Huge Interim Spousal Maintenance Ordered

Moller & Moller [2017] FamCA 841 (23 October 2017)

Last Updated: 9 November 2017

FAMILY COURT OF AUSTRALIA

Brown and Brown [2007] FamCA 151; (2007) FLC 93-316

REPRESENTATION

ORDERS

(1) That the husband pay to the wife by way of spousal maintenance the sum of $700 per week, commencing 14 days from the date of this order and concluding on 31 August 2019.

(2) That the husband, by way of spousal maintenance, continue to pay all interest instalments in respect of the Westpac Bank Home Loan and Westpac Bank Equity Loan secured over the Suburb B Property as and when they fall due, concluding on the earlier of 31 August 2019 or until the settlement date for the sale of the Suburb B Property.

(3) If either party seeks an order as to costs they are to file and serve written submissions as to costs with an accompanying affidavit within 14 days from this date and the other party file and serve any written submissions and accompanying affidavit in reply within a further 14 days with judgment as to costs thereafter reserved to chambers.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FILE NUMBER: PAC 1244 of 2017

Applicant

And

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. The Applicant wife, in proceedings with her former husband for a property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”), seeks interim orders for spousal maintenance.
2. The Respondent husband does not oppose an order requiring him to pay spousal maintenance to the wife but proposes alternate orders.
3. Both parties seek that their costs of and incidental to this interim application be paid by the other party.
4. Following interim hearing on 14 August 2017 judgment was reserved in the matter.

The uncontested facts

5. As this is interim application, it is determined on the basis of the uncontested facts.
6. The husband, who is 54, and the wife, who is 42, were married in 2004 and have two children aged 10 and six.
7. Throughout their marriage the parties enjoyed a high standard of living funded by the husband who is a medical professional and was the sole breadwinner during the marriage. The husband has an average annual income of $1.5 million arising from his employment from various income streams.
8. The wife has previously worked in professional capacity and has run a business. She has not worked outside the home since the children were born and has been the primary carer for the children and is also responsible for household duties.
9. From an unspecified date when the parties’ relationship was intact the wife received around $2,300 per week which is the husband’s after tax income from one of his medical positions. This sum is automatically deposited into a joint account in the parties’ name and immediately transferred by the wife to a personal account in her sole name. This arrangement continued after the parties separated in October 2016 when the husband moved out of the former family home. At one point prior to separation the husband also provided the wife his income from another source for the payment of household expenses. These funds together were approximately $7,300 per fortnight. Since separation the wife receives only the former earnings of about $4,600 per fortnight.
10. The wife and the children have remained living in the former family home since separation and the husband spends time with the children overnight once a month and after school on an ad hoc basis. No orders are sought in respect to the parenting arrangements for the parties’ children.
11. In addition to making the payments from his a part of his employment available to the wife, the husband also pays the children’s private school fees, all mortgage and loan repayments on the home, a boat and three cars as well as rates, insurance and some of the household utility bills.
12. The husband has re-partnered since separation and so far as I am aware the wife has not re-partnered.
13. The wife commenced property settlement proceedings on 21 March 2017.
14. On 16 June 2017 the matter came before the Registrar who noted that the parties had participated in a case assessment conference. It was agreed that the parties’ assets comprised of the family home (which the parties agreed at that stage was to be sold) and the parties’ respective superannuation entitlements in a self-managed super fund. It was further noted that the husband’s private practice was not sought to be valued and that negotiations as to interim property and financial issues were ongoing.
15. At the hearing in relation to interim orders on 14 August 2017 the parties had not filed a joint Balance Sheet as ordered by the Registrar and the asset pool of the parties was somewhat unclear. However, it appears uncontested that the matrimonial assets for distribution at least comprises the family home on the northern beaches, a boat, a sports motor vehicle, a German motor vehicle, a prestige motor vehicle, the family’s self-managed super fund and various bank accounts. The majority of the parties’ assets are subject to mortgage or loans.

THE WIFE’S APPLICATION

16. The wife seeks orders that the husband pay to her $8,000 per fortnight in spousal maintenance. To facilitate such maintenance payment the wife seeks orders that the sports motor vehicle and the husband’s boat be sold and the proceeds used to discharge various loans with the balance to be paid to her.
17. The husband opposes the quantum of maintenance sought by the wife and orders requiring him to sell the motor vehicle and boat and seeks orders that he pay to the wife $700 per week in spouse maintenance.
18. Much of the argument on hearing the application related to the orders sought by the wife for the sale of the boat and two motor vehicles, orders relating to the disbursement of the sale proceeds and an order that the husband provide the wife with another nominated motor vehicle for her exclusive use. Various arguments were raised by the husband including about the value of the boat and vehicles. It was submitted on behalf of the husband that in any event such sales were unlikely to result in any surplus after the payment of loans.
19. In my view it is not appropriate to consider the orders with respect to the sale of the boat and cars which it was argued would facilitate the payment of maintenance as sought by the wife without first considering the respective positions in relation to spousal maintenance.

THE LAW & DISCUSSION

20. I must consider the spousal maintenance claim in accordance with the assessment process identified by the Full Court In the Marriage of Bevan^[1] which requires:
    1. A threshold finding under s 72
    2. A consideration of the factors in ss74 and 75(2)
    100. No fettering principle is to apply so that any pre-separation standard of living must not automatically be awarded where the respondent’s means permit; and
    4. The Court is to exercise its discretion in accordance with provisions of s74 with ‘reasonableness in the circumstances’ as the guiding principle
21. Section 72 of the Act provides as follows:

(1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or

(c) for any other adequate reason;

having regard to any relevant matter referred to in subsection 75(2).

22. It is not in issue that the wife has the care and control of two young children. The questions in issue are whether the wife is unable to support herself adequately and whether the husband is reasonably able to pay maintenance.

Is the wife unable to support herself adequately?

23. The test of ability to support one’s self in s 72(1) was interpreted in Eliades and Eliades^[2] as:

“[N]ot identical to the test of whether one is in need but means whether the applicant is in a position to finance himself or herself from his or her own resources. That is to say, the test is whether by reason of earning capacity, by reason of capital or other sources of income which have accrued independently to the applicant, the applicant is in a position to look after herself …”

24. The recipient of maintenance is entitled to be maintained ‘adequately’. The word ‘adequately’ was interpreted by Lindenmayer J in Nutting and Nutting^[3] as:

A standard of living which is reasonable in the circumstances, including the circumstance that the parties are no longer husband and wife and that the assets and resources which were formerly available to them both in common have now been divided between them.

25. The Full Court agreed with this interpretation in In the Marriage of Bevan (supra). The Full Court also said that a court is not bound by a principle that an applicant is entitled to the same standard of living as was enjoyed prior to separation whenever the respondent is able to pay.
26. In the course of submissions it was said that the current level of financial support the husband provides to the wife is more than adequate to cover any of her personal expenses not already being paid for by him. However the husband must be taken to concede that the wife is unable to support herself adequately as he does not oppose making any payment for spousal maintenance but proposes the much lesser sum of $700 per week.
27. In these circumstances I am satisfied that the wife is unable to support herself adequately by reason of having the care and control of the parties’ two children.

Is the husband reasonably able to maintain the wife?

28. The respondent’s capacity to pay is considered on income, property, financial resources and earning capacity. Capacity to pay is assessed by determining the respondent’s “surplus” after paying his necessary commitments.
29. In Curnow & Curnow^[4] Ellis J said:

In my judgment, a party is only liable to maintain the other party to the extent that the first-mentioned party is reasonably able to do so. In determining whether a party is reasonably able to support or contribute to the support of another party, one should have regard to the income of the first-mentioned party and then the unavoidable, non-discretionary expenses of that party, including his or her reasonable living expenses. After that exercise, one can consider the amount, if any, from which the first party may be able to contribute to the maintenance of the other party.

30. The husband is currently employed as a medical professional and lives with his partner who is also employed. In his Financial Statement filed 4 August 2017 the husband records his income as $30,200 per week and his weekly personal expenditure as $27,009 leaving an excess of $3,191 after expenses and does not include his current partner’s income. The husband also excludes his earnings of about $2,300 from the income stream which is paid directly to the wife.
31. An examination of the husband’s Financial Statement indicates that his total personal weekly expenditure is largely unavoidable and non-discretionary. It includes for example $10,076 per week in income tax as well as rent, home loan repayments, insurances (including $650 per week in medical indemnity insurance) and expenses associated with three motor vehicles, two of which are available to the wife. He also bears the costs of many expenses associated with the children including private school fees, health insurance and children’s activities.
32. Some of the husband’s average weekly expenses listed in part (N) of his Financial Statement do appear somewhat excessive such as $500 in food for himself and $400 per week on telephone expenses being $200 for himself and another adult. Further, it appears that he alone pays rent for the apartment in which he and his partner live of $1,680 per week.
33. According to the husband’s Financial Statement the $3,191 remaining each week after expenses are paid is almost exactly utilised in household expenses (totalling $2,060) and payment of school fees of $1,000. However, the husband proposes that he pay $700 per week as spousal maintenance so must be taken as accepting that he has this amount in surplus each week after the payment of all his outgoings. On this basis I am satisfied that he is reasonably able to pay maintenance of at least $700 per week to the wife.

What level of maintenance is adequate?

34. Section 74(1) further provides that in proceedings with respect to maintenance the court may “make such order as it considers proper”. The meaning of “proper” was considered in Robinson and Willis^[5] where Asche SJ said:

An order which is either insufficient or excessive in the circumstances, is not “proper”. In the former case because the burden of support may be thrown on the public; in the latter because an excessive order will result in inability to pay the accumulation of impossible arrears and, again, ultimately a probably recourse to the public purse.

35. The Full Court in Brown and Brown^[6] considered the meaning of “proper” and “adequate”, at paragraphs 91-92 and 94-95:

Similarly, we think that what is meant by ‘proper’ in s 74 is circumscribed by the provisions of the Act relating to maintenance.

Adequacy is the key concept in determining whether the threshold set by s72 has been crossed. But that concept is not left behind once the step into s74 enquiry as to what is ‘proper’ is taken. Though application of the factors set out in s75(2) may, in a given case, lead to a generous interpretation of needs that are ‘adequate’ and of what is ‘proper’, the nexus between ‘adequate’ and ‘proper’ must remain. As Ache J said in Robinson and Willis [1982] FamCA 16; (1982) FLC 91-215:

‘An order which is either insufficient or excessive in the circumstances is not ‘proper’

36. Mullane J in N & N^[7] stated that:

[T]he interpretation of the expression “unable to support herself or himself adequately” is subject to the words “having regard to any relevant matter referred to in subsection 75(2).

Section 75(2)

37. The husband is 54 and the wife is 42 and each so far as I am aware is in good health.
38. The husband clearly has a capacity to earn a significant income being $32,300 per week.
39. The wife is qualified as a professional and has previously operated an online business. The parties’ two children are school aged and in addition to the school day spend two hours each day travelling on a bus between their school and home and are also enrolled in after school care.
40. Although it appears the wife has opportunity to obtain some employment she has not done so. It is difficult to accept her evidence that she is unable to seek employment as she spends the majority of her time attending meetings with counsellors, psychologists, speech pathologists and other extra-curricular activities for the children. In my view she has some capacity to earn an income through her own employment.
41. In addition to receiving the entirety of the husband’s net salary from one income stream of about $2,300 per week the husband also pays many expenses for the wife benefit including $1,250 per week in motor vehicle costs for the two cars available to her, contributions towards her superannuation, private health insurance, gardening and lawn mowing expenses, cleaning expenses and the reimbursement of some expenses paid for by credit card.
42. The mother has the vast majority of the care and control of the two children of the marriage. As noted they are school aged.
43. The parties’ claims in respect of the commitments that are necessary to enable them to support themselves and the children are found in the respective Financial Statements.
44. According to the schedule in part (N) of the wife’s Financial Statement her own average weekly expenses total $1,405. Most of these amounts seem reasonable except amounts such as $300 per week for holidays and $150 per week in hairdressing and toiletries.
45. In my view some of the claims made by the wife concerning household expenditure and relating to her commitments necessary to support the children are quite extraordinary. For example, she claims that she spends $1,000 per week on food ($300 for herself and $700 for the two children who are aged 10 and six), $1,530 per week on holidays and $350 per week in cleaning. She then indicates in the schedule and elsewhere that a large number of expenses associated with the children are paid for by the husband. It is difficult to discern from the part (N) schedule exactly what she contends are her necessary commitments to enable her to support herself and her children.
46. The wife deposes to the parties having a very high standard of living prior to separation. For example in part (O) to her Financial Statement she says that the children had a holiday “away” at the end of every school term and that the estimated amount spent in 2014 on holidays was between $150,000 and $200,000.
47. Having regard to the principles espoused in Nutting & Nutting (supra) and In the Marriage of Bevan (supra) the wife is not entitled to be maintained by the husband to the same standard the parties enjoyed prior to separation. In circumstances where the husband is paying almost all the expenses of the children, including school fees, some household costs and their extra-curricular activities and making all mortgage and loan repayments, I am of the view that the wife’s necessary personal expenses cannot amount to $8,000 per fortnight.
48. As the wife is already receiving the entirety of the husband’s income from income stream of $2,300 per week and has the capacity to find employment during the hours the children attend school, I am of the opinion that spousal maintenance should be paid in accordance with the orders sought by the husband. This will result in the wife receiving $3,000 per week in financial support. This sum should be more than adequate to cover any expenses not currently paid by the husband.
49. Accordingly, the orders I make are those set out at the forefront of these reasons for judgment.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 23 October 2017.

Legal Associate:

Date: 23 October 2017

^[1] (1995) FLC 92-600 at 81,981-81,982; (1993) 19 Fam LR 35 at 42.

^[2] [1980] FamCA 7; (1981) FLC 91-022 at 76,232. See also Clauson and Clauson (1995) FLC 92-595.

^[3] (1978) FLC 90-410 at 77,094.

^[4] Unreported, Family Court of Australia, Full Court, 28 April 1997.

^[5] [1982] FamCA 16; (1982) FLC 91-215 at 77,157.

^[6] [2007] FamCA 151; (2007) FLC 93-316.

^[7] (1997) FLC 92-782 at 84643.