YARLEY & YARLEY

[2013] FamCA 490

FAMILY COURT OF AUSTRALIA

YARLEY & YARLEY [2013] FamCA 490

FAMILY LAW ─ SPOUSAL MAINTENANCE ─ Where the husband submitted that the wife does not satisfy the threshold test of being unable to support herself ─ Where the Court found that the wife was unable to support herself from her own income, and was entitled to proceed with an application for spousal maintenance ─ Husband ordered to make weekly payments to the wife by way of spousal maintenance

FAMILY LAW ─ CHILD SUPPORT – Departure application ─ Where the Court found that it was just and equitable to make a departure order having regard to the objects set out in s 114 of the Child Support (Assessment) Act 1989 (Cth), which include ensuring that the children have their proper needs met from a reasonable and adequate share of the income-earning capacity, property and financial resources of their parents ─ Departure order made

Family Law Act 1975 (Cth) s 72
Child Support (Assessment) Act 1989 (Cth) ss 114, 117(2)

APPLICANT: Ms Yarley

RESPONDENT: Mr Yarley

FILE NUMBER: SYC 2187 of 2013

DATE DELIVERED: 29 May 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 29 May 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lethbridge SC

SOLICITOR FOR THE APPLICANT: Barkus Doolan Kelly

COUNSEL FOR THE RESPONDENT: Mr Gould

SOLICITOR FOR THE RESPONDENT: McDonell Milne Toltz Family Lawyers

Orders

IT IS ORDERED   

1. That pending further order the husband pay to the wife by way of spousal maintenance the sum of $635 per week the first payment to be made on 31 May 2013 and weekly thereafter to a bank account nominated by the wife.

2. That pending further order by way of departure from any assessments made by the Child Support Agency by way of child support in respect of the children R (male) born … November 2007 and S (male) born … March 2009:

   a)the husband pay by way of periodic child support for the children the sum of $550 per child per week ($1100 in total per week) the first payment to be made within 7 days of the date of this order and thereafter weekly such payments to be made to the wife or as she otherwise directs in writing;

   b)the husband pay as and when they become due and payable all fees in respect of the children attending School B such fees to include but not be limited to all attendance and tuition fees, compulsory school and extra curricular activity and excursion fees, the costs of all compulsory school text books and materials required in respect of each of the children for the fulfilment of the children’s school requirements and 50% of the costs of their school uniforms and shoes including sporting uniforms and sports shoes; and

   c)the non-periodic child support paid by the husband together with the periodic child support paid by the husband pursuant to these orders shall account for 100% of the annual rate of child support payable by the husband under any administrative assessment and the annual rate of child support under any assessment issued for each year from the date of this order until the determination of the final proceedings between the parties.

3. That the parties forthwith do all acts and things necessary to cause a copy of this order respecting child support departure to be lodged with the Child Support Registrar.

4. That the application of the wife for interim costs is dismissed.

5. That the oral application of the wife for payment of the fees of the single expert is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Yarley & Yarley 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 SYDNEY

FILE NUMBER: SYC 2187 of 2013

Ms Yarley

Applicant

And

Mr Yarley

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. Before the court is an application by Ms Yarley (“the wife”), in relation to her marriage to Mr Yarley (“the husband”).

2. The parties commenced cohabitation in 2003, and married in 2005.  There are two children of the relationship, R, aged five, and S, aged four.  The parties separated in June of 2011.

3. The applications before the court which will be determined today concern spousal maintenance and a child support departure application.

4. On behalf of the wife, an oral application was made for an order that the husband pay the whole of the costs of the expert who has been nominated to value the commercial enterprises of the parties.  There was no evidence about the amount of costs, except a speculation that the costs might be between $40,000 and $70,000, and in the absence of appropriate evidence, I am not prepared to determine that application.

5. Also before the court was an application for interim costs on behalf of the wife in the sum of $40,000.  The wife’s Financial Statement indicates that she has $78,839 in bank accounts.  In addition, the wife’s mother, according to documents tendered in the husband’s case, paid $31,000 in 2013 to the wife’s solicitors.  In those circumstances, it is not appropriate to make an order for interim costs therefore I dismiss the application for interim costs.

6. Turning then to the question of spousal maintenance, the husband submits that the wife should work, and that she does not satisfy the threshold test in s 72 of the Family Law Act 1975 (Cth) of being unable to support herself.

7. The husband’s evidence is that the wife worked until 2006 while the parties were in the United States of America.  He also gives evidence that she was offered a job as a sales assistant in 2008.

8. The wife’s evidence is that she worked in the parties’ business until separation, and I accept her evidence that it was untenable for her to continue to work in the business with the husband. 

9. In early 2012, she commenced research and development to establish her own business, using money borrowed from her mother.  She expects not to draw a wage from that business for two years.

10. It is the husband’s contention that 18 months is an unreasonable time to spend in setting up the business.  I do not accept that contention.

11. The husband’s evidence in relation to the business established by the parties during their cohabitation was that the financial year 2006 to 2007 was wholly spent in planning.  He says that the business first traded in, I infer, the second half of 2007, that is, about 18 months from its inception.  The husband gives evidence that the parties drew no salary from the business until the financial year ended 30 June 2010.  In my view, it is appropriate to allow the wife a similar time to establish her business. 

12. I therefore find that the wife is unable to support herself from her own income, and is entitled to proceed with an application for spousal maintenance.

13. It is the husband’s case that whatever the wife’s reasonable needs may be, the court should find that he should not be required to contribute to them because the wife’s mother’s wealth is a financial resource of the wife.  There is no evidence before me of the financial position of the wife’s mother.  Exhibit 3 in the proceedings establishes that in 2013 the wife’s mother has advanced $56,000 to the wife.  The wife says her mother lent her $100,000 to establish the business, and there is no doubt that the wife’s mother has been generous in the past to the wife, in particular in relation to the payment of the wife’s credit card debts. 

14. The wife’s mother may well continue to support her, but she has no obligation to do so.  The primary obligation to support the wife is the husband’s, and the primary source of that support is the assets and income of the marriage.  In saying that, however, the husband’s obligation to support the wife extends only to her reasonable expenses, and he is not obliged to support her in the manner in which her mother has provided support in the past.  However, he should contribute to her reasonable expenses, and for the purpose of this application I find her reasonable expenses to be $635 a week.

15. To come to this conclusion, I have excluded the following expenses in Part N of her Financial Statement.

    1.House repairs of $50 are excluded, there being no evidence that any repairs are required.

    2.Child minding of $200 a week is excluded, in circumstances where the wife is not in fulltime employment and the children attend school.

    3.Holidays of $80 a week are excluded, since the evidence would appear to be that those are paid by the wife’s mother.

    4.Foxtel of $14 a week is excluded, because I intend to exclude the same expense from the husband’s expenses.

    5.Gardening, lawn mowing, cleaning are excluded.

    6.Repairs and replacements are excluded.

    7.Dry cleaning, books and magazines and gifts are excluded.

    8.The claimed cost of keeping a pet of $72 a week is excluded.

    9.Bank and credit card charges are excluded, that being a double counting.

16. Turning then to the husband’s capacity to pay.  The husband has $171,649 in bank accounts.  He says that of that sum $65,571 in accounts in the United States of America would be subject to a penalty on withdrawal, but he gives no evidence about the amount of the penalty.  The husband has at least in excess of $110,000 available in ready assets.  The extent to which his cash assets available exceed that amount is not a matter in relation to which I could make a finding, except to say clearly that there are other moneys available.  I do not accept the submission that it is not appropriate to order the payment of periodic maintenance out of the capital sum.  However, that is not the only basis upon which I come to the conclusion that the husband has a capacity to pay.

17. Since separation, the husband has had sole control and benefit from the business, which was established by the parties during their cohabitation.  Documents tendered show that in the year ended 30 June 2012, the profit after tax of the company, after the payment of the husband’s salary, was $483,000.  The husband was entitled to 80 per cent of the after-tax profit, or $386,400.  Adding to that his salary of $190,000, the husband had an entitlement, in that financial year, to $576,400 over the course of the year.

18. I note that the after-tax profit takes into account the allowance for depreciation of $312,009.  It is, of course, completely proper for accounting purposes to take depreciation into account, but I cannot ignore the fact that in real terms that money was not spent, and that the actual amount accessible to the husband was greater than the profit demonstrated in the Financial Statements.

19. It is the husband’s evidence that he chose to use the whole of the profit for the 2012 financial year for the expansion of the business.  That was his choice, but the wife was not consulted and the husband cannot rely upon his choice to escape his liability to support the wife.

20. In paragraph 33 of the husband’s affidavit he says that the earnings before income tax, depreciation and amortisation for the current financial year are likely to be in the region of $1,450,000.  That will result, on my calculation, in a profit greater than the profit for the year ended 30 June 2012.

21. The business was set up by the husband and the wife together.  She contributed start-up capital of $834,623.  Until separation, she was paid a salary.  After separation, which took place in June of 2011, the wife continued to receive a salary in the year ended 30 June 2012.  In that year, the husband was paid $101,875, and the wife was paid $58,055.  In the year ended 30 June 2013, the wife was paid nothing, and the husband was paid $190,000, which was more than both of the parties received in the previous financial year.

22. The husband has continued to have the use of the wife’s capital, and chooses to make no return of capital to her from the profits of the business.  In addition, the husband is owed $121,875 by his business partner, due to be repaid to him in August 2013.

23. The husband is not required to apply the profits of the business or the repayment of the loan to expand the business.  He chooses to do so.  His spending is entirely discretionary, but not at the expense of the wife.  The husband can, if he chooses, use the profit of the jointly owned business to meet any order for spousal support or for the support of the children.

24. Turning then to the departure application. Pursuant to s 117(2) of the Child Support (Assessment) Act 1989 (Cth) (“the Child Support Act”), I find two grounds to be made out. Firstly, pursuant to s 117(2)(b)(ib), because the children are being cared for, educated or trained in the manner that was expected by his or her parents, and secondly, pursuant to s 117(2)(c) that in the special circumstances of the case, application in relation to the children on the provisions of the Child Support Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the children.

25. I find that it is just and equitable to make a departure order having regard to the objects set out in s 114 of the Child Support Act, which include ensuring that the children have their proper needs met from a reasonable and adequate share of the income-earning capacity, property and financial resources of their parents.

26. Turning then to the matter of school fees.  There is no dispute that the application to enrol the children in their present private school was signed by both of their parents during their cohabitation.  On 7 December 2011, after separation, and I infer, before any of the children started school at their current schools, the parties agreed on a parenting plan.  Under the heading, Education, the parenting plan says as follows:

    The children will attend a private school in the eastern suburbs of Sydney.  Subject to offers of admission and preparedness to attend, the children will attend [School C], [School B] or [School D], commencing at preparatory/transition or kindergarten school stage.  Subject to offers of admission and preparedness, [R] will commence preparatory school in 2012 at [School B], and kindergarten in 2013 at [School C], [School D] or [School B].  In the event that [R] does not commence preparatory school in 2012, he shall continue attendance at the [E] Child Care Centre with [S].  The parents’ agreement that payment of school fees shall be negotiated within the context of their marital settlement. 

27. The children both attend schools in accordance with the agreement.  The time to object to the children’s attendance at their current school was before each of them had started.  No such objection was made.  The current schooling regime commenced with the consent of both of the parents and in accordance with their parenting agreement.  Until the finalisation of their property settlement, the fees must be paid, and since the husband has appropriated the income-earning business of the parties, and where I have already determined that he has the capacity to do so, he should pay the school fees.

28. In relation to the periodic support of the children, the husband says that he should pay approximately $330 per week, which is the amount he would pay, he says, if he were assessed to pay using the formula provided by the Child Support Agency.  That formula does not take into account the fact that the husband’s actual income is some $215,000 gross, as is set out in his Financial Statement.  Neither does it take into account the ability of the husband to use the profits of the business as he chooses.

29. The expenses which are claimed by both parents for the children, who live in an equal time arrangement, are quite similar.  The husband’s claimed expenses for the children, excluding education and Foxtel, as set out in part N of his financial statement, are $1,100.

30. The children are entitled to be maintained in the same manner in each of their households.  Again, since the husband has appropriated the income-earning assets of the parties, and as I have found, is able to direct the resources of the business as he chooses, he will meet the children’s expenses in their mother’s home at the same level as he does in his own.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 29 May 2013.

Associate: 

Date: 07.06.2013