RO and EO - [2003] FMCAfam 281

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RO & EO

[2003] FMCAfam 281

FAMILY LAW – Spousal maintenance – adequate support is not determined by a fixed standard – adequate imports a standard of living which is reasonable in the circumstances – where husband had all available assets at separation – wife has care of only son – wife in full time employment – husband unable to find employment but has lifetime pension – application dismissed.

Family Law Act 1975, ss.72, 74, 75

Bevan & Bevan (1995) FLC 92-600

Applicant:

Respondent:

File No:

PAM577 of 2003

Delivered on:

24 July 2003

Delivered at:

Parramatta

Hearing date:

17 July 2003

Judgment of:

Ryan FM

REPRESENTATION

Applicant:

In person

Solicitor Advocate for the Respondent:

Mr J Naughton

Solicitors for the Respondent:

Pearson Family Lawyers

ORDERS

That the Applicant’s application for maintenance filed 23 December 2002 is dismissed.
Unless an appeal is filed at the expiration of one calender month all exhibits are to be collected by the party who owns them.
That any application for costs is to be made within 28 days from today’s date. Such application to be listed by arrangement with my Associate.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

PAM577 of 2003

Applicant

And

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application by RO (“the applicant”) that his former wife pays spousal maintenance. The proceedings started when Mr RO filed his application on 23 December 2002. The applicant asks for an order that the wife pays $1,000 per month on the first day of each month. This equates to $230 per week.
EO (“the respondent”) opposes the application, challenging both his need for spousal maintenance and her capacity to pay it.
In Bevan & Bevan (1995) FLC 92-600, the Full Court of the Family Court, identified the process and essential elements of an application for spouse maintenance. They said:
“An award of spouse maintenance requires:
1.   A threshold finding under s.72.
2.   Consideration of s.74 and s.75(2).
3.   No fettering principle that pre-separation standard of living must automatically be awarded where the Respondent’s means permit.
4.   Discretion exercised in accordance with provisions of s.74, with reasonableness in the circumstances as the guiding principle.”
It is important to understand the limitations contained in s.72 of the Family Law Act 1975:
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).
The husband’s application is pressed on two grounds; essentially that by reason of his age or physical health he does not have the capacity to obtain appropriate gainful employment.

Background facts

The applicant is 75 years old. He was born on 8 July 1928 in the United States. He married the respondent on 19 June 1981 in Z. The parties have one child, PJ who was born on 8 August 1987. On 28 May 1993 the respondent and PJ left the United States and returned to live in Australia permanently. They have lived in Australia ever since. The parties have not lived together as husband and wife since then.
On 31 May 1995 the respondent completed an application to the Department of Immigration and Ethnic Affairs agreeing to sponsor the applicant’s migration to Australia as her spouse. The respondent had previously transferred her interest in the former matrimonial home at XX. The husband completed the sale of the property on 27 July 1995, retaining the net proceeds of $US92,379 for his exclusive use. His application for permanent residence was successful and on 1 October 1995 the applicant migrated to Australia. The parties disagree about the reason for the applicant’s migration. The applicant says he migrated to continue the marital relationship; while the respondent asserts that the applicant migrated to live close by to their son.
Throughout his working life the applicant made maximum contributions to a US social security program. Since his retirement he has received a monthly payment which is currently paid at $US1,538.70 or $A31,356 annually[1]. The same social security program makes a monthly payment for PJ which is currently $US732 per month. Depending upon the fluctuations in the exchange rate and the annual amount payable, the amounts received by the respondent for PJ have ranged between approximately $1,000 and $1,400 per month. The applicant’s benefit is a lifetime benefit. PJ’s entitlement will expire when he completes his formal education or celebrates his 22^nd birthday, whichever is the former. Currently, the applicant receives $A603 per week from his social security payment[2] and the respondent receives $1,243 monthly for PJ[3].
[1] Paragraph 6.2.2 husband’s affidavit 12 February 2003.
[2] 6.42 applicant’s affidavit
[3] Applicant’s affidavit paragraph 6.4.1
The respondent is 48 years old. She was born on 10 January 1955. She says that when she left the United States with PJ she took with her a few items of personalty of negligible financial value. She transferred to the applicant her interest in the former matrimonial home and otherwise left him its contents and the family motor vehicle. Upon her return to Australia she and PJ took up residence in her parents’ home. In July 1993 she obtained employment and is currently employed as a scientific officer by D Pty Ltd. Her gross annual income is $63,414. The respondent takes her income as a package which enables her to salary sacrifice to superannuation of $13,000 taking the remaining $53,414 as income. After her parents subdivided their property at C they gave her the newly subdivided block of land. Having borrowed $100,000 from Aussie Home Loans the respondent built a three bedroom strata title home on the land. Her home was completed on 10 January 1996. The respondent made all payments of principal and interest in reduction of the mortgage, including paying $94,000 received from her father’s estate in 2001. The respondent supports PJ from income earned by her, family allowance and the child’s US social security benefit. The applicant has made no child maintenance payments since at least 1995.

Application of s.75(2) to the relevant facts

The applicant suffers a complex array of long term health difficulties that require careful management. He has ischaemic heart disease and has undergone two heart by-pass operations, the second in September 2002 at R Hospital in Z. In April 2003 he had heart fibrillations which required his admission to hospital for a number of days. Dr. R reports that he takes medication for non-insulin dependent diabetes, hypertension, hypercholesterolaemia and heart disease.
Before he departed the USA the applicant had been unemployed for at least six months. Upon his arrival in Australia he actively looked for employment is a variety of fields. For example he applied for management and sales positions in an array of industries. He looked for work with the US consulate and in the financial sector. Because he was largely unsuccessful in securing continuing employment he completed a course with the Real Estate Institute of NSW that addresses the educational requirements for registration as real estate agent. Attached to the applicant’s affidavits is a considerable volume of letters from prospective employers declining his applications for employment. Eventually the applicant undertook product sales and tried breaking into the jewellery market promoting a self-designed crucifix. After relentlessly disheartening outcomes it seems that at least by 2000 he had stopped looking for paid work. I am comfortably satisfied that both by reason of his age and state of health the applicant is unable to obtain paid work in the future. The applicant has a weekly income, which at current exchange rates gives him $603. Fluctuations in the exchange rate influence the income derived from his US pension. The amount paid increases by an annual cost of living adjustment.

I am satisfied that the applicant will have a comparable income for the rest of his life.
The respondent is in reasonable health. She is treated for hypertension and is being monitored for glaucoma. She is in full time employment as a Scientific Officer in a company with whom she has been employed continuously for nine years. Although she has no immediate prospects for promotion I am satisfied that her longevity with the company evinces that she is well regarded by her employer. I am satisfied that the respondent has the capacity to continue to earn an income at least comparable to that which she currently earns for no less than about

10 –12 years.
The applicant has few assets of value. He owns a 1985 Holden Commodore worth $800, household effects worth $300, personal effects worth $600, $1,200 bond securing his tenancy and savings. In December 2002 he had $13,619 savings. Currently he seems to have about $9,400 in Australia. I am somewhat unsure about the state of his US savings because the applicant said that he now had $US3,000 in his US funeral account. It appears that he has reduced the Texas Citibank account to about $US3,500[4] since filing this application. The applicant has credit card liabilities American Express Gold Card $US1,739.00 (as at 26 June 2003)[5] and Citibank Platinum Edge Mastercard $US10,567.82 (as at 9 June 2003)[6]. Using an exchange rate of 65.5 $A/$US this is about $20,300.[7]
[4] Paragraph 18 Applicant’s affidavit filed 10 July 2003
[5] Exhibit A
[6] Exhibit B
[7] Australian Financial Review 18 July 2003
The respondent s financial circumstances are identified in her Response filed 4 February 2003. She owns her home at Y, which is valued at $350,00, motor vehicle worth $10,000, household furniture and personal effects modestly valued at $2,000, shares worth $3,060, personal effects of $500 and savings of about $40. Her superannuation entitlement is $25,263. Her liabilities are modest. She has $1,369 secured against her home, although this may have increased by reason of legal expenses associated with these application and credit card debts of $606. Monies held in her solicitors trust account in February 2003 appear to roughly equate to then outstanding work in progress.
The respondent has primary responsibility for PJ. Although he sees his father most days, she overwhelmingly meets his costs.

I accept that it is probable that PJ will continue to live with the respondent at least until he completes his secondary education in Year 12.
The applicant’s commitments are set out in considerable detail. He lives in a studio apartment at H for which he pays $180 per week rent. He has lived in the same place since 17 June 1998 and I infer is a reliable tenant. At page 4 of his application he claims $766 as his necessary average weekly expenses. These include entertainment of $72, holidays to the USA averaged at $23, clothes at $31, mobile phone at $5 and church gratuity of $10 (unnecessary). I do not accept that these expenses are necessary to the extent claimed. He last travelled to the USA in 1997 and now wishes to return each alternate year, enjoyable but unnecessary. I do not consider the ubiquitous mobile phone a necessary expense nor am I satisfied that the applicant needs a new suit every year. He pays his utilities by credit card and claims credit card repayments and interest as weekly expenses. Prospectively that is double counting. However even though he knew he was unlikely to ever work again he built up credit card debts that now he must repay. That is the retrospective element of the repayments. With a car worth $800 it seems that comprehensive insurance at $480 per annum is unnecessary and that third party insurance would suffice. He is quite capable of attending to his own shirts and laundry expenses of $180 annually are unnecessary. In total I am satisfied that the applicant has necessary weekly expenses of about $600. I take into account the findings made above and do not include credit card interest. I have allowed petrol at $40, which may be on the high side and entertainment at $50. The credit card repayments at $88 per week I have allowed as claimed. The applicant claimed cable TV, but does not have it and I do not consider it necessary. Although detailed, with respect to him I felt the applicant took a somewhat generous approach to the concept of necessary expenses.
The respondent spends about $328 per week for PJ and deposits $50 per week into a trust account set aside for his anticipated tertiary education expenses. As both parties appear to agree that their son should receive a tertiary education, the somewhat daunting university fees that parents now face make this a necessary and prudent step. Thus in total the respondent pays about $378 per week for her sons necessary expenses. I do not accept that a reasonably new house requires annual repairs worth $6,760 nor that her car needs $52 per week maintenance. Both amounts seem exaggerated.
Presently the applicant salary sacrifices by paying $250 per week into her superannuation. She only started to contribute to superannuation in 1993 and its present value is small. Provided she does not remarry before she is 60 and reaches 62 the respondent may be entitled to a US social security benefit from the same fund that currently pays the applicant.[8] Because of this potential entitlement the applicant says that the respondent’s contribution to superannuation is unnecessary and that she could confidently borrow against her home in order to fund his spousal maintenance claim. That is because she will have a US pension. I do not accept this submission. It is unreasonable to expect that the respondent would refuse marriage in order to possibly obtain a US pension. Looking 14 years into her future I find it is impossible to have any confidence that she will be eligible for a US pension. The only prudent and reasonable course is that she plans now to provide for her retirement. Even paying $250 per week throughout the remainder of her working life it is unlikely that she will establish retirement benefits anywhere nearly as valuable as those that the applicant has. However she has capital assets that will increase in value. If I were satisfied that it is reasonable to do so in order to meet the applicant’s needs, I would consider that the respondent could nonetheless reduce her additional superannuation payments to a small degree. Of course if she reduced her salary sacrifice payments the respondent’s taxable income and hence taxation liability would increase. As will be apparent I am not satisfied that the applicant is entitled to spousal maintenance.
[8] Annexure L Applicant’s affidavit filed 10 July 2003
The respondent receives a family allowance of $57 per week.
The parties disagree about the date of their separation. On this issue I prefer the respondent’s evidence. I accept her evidence that upon her marriage she sold a block of land and made an initial contribution of about $US40,000. Throughout the marriage she contributed her income to joint matrimonial purposes, which enhanced the applicant’s capacity to pay alimony to his former wife and to pay his children’s education expenses. In 1984 the parties bought their home paying $US90,000 for it. They separated for the first time in September 1991 when the respondent returned to Australia. She and PJ remained in Australia until she decided to return to the USA to try and resurrect the marriage. Having decided that she wanted to return permanently to live in Australia with PJ, the respondent bargained with the applicant in order to obtain his consent. Although he denies it, I am satisfied that the respondent transferred all the valuable matrimonial assets to him as the price for his consent to her return to Australia with PJ. Even though there may have been an overall capital gains tax benefit in doing so, I am satisfied that the respondent transferred her interest in the matrimonial assets to the applicant because she believed their marriage was at an end and wanted to return to Australia.
When she left the USA there was still part of the mortgage secured against the home. The applicant raised further borrowings in the following years which were used for his own purposes. He described the borrowings as being an equity loan used to sustain him. I was left with the comfortable satisfaction that a portion of the monies paid out on the sale of the home related to capital outstanding to the mortgagee at separation and that the majority of the $US38,000 related to the applicant’s post separation borrowing.
In challenging the 1993 date of separation the respondent emphasises that he came to Australia in December 1994 and that the parties took PJ on some family outings. He ignores that in 1995 he unsuccessfully applied to work at J in the USA. The main plank of his assertion that separation occurred on 1 October 1995 is that the respondent completed a migration sponsorship on his behalf in early 1995. Having the benefit of a s.128 Evidence Act (Cth) certificate the respondent explained that she knew that their marriage was over and that she completed a false declaration supporting the applicant’s migration on the basis of a continuing marital relationship. I accept her evidence that she did so because the applicant wanted to migrate to Australia, which she did not oppose. There were obvious benefits to PJ in having his father close by and her decision was compassionate albeit unlawful. Having had the respondent’s wedding ring thrown in his face before she left the USA and living in different countries for two and a half years, the applicant’s hope that the marital relationship would resume was ambitious. He emphasises that he was able to live at the respondent’s parent’s home for a time and that until 23 December 2002 he was able to visit the respondent’s home. Both agree that this happened after separation. It reinforces my satisfaction that the respondent and her family have tried to behave generously towards the applicant and facilitate his involvement in their son’s life. I accept the respondent’s evidence that the marital relationship ended in 1993 and that thereafter the parties lived separately and apart.
My confidence in this finding is reinforced by the applicant’s exclusive use and disposal of the matrimonial assets. After the respondent left the USA he incurred significant personal debts and it seems that when he sold the former matrimonial home he needed to use the funds to repay significant debts that he had incurred post May 1993. There is no evidence that suggests that he had any other means of discharging these debts. He had been unemployed and was to some extent living on the equity in his home. In doing so, he lived beyond his means and seems to have disregarded the consequences of borrowing money without a reliable income by which the debt could be repaid. As I found earlier in these reasons the applicant received $US92,379 nett from the sale of the home, after selling costs and discharging loans of $US65,312 (Spencer) and $US14,999 (Charter). He discharged personal debts of about $US38,000 leaving about $US54,000. In paragraph 6.2.12 of his affidavit filed 12 February 2003 the applicant deposes that he received $US77,400 after selling costs and mortgage repayment. However the settlement statement from the Department of Housing and Urban Development reveals that the nett proceeds were the larger figure I have identified. Using an exchange rate of 73.5 $A/$US this is about $68,000. He bought a car for $10,000. Excluding the savings already identified he has spent the balance. None of the money was shared with the respondent by way of property adjustment nor paid as child maintenance. Knowing that the respondent and their son were sharing a bedroom at her parents’ home, if the marital relationship still survived I would have expected that at least some of the monies would have been given to the respondent at settlement on 27 July 1995.

The composite effect of these findings leads me to conclude that when the applicant migrated to Australia he knew that the respondent regarded their marriage as over. He came to Australia for his own reasons and whatever hopes he may have had of persuading his wife to a different view he realised at 1 October 1995 that she would not resume their marriage. He did not approach the respondent and insist that she support him in accordance with her obligation as his sponsor. This is probably because he knew that the spouse migration was a sham and any claim would withstand scrutiny by departmental officials.
It is clear that the parties now have quite different standards of living. The respondent’s is superior to the applicant’s, in the sense that she has a home that she owns and an income that enables her to meet her needs and provide for her future. By comparison the applicant lives in a bedsit and had credit card debts that exceed his capital assets. He has no prospect of returning to the paid workforce. In the years immediately following separation the applicant maintained a superior lifestyle to that which the respondent had. He had a home and an income. She had no assets and shared a bedroom in her parent’s home. As will be apparent this many years after separation I do not consider the different standards of living that the parties should be determinative. The husband has lived beyond his means, which were reasonable, for ten years. Knowing that he was unlikely return to work, he continued to do so. He could have lived reasonably, perhaps somewhat frugally without spending most of his sale proceeds. His financial strategy was foolhardy and I am not satisfied that he is now entitled to have the respondent contribute to his expenses.
The applicant does not assert that he has contributed to the respondent’s property, earning capacity or financial resources in a s.75(2)(j) respect. The respondent’s career was disrupted while she lived in the USA and she resumed her scientific career after separation. To an extent the applicant claims that because the respondent receives PJ’s pension entitlement he has contributed to her income and/or paid child maintenance. While I accept that the pension entitlement derives from the applicant’s payments into a fund and his status as a US citizen, it cannot be overlooked that the parties cohabited for 12 years during which he paid into the fund. In my opinion this situation is analogous to contributions made into a superannuation fund, that is a joint venture as family income is diverted in order to provide for retirement. There is no evidence that the applicant was required to make extra payments in order to establish eligibility under the social security scheme for PJ. As a consequence I infer that the applicant provided for his future entitlement and that the benefits for the child have arisen at no additional expense to him. I take into account that the child’s entitlements have a primary nexus to the applicant and that he made a greater contribution to its acquisition than the respondent did. However I am also satisfied that the respondent expends all of the child’s income on their son, meeting the regular shortfall from her own income.
No s.79 property orders have been made nor are any proposed. However to the extent that I have not already done so, I take into account pursuant to s.75(2)(o) the distribution of the matrimonial assets as already outlined..

Conclusion

The first question that must be answered is whether the applicant has established that he is unable to support himself adequately. In Mitchell and Mitchell (1995) FLC 92-601 the Full Court of the Family Court said: “Thus, the question whether the applicant can support herself adequately is not to be determined by reference to any fixed or absolute standard but having regard to the matters referred to in s.75(2) and more specifically the paragraphs of that sub-section identified above”. That is ss.72(2)(a),(b),(g),(j),(k) and (n). In Nutting (1978) FLC 90-410 Lindenmayer J discussed the meaning of “adequately” as used in s.72. He said “…adequately imports a standard of living which is reasonable in the circumstances, including the circumstance that the parties are no longer husband and wife and that the assets and resources which were formerly available to them both in common have now been divided between them”.
When credit card repayments are included the applicant has $3.00 per week left after he meets his weekly necessary expenses. Although I am satisfied that he must pay his credit card debts, at least at the minimum monthly payment, I am not satisfied that this expense is reasonable vis the respondent. The debt has been established somewhat recklessly. Established entirely after separation when the applicant had a fixed income and finite assets. He was far from destitute and with sensible financial planning, which was his field of endeavour, the applicant was reasonably able to provide himself with a reasonable standard of living throughout his retirement. His lifetime pension gave him a sound financial base, which when coupled with the exclusive use of the valuable matrimonial assets he could have provided himself with a reasonable and appropriate standard of living without incurring debt.
In the unusual circumstances of this case I am not satisfied that the applicant has met the threshold requirements for entitlement to spousal maintenance. I am satisfied that in spite of the different standards of living which the parties now have, the applicant is able to support himself adequately from his own income.
For these reasons I make the orders identified at the start of this judgment.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Ryan FM

Associate:

Date: 24 July 2003