Small Asset Pools and Property Disputes
All property disputes in the Family Law Courts involve a five step process to determine how division of property is to be dealt with in a just and equitable way.
In short, pursuant to the Family Law Act 1975 (“Act”), the courts must identify:
- Should there be an adjustment at all?
Section 79(2) of the Act provides that, “The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order” (Stanford v Stanford [2012] HCA 52);
- Identify the property pool available for division
This requires a consideration of the assets, liabilities and financial resources available for division between the parties, irrespective of in whose name they are held or when they were acquired. Financial resources are items that are not strictly considered assets for division, but which will be factored into what is considered a just and equitable division of property (such as an interest in a deceased estate).
- The contributions – financial and non-financial – of the parties
Contributions are considered at various stages throughout the relationship, being those that are made at the commencement of the relationship (i.e. if a party brings to the relationship a home, or substantial savings), during the relationship (such as income from employment, an inheritance or personal injury payout) and post separation (such as meeting mortgage repayments or a windfall received by one party).
- Any relevant adjustment factors as set out in sections 75(2) or 90SF(3)
This requires a consideration of each party’s future needs, taking into account their earning capacity, the care of any children of the relationship, health needs and the like.
- Justice and Equity
This requires the Court and the parties to consider what, having determined that it is just and equitable to adjust the property of the parties as the first step above, would be a just and equitable division of the property taking into account steps 2, 3, and 4.
What about when the parties have a small asset pool? Does this change things?
Whilst the courts strictly adhere to the above 5 step process, property division is not a one size fits all process. Despite the system of Stare Decisis – determining matters according to precedent – the family law courts are not rigid in their application of the five steps.
In property disputes the court’s decision making process involves a broad and independent exercise of discretion which turn on the facts of each matter: Russell & Russell [1999] FamCA 1875.
Your family lawyer therefore needs to be experienced in identifying judicial approaches to decision making as it relates to the specific facts of your case. In a small asset pool scenario your solicitor should be mindful of the case law, statutory provisions and the attention a judge in a particular matter gives toward the net equity (after liabilities) for division between the parties.
To illustrate this point an overview of relevant case law is provided below.
Small Asset Pools & Contributions
In Mitchell & Nevis [2014] FCCA 376 the small asset pool in combination with the significant contributions of the wife, led the court to find that the starting point for consideration of contributions was 70/30 per cent in the wife’s favour. This was prior to any adjustment for maintenance (or future needs) under sections 75(2) or 90SF(3) – the latter sections allowing for broad discretion, especially under subsections “o” (matrimonial) and “r” (de facto), to further adjust the property division in favour of one party over another. The court held that it would amount to a “marked injustice” to the wife, especially in the context of a small overall asset pool, if her overwhelming contributions were not recognised.
Small Asset Pool & Adjustment Factors
The case law tends to show that, despite cases like the above, sections 75(2)(o) (matrimonial) or 90SF(3)(r) (de facto) (“maintenance sections”), in step 4, trump, or at least attract more judicial focus, than arguments about contributions. These maintenance sections provide for the court to consider “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
This gives the court broad discretion to factor in many aspects of the dispute. Small asset pool arguments rank high in such assessment of “any fact or circumstance” by the court when adjusting property pools. Our family lawyers are well versed and equipped in making such submissions, always mindful of the latitude available to the court when making adjustments that favour one party over the other.
In H & T [2002] FMCAfam the court stated that, “In some senses the smaller the asset pool the more critical the adjustment for other factors beyond contribution may be”. This statement was approved of in subsequent cases.
In Bauer & Bauer [2013] FCCA 1125, the court referred to the “insufficient assets to distribute between the parties to take into account both of their contributions and the 75(2) factors”.
In this case, the adjustment factors at step 4 ranked higher than contribution factors in the court’s adjustment of the small asset pool. There were inadequate assets for division when factoring in the husband’s significant initial contribution and the need for an adjustment in favour of the wife. Judge Myers stated that, for “this reason the adjustment in favour of the wife for section 75(2) is all the more critical in the outcome of these proceedings”.
Similarly, in Sadler & Mistry [2015] FCCA 3407 (de facto property adjustment) Judge Phipps stated, “Given the small asset pool the real significance is the s90SF(3) [adjustment or maintenance] considerations”.
Small Asset Pools – Justice & Equity
The small asset pool argument also impacts the courts view of what would be a just and equitable property settlement, as the fifth and final step. It is the order itself which must be just and equitable “not just the underlying percentage division of the net value of the parties”: Maybury & Maybury and Ors [2011] FMCAfam 540.
In the latter case the court, in applying and quoting H & T [2002] FMCAfam, noted, “in determining what order the court should make under section 79, it must be satisfied in all the circumstances that it is just and equitable to make relevant orders,”. The court stated that, “it is the justice and equity of the actual orders not of the percentage distribution which must be considered.” (with reference made to Russell v Russell (1999) FamCA 1875).
How can Marino Law help?
At Marino Law our Accredited Family Law Specialist Abbi Golightly and the Marino Law team of experienced family lawyers will assist you to receive a just and equitable division of your relationship property. We strive to negotiate and mediate before we litigate. Our aim is to resolve matters in a commercially sensible way, with as little financial and emotional costs as possible.
However, should you find yourself needing to file an application for property matters or responding to same, we have extensive understanding of and ability to apply current case law and statutory provisions in both small and large matrimonial and de facto property matters.
Please contact us by phone or our online enquiry form to organise an initial consultation with one of our friendly team of family lawyers.
