle.  The husband continued to pay all of the utilities and outgoings and more importantly, serviced the debt.

29. In June 2010, the husband became critical of the wife’s expenditure and terminated her access to credit facilities.  In his affidavit, the husband said that the wife’s unrestrained spending had placed overwhelming demands on the separated family’s finances to the extent that he felt that he had to set a limit on the payments that he would make.

30. In July 2010, correspondence occurred between the parties’ respective lawyers including a demand by the husband for details about overseas bank accounts said to have been controlled by the wife. 

31. In her affidavit, the wife referred to the fact that between July and November 2010, her “financial circumstances became increasingly perilous”.  By that statement, she meant that there was insufficient money to meet “basic day to day needs”.  As a consequence, with the husband having curtailed the access to finance, the wife withdrew $80,000 from joint savings.  The husband’s immediate reaction was to threaten to cut off support entirely.  Counsel for the husband described the husband’s position as informing the wife that she could either use the $80,000 or return it and he would make the periodic payments that he was then offering.  The wife’s response was to decline to return the $80,000 saying that she would hold and use the funds on the basis that the payments previously offered and made, were inadequate.  This rather tortuous correspondence led to the husband ceasing to make any payments. 

32. To the extent that the husband’s position was that he needed the $80,000 to meet the high commitments that he then had, his position seems inconsistent with his actions in then buying a property for $1.875 million.  That property was described by the estate agent as “historically significant”.  It was a Victorian residence and the contract of sale was executed in October 2010.  The transfer of land alone shows that payment of stamp duty amounted to $103,000 and that was paid in January 2011.  The husband’s explanation for all of that was that he had to find somewhere to live and having found the property, decided it was a good buy and decided to acquire it.  In his affidavit, he said that he did not tell the wife about it because having paid a deposit, he was concerned that the wife might “interfere” with his banking relationship giving rise to the prospect of the purchase falling through and exposing him to considerable damages.  The finance for the purchase came from the National Australia Bank and was funded by a draw down of existing credit facilities and a stand alone mortgage of $1.5 million.  Regardless of the existing facility, it does not take much imagination to understand that a $1.5 million debt is extremely expensive to service in circumstances where problems within the family household had not been resolved.  The wife’s position was to complain bitterly that the husband was curtailing her expenditure of an affluent lifestyle yet doing exactly the opposite himself.

33. All of these matters no doubt will be tested in the fullness of time.

34. In that context, the wife said that her salary was insufficient to meet the household expenses which included the five children.  I am not entirely sure of the accuracy of that statement having regard to the assertion by the husband of the employment of at least two of the sons nor do I have any evidence or understanding of their capacities to support themselves.  I take into account in that regard, the fact that at least one of the children has significant health problems. 

35. Throughout her evidence, the wife largely did not distinguish between the children notwithstanding their varying ages.  There are considerable medical expenses for psychologists and psychiatrists all of which were and are being paid from the various financial resources under the control of the wife.  By February 2011, the wife had expended much of the $80,000 of money she took and was using up other accounts which had funds such as $31,665 in a V2 account, $1971 in a cheque account and $1971 in a savings account.  By the same token however, there was a $10,569 credit card bill outstanding.

36. The wife expressed concern that all of these funds would be exhausted within a very short space of time.  That statement might normally give rise to an apprehension that the wife needed some immediate financial assistance.

37. The husband however pointed to the fact that the wife had accounts in Switzerland and specifically referred to travellers cheques that she had possessed in 2007.  He said that these funds were from the wife’s inheritance and he had asked the wife to use them to assist in reducing debt and meeting pressing household expenses during the marriage.  He said she had refused.  The husband then complained in respect of these proceedings, that the wife had not included superannuation funds, jewellery and contents when setting out her financial position before the Court.  He said that despite his “many requests” that the wife bring the money from Switzerland, she consistently refused saying that the inheritance was none of his business. 

38. In the context of the proceedings before the Court therefore, the husband denied that the wife had minimal funds.  He strongly denied that her financial position was “perilous”.  Despite terminating the wife’s financial support, he continued to pay all mortgage payments, lease payments on the wife’s car and various other modest things.

39. With the husband having denied the wife’s position was as she proclaimed, the wife filed a further affidavit on the day of the hearing.  She conceded that she held between $93,000 and $98,000 in two Swiss bank accounts.  She set out where those funds had come from and where they were held.  She set out how those funds had been accessed during the marriage.  She maintained that the husband knew of the funds and in that regard, that would appear clear on the husband’s evidence.  She asserted that she had been told by the husband not to “disclose” the accounts because she would be in trouble with the Australian Taxation Office.  Whether or not that is so will be a matter for future consideration.  The wife’s own evidence indicated that interest had been earned on those accounts and as I pointed out in discussion with counsel, a court may have to give consideration to drawing the matters to the attention of the Australian Taxation Office if the parties do not. 

40. More importantly, the wife conceded that she had denied the existence of the funds when the husband and his solicitors questioned their existence in correspondence.  In her second affidavit, she then said:

    More importantly, I failed to disclose the monies to this Honourable Court in my financial statement and affidavit filed 15 February 2011.  I now understand that my failure to disclose the monies was wrong and I apologise to this Honourable Court.

41. The difficulty with that concession is also that her affidavit attached to the financial statement acknowledges having read Rule 13.04 and understanding her obligation at law to make a full and frank disclosure. 

42. The wife’s position was that she would not be able to access the Swiss accounts in any event without going there.

43. All of this points to the question of whether or not the wife was in immediate need of financial assistance not only at the time of filing the application but also at the time of hearing. On any view, at the time of the filing of the application, she was less than candid. Her true position would have meant that she could not have justified a claim of impecuniosity. Her position at the hearing was forthright but it is hard to see how I could find that there is an immediate need of financial assistance with so many questions unanswered. This is not a case in which I could be satisfied that there is a justification for an order for financial support without the evidence being comprehensively examined and tested. The wife’s application for an order under s 77 of the Act must therefore fail.

1. The second issue related to the question of disclosure. Attached to the wife’s application was a very significant list of documents being pursued. The husband’s position was that the wife could have any documents that she wanted. He had suggested in correspondence that she contact the accountants who had looked after the parties’ interests during the marriage. In her affidavit, the wife complained that she had been thwarted in that attempt when she endeavoured to obtain information from the accountants. Be that as it may, in this case, there is a distinction between the provision of copied documents and the making of them available for inspection. Chapter 13 of the Family Law Rules 2004 requires each party to disclose documents that are relevant to an issue in the case which have been in the party’s possession or control. The same rules make provision for the inspection of the documents including the production of originals if copies are provided. There is no basis for me to say that the rule requires photocopying to be undertaken at enormous time and expense in circumstances where the original documents can be made available for inspection and copying at the expense of the person who wishes to see them. It is not suggested in this case that the documents are not being made available for inspection. The dispute seems to be about them being copied.

2. I would not be prepared to make an order for documents to be copied in this case having regard to the voluminous number involved. That is particularly so where the primary application before the Court immediately is under s 77 of the Act. I am also conscious that the offices of both practitioners are within a reasonable proximity of one another so that inspection could be undertaken without considerable inconvenience.

3. I am not to be seen as indicating that discovery is not important.  I am however concerned that with the stated financial difficulties of both parties, further costs are not incurred unnecessarily.  In those circumstances, I decline to make the order as sought by the wife at this stage.

I certify that the preceding Forty Six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 6 April 2011.

Associate: 

Date:  6 April 2011