When is it NOT just and equitable to make orders for property settlement?

In Australia, the Family Court can only make orders for property settlement if it is just and equitable to do so (see Stanford v Stanford [2012] HCA 52).  There is not a definitive list of when it will be considered not just and equitable to make orders for property settlement. It will depend on the circumstances of each case.

  

In most cases, it will be considered just and equitable to make orders for property settlement. However, in the recent Full Court decision of Chancellor & McCoy [2016] FamCAFC 256 (delivered on 2 December 2016) it was upheld on appeal, that in this case, it was not just equitable to make any orders for property settlement.  Read our latest blog post to find out more. 

In Chancellor & McCoy, the parties were in a same-sex de facto relationship for about 27 years.  During the parties’ relationship, the parties kept their financial affairs almost entirely separate.  At the time of trial, the respondent’s assets and superannuation were worth significantly more than the appellant’s, mainly due to the respondent making additional personal contributions to her superannuation entitlements throughout the relationship.

 

The trial judge concluded that it would not be just and equitable to make any orders altering the parties’ property interests for the following reasons [at 59]:

  1. The parties conducted their finances in such a way that neither party could or would have acquired an interest in the other party’s property because:
    • There was no intermingling of their respective finances.
    • The parties did not have a joint bank accounts.
    • Each party acquired property in their own name with there being little exchange of the detail of these acquisitions to the other party.
    • Each party remained responsible for their own debts.
    • Each party was able to use the remainder of their wages as they chose without explanation or accountability to the other party.
    • There was a complete lack of joint financial decision making.
    • There was the absence of sharing of any information with each other as to their financial situation or individual decision making.
    • Neither party made provision for the other party in the event of their death either by way of will, beneficiary to superannuation funds or beneficiary to life insurance policies.
    • The parties at the time of separation were unaware as to the worth of the assets acquired by each of the parties during the relationship and the decisions that had been made in respect to the acquisition of these assets.
  2. The parties did not intertwine their finances during the relationship. It was not relevant as to whether this was a conscious decision by one or both of the parties or not.
  3. During the relationship, the appellant paid the respondent between $100 to $120 per fortnight. The respondent classified this as rent or board money, whereas the appellant classified the money as mortgage repayments. Given the small amount paid as compared to the overall size of the respondent’s net asset pool, this was regarded as financial assistance to the respondent who was providing housing to the appellant during the relationship, and was not considered financial intermingling.
  4. There was no evidence that the financial and non-financial contributions made by the appellant to the respondent’s properties, improved the value of these properties, and as such no equitable interest by the appellant in the properties has been established.
  5. Both parties had the opportunity during the relationship to financially plan for their future given their profession and employment histories.
  6. There was no evidence to support that either party was hindered in their individual financial decision making during the relationship.
  7. For many years, the appellant appeared to be in a more advantageous position as the appellant did not own real estate or give evidence of servicing debts; but this is not reflected in the pool of assets each party has retained since separation.
  8. It would be unfair for the respondent, who has taken steps to maximise her future wealth, to have to share that wealth with the appellant who did not invest as wisely; especially in regard to maximising her superannuation benefits.
  9. The appellant has demonstrated her continuing struggle with financial matters given the spending of the inheritance and the increase in her mortgage over her property since separation, despite the earning of an income.
  10. Although the alteration of property interests has been denied due to it not being just and equitable for such an alteration to take place, the appellant has still been left with the significant assets accumulated by her during the relationship, consisting of two houses, several motor vehicles and superannuation.
  11. The appellant has the capacity, unlike the respondent, to accumulate more assets, with her ability to work and her ability to contribute to her superannuation fund.

 

The Full Court found no merit in any of the appellant’s grounds of appeal and the appeal was dismissed. An order was made that the respondent pay the appellant’s costs of the appeal.

 

If you require family law advice, please contact us on (08) 9364 9915 or 0474 458 340.

 

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