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Family Law update: Divorce — What’s yours is mine

Nov 9, 2011

The end of a marriage inevitably leads to a carving up of assets of spouses so that each spouse is able to financially move forward independent of the other. It is the role of the Family Court to assess the spouses’ respective contributions, place a value on those contributions and then come to a view as to how to ‘carve up the cake’ after adjusting the assessed contributions in light of a number of considerations commonly referred to as ‘future needs’.

The carve up — bygone days?

Family Court Judges have a discretion as to how contributions made by spouses during a marriage are to be valued. A partnership approach to contributions now appears to be favoured by the majority of those Judges. In the past Judges tended to place a greater value on financial contributions than on the homemaker/parent contributions. They treated business acumen/financial contributions as more valuable than the contributions of the homemaker/parent.

A common arrangement in many families is that one spouse is engaged in full-time paid employment whilst the other, traditionally the wife, undertakes most of the domestic and childcare responsibilities as well as part-time and (increasingly so) full-time paid work. Recent research has shown that the majority of spouses regard their property as jointly owned and, more importantly, regard this state of affairs as underpinning the healthy functioning of their relationship.

Understandably, the Family Law Act (the Act) cannot and does not, however, provide a formula for valuation of contributions financial or non-financial). The ever increasing incidence of divorce and of second, or even third, marriages, means that the question of contributions made to assets held by a married couple and how to fairly value them in case of divorce assumes foremost importance.

Even-handed slice?

A relatively recent English case signalled the dawn of a new era in the Court’s approach and treatment of the heated question, “When the candles blow out, how big is my slice of the cake?” The decision in that case challenged the historically “only if it can be measured” gender biased approach to the assessment of contributions to a family’s welfare.

It confirmed that above all, the role of the Court is to achieve fairness. Fairness grounded in equality and non-discrimination as a starting point. The ‘starting point’ cannot and must not, however, be treated as a presumption of equal division. To do so would take us beyond the language and intent of both English and Australian law.

The recent approach of the Australian Family Court has reflected a partnership view of marriage. This has resulted in equality as the appropriate outcome of a decision-making process which goes beyond merely paying lip service to the concept of a joint effort vision of committed relationships.

The current approach is best summarised from the decision in the English case. There the Court said:

“In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party,” and “If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the homemaker and child carer.”

Cream on top?

The finding of the Court at the end of a “contribution analysis” is, of course, not the end of the story. That finding must then be viewed through the prism of the future where the foreseeable needs of each of the spouses and their children are kept in mind. In appropriate cases, the future needs factors are of such importance and are allocated such weight that when the Family Court exercises its discretion, the asset pool is divided in a way that awards a very substantial part of the pool to the spouse who is not capable of earning substantial income. A spouse may not be capable of earning substantial income either because of training or experience or because that spouse is charged with primary childcare responsibility or bears more of the responsibility for childcare than the other spouse. Two clear principles have emerged in regard to the alteration of property interests:

  • the notion that commitment involves a sharing of responsibilities and benefits including wealth; and
  • the view that property is a potential resource for children and their carers.

What’s next?

The carve up of the matrimonial asset pool is governed by the Act and the Family Court. Such is not the case for other types of relationships.

There is, however, an impending revolution in the area of domestic relationship law. Legislation presently before the Victorian Parliament is designed to make sure that domestic, including same sex partners have largely similar legal rights and protection as married couples do!

More information

For more information, please contact the Family Law team on (03) 8600 8888.

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