Navigating the aftermath of separation or divorce can be difficult, particularly when it comes to financial arrangements. One fundamental aspect that often requires careful consideration is spousal maintenance. This provision ensures that one party, who may be economically disadvantaged as a result of the relationship breakdown receives financial support from their former partner. But what exactly influences the court’s decision when it comes to spousal maintenance?
It is known that there is a threshold test for spousal maintenance which determines whether one party is entitled to receive spousal maintenance from the other. The two limbs of the test are, need and capacity. To satisfy there is a need, the applicant must demonstrate that they are unable to support themselves to the extent to which they previously enjoyed adequately. This could be due to various reasons, such as physical or mental incapacity, inability to gain employment, or any other adequate reason. The second limb, capacity requires analysis of the respondent’s financial ability to pay the spousal maintenance, meaning that the person the maintenance is being sought from, must be reasonably able to provide financial support for the person who is seeking spousal maintenance.
When determining spousal maintenance, section 72(2)(m) of the Family Law Act 1975 considers the financial circumstances of either party if they are cohabitating with another person.
Understanding this element not only provides clarity for those currently undergoing this process but also sheds light on the broader legal principles that underpin family law.
A relatively recent case which demonstrates the significant impact this factor has on the court’s rulings is Stamatou v Stamatou [2022] FEDCFAMC1F 241.
In Stamatou, the court examined the financial circumstances of the husband, who was cohabitating with another person. The husband failed to make proper financial disclosures, which revealed that his partner had significant financial resources and support. This lack of transparency led the court to infer that the husband’s financial situation was far more favourable than he had presented. As a result of the significant advance of the husband’s financial circumstances due to his cohabitation, the court decided that an adjustment should be made in the wife’s favour under section 72(2)(m) of the Family Law Act 1975.
The court’s decision in this case underscores the importance of full financial disclosure in family law proceedings. It highlights that cohabitation with a new partner, who has substantial financial resources, can significantly impact spousal maintenance decisions. The court will consider the financial benefits derived from such cohabitation and may adjust maintenance orders accordingly to ensure a just and equitable outcome for both parties.
