Orders for family law property settlement may be made years after separation

Orders for family law property settlement may be made 20 years or more after a couple separate depending upon the circumstances. It is not a given however. The Court must be satisfied that it is just and equitable to make an order altering property interests.

In Orchide & Orchide [2017] FCCA 1833, a single judge decision in the Federal Circuit Court of Australia, the Husband was seeking property orders for family law property settlement 20 years after the parties had separated. The Court was willing to make orders but not of the kind that the Husband sought.

Background

At the time of trial in Orchide’s case, the Husband was 60  years of age, earning $70,000 gross per annum and the Wife was 61 years of age, earning $87,000 per annum. The parties’ daughter was over 18 years of age and independent.

The Wife and the daughter had remained living in the former matrimonial home at Property A (“the former matrimonial home”) after separation.  The Husband claimed that the parties had agreed that the Wife and daughter would remain living in that home instead of paying child support. The Husband claimed that because their daughter was at that time still in primary school and he did not want to cause upheaval for her as well as her having to deal with her parents’ separation, he had decided, even against the legal advice that he was receiving, that he would not then pursue property settlement.

The Wife maintained that when the parties separated, they had agreed that she would retain the former matrimonial home and that the Husband would retain another property (“Property C1”) and a business and that the Husband would be responsible for borrowings of some $150,000 from Bank B and an overdraft of some $15,000.

The Husband maintained that there had been no agreement such as the Wife asserted.

In the year following separation, Property C1 was sold and the Husband claimed (but did not evidence) that the proceeds of sale had been used to pay overheads for his business, to reduce loans from Bank B that had originally been taken to fund renovation and extension of the former matrimonial home and to purchase the Wife’s motor vehicle.

The Wife claimed that she believed that the proceeds of sale of Property C1 had been used to pay all monies owing to Bank B and that the mortgage and overdraft secured over the former matrimonial home had been discharged.

However, the Husband made further drawings on a loan facility from Bank B.   He also borrowed monies from Bank A to assist in the purchase of another property (Property D) where that loan was secured over that other property.  Th Husband refinanced the Bank B loan secured over the former matrimonial home with Bank A.  The Husband was described as the sole borrower and the Wife as guarantor. The Wife claimed that she was trying to assist the Husband and that she trusted that he would repay the loan when Property D that he had purchased was redeveloped and sold.  She said that she did not realise that the Bank A loan was secured over the former matrimonial home.

In 2014 the Husband asked the Wife to sign documents guaranteeing a loan from Bank A where the Husband was switching to interest only payments.   The Wife claimed that she had not realised at any time that the loan was $252,000. The Husband later contacted the Wife in May 2015 telling her that the former matrimonial home must be sold as he could no longer afford his high level of debt which then exceeded $400,000.

The Wife claimed that at no time after separation had the Husband told her that there was a mortgage over the former matrimonial home to Bank A which he was using to pay his living expenses  or to support his failed business ventures.

Court findings

Superannuation

Relying upon the decision of the Dull Court in Zaruba & Zaruba [2017] FamCAFC91, the  Court found that where the Wife’s superannuation was earned by her post separation and where the Husband has made no contributions to it whatsoever, it cannot be seen to be just and equitable to make orders that alter the Wife’s interest in her superannuation. The Court made a similar finding regards the superannuation of the Husband.

Motor vehicles/current bank accounts/tools

As with the superannuation, the Court found that where all of these assets had come into existence since the date of separation, it was not just and equitable to make orders altering the parties’ current interests in these assets.

Former matrimonial home

It had an agreed value of $1,325,000.

The Husband’s liabilities totalled $343,580secured over the former matrimonial home and credit card debt and tax liability which together with the debt over the former matrimonial home gave a total debt figure for the husband of $505,330.

The Court found that those liabilities were solely for the husband’s account as they had all been incurred by him after separation and he had had the sole benefit of the monies giving rise to the liabilities.

Regards contributions, the Court found that the Wife had made significantly greater contributions than the Husband post separation and gave her an adjustment of 25% of the net asset pool.

The Court did not accept the Husband’s contention that his “letting the Wife and [the child] remain in the former matrimonial home for nearly 20 years was somehow or other a contribution by him to the maintenance of [the child] throughout the entirety of her education.”

The Husband had had the benefit of the proceeds of the sale of Property C1 and of [Business A]. The Wife and [the child] remained in the former matrimonial home. The Wife had the sole financial responsibility for almost all of the child’s care after the parties separated as well as providing almost all of the child’s physical and emotional care as the Husband had spent such little time with the child. The Wife also maintained the former matrimonial home with only very limited assistance from the Husband

Regards section 75(2) Family Law Act 1975 (Cth) and future needs factors, the Court considered that the Husband had made lifestyle choices after separation having closed his business, travelling around Australia and undertaking study where he obtained qualifications. (omitted). He attempted to establish a business that had been unsuccessful and was now running another business. Since separation, and particularly since 2008, the Husband had incurred considerable debt in supporting his lifestyle and had done so knowing that he was not making sufficient income to meet his liabilities.

Whilst the Wife currently earned more than the Husband, the court was not satisfied that she had a superior earning capacity to the Husband who had the capacity to earn a reasonable living in the profession in which he was qualified but had chosen not to do so.

The Court considered that the Wife’s superannuation of $132,000 in comparison to the Husband’s superannuation of $1,187 was a superior financial resource available to the Wife and allowed an adjustment in the Husband’s favour for s 75(2) factors of 2.5%.

Just and Equitable

The Court concluded that there should be a family law property settlement involving a distribution between the parties in relation to the former matrimonial home. The Wife retained 72.5% of the value of that asset and the Husband retained 27.5%.

The Husband submitted that it was not just and equitable to make orders that would have the net effect of the Wife retaining a million dollar property and $130,000 worth of superannuation whilst the Husband was left with debts of over $500,000.

The Court acknowledged that whilst the Husband’s current financial circumstances were dire, the Husband was responsible for his financial predicament and that in all the circumstances, the Court considered that the outcome of the orders was just and equitable.

If you have concerns how to obtain a family law property settlement, contact our experienced Brisbane family law team or Brisbane Northside family law team and we will be happy to assist you to resolve your family law issues.