Dawson and Dawson (No.2) - [2010] FMCAfam 1106

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DAWSON & DAWSON (No.2)

[2010] FMCAfam 1106

FAMILY LAW – Spousal maintenance – whether husband reasonably able to support his wife – wife not able to work – reasonable standard of living.

Family Law Act 1975, ss.72, 75, 79, 80(1)

In the marriage of Clauson (1995) FLC 92-595

Applicant:

MR DAWSON

Respondent:

MS DAWSON

File Number:

MLC9982 of 2009

Judgment of:

Turner FM

Hearing date:

30 September 2010

Date of Last Submission:

30 September 2010

Delivered at:

Melbourne

Delivered on:

13 October 2010

REPRESENTATION

Counsel for the Applicant:

Ms Smallwood

Solicitors for the Applicant:

Pearsons Barristers & Solicitors

Counsel for the Respondent:

Mr Pavone

Solicitors for the Respondent:

Hughes Legal

ORDERS

The application for periodic spousal maintenance is dismissed.
The application for lump sum spousal maintenance is dismissed.

IT IS NOTED that publication of this judgment under the psuedonym Dawson & Dawson (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT NEWCASTLE

MLC9982 of 2009

MR DAWSON

Applicant

And

MS DAWSON

Respondent

REASONS FOR JUDGMENT

The wife seeks periodic spousal maintenance of $400.00 per week to commence from one week after settlement of the sale of the former matrimonial home, pursuant to orders made on 18 August 2010. Her claim for lump sum spousal maintenance was not pressed, but is dealt with herein.
Mr Pavone appeared for the applicant wife and Ms Smallwood appeared for the respondent husband.
It is agreed by the parties that the wife’s disability pension of $700.00 per fortnight is income tested. Section 75(3) of the Family Law Act 1975 (the “Act”) provides that:
In exercising its jurisdiction under section 74, a court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
Ms Smallwood submits that in assessing the needs of the applicant, she should be treated as having no income from a pension. The Court accepts that submission.
Part of the case put for the wife is that she has weekly expenses of $350.00 per week, and once the former matrimonial home is sold, she will need an extra $300.00 per week to rent a two bedroom apartment. She would however prefer to purchase a property.
The husband submits that he needs significant funds to buy a property for around $410,000.00. That would involve weekly mortgage repayments of $580.00 plus stamp duty, mortgage insurance, rates and upkeep.
One of the factors to be taken into account under s.75(2) of the Act is in sub-s.(g):
where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
As both parties would like to purchase a property, but one concedes they are prepared to rent, and there is a significant difference in the cost of renting and purchasing, the Court decides that a standard of living that in all the circumstances of this case is reasonable, is for each party not to purchase a property. The husband wants to purchase a property at a cost of $410,000.00. That would require repayments of $580.00 per week, plus stamp duty of $17,300.00 plus mortgage insurance.
It was put for the husband that in assessing his ability to maintain his wife “to the extent that (he) is reasonably able to do so” (s.72(1) of the Act) the Court should take into account only the income of the husband and not his capital.
The Court notes s.75(2)(b) of the Act that the Court shall take into account “the income, property and financial resources of each of the parties”.
The Court notes also s.80(1)(ba) of the Act that a Court exercising its powers under this part may:
order that a specified transfer or settlement of property be made by way of maintenance for a party to a marriage.
The Court is required by s.75(2)(a) of the Act to take into account “the terms of any order made… under s.79 in relation to the property of the parties…” Orders were made pursuant to s.79 of the Act on 18 August 2010. The Court will therefore have regard to the distribution of the pool there under. It is significant that instead of an order splitting the husband’s superannuation, the wife sought and received a cash payment of her share of the superannuation.

Whether the wife is unable to support herself adequately?

The first issue to be determined is whether the applicant is unable to support herself 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).
By order by consent on 22 June 2010 the party’s 15 year old son [X] born in 1995 is to live with the husband. The wife does not pay any child support for her son, nor make any payment towards expenses relating to him. The husband will bear all those expenses.
The wife is morbidly obese, and on the evidence that led to the judgment on 18 August 2010, she suffers from physical and mental incapacity for appropriate gainful employment (which is a s.72(1)(b) factor).
It is common ground that both parties have spent the $15,000.00 each redrew on the mortgage in 2009 (Transcript “T” p.14, l.13).
Taking account of the s.79 orders, the wife will have capital of $249,911.00, which invested at 5.5% will give a weekly income of $264.00. Her expenses disclosed in her financial statement filed on

16 June 2010 were adjusted as a result of cross examination. She conceded:
·that her taxi expenses are $20.00 per week (T p.8, l.36);
·her hairdressing costs are $100.00 per annum, = $2.00 per week;
·the money spent on gifts can be reduced to $1.00 per week;
·the cost of dry cleaning can be eliminated (T p.9, l.32); and
·
the cost of the chemist and pharmaceuticals is $9.00 per week

(T p.10, l.19)
The reductions reduce her total weekly expenditure (on page 11 of her Financial Statement filed on 16 August 2010) to $422.00. To that she would add the estimated cost of renting of $300.00 per week.
During the hearing in June 2010, the value of the former matrimonial home was agreed at $565,000.00. The wife has now placed a reserve on it of $580,000.00. The property has not yet been sold. The new reserve does not show that the wife will receive more from the division of the property than awarded by the Court on 18 August 2010. Obviously if the property sells for more that $565,000.00, both parties will benefit according to the percentage division determined by the Court.
The wife’s total ongoing expenses will therefore be $722.00 per week with an income of $264.00 per week. Even drawing on the cash the wife received in lieu of a superannuation splitting order, the wife will not be able to support herself adequately in the long term.

Whether the husband is reasonably able to maintain the wife?

The next issue is whether the husband is reasonably able to maintain the wife. Pursuant to s.79 of the Act he received a distribution of $166,607.00 including his superannuation of $46,923.00. That will leave him with cash of $119,648.00.
In his Affidavit filed on 21 September 2010, the husband gave evidence that out of the cash payment of the property settlement awarded on 18 August 2010:
·he will repay his mother $33,000.00 borrowed from her to pay his legal costs;
·he will pay off his credit card balance of $5,000.00;
·he will pay school fees outstanding of $8,000.00, which he has borrowed from his mother.
This will leave him cash to invest of $81,648.00. Invested at 5.5%, that will produce a weekly income of $86.00. To this the Court adds his income from employment of $1,140.00 after tax, giving a total income of $1,226.00 per week.
The husband’s total weekly expenses on page 11 of his Financial Statement filed on 21 September 2010 include the $5,000.00 cost of [X] visiting [Europe]. The parties are not in a financial position for such trips to occur annually.
The husband’s total weekly expenses also include $1,200.00 for a laptop for [X]. Again, this expense will not be able to be borne annually.
The husband pays school enrolment fees for [X] of $600.00 per annum. The husband pays school fees for [X] of $5,800.00 per annum. The husband pays for school books and clothing of $1,000.00 per annum. The husband pays for other school excursions of $300.00 per annum. These costs all contribute to the total education expenses in the husband’s Financial Statement of $267.00 per week. Deducting the $5,000.00 for the trip to [Europe] and the $1,200.00 for the laptop the total weekly education expenses would be $148.00.
Mr Dawson conceded in cross examination that he will probably have to go without giving gifts, estimated to be $40.00 per week. The reduced figure for the wife is $1.00 per week. It is fair that the husband’s expenditure on gifts be reduced to the same amount.
The adjustments above, reduce the figures on page 11 of the husband’s Financial Statement :
a)For children  $403.00 per week
b)For the husband  $458.00 per week
c)Total  $861.00 per week
To this must be added the cost of renting accommodation of $300.00 per week. The husband’s total weekly expenses will be $1,161.00.
His total weekly income will therefore be $1,226.00, less tax on the income from interest earned. He therefore will have a surplus of less than $65.00 per week to provide for any unexpected expenses for him and his son.
The Court will now examine the s.75(2) factors as required by s.72(1) of the Act. Section 75(2) of the Act provides:
(2)The matters to be so taken into account are:
(a)the age and state of health of each of the parties; and
(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; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(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; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
The Court will consider each factor:
a)The husband is forty two years old and in good health. The wife is forty two years old and has significant physical and mental conditions.
b)The income, property and financial resources of each of the parties are examined in detail (supra).
c)The husband has the care and control of the party’s 15 year old son, [X].
d)The wife estimates that once she starts renting, her weekly commitments will be $722.00. The husband estimates that, if renting, his weekly expenses will be $1,161.00. He will of course have to support himself and [X].
e)Apart from the husband being responsible to support [X], neither party is responsible to support any other person.
f)It is not suggested by either party that the husband is entitled to a pension, allowance or benefit under the law of the Commonwealth or any superannuation fund or scheme; the wife’s disability pension is income tested and must be ignored (s.75(3) of the Act).
g)This issue has been examined (supra). Neither party will be able to purchase accommodation. At best, both will have to rent. To have a reasonable standard of living, the husband will need to rent a two bedroom flat, and the wife a one bedroom flat or find accommodation elsewhere, and thereby reduce the wife’s weekly expenses significantly. The wife’s mother has been living with her for nine months but will soon return to her three bedroom house in Heywood. The evidence is that the third bedroom is in poor condition, but it is not clear to the Court why the wife cannot use the second bedroom. The wife living with her mother would appear to provide her with reasonable accommodation and a standard of living that in all the circumstances is reasonable. However, even removing the $300.00 per week from the wife’s expenses, her expenses will still exceed her income by $158.00.
The Court recognises that the proposal that the wife live with her mother was not put by the husband. However, it is a circumstance which the Court considers “the justice of the case requires to be taken into account” (s.75(2)(o) of the Act).
h)Payment of maintenance to the wife will not increase her earning capacity by enabling her to undertake a course or training, or to establish a business to obtain an adequate income.
ha)Not relevant
j)The wife has contributed some of her pension to the expenses of the family. She contributed towards the purchase of a property (see judgment of 18 August 2010). Those matters are accounted for in the judgement of 18 August 2010.
k)The duration of the marriage was sixteen years, and that has not affected the earning capacity of the wife. She has become ill during the marriage but there is no evidence that the marriage has affected her health and thereby her earning capacity.
l)The husband wishes to continue his role as a parent. The wife apparently has no wish to perform the role of a parent.
m)Not relevant
n)The terms of the s.79 orders have been considered (supra).
naa) Not relevant
na)There is no suggestion that the wife will be assessed to pay child support for [X].
o)The Court considers that justice requires the Court to take into account the circumstance that the wife received a cash payment equivalent to 60% of the husband’s superannuation because of her need for immediate cash (s.75(2)(o) of the Act). Using that cash to pay expenses will, overtime, reduce significantly her capital available for investment, but it will enable her to meet current vital needs. The Court also takes into account that the wife can live with her mother in a three bedroom house at Heywood (supra and post).
p)Not relevant.
q)Not relevant.
Removing the $300.00 per week rent from the wife’s expenses by her living with her mother, means that her expenses will exceed her income by $158.00 per week ($722.00 minus $300.00 equals $422.00 per week expenses: less income of $264.00 equals $158.00 per week).
The Court finds that the wife is unable to support herself adequately.
The Court finds that the husband is not reasonably able to maintain his wife.
The application for periodic spousal maintenance is dismissed.
The Court quotes from the decision In the marriage of Clauson (1995) FLC 92-595 at [81], 907:
In addition, it is necessary to determine the issue of periodic maintenance first because this type of lump sum maintenance is the capitalization of that conclusion. The Court must satisfy itself of the components necessary to justify a periodic maintenance order, namely in effect, need and capacity, and determine the amount in question and in some cases the duration of that order. If the applicant fails to establish those components that will end any claim for not only periodic maintenance but lump sum maintenance as well.
The application for lump sum spousal maintenance is dismissed.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Turner FM

Date: 13 October 2010