Yanez and Kouros

[2009] FMCAfam 791

FEDERAL MAGISTRATES COURT OF AUSTRALIA

YANEZ & KOUROS [2009] FMCAfam 791

FAMILY LAW – Interim spousal maintenance.

Family Law Act 1975, ss.72, 74

Black and Kellner (1992) FLC 92-287
Oriolo and Oriolo (1985) FLC 91-653
Weir (1993) FLC 92-338

Applicant: MS YANEZ

Respondent: MR KOUROS

File Number: SYC 1183 of 2009

Judgment of: Altobelli FM

Hearing date: 24 June 2009

Date of Last Submission: 24 June 2009

Delivered at: Sydney

Delivered on: 26 June 2009

REPRESENTATION

Counsel for the Applicant: Mr Levy

Solicitors for the Applicant: Marsdens Law Group

Counsel for the Respondent: Mr Givney

Solicitors for the Respondent: H C Stathis & Co Solicitors & Attorneys

THE COURT ORDERS PENDING FURTHER ORDER THAT:

1. By way of interim spouse maintenance the husband pay to the wife $866 per week, payable weekly in advance and with the first payment to the wife, or as she may direct in writing, no later than 1 July 2009.

2. Orders 5, 6, 7, 8 and 9 made 7 April 2009 be continued pending further order.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC 1183 of 2009

MS YANEZ

Applicant

And

MR KOUROS

Respondent

REASONS FOR JUDGMENT

(Ex tempore)

Introduction and background

1. This is an application for interim spouse maintenance. The applicant wife lives in [L] and describes herself as a homemaker. She is 40 years old. The respondent husband lives in [M]. He describes himself as a [trade omitted] and is 50 years old. Cohabitation commenced in January 2004. They married in September 2004 and separated on 4 July 2008. There are two children in the care of the applicant mother, four and three years old, the older one who has special needs arising out of health issues.

2. The substantive application relates to property settlement and in that regard a conciliation conference has been ordered. The present issue is for interim spouse maintenance. The wife asks for $896 per week. There are current orders for urgent spouse maintenance made on 7 April at $180 per week. The respondent husband has through his counsel quite properly conceded that the wife has established her need for the purposes of an application under s.72 and the only issue is capacity to pay. The husband concedes he has capacity to continue to meet the existing urgent order for spouse maintenance. If the husband's capacity to pay is found, then the wife's need will need to be quantified.

3. Accordingly, the issue is the husband's capacity to pay for the purposes of s.72(1) of the Act. The applicable law is contained in s.74 of the Family Law Act 1975, which I incorporate into these reasons.

4. This is a case where it is either plainly apparent to all parties or should be apparent that the matter is to be resolved by a close consideration of the husband's financial circumstances. It follows I think that the duty is on the husband to adequately disclose his finances. The authority for this are well-known, the Full Court's decisions in Black and Kellner (1992) FLC 92-287, Oriolo and Oriolo (1985) FLC 91-653, Weir (1993) FLC 92-338 and several other well-known authorities. The consequences of failure to disclose are also dealt with in those cases.

Evidence about the husband's financial circumstances

1. At paragraph 2.10 of the husband's affidavit filed 6 April 2009 the husband agrees that between the date of separation, July 2008, and March 2009 he was paying to the wife for the benefit of the children and herself $960 per week, comprising $234 per week child support and the rest for the wife. He says he is unable to pay "due to the general diminution of the economy and the fact that my business is not providing sufficient income to pay the additional sum". He also refers to pressure from creditors. This assertion by the husband is an issue in this case. By his own actions he concedes that until March 2009 he had capacity to pay $695 per week to the wife, as well as child support of $234 per week. For me to accept his explanation his own evidence will need to establish that the matters he asserts are true. Otherwise, I would consider myself free, subject to the evidence, to find that he does continue to have the capacity to pay he had in March.

2. I make the following observations and findings about the husband's financial circumstances.

3. The financial statement of the husband sworn 6 April 2009 makes it plainly obvious that from the husband's perspective his business and personal affairs are plainly intermingled. Even though the [Kouros] Family Trust operates the [omitted] business and [D] Investments the [business omitted], the husband is the effective controller of both. He personally owns the property from which the business is conducted. He seems to claim most of the business debts in his own financial statement, even though in evidence there was a selection of financial documents from each of the entities to which I have just referred. In the father's financial statement he asserts, and I accept for present purposes, that these are just convenient entities the husband uses for income splitting and tax planning purposes.

4. In his financial statement the husband asserts that his only income is $1375 per week. At paragraph 5 of his affidavit of 6 April 2009 he asserts that "my average monthly earnings from the business are $50,000" or $600,000 per annum. He asserts that he is left with approximately $358 per week to pay for groceries for himself and his sons. It is certainly not apparent to me how he gets the figure to which he refers in his financial statement. In his 2008 personal tax return, that is, the latest one available, his taxable income is $93,963 or $1807 per week. For child support purposes his assessable income is $94,885. These figures are derived from documents that the husband annexes to his own affidavit. He goes on to assert at paragraph 4 that his total monthly expenses are just under $48,500 per month. The evidence indicates this is business as well as personal.

5. The 2008 financials for [D] Investments and the [Kouros] Family Trust are in evidence. The [D] statement of financial performance indicates that the revenue of [D] over the following periods are as follows: 2006 $434,953; 2007 $366,390; 2008 $514,400. These are gross figures of course and include sales, interest and other income which I presume is rental from telecommunication towers on the [M] property. There are of course substantial expenses claimed and a very low operating profit in 2008. This was $13,517. Nonetheless, it is interesting to note that the gross monthly business income in the financial year 2008 was just under $43,000. The financials for the family trust show minimum income and this is consistent with the husband's other evidence about the [omitted] business only having been established from about July 2008.

6. There are cash flow statements for each entity to the end of March 2009. The family trust year to date is $129,802 or an average of $14,422 per calendar month. It should be noted that the March sales were $16,663 or above average. The [D] Pty Ltd statement year to date is $367,594 or $40,843 per month on average. And it should be noted March sales were $43,381, again above average. This combined year to date cash flow for the business controlled by the husband amounts to $497,396 or an average over nine months of $55,266, which is $5000 more per calendar month than the husband asserts in his affidavit. The situation in relation to his expenses is more complex and is certainly less clear. But it must be remembered that the onus is on the husband to produce clear evidence to the court about these matters. The family trust seems to assert operating expenses and loan expenses to date of $154,188 or an average of $17,132 per calendar month. [D] seems to assert operating expenses year to date of $153,790 or $17,087 per calendar month. The total combined average monthly expenses are $34,220 per calendar month, significantly less than the $48,000 per calendar month to which the husband refers in his affidavit.

7. The husband's evidence about the financial circumstances of his business is at this point both inconsistent and unclear. What is noticeable is that in March 2009, the month the husband ceased paying maintenance to the wife, monthly sales for both businesses were above average and indeed totalled $60,000 per calendar month. According to the husband's own cash flow reports, combined operating profits that month were $14,780.

8. The husband tenders a valuation of Mr B of the family trust business and of [D]. The valuation of the family trust contains a more detailed profit and loss report that produces not just March year to date but cash flows for each of the months from July 2008 to March 2009. Curiously, the husband does not produce a similar document for [D] Pty Ltd. It is curious indeed that this document is missing. Nonetheless, that family trust profit and loss provides a revealing insight into the operations of the [omitted] business. As indicated, average monthly sales were $14,422 and in March that was $16,664. I note, however, that in February, which was the worst month of the relevant reporting period, the sales were $4895. It is possible, therefore, that the husband made the decision in March that he could no longer afford to pay maintenance at the previous rate on the basis of poor turnover. That does not justify his actions under the circumstances, though it certainly makes it more understandable. The two preceding months, December and January, were both above average. His concerns about declining profitability in February are also apparent from the profit and loss figures for net profit. In February there was a loss, but in January there was a profit of $4770 and March a profit of $7912 and on current indications the family trust produces net profit of about $50,000 after payment of all loans. This document, though presenting only part of the picture (given the absence of comparable data regarding [D], which was a matter entirely for the husband) nonetheless shows that the husband was paying $960 per week combined payments to the wife from July 2008 continuously in circumstances where the business was very profitable (for example, in July and November 2008) and quite unprofitable (for example, in August 2008). If he had the capacity then, what has changed?

9. He asserts a general downturn of the economy, but this is not borne out by the figures that he himself presents before the court. He also refers to pressure from traders and creditors. In his affidavit of 6 April 2009 at paragraph 3 he lists these and the debts total $1.94 million. In his financial statement of the same date he lists these at $2.025 million, but he includes a contingent capital gains tax debt of $232,500 if the [M] land were to be sold. Of course that is not an appropriate adjustment at this stage. So therefore in reality the figure for the debts would be $1.79 million. It is hard to understand this inconsistency in the husband's evidence. At paragraph 24 of his affidavit filed 6 April 2009 he assesses the debts at the date of separation at $1.977 million. Date of separation of course was July 2008. Thus, on the husband's own evidence as at March 2009 his debt level had either not increased or it had decreased. He certainly is unable to establish that his indebtedness is greater or that there was greater pressure from creditors.

10. In a context where there is a clear onus on the husband to provide financial disclosure and to provide matters that he asserts as to his lack of financial capacity to pay maintenance, the evidence of the husband is inconsistent, fragmented, but nonetheless points to a business that produces for the most part a positive cash flow and is able to sustain a personal weekly payment by the husband for the benefit of the wife and children of at least the amount he was paying between July 2008 and March 2009; that is, $960 per week, subject to whatever findings I make about the needs of the wife.

Evidence about the wife's needs

1. There are few issues about this. The evidence of the wife's personal needs are set out in her financial statement and her affidavit. Mr Levy submits a total of $896. Her claims are set out in part N of her financial statement and the only matter in respect of which I think there is excess is item 60 where she claims hairdressing and toiletries at $53. I am prepared to allow as reasonably necessary $23. Therefore, the total part N expense should be $377. The other expenses claimed at part G are reasonable and accordingly total $866 per week.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate:  Anthony Thompson

Date:  29 July 2009