Bastow and Bastow
[2009] FMCAfam 21
•21 January 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BASTOW & BASTOW | [2009] FMCAfam 21 |
| FAMILY LAW – Spousal maintenance – husband seeks discharge of order – wife seeks increase – husband’s capacity to pay not disputed – wife’s employment prospects – wife’s hearing loss – wife’s financial circumstances – “just cause”. |
| Family Law Act 1975 (Cth) ss.72, 75, 83 |
| Lutzke (1979) FLC 90-714 Astbury (1978) FLC 90-494 Vakil (1997) FLC 92-743 Bevan (1995) FLC 92-600 Hirst and Rosen (1982) FLC 91-230 |
| Applicant: | MR BASTOW |
| Respondent: | MS BASTOW |
| File Number: | HBC 135 of 2008 |
| Judgment of: | Roberts FM |
| Hearing dates: | 2 & 3 December 2008 |
| Date of Last Submission: | 3 December 2008 |
| Delivered at: | Launceston |
| Delivered on: | 21 January 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr T North SC with Ms F Di Giovanni |
| Solicitors for the Applicant: | Wallace Wilkinson & Webster |
| Counsel for the Respondent: | Mr F Dixon SC with Ms M Harper |
| Solicitors for the Respondent: | Murdoch Clarke |
ORDERS
That the order made by the Family Court of Australia at Hobart on
26 August 1998 for the payment of spousal maintenance by
MR BASTOW to MS BASTOW is discharged with effect from the date of this order.
IT IS NOTED that publication of this judgment under the pseudonym Bastow & Bastow is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
HBC 135 of 2008
| MR BASTOW |
Applicant
And
| MS BASTOW |
Respondent
REASONS FOR JUDGMENT
The Issues
The Court must decide whether an order for spousal maintenance made by Hannon J in the Family Court of Australia on 26 August 1998 (“the order”) should be discharged or varied. The Applicant, MR BASTOW wants the Court to discharge the order and the Respondent,
MS BASTOW wants the Court to increase the amount payable under the order.
Although the parties were divorced many years ago, for convenience I will refer to them as “the husband” and “the wife” throughout these Reasons. The fact that they were once married gave the Family Court of Australia jurisdiction to make the order. It provided that the husband should pay the wife $400 per week by way of spousal maintenance commencing on 1 September 1998, with annual adjustments in accordance Consumer Price Index variations.
Background
The parties, who are both aged 54 years, were married in mid 1979 and separated in 1995. They had three children who are all now adults and are not reliant upon either of them for their support. As mentioned, the parties have been divorced for many years.
At the time that the order was made the parties’ children were aged 14, 12 and 10 years. The two youngest of those children were then living with the wife and the oldest child was living with the husband.
At that time the husband was a [occupation omitted] and he continues in that occupation today. The wife was not working then but she is now working in a part time capacity.
Hannon J made the order as one of a series of orders in relation to property settlement and spousal maintenance. In essence, those orders provided for the following:
(a)That the former matrimonial home be transferred to the wife together with the furnishings and chattels and her motor vehicle.
(b)That the wife retain her superannuation, bank accounts and shares in her sole name together with 1,500 jointly owned shares in a publicly listed company.
(c)That the husband pay to the wife the sum of $270,000.
(d)That the husband retain his interest in his medical practice and the wife transfer any interest in that business to him.
At the time that Hannon J made those orders, he said the following in his Reasons delivered on 26 August 1998:
The wife has the primary responsibility for the care of the two younger children and having regard to their ages and her expressed wish to maintain her role as a parent, that responsibility will continue for some years and further affect the wife's capacity for gainful employment, particularly when coupled with her university studies.
In my opinion this is an appropriate case where an order for spousal maintenance should be made…
The wife graduated with a degree in science in 2000.
In two affidavits filed on behalf of the husband, he admits that he has the capacity to pay spousal maintenance. In his later affidavit, he states out that his taxable income for the year ended 2007 was approximately $730,000 and that he expected his income for the year ended 30 June 2008 to be similar. In that later affidavit he said:
I do not dispute that at the present time, I have the capacity to pay the spousal maintenance order. I object to the continuation of paying (the wife) spousal maintenance in circumstances where (she) has the capacity to meet her own financial needs from her own income, property and financial resources.
Relevant law
The law in relation to modification of spousal maintenance orders is found in section 83 of the Family Law Act 1975 (“the Act”).
Subsection (1)(c) enables the Court to “discharge the order if there is any just cause for so doing”. While the Act does not define “just cause”, it is clear that those words must be construed with the general spousal maintenance provisions of the Act in mind. As was stated by Lindenmayer J in Lutzke: [1]
Thus a “cause” for the discharge of an existing maintenance order will be a “just cause” only if, having regard to the other provisions of the Act, particularly those relating to maintenance, it can be said that it is “right” or “proper” that the order should be discharged.
[1] See Lutzke (1979) FLC 90-714 at 78,832
Subsection 83(7) requires the Court to have regard to the provisions of sections 72 and 75 for the purposes of section 83.
In my opinion, it is not possible to decide whether a “just cause” for a discharge exists, without firstly considering the evidence in the light of section 72 of the Act which provides that:
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).
In my view, if a recipient of spousal maintenance can be shown to be capable of adequately supporting himself or herself, then “just cause” exists for a discharge of the spousal maintenance order.
It is clear that the applicant has the onus of establishing whether or not a “just cause” exists for the discharge of an order for spouse maintenance.[2] However, even if “just cause” is found to exist, the question whether or not an order should be discharged still remains a matter of discretion for the Court.[3]
[2] Astbury (1978) FLC 90-494, Lutzke, supra at 78,832
[3] Vakil (1997) FLC 92-743
Subsection 83(1)(f) provides that a court “may vary the order so as to increase or decrease any amount ordered to be paid”. However, before doing so, the Court must be satisfied that:
a)that there has been a change of circumstances;
b)that there has been a change in the cost of living;
c)that, in the case of a consent order, the amount ordered to be paid is not proper or adequate; or
d)that material facts were withheld from the court.[4]
[4] See sub-section 83(2).
When there are competing applications for discharge of a spousal maintenance order and an increase of the amount provided for in that order, it is logical to determine the outcome of the discharge application first. Clearly, if there is to be a discharge of the order, there will be no need to consider the question of an increase.
The applicant’s case
The husband’s case is summarised in the penultimate paragraph of his later affidavit. It reads as follows.
I seek a discharge of the spousal maintenance order on the basis that (the wife) no longer has a need for such payments as she no longer has the responsibility for the care of children under eighteen, she has the capacity for gainful employment and she is able to meet her own financial needs from her income, property and financial resources.
The respondent’s case
Essentially, it is the wife's case that:
a)she does not have the capacity for appropriate gainful employment, despite making numerous job applications; and
b)she does not have sufficient income, property and financial resources to adequately meet her needs into the future.
In relation to the former, she also says that her chances of obtaining appropriate gainful employment are diminished because:
a)she has not had full-time employment since 1982; and
b)her difficulties in obtaining employment are exacerbated by:
i)mild nerve damage resulting from lymph node removal as a consequence of being diagnosed as suffering from breast cancer in 2000; and
ii)a hearing loss, which she describes as "significant".
The wife’s health
The wife stated that she has mild nerve damage to her upper arm as a result of the removal of lymph nodes, which causes pain and discomfort in her right arm if she does any heavy lifting or if she is not able to get sufficient movement in her arm, such as when typing for long periods of time. She contends that this renders her unsuitable for many employment positions.
The wife brought no medical evidence to the court to support this claim. However, in cross-examination she admitted that she still plays tennis on Mondays and that she is a right-handed tennis player. Consequently, I am not persuaded that her mild nerve damage is detrimental to her obtaining employment
In relation to the wife’s hearing, each party relied upon the evidence from audiologists. In general, those audiologists each agreed with the evidence of the other. Ms S, who had filed an affidavit on behalf of the husband, annexed a report to her affidavit, which included the following:
(The wife's) hearing loss would cause significant difficulties in a workplace situation, where the environment is less able to be controlled: background noise from other conversations, office equipment and incidental extraneous noise, such as traffic, noises from other areas, radios and so on would all contribute to raise the noise level and become the predominant noise, over speech.
(The wife) quotes difficulty when trying to take minutes of a meeting, as a typical effect of her hearing loss. In the normal flow of meetings where discussion occurs at various levels, it would be difficult to perceive all speech in the proceedings, unless each speaker directed their voice to the minute taker.
Similarly, (the wife) would have difficulty hearing speech on the telephone as content is lost without the listener being able to hear the speech clearly and is not assisted by reading cues. Additionally, if the telephone does not have the facility for volume increase, the speech may be too soft to be perceived with such a hearing loss.
The hearing loss is bilateral (both ears) and a binaural hearing aid fitting would be appropriate to remediate (the wife's) hearing handicap. This is recommended to allow the normal speech reproduction, directional hearing of sound and separation of speech and noise, as a normal hearing listener would be able to perceive.
Ms S reported that the cost of such a hearing aid fitting would be between $3,060 and $6,870 depending upon the style of hearing aid. The price range included warranty, ongoing service and maintenance costs. It appears that Medicare does not cover that cost, although the wife's private health insurance would provide a refund of approximately $800.
Both audiologists gave evidence that some training would be needed in order to become familiar and confident in the use of such a hearing aid. It appears that such training would need to be for approximately
12 months but the success rate for people of the wife's age is good, with a failure rate of less than 10%.
Ms B, a recruitment consultant, who gave evidence on behalf of the husband, had been asked to comment upon the impact that hearing loss would have on the wife's ability to obtain employment. In her affidavit she states that if the hearing loss is found to be mild, positions such as that of a receptionist would not be able to be pursued by the wife. If the hearing loss is found to be profound, her chances of finding employment would be much more restricted.
Ms G, the audiologist called on the half of the wife, annexes test results to her affidavit which show that the wife's hearing loss is in the mild to moderate range. Consequently, I conclude that the wife's hearing loss will have a limited effect upon her ability to obtain employment.
I note that Ms G also annexes a copy of hearing test results from 1982. At that time a “moderate high frequency sensori-neural loss bilaterally” was reported. Although Ms S reports that her degree of high frequency loss has worsened since that test in 1982, it is clear that the wife has known about her hearing loss for many years, but to date she has done nothing about it.
The wife’s attempts to find suitable employment
The wife says that she has applied for many positions with various entities over the years. She says that she has not kept records of all such applications but gives details of some in her affidavit. In general, it is her view that her lack of experience is the major factor preventing her from obtaining suitable employment.
Ms B had been shown examples of the wife's written applications and she commented as follows:
I have considered (the wife's) written applications for positions. I consider that the applications lacked structure and did not show relevant examples of why she would be suitable for the roles she applied for. (The wife) did not adequately address selection criteria in her applications and it is not surprising to me that she was not successful.
She went on to say:
I have noted from (the wife's) affidavit that (she) worked as a [omitted] prior to the marriage until 1982 however this is not mentioned on her resume. Although [omitted] are looking for [omitted] with experience in the past 10 years, it is still imperative to have this on (her resume) as it builds a picture of her as a suitable candidate. In the [omitted] industry currently there is a substantial shortage of [omitted] and most candidates are able to find work relatively easily. With some contemporary work practice training such as typing speed tests which are available online and are free or maybe a TAFE course in business administration, (the wife) would be suitable to apply for such positions. There are refresher courses in computer skills and basic secretarial skills. The timeframes and cost for these courses depend on what the applicant requires. With this in mind, (the wife) would be able to obtain full-time or temp work in the legal secretary area.
Ms B offered the opinion “that with the proper assistance, training in writing job applications and a new updated resume (the wife) could expect to find full-time employment within a period of three to six months”.
When she was cross-examined the wife indicated that she is familiar with the use of the Internet and attaching documents (I presume to emails), she can touch type, open PDF documents and uses Microsoft Word. She also acknowledged familiarity with photocopiers. I therefore conclude that she has basic office skills that are generally required in a [omitted] office. She has been able to obtain a science degree, so she is obviously not lacking in intelligence. I further conclude that she would be quick to learn any additional office skills that she may lack.
I also note that the wife has not been registered with any employment agency for some years.
When I consider the above, I conclude that the wife's employment prospects are much better than she makes out and that she has not made sufficient effort to find suitable employment.
The wife's financial circumstances
The wife swore her financial statement in May 2008 and updated that information in the witness box. Her evidence is she earns $216 a week from her part-time employment (8 hours per week at $27 per hour) and receives dividends totalling $85 per week, making a total of $301 per week. In addition to that, she is currently receiving spousal maintenance at the rate of $534 per week, making a total “income” of $835 per week.
Her claimed expenses at Parts G and N of her financial statement (as amended in her oral evidence) total $1,187 per week. Consequently, she must be saying that she has a shortfall of $352 per week.
Such a shortfall amounts to more than $18,000 per annum. Somewhat strangely, the wife did not make reference to such a continuing shortfall in either her affidavit or her oral evidence. If it was true, it would result in a diminution of her capital reserves. However, there is no mention in her evidence of a continuing diminution of her capital reserves. Indeed, the situation appears to be quite the contrary.
As a result of Hannon J’s findings and the property orders that he made, in August 1998 the wife’s capital reserves were made up of investments and cash totalling $27,497 in addition to the sum of $270,000 that Hannon J ordered be paid to her, making a total of $297,497.
The wife’s latest financial statement shows that in May 2008 she had investments and cash (exclusive of her inheritance from her mother’s estate) as follows:
Westpac
$3,498
ANZ
$2,473
Westpac Term Deposit
$25,000
CBA Shares
$31,931
eWRAP investment
$376,743
Seven Network
$13,200
Woolworths
$23,424
Total
$476,269
It therefore appears that the wife has been able to improve the value of her investments and cash by an average of approximately $18,000 per annum over a period of slightly less than ten years, rather than suffering a diminution in annual value of approximately that amount as suggested by her claimed expenses over income.
Although she was not challenged greatly in relation to her expenses, I cannot help but find that the wife overstates her expenses to a significant degree. This has an unfortunate consequence in relation to the evidence given by two financial planners because it completely undermines the assumptions made by each of them in relation to the wife’s future financial needs. I will refer to the wife's future financial needs further below.
Both financial planners provide details of the wife's investments which differ from the details provided by the wife in her financial statement. However, I assume that the differences arise from the recent general financial downturn in Australia. I note also that those financial planners’ figures differ slightly from each other. For the purposes of these Reasons, I propose to adopt the figures set out under the heading "Current Investments" in the Financial Analysis attached to the affidavit of Mr S. That shows that the wife has $927,716 in total current investments. However, that must be increased by $9,000 because the wife's evidence was that she had received a net inheritance of $384,000 from the estate of her late mother, and not $375,000 as originally anticipated. Consequently, I find that the wife's has $936,716 in total current investments, including superannuation.
In addition to what is set out in the preceding paragraph, the wife has a home with an agreed value of $600,000, and a car and household contents. It is the husband’s position that she could sell that home and purchase a suitable smaller home, which would not require such expensive maintenance and gardening costs as those claimed by her.
It is clear that the wife wishes to continue living where she is. However, it is also clear that she lives in a very much larger home than she needs. None of the parties’ children live in that home and the accepted valuation report by Mr B reveals that it comprises five bedrooms, two bathrooms, a foyer, a hallway, a family room, a living room, a dining room, a kitchen, a laundry, a study and an additional toilet. Obviously, that is well in excess of the reasonable accommodation needs of one person.
The home is located on a double block in one of the more desirable suburbs in Hobart. The wife's evidence is that the costs of maintaining the garden are significant. Indeed, in her financial statement, she estimates that it costs $120 per week, which she said in her oral evidence includes major items such as tree cutting.
Clearly, the wife can live wherever she wants to live. However, she cannot expect the husband to subsidise her choice, if the expense of that choice is unreasonable.
Further, if the wife was to sell her home and purchase a more modest but suitable home, I find that she would realise a profit on such sale and purchase. While I have not been provided with any particulars of the costs of more modest accommodation, I am of the opinion that it is likely that the wife would realise a profit in the order of $200,000 or more. If that was so, she would have more than $1,100,000 available to her in cash and investments. It would also not be necessary to incur many of the expenses related to her current home that are detailed in the calculations done by both financial planners. In addition, the gardening costs of a more modest home would be less. In short, the wife could have significantly more to invest, with significantly less expense.
All of the above means that the calculations done by the financial planners are of little direct assistance to me. However, I note that the financial modelling projections by Mr S, as detailed in Scenarios 5 to 10 in Exhibit “H3” show that, without employment income, the wife's capital would be depleted at various ages between 77.5 and 86.5 years. I note that current life tables suggest that the wife will live until she is 85 years old and that those modelling projections are based upon what I find to be:
a)excessive expenditure; and
b)less investment capital than could be available to the wife.
Consequently, I find that it is reasonable to expect that the capital that could be available to the wife would not be depleted within her lifetime.
Conclusions
It will be clear from what is set out above that I conclude that:
a)the wife has better employment prospects than she suggests; and
b)in any event, even if she was not employed at all, she would still be able to maintain herself adequately from her own resources.
I reject any argument which suggests that the wife should not be required to support herself from her own resources or that she should not deplete those resources. Section 75(2)(b) clearly refers to "the income, property and financial resources of each of the parties". In relation to depletion of resources, I was referred by senior counsel for the wife to the decision in Bevan[5] and in particular to page 81,980, where the Full Court said:
However, we do not think that the law requires that a wife should deplete an already comparatively meagre capital sum, to enable a much higher earning husband to avoid his obligation to maintain a former spouse who is in financial circumstances such as those in which she finds herself. She may well wish to apply all or part of that sum to the purchase of new premises and we do not think that she should be prevented from doing so should she desire it.
[5] (1995) FLC 92-600
Clearly, what the Full Court said there has no relevance to this matter. The wife's capital sum cannot be described as "comparatively meagre", and she does not need to deplete that capital to purchase new premises. Indeed, I have found that she could make a profit by selling her current home and buying one more suited to her reasonable needs.
It is clear that the wife is not entitled to spousal maintenance simply because of a disparity between her income and that of the husband. In Hirst and Rosen, Nygh J said[6]:
I also reject any argument based solely upon the disparity in financial resources between the parties. Section 79, as I have indicated in argument, does not entitle the Court to adopt “a soup kitchen” approach.
[6] (1982) FLC 91-230 at p 77,251
In my view, that reasoning also applies to sections 72 and 75(2). All that is required is "a standard of living that in all the circumstances is reasonable",[7] and not an equality of standard of living between the parties. In that regard, I reject any argument that the wife is entitled to be maintained ad infinitum at a pre-separation standard of living.
[7] See section 75(2)(g).
I have little doubt that the wife is living at a standard of living that in all the circumstances is reasonable. For example, she holidayed in Sydney and England the year before last and she goes to Melbourne to shop. Further, her claimed expenses are well in excess of the Westpac-AFSA Retirement Standard[8] for a "comfortable lifestyle" for a single female in Tasmania. However, that is probably only confirmation of my view that her claimed expenses are overstated.
[8] See pages 2 and 3 of the Financial Analysis annexed to Mr S’s affidavit.
Given what I have set out above, I conclude that there is just cause to discharge the order for spousal maintenance and further, that it is appropriate for me to exercise my discretion to do so. Obviously, there is no need to consider the wife’s application for an increase.
I will discharge the order.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Roberts FM
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