How the ‘justice and equity principle’ is applied to the division of assets in the Family Courts

When the Family Court is asked to decide how property should be divided, the first thing it will consider is whether it is “just and equitable” to do so. In the great majority of cases, the Court has no hesitation in finding that it is just and equitable to alter the property interests of the parties. However, it is not an absolute certainty that an order splitting property will be made, even in very long relationships. Such was the case in the recent matter of Chancellor & McCoy [2016] FCCA 53 (25 January 2016).

The case involved a property application in the circumstances of a same sex de facto relationship of 27 years. The stand-out facts in this case were that although the parties lived together in a property owned by one of them, there were no children, they shared expenses, they did not share their financial information with one another, there were no joint financial decisions made, they kept separate financial accounts and were solely responsible for their own debts.

A further point of interest was the Court’s focus on the fact that prior to separation, they lacked any plans for their joint futures; and despite having been together for such a long period of time, they lacked mutual wills.

Ms Chancellor made an application to the Federal Circuit Court of Australia seeking to adjust the property interests of Ms McCoy, who was the owner of the home the parties lived in. At the time of the trial, Ms Chancellor, 59, was employed and owned net assets of $720,391 and Ms McCoy, 55, had retired and owned net assets of $1,698,664. Perhaps quite harshly, Judge Turner commented:

“… It is unfair for Ms McCoy, who has taken steps to maximise her future wealth, to have to share that wealth with Ms Chancellor who did not invest as wisely; especially in regard to maximising her superannuation benefits … Although the alteration of property interests has been denied due to it not being just and equitable for such an alteration to take place, Ms Chancellor has still been left with the significant assets accumulated by her during the relationship, consisting of two houses, several motor vehicles and superannuation … Further, Ms Chancellor has the capacity, unlike Ms McCoy, to accumulate more assets, with her ability to work and her ability to contribute to her superannuation fund.”

The application was dismissed.

Streeterlaw’s Accredited Specialist in Family Law, Ms Simone Green, said this case provides some lessons for those in de facto relationships.

“It would be interesting to see how the Court would deal with the same fact scenario had the parties been married, given their focus on the couple’s lack of future commitment,” she said. “Despite the Court’s application of a checklist of sorts towards the usual signs of contributions in a relationship, the case falls short of a failsafe guide on how to protect assets in a de facto relationship. Those wishing to protect their assets prior to or during a de facto relationship should obtain competent legal advice and consider drawing up a Financial Agreement.”

Streeterlaw are experts in all Family Law matters. For further information or to discuss your personal circumstances and how we can help you, call us on 8197 0105 or email advice@streeterlaw.com.au.