A property settlement is an arrangement made between parties to divide assets, liabilities, and financial resources when a couple separate. Assessing contributions for property settlement is a significant element in working out what is an appropriate way to divide assets following separation.
Generally, in a long-term relationship, the court takes into consideration the contributions made by both parties and the totality of assets.
Relevant Case Law
In the recent case of Jabour & Jabour , the Full Court of the Family Court of Australia set aside the orders made by a primary judge who, in assessing contributions, had awarded the husband 66% of the net non-superannuation property and the wife only 34% of that property. The parties had been in a long term marriage where the husband had owned Property A before he met the wife. Originally, the husband as a child had acquired from his father a half interest in three blocks of land. Following marriage, two of the blocks had been divided between the husband and the other co-owner. the net proceeds from sale of the block that the husband took were used as to half for family purposes and as to the other half, the proceeds were used for the husband to buy out the co-owner’s interest in the third block of 44 acres. The husband became sole owner of that block of land. The land had been re-zoned and as a result had increased substantially in value to in excess of $10,000,000 at the time of the court hearing.
Full Court Analysis
The Full Court accepted the wife’s argument on appeal that the primary judge in assessing
contributions was in error in seeking a nexus between the contributions by the parties to Property A and its present value. The only contribution of that kind that the primary judge had identified was on the part of the husband in bringing the property to the relationship.
The primary judge was in error in weighing the myriad of contributions made by the parties against the contribution made by the husband in bringing Property A to the relationship. Instead, the primary judge in assessing contributions should have treated Property A as one of the myriad of contributions made by the parties.
The Full Court said that the approach of the primary judge had the effect of overlooking:
• the parties’ decision not to use all of the funds from sale of the other block for family purposes but to use half of those proceeds in order for the husband to gain sole ownership of the block of land that was rezoned;
• the decision not to sell the rezoned land at an early stage was also a significant contribution, allowing the parties to enjoy the benefit of the increase in the land value.
The approach taken by the primary judge in assessing contributions had also had the effect of minimising the myriad of other contributions that were made in the course of a long-term marriage and which the parties regarded as equal.
It was confirmed in relation to a sudden increase in the value of an asset unrelated to the efforts of the parties, such as a re-zoning by a council or a lottery win, that that increase is treated as a joint contribution by both parties, regardless of which party may have bought a lottery ticket during the relationship.
Full Court’s Conclusion
The Full Court in assessing contributions considered that the primary judge however had erred in giving the husband credit for the revaluation of Property A when the primary judge recognised the value of that property at the time of the hearing rather than it merely being the springboard for its later value.
It was not right in assessing contributions to quarantine Property A from the myriad of other contributions made by both parties throughout the relationship. The evidence showed that throughout the relationship, the parties’ contribution to Property A were of the same nature and extent that each made in their respective agreed roles.
The Full Court set aside the orders made by the primary judge.