The Family Court of Australia effectively adopts a 5 step approach in regard to dividing assets by way of property settlements. The court will only consider making orders in relation to a property settlement if it is fair and reasonable to do so.
The court must firstly identify and value the assets and liabilities of the parties.
It then must consider the financial and non-financial contributions made by the parties, such as who paid the mortgage and outgoings, who cared for the children and who made unpaid contributions to a business partnership or improvements to property for example.
The next step is to consider what are called “section 75(2) factors”, such as the health and age of the parties and their earning capacities.
Lastly, the court must be satisfied that it is fair and reasonable, or a “just and equitable” settlement for both parties.
The issue of assessing contributions can be made more complicated when those contributions are made in the latter stages of the relationship or even after the relationship has broken down.
The recent full court of appeal case of Trask & Westlake 2015 concerned a husband’s significant post separation earnings some 4 years after the parties had separated. The total asset pool of the parties was worth $9 million but the husband accrued assets worth about $2 million post separation.
Throughout the marriage the husband worked and furthered his career as a result of the wife raising the parties’ four children. During the marriage, the parties had agreed to “embrace” these roles, which had led the husband to become extremely successful in his career as recognised by his tangible financial assets. The wife in turn was unable to develop her career or earn significant income.
The husband acquired further assets post separation, due to his employment. The husband argued that the Court should have given greater weight to his post separation contributions and making an adjustment in his favour.
The Court did not agree, making an order dividing the assets in 60:40 in favour of the wife.
The Court determined that both parties made equal post separation contributions, with the husband making direct financial contributions, and the wife contributing to the home and welfare of the family in a non-financial way. Furthermore, an assessment of contributions could not be based on applying calculations.
The wife’s contributions, whilst not “tangible”, were held to be no less significant than the husband’s financial contributions. The wife’s contribution as a (single) parent and homemaker, were not only considered to continue despite the ending of the marriage, but had allowed the husband to gain experience and knowledge and take advantage of opportunities throughout his career, leading to the acquisition of the husband’s assets during, and also, after the marriage.
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