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19 February 2018

Reach agreement and formalise your settlement before something happens

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The case of Holland and Holland [2017] FAMCAFC 166 is a strong example of why property matters should be resolved and formalised as soon after separation as possible.

In this case the husband inherited a house from his brother’s estate, worth approximately $715,000, some three and a half years after separating from the wife.

At first instance the trial Judge excluded the property from the pool of assets to be divided between the parties and referred to the inheritance instead as a financial resource of the husband.

In allowing the wife’s appeal the full court of the Family Court referred to the following points:-

  1. Property acquired by one or both parties after cohabitation has ceased is not in immune from the reach of Section 79. Indeed, the opposite is the case. “The property of the parties or either of them” includes all property of whatever type, whenever acquired. The full court referred to the case of Norman and Norman which is authority for the principle that it is not necessary to prove that any particular form of contribution is connected with any particular part of the property.
  2. The Full Court stated that the nature of a particular interest in property and how it was acquired, utilised, improved or preserved maybe very relevant to each or all of three central questions which are:
    • firstly, should a Section 79 Order be made at all,
    • secondly, whether contributions should be assessed globally or asset by asset, and
    • thirdly, what is the nature and extent of each parties contributions.

The court emphasised that there is no basis for excluding from consideration any property in which the parties have an existing legal or equitable interest.

The Full Court went on to state that it may have been open for the trial Judge to find first that the inherited property should be assessed separately from the other property and secondly to find that the wife should be assessed as having no entitlement to a share of it by reference to those considerations. This was however altogether different and excluding the property from consideration and treating the inheritance as a financial resource.

In the end the appeal was allowed and the matter was remitted for rehearing.

At first instance the trial Judge assessed the value of all other property to be $373,000. The trial Judge awarded the wife 62% of that pool of property and excluded the husband’s inheritance. The reason given by her Honour for the adjustment in the wife’s favour was that this was to account for both a disparity in earning capacity between the husband and the wife and also to account for what the trial Judge referred to as the financial resources available to the husband by way of the inheritance.

The lesson to be learned from this case is that had the husband resolved his property settlement with the wife prior to receiving the inheritance he would have received a greater portion of the property acquired by the parties during the relationship. Any property acquired after separation but before resolution or the final hearing of the property matter will be treated by the Court as property of the parties or either of them. It is then up to the court to determine whether it is just and equitable to make any Orders in relation to such property after an assessment of the circumstances in which the property was received and an assessment of the contributions made by each party to the acquisition of that property.

If we can be of assistance in your property matter, please contact us to arrange an initial consultation.

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