What property settlement will I get if we separate? Answering the question in Australia

Given one of the foremost academic commentators on family law in Australia, Professor Patrick Parkinson, has entitled an article ‘Why are decisions on family property so inconsistent?’, it is not surprising that so many clients are confused and worried about what their or their ex-spouse’s property settlement entitlements might be if their relationship fails.

At our end, as family lawyers, advising our clients on this topic is now especially complicated because of some High Court decisions that can seem to contradict each other.

I have often said to clients that you can do (some) of your own family law work but it is like doing your own electrical work – it’s possible but inclined to be dangerous. Now even more uncertainly prevails.

This is very much the case in relationships where the couples have not had children together, mingled their money or bought any assets jointly.

Recently in Thorne v Kennedy, the High Court found that a prenuptial agreement signed four days before their wedding by a very wealthy elderly man and a much younger mail order bride, should be set aside.

The agreement had given the wife what her own solicitor called the ‘piteously small’ sum of $50,000 of the husband’s many millions, if they separated after three years without any children.

They had separated within four years, still childless. The wife challenged the $50,000 provision and ultimately the High Court called that provision ‘grossly unreasonable’.

However, if you look at cases following the 2012 High Court case of Stanford, spouses who did not raise a family or pool their income and kept their assets separate received nothing after separation, even after much longer relationships.

The reasoning in those cases was based on Stanford which requires the court, and negotiating separated couples to:

1. first identify who owns each asset (called legal title); and
2. then to satisfy the court that justice and equity require that legal title should be altered and orders be made giving the party without legal title a share of those assets.

Following a de facto relationship of four or five years, the couple in Watson v Ling separated. The man filed for a property settlement but died soon after and the claim was continued by his personal representative. The female de facto purchased some of the properties she owned during the relationship but the male de facto was found not to have made any contribution to them.  He was also a bankrupt for much of their time together. They had completely separate finances. In those circumstances, the male de facto’s claim failed.

In Fielding v Nichol, the male and female de factos lived together for 12 years. Except for one joint account, they kept their finances separate. The man did work on the woman’s house in which they lived as a couple. He did not pay any rent and they met all their living expenses jointly. After separation, the male de facto sought 50% of the combined assets. The Court found that no orders altering legal title should be made and that each party should retain the assets they had brought to the relationship, which had not really changed.

In Chancellor v McCoy, after a long de facto relationship of 27 years, no property settlement orders were made despite one party having significantly less than the other party. The Court noted that there had been no intermingling of finances in their childless relationship.

What is the difference between these cases and Thorne v Kennedy? Why was Ms Thorne’s $50,000 described as ‘paltry’ yet the poorer spouses in the other cases awarded nothing?

These cases highlight the difficulties everybody faces when trying to determine what one spouse might receive of the other spouse’s assets, if any, in the event of separation.

Here are some questions for you to ponder:

1. Does marriage of itself mean something to a court when assessing who gets what?
2. What contributions do parties need to prove to convince a court to make orders altering property rights even where they haven’t had children, pooled their money or bought joint assets together?
3. What future needs would a party need to prove to obtain a settlement when all the finances were separate?

We would be pleased to discuss these and other family law issues you may have with you. You are most welcome to call for a free initial telephone consultation about your matter.