When parties enter into a relationship it is not uncommon for one party to earn a higher income than the other. In family law proceedings the court will consider any income earned by either party as a “contribution”, in addition to the real property held by the parties such as real estate and cars, when weighing up the asset pool.
It is section 79(4) of the Family Law Act (1975) which deals with contribution issues in regard to property settlements. The contributions can be either financial (such as income) or non financial (performing unpaid duties and making home improvements), and can relate to the welfare of the family (such as caring for children and home making).
The recent appeal case of Petruski & Balewa [2013], considered whether there should be more “loading” given to a wife’s contributions because she was the higher income earner at the commencement of, and during the short five year marriage. The wife argued that her greater financial contributions to the marriage should in turn diminish the husband’s entitlement to the asset pool.
The court agreed with the trial judge that the marriage was “a merging of effort, finance, risk and support…”. For example, throughout the marriage, the wife allowed for the intermingling of finances, the establishment of joint bank accounts and for her husband to receive distributions from her family trust. There was joint effort and joint responsibility toward the finances by both parties.
Furthermore, the husband, who along with the wife had worked to his full capacity and potential, was also held to have made significant non-financial contributions throughout the marriage including running the household for instance. This non-financial contribution could not entirely be overridden by the wife’s financial supremacy.
The court held that the wife could not simply treat the marriage as “an event without consequence, to be wound up at its conclusion by a distribution based on an audit of earnings”.
This case clearly illustrates that where one party makes a significantly higher income as opposed to the other, the court will not adopt a simple mathematical approach when assessing the asset pool. A decision will be made in light of the joint nature of the relationship taking into account both financial and non financial contributions made by the parties in order to achieve a just and equitable settlement.
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