A recent judgment regarding a same-sex de facto relationship spanning 27 years reminds us not to assume that the Family Court will automatically adjust assets by way of property settlement, even where a couple has been in a long-term relationship.
Before the Court can made orders regarding the division of a former couple's property, it must be satisfied that it is just and equitable for it to do so. In the vast majority of cases arising from the break-up of a marriage or a de facto relationship, this requirement will be readily satisfied. However, a recent court case highlights that it is not to be presumed, and that the Court will always take into account all the relevant facts pertaining to each particular case.
Ms Chancellor and Ms McCoy had been in a same-sex de facto relationship for some 27 years. At the time of the court case to determine their property settlement, Ms Chancellor, aged 59, had net assets totalling $720,391 and Ms McCoy, aged 55, had net assets totalling $1,698,664. Throughout the relationship each of the parties acquired properties in their own names and each funded renovations to their own properties. In addition, both parties assisted with manual labour in relation to the renovation of the other's property, and Ms Chancellor paid approximately $100 to $120 per fortnight to Ms McCoy throughout most of the relationship by way of a contribution towards household expenses.
Ms Chancellor asked that the Court make an order to adjust the settlement so that she received a greater share of the net asset pool (her exact claim was not specified in the judgment). The Court dismissed her application on the basis that it would not be just and equitable for it to alter the parties' respective property interests because they "conducted their affairs in such a way that neither party would or could have acquired an interest in the property owned by the other". In arriving at this decision, the Court took into account that:
- there was no intermingling of the parties' respective finances. Ms Chancellor and Ms McCoy did not have a joint bank account and each remained responsible for their own debts. Each party used the remainder of their wages as they chose without accounting to the other party;
- there was a complete lack of joint financial decision making. Ms Chancellor and Ms McCoy did not share information with each other about their financial situation or their respective property acquisitions; and
- neither Ms Chancellor nor Ms McCoy had made provision for the other party in the event of their death.
It is important to remember that even if a couple conducts their affairs in a similar way to Ms Chancellor and Ms McCoy, there is no guarantee as to whether the Court will or will not make a property adjustment order. Each couple's case is decided on its own particular facts.
Couples who wish to retain control over how their property and other financial assets will be divided should consider creating a valid financial agreement. Financial agreements are legally binding documents that outline how a couple would like their assets to be split between them if they decide to separate. A key benefit of having a financial agreement is that it removes the Court's power to determine how your assets will be divided, meaning that you both retain control over your property and financial settlement.
Tamara Cook, Senior Associate
Rachell Davey, Special Counsel
Tamara Cook | Senior Associate
Family & Relationship Law
+61 3 9269 9463
Rachell Davey | Special Counsel
Family & Relationship Law
+61 3 9269 9126
All information in this article is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted