Court Adjusts Contributions in a Long-Term De Facto Relationship where Financial Agreement Ineffective

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

Section 79 of the Act allows the Court to alter property interests of parties as the Court sees fit, but under section 79(2) a court can only do so where it is satisfied that the outcome is just and equitable.

In assessing contributions for the purpose of determining a just and equitable settlement, the Court outlined the principles outlined in the case of Aleksovski v Aleksovski 135 FLR 131; [1996] FLC 92-705 that:

1. In a short relationship, significant weight should be given to initial contributions.
2. In a long relationship, many factors assume significance and “[w]hat is important is to somehow give a reasonable value to all of the elements that go to making up the entirety…”
3. Early capital contribution is diminished by subsequent events in the relationship.

Based on the section 79 factors, the Court found a property division of 72.5/27.5 in the husband’s favour. The Court next considered section 75(2) factors going toward spousal maintenance and the future needs of the parties.  The main factor to consider here was that the de facto wife was not working and it would be difficult for her to find employment as a person without any formal skills.  On government benefits, she would receive about $14,000.00 per annum while the husband’s income was about $47,000.00 per annum.

Based on these factors, the Court made an adjustment and ordered a property division of 67.5/32.5 in favour of the de facto husband.

Conclusion

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.