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16 January 2024

Intermingling and your family law matter

In this video, CGW family law partner Justine Woods talks about why intermingling is not just important for your social life, but also vitally important to understand in your family law matter.

In this video, CGW family law partner Justine Woods talks about why intermingling is not just important for your social life, but also vitally important to understand in your family law matter.

Video transcript

Hello. Hello, everyone. I’m Justine Woods, I’m the family law partner at Cooper Grace Ward. And today’s topic is about why intermingling is not just important for your social life and your popularity, but vitally important in your family law matter.

Case of Cosola and Moretto

I thought I’d discuss that topic through the prism of a recent case called Cosola and Moretto, decided in 2023  and that concerned a 15-year childless de facto relationship from two older people who both had been divorced and had children from their previous relationships. They each had homes with mortgages, different values, different net equity. They moved into the male de facto’s house and lived there for 15 years. At the conclusion of their relationship, the female de facto applied for property adjustment orders, that is, to receive a property settlement.

Party’s legal and equitable interests

Now, at first instance, the trial judge said, I don’t find that it’s just an equitable to make any orders at all. And I’m following the High Court’s decision in Stanford, which says, the first thing that I must do as the judge is determine what each party’s legal and equitable interests are in the assets. So, that’s having a very detailed look at who’s name an asset is in, who’s names the liabilities are in and what has occurred in terms of financial transactions during the relationship. Now, the male de facto said, well, yes, we had a company in which we each had two shares, but I was the sole director and the sole employee. And yes, you female de facto did some work and did all the bookkeeping and bill paying for the company, and she certainly had authorised access to the company accounts and she dealt with appropriately the funds of the company during the relationship.

The court’s decision

But the trial judge found and ultimately a full court sitting as three judges. Now, the court itself has the sole determination as to whether the full court, which is the appeal court, will be composed of one judge or three. So, if it’s a bit, now, this isn’t the rule, but often if it’s a bit interesting or special, three will sit. So, this was a full court of three, and they upheld the trial judge’s decision and said that there hadn’t been any intermingling, which it’s it’s pushing I think the Stanford case, which I’ve talked about in other videos, I think even a little bit further, because it’s certainly arguable, in my view that intermingling is if you establish a company together and you permit the other person to touch those funds. But the court, so, it was certainly not an utterly doomed case, but the court looked at whether there should be any adjustment as the first issue and the full court approved that approach and then only later would they have looked at to what extent it would be appropriate to make an adjustment, such as giving the de facto wife a cash settlement, for example.

The important facts

So, the facts that were found to be very important by the court were that they each kept their homes in their sole name, they use the equity in their homes without any consultation with the other and I think this was probably very problematic for the female de facto. She had given hundreds of thousands of dollars to her adult children from her mortgage without any knowledge or consent or even involvement of the male de facto. And so, when it came to be trying to divide their assets, her equity had been depleted by her generosity to her adult children. Well, she was left with the consequences of that and the court said, no orders to be made. Everyone keeps what they’ve got. Now, when I first started practicing in 1995, if you simply, now, it didn’t apply to de factos then in the same way. But if certainly if you’re married, if you turned up for any particular length of time, you would get, other than in a very short relationship and you’d get something for your trouble. Just some kind of gift with purchase would be given to you. And there was not so much emphasis. Certainly, that was a consideration of it. But prior to the High Court’s decision in Stanford, there was less emphasis in day to day matters about in whose name things were held. It is now absolutely vital and again, my advice depends on whom I’m acting for. So, if I’m acting for the wealthy person, I say, keep it in your name. Don’t buy things jointly with them, don’t have nothing but a joint account, perhaps for bills. Don’t make joint investments. Give presents, don’t give them shares in your company or put them on your trust as a co-trustee. Keep things very neat and nice because any form of intermingling is arguable as a ground for it being just and equitable and it has to go quite far now in these cases, but just and equitable to adjust the property interests. If I’m acting for the person without the money, I say get your name on the title, buy things jointly. Do as much as you can.

Could have had a binding financial agreement

Now, of course, everything comes with risk, but one of the grounds that the female de facto tried to raise here in support of her appeal was that they could have had and had been divorced. They could have had a binding financial agreement, but they chose not to. They entered into a significant commitment to a relationship, a genuine domestic relationship, in accordance with the Family Law Act for 15 years, having once been skinned but without a binding financial agreement. So, I really always circle back to, if you’re not a young couple starting from scratch with nothing and your positions are virtually equal, certainly if you’ve been through it once, you’ve got adult children, have a binding financial agreement because it might have all been avoided because clearly the parties expectations were quite different. And in this case this is not in every appeal, but in this case the court simply affirmed the decision of the lower court and sent them away. And so, again, I think it’s very important to realise that the expectations and the decisions made in family court world can be quite different from and very jarring to people living in the real world. So, what do you think might be blended, may or may not be blended or intermingled from the court’s perspective. So, in my view, it’s best to have at least the buffer of a binding financial agreement to protect you from that.

If you’d like to discuss that issue or any others, please don’t hesitate to contact us.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.

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