Keywords: property; settlement; de facto; section 75(2); section 79; initial contribution; financial contribution; other factors.
The case of Marks & Xander [2016] FCCA 282 (15 February 2016), was a property settlement matter between separated de facto parties which was heard by the Federal Circuit Court of Australia.
Background
The parties met about March 2000 and entered into a de facto relationship. They remained together for about 13 and a half years after which they separated. The parties did not have any children together. At the time of the hearing, both parties were 54 years of age.
At the time of entering into the relationship, the de facto wife had little in the way of assets to contribute. The de facto husband had an unencumbered house (“C Property”) which was worth about $175,000.00 and which both the parties moved into at the time of commencing their relationship.
Ineffective Financial Agreement
The parties entered into an agreement stating that if they separated the de facto wife would not attempt to pursue the de facto husband’s interest in the C Property.
The Court considered the agreement and found that it was not a valid Binding Financial Agreement under the Family Law Act and therefore the financial agreement would not prevent the Court from taking the C Property into account in the property settlement. However, the Court stated that the intention behind the financial agreement would still be a factor that needs to be considered.
Contributions during Relationship
The Court considered each party’s contributions during the relationship and the terms of the relationship. This included that the parties had lived together from the outset in the de facto husband’s unencumbered property. The parties had a close relationship which included socialising together; spending time with the de facto husband’s parents who lived nearby, plus the de facto wife had taken the de facto husband’s parents on holiday and had assisted with their care as they were advanced in age.
The de facto wife had worked both casual and part-time jobs during the relationship and had made some financial contributions to the standing of the relationship. Since 2011 the de facto wife had not worked which she claimed was due to illness. However, there appeared to be a lack of evidence supporting these grounds. The de facto wife was assessed as having a short working life ahead of her as she was 54 years of age.
The de facto husband was working on a full-time basis earning about $47,000.00 per annum in secure employment. The Court considered that the employment involved manual labour and this would affect the de factor husband’s ability to continue working.
It was accepted that the de facto wife did most of the domestic duties and cleaning during the relationship. Both parties contributed to the upkeep and care of their pets.
Assessment of Contributions
In this matter, the de facto husband brought significant contributions to the relationship. The parties had a close relationship and supported each other financially. The de facto wife had worked on a casual or part-time basis but ceased working in 2011. The de facto husband had worked full time during the relationship and had made superior income contributions. The de facto wife had made significant contributions to the domestic duties and looking after the de facto husband’s parents.
Based on these factors, the Court initially made a property division of 72.5/27.5 in the de facto husband’s favour. Upon consideration of future needs, the Court made a 5% adjustment in the de facto wife’s favour as she was unemployed and would have difficulty finding employment.
Significantly, the Court outlined that a sizable initial contribution will be diminished significantly due to contributions during the relationship and especially where the relationship is of a long duration.
Conclusion
The Appellate Court was made up of Judge Strickland, Judge Murphy and Judge Watts. The Court considered the trial judge’s decision and focused particularly on his determination that the husband would have a shorter life expectancy due to illness.
The Court considered the case of Lawrie and Lawrie (1981) FLC 91-102 where that Court had to determine a matter where a party had terminal cancer and would only live a further 6 months. This case included comments “by the way” that an adjustment should only be made where life expectancy was determinable, otherwise it would “open the flood gates” as to the future life expectancy of parties.
The Court next considered the unreported case of S & P of the Family Court of Australia (22 April 1997) which dealt with a husband who had HIV and was thought to have a life expectancy of 5 years. That court considered Lawrie , and stated that the principles from Lawrie were correct but ultimately a judge could use their discretion with regard to health issues.
The Court turned its attention to the trial judge’s conclusion that on the evidence the husband’s life expectancy could not be determined with any accuracy. Despite this, the trial judge made an adjustment in the wife’s favour because the husband was likely to have a shorter life expectancy. The Court found the trial judge was in error in making this finding without being able to provide a measurable period of life expectancy for the husband.
Conclusion
In this matter, the husband had diabetes and renal failure resulting in the possibility that the husband would have a shorter life expectancy compared to the wife. Under section 75(2) of the Act, when considering spousal maintenance, a court may take into account a shorter life expectancy of a party and how this will affect the future needs of the parties.
In this case, the trial judge concluded that he could not determine the husband’s life expectancy based on the evidence, but he still found that the husband was likely to have a shorter life expectancy. The Appellate Court found the trial judge erred and that life expectancy should be taken into account only when a determination as to the likely period of life expectancy can be made.
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