Maintenance Series Part 2: Distinguishing Spousal Maintenance from Contributions and Property Settlements in the Family Law Case of Deith

Background of the Case

The marriage in the case of Deith [1989] FamCA 19 (14 April 1989) lasted only three years, during which the couple had one child who primarily lived with the mother. The mother, working as an air hostess, contributed about $18,000 to the marriage. In contrast, the husband, a successful advertising executive, had a net worth nearing $1 million, thanks to strategic investments in the Sydney property market.

Initially, the Court awarded the wife a property settlement of $150,000, considering her role as the child's primary caregiver. This decision was based on factors outlined in section 79(4) of the Family Law Act 1975, which describes financial and non-financial contributions, as well as section 79(5) (previously section 75(2)), which deals with current and future needs. Section 75(2) considers matters to be taken into consideration in relation to spousal maintenance.

The Husband's Appeal

The husband contested the $150,000 property settlement, claiming it was unfair given the brief duration of their marriage and his wife's minimal financial contributions. He argued that such a decision could be viewed as biased against wealthy individuals. He suggested that if the roles had been reversed, he would not be facing such a high settlement.

In reviewing the case, the judge found that the property settlement was reasonable, particularly in light of the wife's ongoing care for their child. The court emphasised the importance of addressing the parties' income disparities. It recognised that the wife's caregiving responsibilities significantly impacted her ability to generate income.

Maintenance vs. Contributions

The next point of contention was the husband's argument that $120,000 out of the $150,000 settlement should be considered spousal maintenance under section 77A. This section requires a clear identification of sums designated for maintenance versus those for property contributions. The husband contended that a substantial part of the settlement was intended to assist the wife financially and therefore should be characterised as lump-sum maintenance.

Upon reassessment, the court agreed that a significant portion of the $150,000 was indeed allocated for the wife's maintenance. The original judge had dismissed her maintenance claims on the assumption that she could earn income from investments arising from the property settlement.

The wife's cross-appeal argued that the $120,000 was insufficient for her maintenance.

The court found that determining property settlement and maintenance is a 3-step process. First, contributions are assessed. Secondly, section 79(5) current and future need factors (formally 75(2) future needs factors) are considered in light of a property settlement. The third step is to consider maintenance over and above the property settlement, having regard to the section 75(2) factors.

The second and third steps must not be conflated, despite two separate considerations of similar factors: one assessment in relation to property settlement, and then a second assessment in relation to spousal maintenance. These are technically separate enquiries, and the court clarified that the maintenance assessment in the third step is "not entirely identical with the so called section 75(2) factors but consist[s] of a narrower core of the matters set out in section 75(2)."

It was found that the husband conflated the second and third steps, and when the trial judge suggested that the wife could live on $300 a week returns from the $150,000 investment, he was merely considering the wife’s maintenance needs in light of an already made property settlement.

The wife also failed in her cross-appeal for increased maintenance, as it was determined that the trial judge had taken into account the relevant factors and that it was within his discretion to make the orders he did. Both appeals were dismissed.

Key Implications

This case underscores the necessity of clearly distinguishing between spousal maintenance and property settlement. It illustrates how courts evaluate not only financial investments but also the roles of caregivers and the challenges posed by income disparity and each party's circumstances in short marriages, especially where there is a child from the relationship.

The court's responsibility is to ensure fair outcomes that encapsulate the intricacies of each case. It accounts for both parties’ financial contributions and the ongoing requirements of the primary caregiver. The dialogue surrounding spousal maintenance and property settlements is continually evolving, reflecting the diverse experiences of couples.