Lambton & Lambton [2017] FCCA 1744 (8 June 2017)
Spousal Maintenance Considerations and Threshold Test under Section 72(1) and 75(2) of the Family Law Act 1975 (Cth)
In the recent case of Lambton & Lambton [2017] FCCA 1744 (8 June 2017) the Federal Circuit Court of Australia heard an application by the wife for interim spousal maintenance and final spousal maintenance. The wife made the application while appealing an earlier decision of the Family Court for property and parenting matters made by her Honor, Judge Rees in Lambton & Lambton [2017] FamCA 73 (15 February 2017).
Keywords
What is spousal maintenance based on?; How is spousal maintenance calculated?; Am I entitled to spousal maintenance; How long does a person have to pay spousal maintenance?
Background
The applicant Ms Lambton (‘the wife’) was born in the United Kingdom and the Respondent, Mr Lambton (‘the husband’) was born in Australia. The parties met in the United Kingdom and moved to Australia in 2006. They commenced cohabitating together sometime around April 2007 and married in 2008. They have a daughter aged 4 (‘the child’). The parties separated in July 2014, after which the child mainly lived with the wife but spent significant time with the husband.
The original decision of Judge Rees in Lambton & Lambton [2017] FamCA 73 (15 February 2017)
In the Family Court hearing the wife applied for a relocation order to relocate with her daughter to the United Kingdom. The husband opposed the application. The Court agreed with the husband. The wife asked the Court to make orders adjusting their financial interests and an order for spousal maintenance of $1,956 per month. Her Honour made an order for property division and gave the wife the capital sum of $656,288. The order also included payment for the wife out of the husband’s superannuation fund, shares and spousal maintenance for three months at $1,361 per month to be paid weekly. The wife appealed that decision to the Full Court of the Family Court. Pending that hearing, the wife made an application to the Federal Circuit Court of Australia.
Judge Henderson in this matter heard the wife’s application for spousal maintenance. His Honour began by reassessing what Judge Rees considered during her decision to grant the wife spousal maintenance of $1,361 monthly payable in weekly installments for up to 3 months. Judge Rees, in her decision gave particular attention to the husband’s weekly contribution to the wife’s rental costs of $803, the wife’s income of $837 per week (made up of child support for $400, Family Tax Benefit for $218 and interest payments of $115). The wife claimed that she had fixed expenses of $1,332 per week, however these expenses where challenged by the husband’s counsel. Judge Rees considered the earning capacity of the wife. Although the wife had been unemployed during the time of the proceedings, Judge Rees determined that she had the capacity to gain professional employment and earn up to $100,000 per year in Australia. The wife agreed that her parents were willing and able to assist her to care for the children if she found employment. Further, the wife admitted that she could work during weekends or at night if she wanted. The wife put forward medical evidence regarding a diagnosis of depression and anxiety, and the impact these conditions would have on her earning capacity. Judge Rees was dismissive of these conditions, and linked them to the wife’s recent relationship breakdown and the legal proceedings. Her Honour determined that the wife’s conditions would not affect her long-term prospects of employment. Her Honour found that with the wife’s lump sum payment from the husband and her employment prospects, that an order for spousal maintenance of $1361 per month for 3 months, payable in weekly instalments was sufficient.
Judge Henderson’s Review of the Wife’s Request for Spousal Maintenance
Judge Henderson took a different view than Judge Rees. First his Honour clarified that in Judge Rees’s judgment, her Honour believed that the wife had fulfilled the threshold test set out under section 72 of the Family Law Act 1975 (Cth) (“the Act”) and some of the relevant factors outlined under section 75(2) of the Act.
The relevant test for Spousal Maintenance under the Family Law Act
Section 72 of the Family Law Act 1975 (Cth) - Right of spouse to maintenance
72(1) A party to a marriage is liable to maintain the other party, to the extent 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, 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) of the Act.
Section 75 of the Family Law Act 1975 (Cth) - Matters to be taken into consideration in relation to spousal maintenance
(2)(a), the age and state of health of each of the parties;
(b) the income, property and financial resources of each of the parties, and the physical and mental capacity of each of them for appropriate gainful employment;
(c) whether a party has the care or control of a child of the marriage who has not attained the age of 18 years;
(g) where the parties have separated or divorced, a standard of living that is reasonable in all the circumstances;
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
(n) the terms of any order made or proposed to be made under section 79 in relation to
(o) any fact or circumstance which in the opinion of the Court, the justice of the case requires to be taken into account.
Judge Henderson’s Factual Interpretation and Balancing what is Fair
Husband's income earning capacity and financial obligations
Judge Henderson believed that considerable weight should be given to the husband’s income earning capacity. The Financial Statement sworn by the husband indicated that his annual salary was $220,000. In 2015, the husband received an incentive bonus of $125,000 gross providing about $62,000 net and had a long-term incentive in deferred shares of $38,000. This gave him a total annual gross income of about $483,000. The husband also received his 2016 bonus of $58,000 net, which would be accounted for in his 2017 tax return. Overall, the husband’s income was almost five times greater than the wife.
Despite this, the husband had to borrow $796,000 from his mortgage to pay the wife’s capital sum and to assist him to pay $400 per week in child support. This had to be taken in to account before any adjustments are made for spousal maintenance.
Wife’s health and income earning capacity
His Honour accepted the evidence presented by the wife in her affidavits during the trial and on the appeal. His Honour was satisfied the wife was at that time incapable of engaging in appropriate gainful employment due to her health and her emotional state under the provisions of section 75(2) of the Act. The wife’s income was low and the financial resources of the parties were vastly different. The wife had the primary care and control of the parties’ child. The wife’s commitments to support the child and her low income of $115 per week was a compelling factor in His Honour’s reasoning and conclusion.
Conclusion
Judge Henderson concluded that the wife fulfils the threshold test of a spouse in need of maintenance. The wife’s current income or the previous spousal maintenance order does not provide an income sufficient for her to maintain any standard of living. On the other hand, the husband has at his disposal a combination of highly geared real estate, shares and some cash in his bank account. Further, the husband receives yearly net bonuses of around $60,000. Considering these facts, his Honour ordered the husband to pay a weekly sum of $400 on an interim basis to the wife until the wife gains employment.
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