No Property Settlement Orders – Even After 27 Years…

Ross Dunlop
Consultant
Barrister and Solicitor

Posted on 02/03/2018

Many people assume that the breakdown of a legally recognised relationship, be it a marriage or a de facto relationship, will automatically result in a property settlement occurring. Whilst this is true in the majority, some relationships have unique details and peculiarities that differentiate them from the norm. Below is an example of one such situation, highlighting the importance of Financial Agreements between partners.

Case Study

The case of Chancellor & McCoy [2016] FCCA 53 involved a same-sex couple who were in a de facto relationship for 27 years. At the end of the relationship, the Applicant had net assets worth $720,000, and the Respondent $1.7m. The Applicant argued that the Trial Judge, Turner J, had erroneously found it not just and equitable to make a property adjustment Order.  

The material facts at Trial, which were largely not disputed, included the following:

  • Despite being in a lengthy relationship, the parties kept their financial affairs wholly separate.
  • The parties both worked in the same industry throughout the entirety of their relationship.  Their careers followed similar paths and each belonged to the same superannuation fund.  The Respondent had a larger fund by reason of her making voluntary superannuation contributions through salary sacrifice.
  • The Respondent bought a home in her sole name in 1983 for $50,000. She also provided the deposit of $27,000 with the balance being sourced via a mortgage which she had in her sole name. The Respondent, exclusively, paid the mortgage instalments each month.
  • Later that year the parties began cohabiting in the Respondent’s home. This property was renovated shortly afterwards with the Respondent contributing the necessary funds and the Appellant helping with the labour. The Respondent’s parents gifted her $35,000 in 1984 to discharge the mortgage.
  • The Respondent sold the property for $62,000 two years later and used around $50,000 to purchase another property, again in her sole name.  The following year, 1987, the Respondent loaned $45,000 from her parents to construct a residence on the block, which the parties then occupied.
  • In 2002 the Appellant bought a house in her sole name for $187,000, with the deposit coming from money that she had received from her uncle, and the balance was funded by a mortgage which, again, she alone paid.
  • From 2002 – 2003 the parties renovated the Appellant’s property, with the Appellant providing the cash resources and the Respondent helping with the labour.
  • In 2010 the parties separated “under one roof.”
  • In 2011 the Appellant received an inheritance of approximately $560,000 from her late uncle’s estate.
  • At Trial, the Appellant was 59 and the Respondent was 55. The Respondent had retired and re-partnered, but the Appellant was still working and still single.
  • Judge Turner concluded that it would not be just and equitable to make any Order altering the parties’ property interests, based on the following:
    1. the parties conducted their affairs in such a way that neither party would or could have acquired an interest in the property owned by the other because;
      • there was no intermingling of their respective finances during the relationship;
      • there were no joint bank accounts;
      • each had acquired a property in their own name; and
      • each was fully responsible for their individual debts.
    2. there was a total absence of joint financial decision-making.
    3. Neither party had made provision for the other party in their respective wills.
    4. Whether this policy of individual finances was primarily a conscious decision by one or both parties was not relevant – what mattered was that the parties had continued to conduct their relationship without combining their resources for some 27 years.
    5. It was unfair for the Respondent after all her work in maximising her future wealth to have to share those resources with the Appellant, who hadn’t invested as shrewdly.
    6. The Appellant was still being left with substantial assets, as well as retaining the capacity to accumulate more assets with her ability to work and make further contributions to her superannuation.  

These reasons were endorsed by the Full Court when the matter was heard on appeal.

Comments

If you are in a de facto relationship and, in essence, want to lead a completely separate financial life from your partner, then it is possible that you may walk away with all that you own after a separation without any property adjustment Orders being made. However, each case is different and depends upon its own facts and circumstances. To properly protect your assets and resources in such circumstances, you may need to consider entering a Financial Agreement with your partner in the early stages of your de facto relationship.

For advice on all aspects of Financial Agreements, call DS Family Law to arrange your one-hour initial consultation.

For further advice regarding this or any other parenting issue call DS Family Law on 08 9486 1766 or visit our Financial Agreements information page.

The above information is general in nature and is not specific advice for your situation. If you have questions about how the information contained this article may apply to your situation, you must seek independent legal advice.