Division of assets in divorce at judges’ discretion

3-January-2014 Family Law By Simone Green



Sometimes, parties to a divorce appeal the division of assets decided by a Federal Magistrate. In this case (Bishop & Bishop 2013 FamCAFC 138) heard on 6 September 2013, the division of assets had been decided after a 23-year marriage. The husband’s appeal to the Full Court was based on a number of grounds:

  1. the contributions of both parties 
  2. the exclusion from the property pool of an inheritance to the wife received two years prior to separation 
  3. the improper treatment of the parties’ superannuation by way of contributions 

1. The contributions of both parties 

The trial judge determined that the parties made equal contributions to the marriage, despite the financial contributions being unequal. The husband brought into the marriage a 600-acre parcel of farming land. There was some dispute as to the land’s value but the trial judge determined that it did constitute a “significant financial contribution”. Despite this, the trial judge made a very generous adjustment to the wife’s contributions as homemaker and parent of the parties’ three children whom the wife had primarily raised post separation.

 
The trial judge said he considered the husband’s contributions in the form of the farm and contributions made by the husband’s parents would have required some small weighting in the husband’s favour, but “I think that those matters leave me in a position where I should regard their contributions-based entitlements as being equal. In the context of a 23-year marriage it is not appropriate for me to pretend that I am undertaking something analogous to an accounting or auditing exercise.”

 

The approach taken by the trial judge in this respect is in line with case law suggesting that the longer the marriage, the less initial contributions are likely to retain their full value, if at all. 

The Full Court on appeal, found no fault in the trial judge’s approach in this respect, noting the discretion that each judge holds in determining contributions of the parties.


2. The wife’s inheritance 

In respect of the inheritance, the husband argued at appeal that the exclusion of the wife’s inheritance from the asset pool for division failed to ensure both procedural and substantive fairness and otherwise denied natural justice. 
 
There is sound authority that an inheritance received late in a marriage by either party should only be considered as part of the asset pool for the purpose of assessing the future financial needs of either party. The trial judge stated that on the facts of the case he was “bound to exclude the inheritance from the calculation of the asset pool … and it has been entirely quarantined by the wife (without the objection of the husband) from their dealings since the date of its receipt”. 
 
The trial judge held that the husband had accordingly made no contribution to the inheritance received by the wife and therefore was not entitled to any portion of those funds. 
 

The Full Court did not fault the trial judge’s assessment on this point noting that “each case in this jurisdiction will depend on its own facts or circumstances”. 

3. Treatment of both parties’ superannuation 

The only successful ground of appeal in the case concerned the trial judge’s treatment of the parties’ superannuation. The trial judge, after adopting a separate pool approach, failed to give any consideration to the parties’ contributions to their respective superannuation interests in respect to anything other than considering their future needs. The superannuation interests in this case had a relatively significant value in the asset pool and so should have been assessed for their contributions. 

The matter was remitted for rehearing in the lower Court. 

Summary:

Streeterlaw’s Family Law specialist Simone Green says these drawn out proceedings have not really been worth it financially for the husband, given the asset pool was only $1,134,000.
 

“Given that the appeal succeeded on an error by the trial judge, there were no costs awarded against either party. The irony is that this couple is now facing their third Court hearing and in the overall scheme of things, this was not a particularly large property pool,” she said.

 

“The wife’s inheritance, being only $250,000 and the trial judge’s treatment of it being in all probability the driving force behind the husband’s decision to appeal, in the end probably paled in significance to the legal costs involved for both parties.”   

 

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