Court Determines Health Issues Only a Factor in Property Proceedings when Life Expectancy Determinable

Keywords: property; future needs; spousal maintenance; section 75(2); illness; life expectancy; renal failure; diabetes.

The case of Fontana & Fontana [2016] FamCAFC 11 (9 February 2016), was an appeal to the Full Court of the Family Court of Australia by the husband from an earlier hearing of the Family Court of Australia.

In the earlier hearing heard by Judge Collier (“trial judge”), his Honour made findings on 23 July 2013 that the property of the marriage be divided in the wife’s favour, with the wife receiving 56.4% and the husband 43.6%.  The trial judge took into account the husband’s illnesses as a factor affecting his life expectancy.  This resulted in an adjustment in the wife’s favour as she would have greater future needs as she would live longer than the husband.  The husband appealed on various grounds including that his life expectancy could not be determined at the present time.  The Court upheld the appeal deciding that the trial judge erred in making an adjustment to the asset pool in the Wife’s favour based on the evidence available about the husband’s life expectancy.

Background

At the time of the trial hearing, the husband was 49 years of age and the wife was 43 years of age.  The parties commenced cohabitation and married in 1993.  They separated in 2008. There was one child from the marriage who was 15 years of age.

Since the parties’ separation, the child was primarily in the mother’s care.  It was determined that the child would go to boarding school and that there would be an equalisation of parenting and financial responsibility for the child, but as the father had poor health there would be a greater burden on the mother in the future.

The wife was earning approximately $200,000.00 per annum and previously the husband was earning approximately $250,000.00 per annum.

Husband’s Health Issues

The husband had a number of complex health issues including renal failure and diabetes.  The husband was receiving income protection insurance at the rate of $150,000.00 per annum.  Expert evidence from doctors indicated that if the husband did not manage his diabetes he would have a significantly shorter life expectancy but with proper management, he could live for a long time.  Further, the husband was waiting for a liver transplant.  It was submitted that if the husband had the liver transplant he could live anywhere from 8 to 20 years, or possibly longer.  Without the liver transplant, it was unlikely the husband would be able to return to work.

Trial Judge’s Findings

In determining the matter, the trial judge found that the husband’s life expectancy would be effected by his illnesses.  The grounds for this finding was under section 75(2) of the Family Law Act which allows the Court to make an adjustment to contributions taking into account a number of factors.  The trial judge found the husband was in “poor health”, that no variation should be made based on the disparity in the parties’ income earning capacity; that no variation should be made for the care of the parties’ child except with regard to the decline in the husband’s health and that the husband’s lack of full and frank disclosure should be taken into account.

The trial judge concluded that the husband’s life expectancy was less than the wife’s life expectancy and that an adjustment should be made on these grounds.  The trial judge ruled that the wife receive 56.4% of the asset pool and the husband receive 43.6%.

Grounds of Appeal

The husband appealed on a number of grounds including that the trial judge erred in his finding that there should be no adjustment in the husband’s favour due to the wife’s superior income earning capacity, and on the basis that the trial judge could not conclude that the husband would not receive a liver transplant which would increase the husband’s income-earning capacity.

Appellate Judgement

The Appellate Court was made up of Judge Strickland, Judge Murphy and Judge Watts.  The Court considered the trial judge’s decision and focused particularly on his determination that the husband would have a shorter life expectancy due to illness.

The Court considered the case of Lawrie and Lawrie (1981) FLC 91-102 where that Court had to determine a matter where a party had terminal cancer and would only live a further 6 months.  This case included comments “by the way” that an adjustment should only be made where life expectancy was determinable, otherwise it would “open the flood gates” as to the future life expectancy of parties.

The Court next considered the unreported case of S & P of the Family Court of Australia (22 April 1997) which dealt with a husband who had HIV and was thought to have a life expectancy of 5 years.  That court considered Lawrie , and stated that the principles from Lawrie were correct but ultimately a judge could use their discretion with regard to health issues.

The Court turned its attention to the trial judge’s conclusion that on the evidence the husband’s life expectancy could not be determined with any accuracy.  Despite this, the trial judge made an adjustment in the wife’s favour because the husband was likely to have a shorter life expectancy.  The Court found the trial judge was in error in making this finding without being able to provide a measurable period of life expectancy for the husband.

Conclusion

In this matter, the husband had diabetes and renal failure resulting in the possibility that the husband would have a shorter life expectancy compared to the wife.  Under section 75(2) of the Act, when considering spousal maintenance, a court may take into account a shorter life expectancy of a party and how this will affect the future needs of the parties.

In this case, the trial judge concluded that he could not determine the husband’s life expectancy based on the evidence, but he still found that the husband was likely to have a shorter life expectancy.  The Appellate Court found the trial judge erred and that life expectancy should be taken into account only when a determination as to the likely period of life expectancy can be made.