Financial redistribution - not every player wins a prize

13 Apr 2017 1:28 PMBruce Shaw
Financial redistribution - not every player wins a prize

In the recent matter of Chancellor and Mccoy; the Court of Appeal clarified Stanford v Stanford; and concerns over s.90SF(3) [s.79(2)] “…shall not make order unless…it is just and equitable” – there is no right to adjustment of existing title independently of general property law and satisfying the “just and equitable” requirement by having regard to contributions under s.90SM (4) [s.79(4)]

The facts were mainly undisputed and were as follows:
 - professional, same sex de facto couple for 27 years;
 - kept financial affairs including real estate separate;
 - no joint account;
 - one paid weekly rent/occupancy fee to other;
 - split the bills;
 - no children;
 - cohabited after separation;
 - knew little of other’s finances – disparity at trial $1.7m to $700k

The applicant basically says after 27 years she must have made some contribution justifying some adjustment.

Her Honour Judge Turner dismissed the application finding it would not be “just and equitable” to make any adjustment at all to the parties’ existing property.

The applicant failed to adduce sufficient evidence of her alleged contributions to two properties of the respondent and of any increase in their value. Other than those assertions there was no contribution by the applicant to the respondent’s property that having regard to s.90SM(4) [s.79(4)] made it “just and equitable” to make any adjustment order.

Judge Turner cited Stanford v Stanford at para 40-42 and observed:

“just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them…the power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”.

Her Honour held that, as for “justice”, “equity” and “fairness” it would be unfair to the respondent to have to share her property after conducting her affairs for 27 years on a mutually understood basis with little or no intermingling.

On appeal the full court (Bryant CJ, Thackray & Strickland JJ) dismissed the appeal and upheld Turner J’s application of Stanford to the facts.

The appellant argued it was unreasonable to expect domestic partners to keep records of non-financial contributions.  The Full Court said Her Honour was considering whether the status quo remained just and equitable, so she was entitled to note that the absence of that evidence was relevant.

The Full Court dismissed the argument that Her Honour had held this [same-sex] de facto couple to a higher standard than other de facto couples in findings about their “future plans” and their knowledge of each other’s affairs.  Her Honour’s comments about “future plans” being relevant were a proper consideration on the “just and equitable” question in any relationship.

The key points to take out of this matter are:

  1. The assumption that an alteration is an entitlement applies only “in many cases”, not in “all cases”;
  2. The sexes and genders of the parties don’t matter. The distinction is between couples who intermingle and those who deliberately don’t;
  3. Step 1 is still to list the actual legal and beneficial titles to each client’s assets in separate columns, and apply a contributions based test to see if adjustment is even needed;
  4. Adduce evidence of a client’s significant non-financial contribution to working on the other party’s real estate, e.g. Bunnings entries on credit card statements, short affidavits from family, snapshots up a ladder etc;
  5. If you say your labour has improved the value of the property above general market movement, you will need valuation evidence on the question: have the listed improvements increased the value, and if so, by how many dollars?