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Am I Entitled to Spousal Maintenance?
If you have recently separated, you may be wondering if you are entitled to Spousal Maintenance, particularly if you have a signed Contracting Out Agreement (Pre-Nup) that was entered into prior to your separation.
Spousal Maintenance is covered in the Family Proceedings Act.
Section 64: Maintenance after marriage or civil union dissolved or de facto relationship ends
Under section 64(4)(a): neither party is liable to maintain the other party at the end of a relationship except as provided in sections 64 and 64A.
After a relationship ends, maintenance by one partner may be necessary to meet reasonable needs of the other partner where that partner cannot practicably meet all their needs because of one or more of the following circumstances:
(1) The ability of the partners to become self-supporting having regard to:
- The effects of the division of functions during the relationship (e.g. stay at home parent while the other worked);
- The likely earning capacity of each spouse; and
- Any other relevant circumstances.
(2) The responsibilities of each partner for the ongoing care of any minor or dependent children after the relationship ending.
(3) The standard of living of the partners during their relationship.
(4) The undertaking of one partner for a reasonable period of education/training designed to increase their earning capacity.
Section 64A: Spouses/partners must assume responsibility for own needs within a reasonable time
At the end of a relationship, each partner must assume responsibility, within a reasonable time frame that is reasonable in all the circumstances of their particular case, for the meeting of his/her own needs.
However, one partner (A) is liable to maintain the other under section 64, to the extent that such maintenance is necessary to meet the reasonable needs of the other (B) where it would be unreasonable for partner B to do without maintenance and reasonable for partner A to provide maintenance. In other words, if partner A is unable to meet their reasonable needs and partner B is capable of meeting those needs, then maintenance is necessary.
What is considered reasonable needs?
Determining the reasonable needs of a person is related to the standard of living during their relationship. How did the parties live when they were together. This is reinforced by Hodson v Hodson decision. “In assessing the applicant’s reasonable needs…needs are not to be diminished to the mere necessities of life. They may include a respectable period of grace for re-entry (and retraining) in the work force, having regard to that person’s life situation. Further, a Court should not be niggardly in its approach to the problems faced by a wife (or husband).”
The evidence required is the previous standard of living using bank statements etc and then comparing to the current standard of living. In Hodson, the Court held that “Close reference should be made to the lifestyles the parties enjoyed during their marriage…the reasonable needs of the applicant are not to be so diminished as to create a ‘sudden and traumatic end to that lifestyle, regardless of what the respondent might wish’. It also seems logical, in assessing what is reasonable, to consider and compare the continuing lifestyle of the respondent. If he is living in comparative luxury, it hardly lies in the mouth to say that the applicant should cut her cloth more closely than he is prepared to do so.”
Establishing the previous standard of living can be done by looking at the couples’ lifestyle during their relationship. Did they travel and if so where? Did they travel to Europe yearly with a nanny or did they go to Aunty’s house on the farm? When they travelled did they fly business class and stay in a 5 star hotel or did they stay with family in New Zealand? Did the children go to private school, did they dine out, were they able to save, was their superannuation increasing each year?
It’s important to look back at the standard of living using bank account statements showing the standard of living while in the relationship and then to look forward and show the needs of the applicant and the lack of finances to pay for those needs.
The one claiming spousal maintenance will need to be able to show that they can’t meet their reasonable needs and their partner is able to meet those needs. The sooner a claim is made the better. A claim made 8 years later is not likely to be considered as being unable to meet reasonable needs.
Onus of Proof
There is no onus of proof on the one seeking spousal maintenance to prove their ex partner has the means to meet their reasonable needs.
Legal and accounting costs
Legal and accounting costs are considered a reasonable need in a budget for spousal maintenance.
Section 64(2)(a)(iii) is the “catch all” provision and courts have concluded that “any other relevant circumstances” includes legal costs required to resolve the relationship property dispute. Courts want the parties to be on a level playing field as regards their means to pursue and progress litigation between them. Awards of $12,000 to $15,000 per month have been made to allow the ongoing legal costs of the applicant.
In Able v Able, the wife was 61 years old, no qualifications, a stay at home mother, and had not worked for 38 years. The court was satisfied that the husband was liable and had the income to meet her needs. The husband had already paid $300,000 to the wife to avoid spousal maintenance but the court didn’t accept he would avoid having to assist her with her legal fees.
Access to capital
Dalrymple v Dalrymple [2019] NZHC 637, this is a case where the couple had been in a long relationship and the wife had her own assets. The husband suggested that the wife use her capital rather than claim spousal maintenance for her legal fees. The court held that the husband could meet his legal fees through his income and didn’t have to sell his assets, therefore the wife shouldn’t have to either.
L v L [2020] NZFC 1256, the wife had already received her share of the capital under the Contracting Out Agreement of $70,000 plus they sold properties and she kept $400,000. Therefore, she had $470K at her disposal but wanted $10,000 per month for her legal fees and $10,000 per month spousal maintenance. The Judge did not allow costs/legal fees but allowed $6,000/month spousal maintenance.
The one seeking spousal maintenance should not necessarily be required to have to resort to using their capital and yet, the respondent can be required to do so but the capital must be available (even if borrowing is required). For example, if the respondent has been taking drawings from the company, then he has control over the company and therefore, capital. Where there is a Trust property and there are independent trustees of the Trust then he/she may not have control over the Trust property. However, if he/she is being regularly paid from the Trust property, then it may be considered as having control over the property.
Children’s v spouses needs
If the one seeking spousal maintenance is unable to meet the household needs from her income and child support, then she/he can be topped up with spousal maintenance.
Contracting Out Agreements
If you have a Contracting Out Agreement that states that neither party will not bring a claim against the other for spousal maintenance, then you may not be able to bring such a claim. However, if your circumstances have changed so much since entering into the Pre-nup that it would be deemed unfair, then the whole Pre-nup could be overturned. You would need to speak to a lawyer specialised in Contracting Out Agreements to determine if this is the case for you.
For those wishing to ensure the Pre-nup does not get overturned in the future, I recommend reviewing the agreement regularly and entering into a Supplementary Agreement where circumstances have changed to take into consideration those changes.
Section 15 (Economic Disparity) v Maintenance
Courts take a broad brush approach where the two are claimed and economic disparity will be reduced where spousal maintenance has already been paid.
Scott v Williams (CA): the wife argued for economic disparity, spousal maintenance and for relationship property division. The court held that she can’t get both economic disparity and spousal maintenance.
Harvey v Harvey: the husband had a job in Singapore earning $900,000 and the wife claimed economic disparity of $1.2 million because she was a stay at home mum with young children. The husband had already paid her $156K in spousal maintenance so the judge decreased the economic disparity claim to $237K.
Section 70A: Effect of entering into a new relationship
If the one seeking spousal maintenance enters into a new relationship, then a court must not make an order for spousal maintenance and any previous orders for spousal maintenance will cease to have effect.
Hayley Boud
Your Caring Relationship Property Lawyer, specialist in Contracting Out Agreements (Pre-Nups)
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Fax: 07 838 0818
Email: hayley@ghslaw.co.nz
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