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Spousal maintenance – Consent order (made as part of property orders) that husband pay wife’s mortgage could only be a maintenance order, such that it ceased to have effect upon her remarriage pursuant to s 82(4) of the Family Law Act

In Thorpe & Stirling [2021] FedCFamC1A 86 (15 December 2021) the Full Court (Aldridge, McEvoy & Altobelli JJ) heard an appeal from a decision of Judge Kemp where a final consent order required the wife to sell a property and provided that she receive $430,000 of the sale proceeds on the basis that the husband would be guarantor and pay mortgage payments on a future loan of up to $500,000, when the wife next purchased real estate.

The order provided that the husband would continue to pay the mortgage until its loan balance was discharged, however, the husband refused to pay after the wife re-married, contending that the order was a spousal maintenance order that had no effect upon re-marriage per s 82(4) of the Act.

The wife contended that the order was a property settlement order and sought enforcement.

At first instance, the Court rejected the husband’s contentions as to spousal maintenance and made a suite of enforcement orders. The husband appealed.

Considering the wording of the order (referred to as “Order 36”), the Full Court said (from [19]):

“ … [The order] … is said to stay in place regardless of any change in the needs of the wife or the wife’s and the husband’s capacity to earn income. That, to some extent, suggests that the order may not have been made pursuant to the power granted for orders for spousal maintenance.

[20] It can also be seen that the husband’s liability under the mortgage remains until it is paid out. … [T]hat liability could well exceed what the husband otherwise received under the consent orders, essentially resulting in him paying more to the wife than he received under the remaining orders.

( … )

[24] In Mullane v Mullane [1983] HCA 4; (‘Mullane’) at 445 the High Court said:

‘In our opinion … s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them.’

[25] For Order 36 to be an order under s 79 of the Act, it therefore requires the order work such an alteration.

[26] It is plain that property, as defined, is limited to existing property, whatever it may be (Stanford v Stanford [2012] HCA 52; … at [37]), and does not extend to property that might be received in the future even where that interest could be described as a financial resource. Thus, whilst financial resources which might be available to a person, but which do not constitute property or future income, cannot be the subject of division under s 79 of the Act they may be taken into account when determining what division of the property is appropriate. Further, the section does not empower the Court to make an order against property which does not presently exist but could be brought into existence by the exercise of borrowing capacity …

( … )

[28] … [T]he point to be drawn … is that such orders, whatever they may be, are based on a division of the existing capital interests.

( … )

[33] The extent of the husband’s obligation under Order 36 was not and could not have been known at the time the orders were made. In that circumstance, it is difficult to see how the Court could come to a view that the orders were just and equitable because the final distribution of property was unknown, if the mortgage payments were indeed part of that consideration.

( … )

[35] … Order 36 had the effect of creating a liability of a greater value than the existing property which is a course that cannot be followed under s 79 …

[36] … [H]is Honour found … the husband’s obligations under Order 36 ‘were likely to be paid out of the husband’s future income stream including his receipt of any anticipated bonus payments’. Each of those was a financial resource. Each could be taken into account to justify the wife receiving a greater share of the existing … but not … to enlarge the pool of property available for division. The continuing obligation to pay the mortgage (and to act as guarantor) is so akin to him being required to borrow funds to enlarge the property pool as to attract the same principle.

[37] Order 36 does not work an alteration of the interests of the parties in their property but rather creates an obligation which is separate to the division of that property.

[38] We consider, therefore, that Order 36 could not be an order made under s 79 of the Act because that section does not empower the making of such an order. On the binary choice put to the Court, the only remaining possibility is that it is a maintenance order …

( … )

[45] … Order 36 can be seen as being made as a spousal maintenance order. It is an order for the payment of money for the support of the wife. Whether that power was correctly used to make the order is not a question raised by this appeal.

( … )

[56] … [W]e are satisfied that his Honour erred in characterising Order 36 as a property settlement order and in making a series of enforcement orders. The appeal will be allowed and those orders set aside. The consequence is that the enforcement application must be dismissed.”

 

Property – Full Court holds that non-commutable disability income insurance payment is not “property” but a financial resource – Watts J in dissent

Children – Section 68B injunctions that restrained father from contacting mother and children were within power – Machinery personal protection order that mimicked state order set aside

Property – No error in equal contributions weighting together with s 75(2) adjustment of 5 per cent to reflect husband’s post-separation access of superannuation

Children – Treating unified parents’ joint opposition to grandmother spending time with the children as an incident of their parental responsibility such as to prevent judicial scrutiny in error

Other routine procedures – Mother’s delay in raising recusal application waived her right to argue disqualification of judge for apprehended bias

Property – De facto relationship existed despite both parties’ infidelities and de facto husband’s FIFO work