How are interim spousal applications treated where a Binding Financial Agreement exists?

Does a section 90B Financial Agreement prevent the Court from considering an Interim Spousal Maintenance Application?

The recent case of Barre & Barre & Anor [2018] FCCA 97 (“Barre & Barre”) considers an application made by the Wife to the Federal Circuit Court of Australia (“the Court”) for interim periodic spousal maintenance where a Section 90B Financial Agreement exists between the parties, which determines how the property pool will be divided in the event of separation.

The basis of the Wife’s application for interim spousal maintenance formed part of her final application to set aside the parties’ Financial Agreement pursuant to Section 90K of the Family Law Act 1975 (Cth) (“the Act”). 

The Wife maintained that she would suffer hardship if the Court did not set aside the Financial Agreement due to a material change in circumstances, being the birth of children during the marriage.

The Husband maintained that the Wife’s application was without merit and bound to fail.  He opposed the Wife’s application for interim spousal maintenance on the basis that the issue of spousal maintenance is dealt with in the Financial Agreement and therefore the Court does not have jurisdiction to deal with the Wife’s application.

Facts of the case

  • The parties entered into the Section 90B Financial Agreement on 31 August 2005 and married later that same year.
  • The parties had two children, the first in 2007 and the second in 2012. The Wife maintains both children have special needs.
  • The parties separated on 29 October 2019 at which time the Wife and children vacated the former matrimonial home and began living with the Wife’s mother.The Husband continued to reside at the former matrimonial home.
  • At the time of the Court hearing in December 2017, the Wife was employed on a part time basis as a recruitment consultant earning, in conjunction with government benefits and child support $1,465 per week.
  • The Wife asserted her expenses were $2,676 per week. The Wife owned a property which had equity of approximately $350,000 and was tenanted to meet the mortgage repayments.She also had some superannuation, a car and jewellery.
  • The Husband was a director of his own Company earning $1,500 per week.The value of the Husband’s property is an ongoing dispute of the matter, however from the facts of the case it can be inferred he has substantial assets.
  • The Wife was pregnant at the time of the hearing to a ‘Mr O’.The Wife maintained they were not in a de facto relationship.

What did the parties’ argue?

The Wife submitted the Agreement was not compliant with Section 90E of the Act as it failed to specify the quantum of spousal maintenance to be provided.

The Wife relied on the decision in Boyd & Boyd [2012] FMCAfam 439 to support her application as it considered the history and proper construction of section 90E as follows:

Essentially the legislature requires that any consent order or financial agreement specify which portions of any lump sum or property order conferred thereunder are for either spousal or child maintenance, so that the social security implications of such an order or agreement is apparent.

She further submitted that since the birth of the children and subsequent separation from the Husband, her ability to maintain herself was “substantially altered” given her ongoing financial responsibility for the care of the children.

The Husband submitted that whilst the Agreement did not define the quantum of spousal maintenance, it could be reasonably inferred that it was the intention of the parties for it to be included.  At the time of entering in the Agreement, the parties were in employment, able to support themselves at that time and intended to do so in the future.  In turn, given the Agreement deals with the issue of spousal maintenance the Court’s jurisdiction is ousted.

The Husband further argued that the Wife was in a de facto relationship with Mr O and therefore there is an obligation on Mr O to provide for the Wife and not him.

What did the Court decide?

Ultimately, the Court was satisfied the Agreement did not make specific reference to spousal maintenance and that such a reference cannot be reasonably inferred.

In failing to adequately contemplate the provision of spousal maintenance, the agreement did not preclude the Wife from making an application to the Court and the Wife’s interim application was upheld.

His Honour, Judge Kemp, considered that whilst the agreement contemplated the parties having children, it was silent as to the impact of having children on each of their earning capacities.  The Husband had the financial capacity to reasonably contribute. 

The Court considered the Wife had a reasonable shortfall of $381 per week between her income and related expenses and ordered the Husband pay to the Wife the sum of $381 per week until final resolution of the matter.

Key Lessons

Baree & Barre is an interim decision in relation to the provision of spousal maintenance.  The matter remains on foot and therefore the issue of whether the Financial Agreement should be set aside pursuant to Section 90K of the Act on the basis of a material change of circumstances and associated hardship has not yet been determined. 

Barre & Barre sheds light on the importance of careful drafting that contemplates a complete range of future circumstances, especially in the situation of a young couple prior to marriage.

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