Australia: Post separation financial contributions: why quick settlements can be vital

Last Updated: 6 December 2015
Article by Simon Creek

When parties separate, it is not unusual for settlement discussions to take months and years to resolve. When a matter goes through the Court system and requires a decision by a judicial officer because the parties are not able to settle the matter themselves, the parties' financial circumstance at the time of Trial may be very different from their financial circumstance at the time of their separation. As lawyers, we are often asked to provide advice to our clients as to the effect such changes have on the parties' property division. It is not unusual in such cases for a party who has made significant contributions post separation to feel aggrieved that their financial good fortune is to be shared with the party from whom they have now separated. One such case is the recently decided appeal case of Trask & Westlake [2015] FamCAFC 160.

In this case, the parties were married for about 11 years and had lived together for about 13 years. They had four children who were aged 15, 13, 11 and 9 at the time of their separation. They were not able to agree on their property settlement and litigated the matter to a Trial. By the time Orders were made by the Court, some four years had passed since the parties' separation. A significant issue at Trial was the post separation financial contributions made by the husband.

At Trial, the Court found that the parties had net assets of about $7million. The husband submitted that he made a substantially higher financial contribution, post separation, because of his very high income post separation. Specifically, about a year post separation, the husband obtained a new position that paid a markedly higher salary, and included significant sign-on fees and incentive payments. The husband's taxable income for the 3 years after he had obtained the new position was approximately $2million, $3.5million, and $1million respectively. The sign-on fees and incentive payments totalled approximately $2.6million. Notwithstanding these significant financial post separation contributions the Trial Judge found that the husband and the wife's post separation contributions were equal.

In arriving at this conclusion, the Court noted that throughout their marriage, the parties conducted their relationship on the basis that the husband would pursue his career, and that the wife would be the homemaker and primary carer to the children. The Court found that the husband's new position was gained because of the experience, knowledge and opportunities he had obtained in his earlier employment, where he was entirely supported by the wife. The Trial Judge found that the wife's non-financial contribution and contribution to the welfare of the children permitted the husband his promotions, which in turn led to the position he obtained post separation.

The husband attempted to challenge the Trial Judge's assessment of his post separation contributions. On appeal, the Full Court of the Family Court found that the assessment of contributions remains "a matter of judgment and not of computation", and that the Trial Judge correctly recognised that the wife's contributions did not cease upon separation. While any one of the Judges of the Full Court had they been acting as the Trial Judge may have come to a different conclusion, that is not enough for an Appeal Court to overturn a Trial Judge's decision. The Appeal was dimissed.

The above case is but one example of a case where had the husband and the wife settled their financial issues shortly after separation, even if the husband had provided the wife with the majority of their assets at the time of separation, the husband would likely have done better overall.

While there is a requirement in Australia that married parties are required to have separated from each other for a period of 12 months before they apply for divorce, there is no such requirement before they apply for a property settlement. The case outlined above provides an example of a situation where a quick post separation financial settlement would have been financially advantageous for the husband.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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