Sunday, 9 October 2016

Court orders wife to refund over $200k in spousal maintenance


A  case last year in the Family Court of Australia, which had the effect of requiring the wife to repay the husband over $215,000 in spousal maintenance previously paid has demonstrated that it is possible for substantial interim spousal maintenance orders to be discharged- and to be backdated to when the order was first made.

How spousal maintenance orders are made

In order to establish that a court ought to make a spousal maintenance order, an applicant needs to show first that they cannot meet their own reasonable needs, and then that their spouse or former spouse has the capacity to do so.

The wife’s capacity

The case turned on whether the wife had the capacity to meet her own needs. At the time of the first hearing in December 2013, the wife made full disclosure of her financial circumstances, including what she knew of her interest in her late father’s estate. Despite her father dying four years before, there had not been a grant of probate.  She was not an executor, and held a minority interest in various companies, known as the V Group. The V Group was controlled by her brothers. It seems that she did not know what her entitlement was.

The wife was a health care professional who had the care of the parties’ children.
Her income was $300 per week from sessional work. Her late father’s estate provided for her to have two new luxury vehicles at any one time: a convertible and an SUV.

The husband’s capacity

The husband had the capacity to pay. The husband owned property on his account worth $75 million and debts of $54 million. The uncontested evidence was that he had income of $4 million a year. The wife was a health care professional who had the care of the parties’ children.

The spousal maintenance order

The interim spousal maintenance order was made at the rate of $130,000 a year the equivalent to a pre-tax income of $200,000, to continue until the property settlement application had been heard at trial. This payment was on top of the husband paying for the wife’s rates, mortgage and rates, taxes, utilities (gas, electricity) and school fees. In total, the husband was required to pay at the rate of $336,000 a year for these obligations.

The first hearing

The interim order was made in December 2013. Ten days later, the husband sought to appeal the decision.

The second hearing

As the appeal had not yet been heard, seven months later, in June 2014 the husband sought to have the initial spousal maintenance order discharged. He was unsuccessful. The husband also appealed that decision.

The husband argued at the second hearing that there was now information available to show that the wife had received, or would receive, shares from the estate of her late father in the approximate sum of $7.2 million and she was able to support herself.

The wife submitted “that she had fully disclosed her interest in the family companies based upon the information she had been given” and there was no clear or reliable evidence to support the husband’s assertion that the value of the shares from the estate of her late father were valued at $7.2 million. The trial judge noted that there was still “considerable dispute about what interest, if any, the wife [had] in her late father’s estate”.

The appeal hearing

The appellate court noted that the wife’s father died in 2009 and that probate had not yet been sought. The court did not accept the husband’s claim that the wife had failed to disclose these “assets” and, indeed, it was beyond doubt that the wife revealed these assets and interests in the first hearing before the trial judge. In the wife’s statement of financial circumstances filed in 2013, she deposed to having shares in various companies, which she named, and an interest in the estate of her late father, but she did not know the value of either. Further, in her affidavit filed the same day, the wife set out all that she knew about her shares and her interest in her late father’s estate.

New evidence

The wife’s father in his will expressed the wish that V Group provide the wife with $150,000 per annum, net of income tax (or $20,000 more a year than the husband was obliged by the spousal maintenance order to pay the wife). There was no evidence that the wife requested this payment from her brothers, or that any request that she had made for her father’s wish to be carried out had been rejected. Importantly, there was no suggestion that there would be an objection by at least one of her brothers to such a voluntary payment.

The wife had also obtained a personal overdraft of $1 million, apparently to meet her legal expenses and her living expenses.


Discharge of the spousal maintenance order
A spousal maintenance order may be discharged “if there is any just cause for so doing”. The court considered that there was now evidence before the court that demonstrated that the wife was able to support herself adequately. The inference from the evidence was that, if requested, the wife would receive that benefit. The wife had a good relationship with her brothers, it was a wish expressed in the will of their late father and the brothers provided the wife with late models of luxury motor vehicles, possibly through the V Group (although that was unclear on the evidence).
The $1 million overdraft was “a two edged sword though, in that any amount that she draws down from that overdraft immediately becomes a liability that she must repay.”

The court ordered the discharge of the spousal maintenance order. The court noted a statutory provision permitted a court to express an order discharging a spousal maintenance order “to be retrospective to such date as the court considers appropriate”. The court acknowledged that that will require the wife to reimburse the husband for the payments made by him, but she could pursue the payment of $150,000 per year, and she had the ability to draw down her overdraft of $1 million.

The decision is reported as Hall and Hall [2015] FamCAFC 154. http://www.austlii.edu.au/au/cases/cth/FamCAFC/2015/154.html