One of the greatest misunderstandings that people who are going through a divorce or separation have is that they have a right to have property adjusted in some way.
The truth is, that before any changes to the way that people hold property is made, the Court must determine whether it is “just and equitable” to do so. What this means, is that there is no automatic or expected right that simply because a relationship comes to an end, that you or the other party will receive any property or have any property adjusted.
The seminal High Court Case of Stanford and Stanford [2012 ]HCA 52 reinforced this position and makes it very clear that before any property adjustment can be sought that, the Court must find that it is just and equitable to do so.
In the majority of marriages and de facto relationships, it will not be difficult to show that a property division or adjustment is justified and that there has been a “common use” of their property.
The reason for this is that people who are in relationships, will usually have accumulated and acquired property together and will have made assumptions, sacrifices and agreements about their property. In these case, it is necessary that a property adjustment be made.
The case of Stanford was an unusual case. It involved a couple whose marriage was intact. In fact, the couple had been married for 37 years. They did not have children together and each had children from previous relationship. In 2008, the Wife suffered a stroke and developed dementia. She was unable to be cared for at home and she went into the permanent care of an aged care facility. The Wife paid for her care from her war veteran pension and the Husband opened an account and provided about $40,000 towards her care.
During the marriage, the couple lived in the Husband’s house and the house was solely in his name. In 2009, the Wife’s daughter applied to the Court for a property adjustment in her mother’s favour. The Court agreed and made an adjustment of 57.5% to the Husband and the balance to the Wife. The Husband appealed to the Full Court of the Family Court of Australia. Again, he was unsuccessful and during this time his Wife died.
Finally, the Husband appealed to the High Court of Australia and the majority of the High Court found that it was not just and equitable to adjust the property of the parties. There was no compelling basis upon which to adjust any of the parties’ property.
The idea of no community of property, when it comes to property matters in divorce and separation has continued. There are 2 recent cases where no property adjustment was made because the Court found it was not just and equitable in the circumstances.
The first case is Elford and Elford FamCAFC 45, March 2016. This is a case that involved a married couple, where the Husband was 22 years older than the Wife. The Wife has 2 young children from a previous relationship and after some 9 years together the parties separated. By this time the Husband had suffered a stroke and was blind. He also required kidney dialysis 3 times per week.
During the first year of the party’s marriage, the Husband had a lottery win of $650,000 and he put that money in a term deposit account in his sole name. This money was not intermingled with other assets nor was it used to acquire assets. At trial the Wife agreed that the money that the Husband had used to purchase the lottery ticket was from his earning and that she made no contribution to the winnings. When she was asked why the lottery win was a “joint contribution”, she replied “because we were also in a relationship”. The Court went onto say that simply being in a relationship of itself, is not enough to claim that all the assets are acquired jointly or as joint endeavours and a relationship per se, is not ground to adjust property.
“our law does not provide for a system of community of property arising from marriage (or from de facto marriage)”
The second case of Chancellor and McCoy FamCAFC256, December 2016, involved a same sex de facto relationship of 27 years. Throughout their relationship the parties either deliberately or through their conduct kept their financial affairs separate in the sense that:
- There was no intermingly of finances
- The parties did not have a joint bank account
- Each party acquired property in their own name with little input or exchange of information between them
- Each party remained responsible for their own debts
- The parties did not make joint decisions about their property
- The parties had made Wills but did not leave any property to the other, nor were there any binding nominations in favour of the other
- At the time of separation, the parties were unaware of what the other owned and the value of those assets.
As can be seen, this is an unusual relationship. In most relationships, parties discuss, assume and make joint decisions about the acquisition and ownership, improvement and preservation of property.
The full Court of the Family Court decided that in this case there was no just and equitable basis to make any property adjustment. The Court left the assets that each party owned with them. This meant that one party after 27 years had approximately $1,500,000, whilst the other had approximately $750,000. The Court said that “our law does not provide for a system of community of property arising from marriage (or from de facto marriage)”.
The argument that somehow the result was “unfair” was not accepted by the Court. The Court has made it clear, that their job is not to somehow make property matters “fair” for separated couples, where they have lived very separate and distinct financial lives.
The information provided here is not legal advice, it is intended only as general legal information.
Also read our recent article on Divorce and Property which explains more on the entire process.