Property Settlement Does Not Always Mean Altering Interests in Property

Usually you would expect that if you separate you then have a property settlement — and that a property settlement means one person ends up paying or transferring an asset to the other.

However, in recent times the Family Courts have been prepared to order in some very specific circumstances that each party just keeps what is owned in their own name.

The 2012 High Court decision of Stanford provides that a judge must only make orders altering interests in property if they are satisfied that it is "just and equitable" to do so. For most separating couples, the "just and equitable" hurdle is easily satisfied because there are jointly owned assets and that joint ownership means there has to be an order altering interests.

A recent decision is another example that a Family Law Act Court need not always be satisfied that an adjustment of property should occur, even in quite long relationships. Chancellor & McCoy concerned a couple who had been in a same sex relationship for 27 years. At the end of the relationship the Applicant had net assets worth $720,000 and the Respondent's assets were worth $1.7m. Factors that the court took into account included:

• there was no intermingling of their finances
• the parties did not have a joint bank account
• 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
• 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.
• the payment of a weekly amount of about $120 per week as board/rent/mortgage repayments from one partner to another was not considered to be "financial intermingling"
• the court seemed to take on board the argument that one party had been better at managing her finances (especially through salary sacrificing into superannuation)
• that the party with the less assets was still working and able to accumulate further wealth
• that they had equally shared the day to day living expenses

The Trial Judge was not satisfied that altering their interests in property was “just and equitable”. The Judge was influenced by the fact that on the evidence presented each party lived quite separate financial lives and did not combine their income and resources to any significant extent.

This case is another reminder that you cannot assume that a Court will always interfere with parties' existing rights, even when it is a long relationship.

What is the impact of this decision?

This decision confirms that there is a class of situations, even though small, where it will not be just and equitable to adjust property between a couple at the end of their relationship. The situation where there property has been kept separate throughout their relationship is one of those situations.

On a practical level, this case means it is vital for you to get legal advice if you have separated or a contemplating separating as it may be that your situation is one where a court wouldn't divide property.