By Freda Wigan (Partner), Alexandra Moles (Senior Associate), and Amity Anderson (Solicitor)
In many family law proceedings, the issue of spousal maintenance is a fiercely contested issue, arising when one spouse wants the other to provide financial support either before or after their financial matters have been finalised.
Although not many people would claim they need US$1 million a month in spousal maintenance (or 'alimony', as it is referred to in the United States), this is what Los Angeles Dodgers baseball team owner Frank McCourt is facing at the moment.
Frank and his wife Jamie were married for 30 years and now are fighting over seven homes, this spousal maintenance claim, and the Dodgers baseball team.
In addition to wanting half-ownership of the baseball team, unlimited travel expenses, 24 hour security at her homes, a guaranteed parking space at the Dodger Stadium and free use of the players for events and speaking engagements, Mrs McCourt claims she needs US$988,845 a month to pay the US$568,000 a month mortgages on their homes and to maintain her existing lifestyle.
This raises the question of what constitutes a 'reasonable' amount of spousal maintenance. In Australia, the legislation says that maintenance should be paid where one party is reasonably able to support the other party if they cannot adequately provide for themselves. But what does 'adequately' mean? Is it adequate for the party to have a roof over their head, food to eat and clothes to wear, or does it mean they need to be supported in the lifestyle to which they have become accustomed?
Adequacy is a relative term, and one person's notion of adequacy may be different from the next. While subsistence may be adequate for some people, the Court often considers a couple's previous standard of living when determining whether an amount of spousal maintenance is adequate.
One of Australia's 'big money' maintenance cases is that of Wilson and Wilson, decided in 1989. This couple had a multi-million dollar business enterprise, with net assets of $45 million. The wife claimed interim spousal maintenance of $2,750 per week, plus a lump sum of $200,000. The Court had to consider whether to 'fix' the amount of money payable to the wife, which would reduce the standard of living she had enjoyed pre and post-separation, pending the outcome of the case, while the husband continued to live lavishly.
The Court awarded the wife $900 per week maintenance, with a lump sum payment of $100,000, until the finalisation of the case - less than half of what she applied for. The Court also said that a reasonable standard of living for the party seeking maintenance on an interim basis is not necessarily the same as that of the person paying. The standard does not have to be the same as during the marriage. Based on this, it seems Jamie McCourt is lucky that she does not fall under Australian law.
Many clients have achieved, either by agreement or by court order, maintenance payments well in excess of the reported decision of Wilson and Wilson. Likewise, many clients have defended claims using Wilson and Wilson as leverage to 'trim' their spouse's 'reasonable needs'. The skill comes in understanding the client's financial circumstances and using the law and strategy to achieve the best outcome possible.
An example of a reported decision since Wilson and Wilson where a higher amount of spousal maintenance was awarded is Brown and Brown, where the wife was awarded a lump sum spousal maintenance payment of $2,250,000.
While the Court considers the standard of living enjoyed by the couple while they were together, whether or not Jamie McCourt will be awarded maintenance of US$1 million a month is yet to be seen. Based on the current law, if such an application was brought in Australia, the Court would force Mrs McCourt to cut back - significantly!
For more information on spousal maintenance or any other family law issue, please contact HopgoodGanim's Family Law team.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
