Have you brought property into a relationship? Be aware that you may be required to share an increase in the property value with your partner!

In the case of Jabour & Jabour [2019] FamCAFC78, the parties were married in 1991 and separated (on a final basis) in May 2015, making it a 24-year marriage. Before entering into the relationship, the husband had an interest in three blocks of land as he had acquired a half-interest in each of them from his father, when he was 12 years old. After the marriage, two of the blocks were sold, and from the proceeds, the husband bought the third block of land outright. It is important to note that the remaining net proceeds of the sale of the two properties were put towards family expenses.

In 2010, the third block, which the parties had kept, was rezoned. Happily for everyone involved, this had the effect of a significant increase in the value for the property. In fact, the property had substantially increased in value to a sum in excess of 10 Million Dollars at the time that the matter was before the Court for final hearing.

Putting the issue of the property aside, the Trial Judge had determined that the parties’ contributions throughout the marriage were equal. Then taking into consideration what the Trial Judge had noted to be a significant contribution on the part of the husband, with respect to the property, the Trial Judge assessed the husband’s contributions at 66% and the wife’s contributions at 34% and decided that there be no division required to the superannuation of the parties.

Understandably, the wife appealed the decision to the Full Court of the Family Court of Australia.  In considering the Trial Judge’s approach, the Full Court accepted the wife’s argument that the Trial Judge made an error in finding a connection between the contribution made by the parties to the property and its present value.

Interestingly, the Full Court found that the approach of the Trial Judge overlooked the fact that the parties had decided together not to use all of the funds from the sale of the other blocks for family purposes and to use half of those proceeds in order for the husband to gain sole ownership of the block of land that was rezoned. Furthermore, the approach had not taken into consideration the fact that the parties had decided not to sell the rezoned land at an earlier stage. As such a decision should be a viewed as a significant contribution accredited to both parties which allows the parties to enjoy the benefit of the increase in the land value, once sold.

When considering the assessment of contributions in the Appeal, the Full Court assessed the contributions in favour the husband to be 53% and the wife to 47%. It was found that the Trial Judge had weighed the myriad of contributions made by the parties against the contribution made by the husband in bringing in the property at the commencement of the relationship rather than treating the property as one of the myriad of the contributions made.

This case is confirmation of the fact that a sudden increase in the value of an asset which is unrelated to the efforts of any one of the parties of the relationship (such as rezoning by council, or even a lottery win) should be treated as a joint contribution by both parties, regardless of which party may have brought the asset in question into the relationship.

Need assistance assessing your contributions?

Assessing contributions varies from relationship to relationship, having regard to the specific circumstances of the parties and their actual financial and non-financial contributions. At Streeterlaw, our experienced family law lawyers are available to provide you with tailored advice to assist you with your matter. If you would like to discuss your matter further, please contact our offices on 02 8197 0105 to book in a suitable time for you to meet with one of our experienced family law lawyers or accredited specialist in family law.