Danger in delaying financial settlement19-August-2014 Property By Simone Green
While there is no legal requirement to finalise a property settlement with your former partner or spouse immediately upon the breakdown of that relationship, there are many benefits in not waiting too long to do so.
Divorcing couples must finalise a property settlement within 12 months of the date of divorce. Following the 12-month deadline, a property settlement application cannot be made to the courts without a separate threshold application (for being late). This is a costly exercise with no guarantee of success, however, if successful, the Court will consider all property in existence at that date, even property acquired since separation. This can be a very serious problem for the spouse who has acquired additional property and income since the separation.
Case study – Marsh v Marsh (February 2014)
Mr and Mrs Marsh had been separated for 10 years at the time that the matter first came before the Court on Mrs Marsh’s application for property orders. The Marshs were married for 21 years and had three children and net assets of around $3.5 million in 2010 when the matter was first heard. The wife gave up work when the first child was born and remained at home thereafter to care for the home and children. The husband was in a highly paid position in a company he had worked for during the entire marriage. Following separation, the husband (even on the wife’s evidence) had been very generous in the support of his wife and children, paying around $2.6 million in maintenance to the wife. The real problem for the husband was that since the time of separation the asset pool had grown by a further $1.3 million as a result of his efforts.
The trial judge originally found that the contributions of the husband and wife were equal at the time of separation (her non-financial contributions as homemaker and parent weighed against his financial contributions) and then made an additional adjustment to the wife for the disparity in the couple’s future income and for some of her health problems.
This should stand as a very stark warning for people to either settle their property interests or apply for orders as soon as possible after their separation.
This was not enough for the wife, however, who appealed the judgment to the Full Court of Appeal to increase the post-separation assets. The Appeal was allowed by all three of the appeal judges, albeit for differing reasons. They rejected the husband’s argument that the post-separation income and assets earned by him should not be included for division between the parties.
The Full Court found that the wife continued to contribute indirectly to the husband’s post separation earning capacity through her prior contributions to advance his career. They also acknowledged that the income disparity between the wife, who was on a Newstart allowance, and the husband, who earned around $640,000 per year plus bonuses, justified additional intervention.
The matter was remitted for hearing in the lower Court, meaning there would be a fresh hearing in the lower Court before a different trial judge.
Streeterlaw Family Law Specialist Simone Green said the Marsh case has one clear lesson: “The Marsh case should stand as a very stark warning for people to either settle their property interests or apply for orders as soon as possible after their separation,” she said.