Spousal Maintenance Claims and the Case of Elei & Dodt: The Importance of Crossing your T’s and Dodting your Eleis
By Kate Taylor
25 June 2018
When parties marry or commence a de facto relationship they give little (if any) consideration to the possibility that they may be obliged to provide ongoing financial support to their partner even long after the relationship breaks down.
In a recent appeal case released under the pseudonym, Elei & Dodt , Justice Ryan considered whether the correct principles for a spousal maintenance claim had been applied by the trial judge. Spousal maintenance can be paid periodically or as a lump sum.
So what are your rights and obligations in relation to spousal maintenance?
The Court will make orders for spousal maintenance where it is satisfied that one party (the Applicant) is in need of financial assistance in circumstances where they do not have the resources to meet their day-to-day living expenses and that the other party (the Respondent) has the capacity to make those payments.
The Applicant’s Needs
The Applicant’s needs will be determined by reference to such factors as the age, health and income earning capacity of the person seeking an order for spousal maintenance as well as their obligations to provide care to a child or children of the relationship or any other person. Spousal maintenance is commonly ordered in circumstances where, by virtue of having spent many years out of the workforce caring for children one parent cannot readily obtain employment upon the breakdown of their relationship or where the Applicant’s capacity to earn an income sufficient to support themselves in the future is impeded by illness or injury.
In Elei & Dodt, Ryan J determined that the need of a de facto party had been adequately established at Trial. Factors at play included that Ms Dodt had been out of the workforce for a period of five years, was reliant on a government pension and had ongoing out-of-pocket medical expenses in relation to a hand injury. On appeal, Mr Elei raised concerns that Ms Dodt had not made sufficient attempts to regain employment. Justice Ryan, however, felt that Ms Dodt’s desire to re-join the workforce in the real estate industry in which she had significant prior experience was justified. Both at Trial and on appeal it was accepted that Ms Dodt was in sufficient financial stress to the point of being unable to renew the necessary license to re-establish herself in the real estate industry, and therefore she had done all she could to re-enter the workforce at trial.
The Respondent’s Capacity
Once the Court has established that the Applicant is in need of spousal maintenance to support their living expenses, it will turn its mind to whether or not the Respondent has capacity to make those payments. The capacity of a Respondent to pay can be determined either by reference to their income or the realisation of assets in their name. Essentially it asks whether the Respondent has residual income after payment of their reasonable expenses or whether there are significant realisable assets in the hands of the Respondent such that they could support a spousal maintenance payment.
In Elei & Dodt, Ryan J said that the trial judge had erroneously come to the conclusion that Mr Elei had “a significant capacity to generate income” without having sufficient regard to the use to which he properly put that income. It was accepted on appeal that Mr Elei had obligations to maintain his new partner (who at the time of Trial had been expecting his child) and her children from a previous relationship. Justice Ryan distinguished, however, between Mr Elei’s capacity to make ongoing periodic payments and his capacity to make a lump sum payment in the sum of $2,000 on account of Ms Dodt’s known out-of-pocket medical expenses. Mr Elei remained liable to pay $2,000 to Ms Dodt, however the orders for his payment of periodic spousal maintenance were set aside.
The Two-Step Process
Making out a spousal maintenance claim is a two-step process. An Applicant must first establish that they cannot financially support themselves without government assistance as Ms Dodt successfully argued in Elei & Dodt. Only once an Applicant has passed this first test does the Court need to consider whether the Respondent has sufficient resources, whether by virtue of income or realisable assets, to support a spousal maintenance obligation.
Should you have a query as to whether or not you have a right to a spousal maintenance payment, or alternatively have a potential spousal maintenance obligation, please contact a member of our Family Law team to talk through your particular financial circumstances.