‘Summary of Property Settlements: Lengthy Separation Before Trial’, September 4 2015, presented by Peter Carew at the Legalwise Family Law Seminar.
When parties separate there is often a reluctance to sort out the financial issues immediately and usually an intention to get the issues sorted out “down the track”. In circumstances where there is a lengthy delay in bringing a matter before a court to determine property settlement it is important to ensure that clients are aware that contributions to the property pool are assessed at trial; not at separation or some other arbitrary and convenient date determined by the parties and their practitioners. A thorough analysis of all the contributions made by the parties in their own respective spheres (be it financial or as a homemaker or parent) across the entirety of the relationship (including cohabitation and separation) must be made in order to make a just assessment of the weight to be attributed to these contributions.
In cases where there has been a long period of separation and there have been “windfalls” of one sort or another it is open to the Court to take a two pooled approach although the global approach is usually more convenient. It is clearly open to the Court to take an asset-by-asset approach to the contributions however this is not the correct approach when considering spousal maintenance. If the global approach is taken then more weight will be attached to the contribution or windfall shortly before separation or any time after.
When determining how to approach ‘add backs’ it is appropriate in cases where there is a long period of separation to apply the long standing principle to determine whether the parties’ expenditure during post separation is reasonably incurred. Any income deemed to be unreasonably incurred or if the party is unable to sufficiently justify the expense will be ‘added back’ to the pool with an adjustment made in the other party’s favour.
The Family Law Act seeks to sever the financial ties of the parties but the number of cases coming before the Court after lengthy separation indicates that this is not always what Australians want. There may be circumstances in which it is inappropriate to sever financial ties and delay has added substantially to the parties’ financial security. If the parties can work together for greater financial security there is no reason why parties should be obliged to “sever the ties” if it is not going to be to their mutual benefit. The way forward for parties and practitioners is to be aware of entitlements now and what they might be in the future and to act accordingly. We advise the use of financial Agreements to regulate interests going forward be that now or ten years into the future.