re: s77a Spousal Maintenance

Practitioners continue to worry about the vulnerability of their client if a spouse maintenance order has been made in favour of the other party or if there has been an acknowledgement that a portion of a property settlement is a recognition of a spouse maintenance order.

Section 77A was inserted into the Family Law Act in 1987.  The explanatory memorandum makes clear that, “This clause inserts into the Act a new section 77A, the primary purpose of which is to enable the income testing for social security purposes of maintenance received other than by way of periodic sums”.

If an order was not expressed to be one to which section 77A applied, then any payment or transfer under the order would not be taken to make provision for the maintenance of the party to the marriage.

The second reading speech was made on 26 May 1987 by John Spender QC.

“The purposes of the Family Law Amendment Bill 1987 are to amend the Family Law Act so as to reinforce the principle that parents, not the taxpayer bear the prime responsibility for the maintenance of their children.”

“Since the Family Law Act was enacted, society has become accustomed to high levels of marriage breakdown. Perhaps those levels were inevitable.  About 35% of marriages end in divorce and for many marriages are simply a contract.”

He went on to say:

“Just as many treat the institution of marriage casually, so do many treat responsibility for maintenance of their children and former spouses with equal casualness.”

“The majority of custodial parents either receive no maintenance at all or what they get is manifestly inadequate so that many live in poverty and suffering from which they cannot escape.”

“At present, in considering what maintenance the parties to a marriage should be ordered to pay, the court is required to consider the eligibility of either party for social security benefits.  This means that responsibility to support children can be shifted from the parents to the taxpayer. This is not acceptable.”

“As a matter of history, at the time that the Family Law Act was brought into force, the government of the day had recently introduced the supporting parents’ benefit.  Since that time, there has been an astronomic rise in the cost of that benefit to the Australian taxpayer from $40.6 million in 1974 to $1,238 million in 1986.

“These are complex questions because one is dealing with how to divide a limited amount of money between various fundamental obligations.”

The 1987 amendments brought three important changes.  One was the amendment to section 75 which was the section 75(3) inclusion.

Lionel Bowen, the Attorney-General, moved that the bill be read a second time. He said:

“For 11 years the Commonwealth and the States have been negotiating for a reference of powers from the States in respect of family law matters. Last year (1986) four States, New South Wales, Victoria, South Australia and Tasmania enacted legislation referring to the Commonwealth powers over the maintenance, custody and guardianship of and access to all children and for the payment of expenses in relation to children and childbearing.”

At that stage, Queensland and Western Australia were outside those making the referral of powers.

Section 77A was described in this way:

“The bill also inserts new provisions to enable the income testing for social security purposes of maintenance received other than by way of periodic sum.”

The 1987 amendments also introduced the concept of judicial registrars which are so significant in the present court structure.

Both s.75(3) and s.77A were introduced to ensure that the impost on the social security system was reduced as much as possible.

The same amendment act introduced section 66L which ran parallel to s.77A.  The court was to express the order to be one to which “s.66L applies and must specify the child or children for whose maintenance provision is made by the payment, transfer or settlement and the portion of the payment or the value of the portion of the property attributable to the provision of maintenance for the child or for each child”.

Section 66N permitted a variation or discharge of a child maintenance order and s.66N(1) to (4) and (6) to (10) re-enacted the substance of s.83 of the principal act in relation to the variation or discharge of a child maintenance order.

 Paragraph 83(2)(b)(a) provided for an additional ground on which a spousal maintenance order could be varied. The new ground for variation is that “the amount to be paid under the order (where the order was made by consent) is not proper or adequate. In satisfying itself the order is not proper or adequate, the court must have regard to any payments or transfers of property previously made to or for the benefit of the party to the marriage by the other party”.

Section 87A was introduced and “the primary purpose of which is to enable the income testing for social security purposes of maintenance received other than by way of periodic sums”.

Mehta & Crimmins [2021] FedCFamC1A 73, is a significant spouse maintenance decision.

The outcome of this appeal was that one Division 2 order was successfully appealed and an application for summary dismissal was remitted for hearing by a judge other than the primary judge.

The wife’s application for spouse maintenance had been permanently stayed.

The parties began to cohabit in April 2017 at about the time they married, and they separated on 1 August 2017 and divorced on 6 March 2019.

The wife commenced proceedings seeking orders for property settlement and both interim and final spouse maintenance orders.

Interim orders were made on 11 December 2017 requiring the husband to pay the wife spouse maintenance of $1,070 per week as well as $1,800 to be applied to a rental bond.

In April 2018, she filed an Application in a Case. She sought spouse maintenance of $1,515 per week, $450 per week towards rental expenses, and $13,950 to assist her with setting up rental accommodation, dental and medical expenses and a further $1,280 to assist her to repay a debt incurred for her living expenses.  She sought $10,000 being her costs of proceedings in relation to a property dispute, and $100,000 on account of her legal fees in the family law proceedings.

On 1 June 2018, the judge ordered the husband to pay the wife spouse maintenance of $1,500 per week and a lump sum of $15,000.

At that time, the wife was living in Australia on a bridging visa and the husband had cancelled his sponsorship of her spouse visa. She was not working and was ineligible for government support.

A finding was made that she was unable to support herself and that she was in need of support until she was able to obtain “gainful employment”.

Further, the court found that the husband had the capacity “to meet on ongoing but interim obligation for spousal maintenance”.

The court ordered a lump sum payment to the wife of $67,000 to meet her costs of the property proceedings.

On 20 April 2018, the wife amended her Initiating Application and sought a lump sum payment of $1.3 million as property settlement. She sought $2,000 a week for a period of five years.

That application never came to a hearing.

On 25 July 2019, consent orders were made that provided that the husband would pay the wife a sum of $170,000 in five tranches.  The order for the payment of the lump sum was expressed to be a payment pursuant to s.79 of the Family Law Act.

Order 10 of those consent orders was as follows:

“All interim spousal maintenance orders are discharged and to the date they stand paid.”

Order 11 of those consent orders was as follows:

“All extant applications be dismissed with no order as to costs with the intention that each party bear their own costs.”

At that stage, the extant applications included the wife’s claims for spouse maintenance in her amended Initiating Application filed 20 April 2018.

On 4 March 2020, the wife brought an application seeking $195,000 as lump sum spouse maintenance and interim orders for a payment of $100,000 for her security of costs. She also sought various injunctions.

The wife amended that application seeking additional orders that the husband pay her $760 per week as living expenses, $6,138 being her university tuition fees for the summer semester, and $24,552 for the autumn semester university tuition fees.

The husband applied to have that amended application summarily dismissed.

This issue was heard as a discrete issue on 5 March 2021 and was determined on 21 June 2021.  “The primary judge found that the wife was precluded from continuing the application of 19 November 2020 by operation of res judicata because of the dismissal of the earlier claim for maintenance. His Honour then permanently stayed the wife’s application”.

There were two grounds of appeal.  One was that the wrong principle had been applied in making the order that the wife be precluded from continuing the application and the second was the primary judge erred by failing to take into account all the evidence relevant to the application before him.

The Full Court said at paragraph 21:

“There is no need to consider the second ground because the first ground will succeed as the primary judge erred in principle in making the order for the permanent stay.”

No-one had asked the primary judge to permanently stay the wife’s application.

The Full Court said it was not appropriate to make that order.

The Full Court applied the High Court statement from Chamberlain v Deputy Commission of Taxation [1988] HCA 21; (1988) 164 CLR 502 at 510-511:

“… It is no answer to say that the Court might, if appropriate stay the second action as an abuse of process. The impediment goes deeper than that; res judicata may sustain a plea of abuse of process but in that case the appropriate remedy is to strike out the later action.”

At the end of this appeal, the court remitted the husband’s application for summary dismissal to the Federal Circuit and Family Court of Australia Division 2.

The balance of the case requires serious attention.

The primary judge said:

“The Court accepts that the Applicant retains a right to commence proceedings pursuant to section 74 of the Act in other circumstances where the substance and the characterisation of which are not the same as these proceedings. What the Applicant cannot do is maintain these proceedings.”

 At the appeal, the husband’s senior counsel did not adhere to the res judicata argument.

The argument on appeal was that “the dismissal of the wife’s earlier maintenance applications, consequent on the entering of the consent orders, permitted her to bring another application based on different circumstances but not, as here, where he submitted the wife was advancing the same claim”.

At paragraph 30:

“Thus the nub of the husband’s assertion is that the wife’s claim for maintenance made in 2018 and dismissed by the July 2019 consent orders was substantially the same as that sought to be advanced in the November 2020 application.”

The husband had argued the concept of cause of action estoppel.  The operation of that principle was described by Edelman J in Clayton v Bant [2020] 95 ALJR 34 as:

“… if the judgment finally resolved a conflict about the existence or extent of a “cause of action” then the parties to that proceeding, or their privies, will be precluded from relitigating that cause of action.”

The Full Court then set out the important discussion as to in what circumstances can a party be precluded from seeking spouse maintenance.

The statute confers the power to make orders for spouse maintenance.

The Full Court said:

“Whether the Court should exercise its discretion and make an order constitutes the justiciable controversy.”

The High Court in Clayton said:

“The rights created by ss 79(1) and 74(1) cannot “merge” in any judicial orders other than final orders of a court having jurisdiction under the Act to make orders under those sections. The rights of the wife to seek orders under ss 79(1) and 74(1) continue to have separate existence unless and until the powers to make those orders are exercised on a final basis and thereby exhausted.”

The Full Court said that they didn’t consider that in the circumstances of this case, the court’s “jurisdiction to make spousal maintenance orders has been exhausted and no res judicata arises”.

At paragraph 35 they said:

“We do not accept that the wife was precluded from advancing the claim for spouse maintenance in the November 2020 application because of claim estoppel.”

The Full Court referred to s.72(1) of the Act.

The Full Court noted that in s.72, the matters are expressed in the present tense. The Full Court went on:

“Once those two conditions precedent to an order being made are established, s.74 of the Act empowers the court to make an order for the maintenance of a party as it considers proper”.

Further, the Full Court pointed out that it must be at the date of the determination of the application.

Paragraph 39 says:

“It is not suggested that a party’s liability to support the other party ceases on the conclusion of property settlement proceedings by orders nor by the dissolution of the marriage. Indeed s.83 of the Act (while not relevant here) contemplates the revival, variation or dismissal of existing orders for maintenance.”

Section 44(3) provides:

“that an application for spouse maintenance must not be brought more than 12 months of the date of divorce without leave.”

Paragraph 41:

“A party’s right to seek spouse maintenance is capable of being exercised many times and subject to leave over many years. So much is apparent from the terms of the sections themselves.”

The Full Court said:

“The dismissal of the wife’s earlier application did not quell any controversy nor finally resolve a conflict of the existence of a right of the wife to spouse maintenance.”

Clayton & Bant [2020] 94 ALJR 34 is often approached as a jurisdictional case.

The husband in that case had applied to the Family Court for a permanent stay of property settlement proceedings and spouse maintenance proceedings on the basis that the ruling of the Dubai Court operates as a bar to those proceedings “by virtue of the operation of the principles of res judicata – cause of action estoppel”.

At first instance, the trial judge had dismissed the application for a permanent stay.

The Dubai proceedings did in fact not deal with any right of the wife to alimony.

The Full Court ordered a permanent stay of the property settlement proceedings and the spousal maintenance proceedings. The Full Court in that case consisted of Strickland, Ainslie-Wallace and Ryan JJ.

The Full Court in Mehta & Crimmins consisted of Ainslie-Wallace, Aldridge and Rees JJ.

The High Court at paragraph 24 referred to the right conferred on the wife as a party to the marriage by s.74(1) of the Act. “That right is to obtain in the discretion of the Family Court such order for the provision of maintenance by the husband as the court considers proper having regard to the matters referred to in s.75(2).”

“The justiciable controversy as to whether such an order should be made constitutes the matter defining the jurisdiction of the Family Court.”

The High Court identified that the rights were statutory rights and that therefore, the Dubai Court couldn’t give rise to a res judicata in the strict sense in which that term continues to be used in Australia.  The right created “by s.79(1) and s.74(1) cannot merge in any judicial orders other than final orders of the court having jurisdiction under the Act to make orders under those sections”.

The High Court considered that the Full Court’s broad-brush transactional approach was not supported by authority.

Atkins & Hunt [2016] FamCAFC 230 is another significant spouse maintenance case. The Full Court on this occasion was Bryant, May and Murphy JJ, with the principal judgment being written by Murphy J.

Leave was granted to the wife to file a further Amended Notice of Appeal. She was granted leave to appeal. Her appeal was allowed. Orders 1, 2 and 3 of the orders of 21 August 2015 were set aside.

The wife was also ordered to file and serve any Amended Initiating Application within 21 days of the date of the orders.

On 14 July 2015, the wife filed an Initiating Application. Orders for interim and final spousal maintenance were sought.  That would of itself require a variation of a spousal maintenance order made by Aldridge J on 4 December 2014 after a trial of property and spousal maintenance issues.

That application was filed when an appeal against Aldridge’s orders were pending and after he had refused her application for a stay of his orders.

At the hearing on 21 August 2015, McClelland J indicated that the court’s jurisdiction to make the Orders sought by her was a big issue.

The husband had raised the issue in his Outline of Argument filed ahead of that hearing.

The wife then argued in her Outline of Argument dated the day before the hearing that if her contention for relief pursuant to section 83 of the Act was rejected, leave should be granted to amend so as to permit her to seek an order for maintenance pursuant to section 74 of the Act.  An application for that leave was made orally before His Honour.

The wife’s Initiating Application was dismissed with the court ordering that it was without jurisdiction to make an order under section 83.  The wife’s oral application for leave was dismissed with the court expressing the view the amendment “would effectively circumvent section 44(3) of the Act”.

At paragraph 7, the Full Court set out four questions as those to be determined by the Full Court. They were:

• Did the wife’s application seek, in any event, an order pursuant to s 74of the Act as an alternative to her claim pursuant to s 83 of the Act?
• If that question is answered in the negative, was there “in force an order” within the meaning of s 83of the Act as at the date of the hearing of the wife’s application so as to permit the court to, relevantly, “vary the order so as to increase or decrease any amount ordered to be paid”? 
• Is there a distinction between a maintenance order which is “in force” as s 83requires and an order that has “ceased to have effect”?
• Was his Honour’s refusal to grant leave to the wife to amend her application attended by an error of law or did irrelevant considerations attend the exercise of that discretion?

This judgment has headings.  They are:

• The context for the primary judge’s orders;
• Was S 74 pleaded in the alternative?
• The S 83 questions;
• The questions as to s 44(3) and leave to amend;
• Leave to appeal;
• Costs of the appeal;
• Proposed orders.

His Honour considered the form of the orders sought by the wife in her Initiating Application.

Order 2 sought a variation and orders 3 and 4 sought detailed payments to the wife.  Later, 3 and 4 were construed by Murphy J as “in effect, particulars of the order for modification sought in paragraph 2″.

On 4 December 2015, among other orders made by Aldridge J, His Honour ordered that all existing orders for spousal maintenance be discharged upon the completion of the sale of the former matrimonial home. When the wife filed this application, completion of the sale had not occurred.  By the time the application was heard on 21 August 2015, completion of the sale had occurred.

The Trial Judge said, “The Court now has no jurisdiction to make an order under section 83 because, as at the date of hearing, there is no longer an order in force in respect to spousal maintenance. I therefore find that the Court is without jurisdiction to make an order under section 83“.

The wife sought to bring an application under section 74.  The Trial Judge considered that it would confront section 44(3).

The Full Court did not accept that section 74 had been pleaded in the alternative.

The section 83 discussion is important.

At paragraph 27, the Full Court said:

“It is uncontroversial that there was “in force an order” with respect to maintenance of the wife when the application was filed – that is at the time the jurisdiction granted by s 83 of the Act was invoked.“

An argument of statutory interpretation was made.

At paragraph 29, His Honour said:

“In my view, s 83 is to be interpreted in the same manner as the statutory provision considered by the High Court (albeit in a different context) in Lacey v Attorney-General (Queensland) (2011) 242 CLR 573, that is as “a provision which confers jurisdiction … together with powers to be used by [the] Court in the exercise of its jurisdiction.” [593]

The Court continued at 30:

“The conferral of jurisdiction in s 83 is additional to the jurisdiction conferred in respect of matters arising under the Act in which the matrimonial cause “with respect to the maintenance of one of the parties to the marriage” is instituted by proceedings relating to same.  The jurisdiction conferred by s 83 is “the authority which [the] court has to decide” variation of a spousal maintenance order and “in the exercise of that jurisdiction [the] court has powers expressly or impliedly conferred (see Harris v Caladine (1991) 172 CLR 84, at 136 per Toohey J.)“ by s 83. “The claims for relief illuminate the scope of a controversy which constitutes a matter and once the [court] has jurisdiction to determine a controversy it has power in the exercise of that jurisdiction to give the remedies sought” (see Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 590 per Gleeson CJ, Gaudron and Gummow JJ).“

The Court then referring to the Asic v Edensor decision again said, “characteristically an exercise of jurisdiction is attended by an exercise of power”.

At paragraph 32, the Full Court said:

“The jurisdiction conferred by s 83 is validly invoked by the filing of an application seeking relief pursuant to that section when “there is in force an order … with respect to the maintenance of a party to a marriage”.

At paragraph 33:

“Thus, in my view, the court’s power to make an order within the jurisdiction properly invoked by the filing of the wife’s application pursuant to s 83 depends entirely on whether there was “in force an order” at the date of hearing of that application.”

The Court said the question wasn’t really about whether the house had been sold between the filing and the hearing of the application but “whether the statute gives the court power to make the order sought at the time the power is sought to be exercised”.

Section 82 provides for the cessation of spousal maintenance orders being the death of the party whose maintenance is being paid or the death of the party liable to make the payments or upon the remarriage of the party unless in special circumstances.

There was argument before the Court as to the difference between “ceases to have effect” and an “order in force”.

At paragraph 41, Murphy J said:

“Each of sections 82(4), 82(7) and 82(8) provide specific powers to the court in the circumstances provided for within s 82. The powers provided for in s 83 are in respect of a different grant of jurisdiction. That different grant of jurisdiction deals with a circumstance that may be different from “an order with respect to the maintenance of a party to a marriage” which is the subject of s 82. Section 83 can deal with orders made “before the commencement of [the] Act” and orders which are “made by another court and registered in [the court] in accordance with the applicable Rules of Court”. Thus, orders may be “in force” for the purposes of s 83 although they are not orders made under the Act to which s 82 applies. That in my view provides the reason for the difference in legislative language.”

The Caska case, a (2002) FLC 93-092 decision was then discussed.  That case held “that an order for lump sum maintenance is, once paid, not “an order in force” for the purposes of s 83 of the Act“.

At paragraph 46:

“The expression “in force an order” means, in my view, an order pursuant to which (relevantly) obligations to make payments in accordance with its terms exist at the time that the power to make a variation order falls to be exercised. Conversely, where, as here, an order is fully executed by the time of the hearing because of the satisfaction of a condition attaching to payment, there is no order “in force” within the meaning of s 83(1) of the Act.”

In this case, that meant that the wife could not agitate a claim for maintenance relying on s 83.

Section 80(2) did not assist either.

The court then considered s 44(3).

His Honour formed the view that “neither the ordinary and natural meaning of the expressions there contained, nor the broader provisions of the Act pertaining to spousal maintenance, admit of reading down the terms of s 44(3) in that manner”.

Paragraphs 52, 53 and 54 then discuss the interplay of spousal maintenance and s 44(3).

At paragraph 52:

“First, and centrally, the liability for spousal maintenance does not come to an end upon the end of the marriage, nor necessarily when orders are made pursuant to Part VIII of the Act...That new spouse maintenance orders can be made in circumstances where the initial order is properly made within time is entirely consistent with a liability for spousal maintenance persisting despite the formal end of the marriage or other financial orders having been made.“

At paragraph 53:

“Secondly, no specific reference is made within s 44(3) either to s 83 itself or to any link between the expressions used within s 44(3) and like expressions in s 83… it is of significance in my view that the exceptions provided for in respect of settlement of property are made by reference to specific sections whereas the expressions used in respect of maintenance are not. The nature of orders for settlement of property and their “finality” should be contrasted with orders for spousal maintenance which the Act contemplates specifically might be later modified. Despite that important distinction, the words used in s 44(3) are not confined by specific reference to s 83.“

Paragraph 54:

“Thirdly, the expression “an order previously made” is not defined, confined or restricted in its operation. Fourthly, the expression “revival” is not confined in s 44(3), as it is in s 83, to the situation where an order has been suspended.… the word “revival” is a word of ordinary usage and meaning…Thus, s 44(3) can be seen as having in contemplation “an order previously made” becoming “operative or valid again“.“

His Honour said at paragraph 56:

“I conclude that it was not necessary for leave to be sought pursuant to s 44(3) so as to permit any amended application for spousal maintenance to proceed.”

The Full Court Judgment argued against the s 81 having an impact on the maintenance powers. At paragraph 60:

“As has been seen, s 44(3) does not impose an impediment to the wife pursuing an order for maintenance pursuant to s 74 of the Act so as to seek the revival of “an order previously made in proceedings with respect to the maintenance of a party”. Indeed, as has earlier been seen, the Act contemplates applications for maintenance that sit squarely outside any “finality” said to be effected by earlier orders.”

The implications of the views expressed in this Judgment are, in the writer’s view significant.