Recent Developments in Family Law: De Facto Property Settlement

Chancellor & McCoy [2016] FCCA 53 (25 January 2016)

This matter was heard by Judge Turner in the Brisbane Registry of the Federal Circuit Court of Australia. This is a very interesting case where the court delivered a very clear and concise judgement in relation to when and how the court can make an order for a de facto property settlement.

THE FACTS:

A de facto relationship of 27 years;
The parties never intermingled their finances;
The parties had property in their own sole names, not in joint names;
The parties were unaware of the other’s financial situation;
The parties did not have joint accounts; and
The parties did not have mutual wills.

THE ISSUES

Whether or not it was just and equitable for a property adjustment to occur.

THE CASE

In its simplest form, there is a three-step process the court employs when a de facto property dispute comes before the court. Firstly, the court must be satisfied that a de facto relationship existed, and then secondly, make a decision as to whether it is just and equitable to make orders for an adjustment of the relationship property in accordance with the just and equitable principles established in Stanford & Stanford [2012] HCA 52. Thirdly, if the court is satisfied it is ‘just and equitable’ for a property order to be made, then the four-step process for determining what property adjustment should occur will be applied in accordance with the decision in Hickey v Hickey & Attorney-General of the Commonwealth (Intervenor) [2003] FamCA 395; (2003) FLC 93-143 (this decision to be explored in a further blog post) and Stanford & Stanford [2012] HCA 52.

Section 4AA of the Family Law Act 1975 (Cth) sets out clear criteria for the court to apply when they are deciding whether or not a couple is in a de facto relationship as outlined in step one above. What this case does is it assists us in the second step where it sets out a more detailed explanation which can be used to determine whether or not it is just and equitable for a property adjustment to occur.

In Stanford & Stanford [2012] HCA 52 the High Court determined that before any order for the adjustment of property can be made, it first must be determined whether or not it is just and equitable to do so. The court was vague in their description of ‘just and equitable’ in this context, so not to limit its application in matters in the future. Rather unhelpfully Their Honours said at paragraph 36 “the expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.”

This decision, Chancellor & McCoy [2016] FCCA 53 (25 January 2016), assists us to define the parameters of when it is just and equitable for a property adjustment to be made in relation to property of a de facto relationship.

In Her judgement, Her Honour evaluated the evidence of this case with the ‘just and equitable’ principle in the forefront of her mind. She made the following observations:

The age and maturity of the parties and their intentions in dealing with their own assets and property;
The power balance of the relationship and the parties working history throughout the relationship;
That during the relationship both parties utilised their own funds and resources to acquire real property in their own respective names;
Smaller purchases were made throughout the relationship such as cars and boats, with each purchase made from that parties sole funds;
An agreement was reached that one party would contribute financially by way of rent for living expenses; and
Both parties shared the cost of groceries each week.

Perhaps more importantly in her considerations, Her Honour noted the following:

The parties did not have a joint back account;
The parties did not intermingle their finances;
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 maintained their own property interests on a financial basis;
Each party remained responsible for their own debts;
Each party applied their salaries as they chose without explanation or accountability to the other party;
There was a complete lack of joint financial decision making;
Each party continued to maintain their own property interests post separation;
The parties did not during the relationship discuss or execute mutual wills which left property to each other;
One party had a Will where her parents were listed as the executors and beneficiaries;
The parties did not name each other as beneficiaries on superannuation policies;
The parties did not have any life insurance policies with the other person listed as a beneficiary;
The parties did not intend to share assets during retirement;
The parties did not have shared goals or plans they may have shared if they had not separated;
The parties did not have any plans in relation to how they would spend their retirement together; and
Each party had a lack of knowledge about the others financial situation;
There was a lack of evidence to advance an argument in relation to non-financial contributions and appreciation of any asset caused by those contributions (for example helping with painting or doing other things not related to money to increase an assets value)