A Fresh Look at Spousal Maintenance – How much do I Have to Pay? How Long Do I Have to Pay?

02/10/2019

The Family Court of Australia recently considered competing Applications for an increase in payment of weekly periodic maintenance and an Application to terminate or at least reduce the amount of weekly payment. This was in the case of Bodilly v Hand Family Court of Australia 2019.  In this case the Court set out relevant issues that arose in those proceedings.  In this case the former husband had been paying his former wife spousal maintenance for many years. 

Issues Raised in the Case

  1. After many years of paying spousal maintenance, is there a point at which the Court should say it is no longer proper for an order to continue.  Is there a cut off date for payment of spousal maintenance? 
  2. If spousal maintenance has been paid from income does the significant reduction in that income require maintenance to continue to be paid from capital assets if the income stream is inadequate?  Can spousal maintenance be paid from asset sales?
  3. What is the impact of entitlements under the National Disability Scheme of Commonwealth Pensions?
  4. What priority should be granted to the payor or spouse’s second family and his obligations to support that family?
  5. What evidence is required to support the claim for increase; and
  6. What evidence is required to support the claim for termination or reduction?

When can an Order be Made?

Section 72 of the Family Law Act 1975 provides that:

“A party to 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/himself adequately whether:

  1. by reason of having the care and control of a child of the marriage who has not attained the 18 years;
  2. by reason of age or physical or mental incapacity for appropriate gainful employment; or
  3. for another adequate reason;

having regard to the relevant matters referred to in Section 75(2)”.

The most important factors in Section 75(2) are:

  1. The age and state of health of each of the parties; and
  2. 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; and
  3. Whether either party has the care or control of a child of the marriage who has not attained the 18 years; and
  4. The commitments of the parties to support themselves or a child or another person the party has a duty to maintain. 
  5. (e)Any fact or circumstances which in the opinion of the Court the justice of the case requires to be taken into account.

The Facts of a Case – Bodilly v Hand

In this case the husband was 62 years of age and the wife was 61 years of age.  The wife had multiple sclerosis and after 9 years of separation was housebound. 

In 2000 there was an agreement between the husband and wife that he would pay to the wife $500 per week by way of spousal maintenance. 

There was little contact between the parties for many years and in the interim the husband had re-married, had two children, had worked hard and accumulated significant assets and enjoyed a high income.  The husband had acquired the new assets but the assets were registered in the name of his new wife. 

In 2012 proceedings were heard in the Family Court of Australia in Sydney on the Wife’s Application for an increase. The Family Court of Australia increased the spousal maintenance payable and the former Husband was ordered on an interim basis to pay the amount of $3,323.  The former husband had paid maintenance to his former wife for 12 years.

The Expenses Must be Reasonable

The Court gave careful examination to the competing financial positions of each of the former spouses and found that there was a shortfall in the Applicant’s financial position and a surplus in the husband’s position. 

The Court did not accept that all of the Applicant Wife’s expenses asserted were reasonable. 

The Court identified what were to be the reasonable expenses and based the final order for ongoing weekly spousal maintenance on the expenses rather than on the figure sought by the Applicant. 

The Applicant Wife bore the onus of establishing that she could not maintain herself. 

The husband asserted that it was not reasonable for spousal maintenance to be continued because he was transitioning towards retirement and had his own health issues by the time of the Hearing.

The Court found that notwithstanding the fact that the former husband’s financial position was contracting that he should be ordered to continue to pay spousal maintenance and the Court ordered the spousal maintenance be paid at $500 per week and there was no date upon which that order would cease.  This outcome suggests that further applications are likely – otherwise the former husband will continue to pay his former wife periodic spousal maintenance. 

The case illustrates the significance of proper consideration required when settling financial cases in the Family Court of Australia so as to ensure that future liabilities are identified, capped and that there is a realistic termination date for what could be an ongoing financial obligation to pay a former spouse.

In case that was similar to the facts as the Bodilly v Hand Watson & Watson negotiated for variations to the obligations of the former Husband (who earned a significant income) relating to the usual factors that one might think of such as change in earning capacity of the former Husband.

In addition in that matter Watson & Watson was able to negotiate that when the former husband reached 65 years there were changes to be made which included that the former Husband had no obligations to continue in fulltime employment and that there would be a significant reduction in the spousal maintenance payable.

Watson & Watson recommend that upon settlement the spouses only enter into a Binding Financial Agreement (BFA) regulating and/or terminating the right to make future claims for ongoing future spousal maintenance if there is appropriate safeguard for change in circumstances. Similarly one needs to be very aware of changes of circumstances if you are or will be paying child support you actually need to sign a child support agreement. 

We recently received instructions in a matter where the Husband (who was a high earner in his job) had agreed to pay spousal maintenance and child support to his former wife. The Husband had previously instructed an “experienced” family lawyer. The problem was that the agreement was drafted on the basis/assumption that the Husband would continue to be a high income earner. Unfortunately the former Husband lost his highly paid employment and was not able to make the payments.

The experienced Solicitors at Watson & Watson would suggest that the BFA should deal with significant variations that may occur over a period. If the Husband who in such a case would be paying the spousal maintenance one needs to consider such matters that would affect adversely his income or ability to make the payment.

If you are unsure as to your rights in relation to ongoing spousal maintenance please contact Richard Watson Senior Family Law Solicitor or his Shereen Da Gloria his Personal Assistant to discuss your matter and seek clarification as to your rights and entitlements when it come to spousal maintenance.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.

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