A property division in accordance with the Family Law Act 1974(the Act) requires the Court to assess the contributions of the parties both financially and non-financially to the acquisition improvement and maintenance of the matrimonial property.
Ordinarily contribution to the property pool can only be maintained when the parties are together and physically making those contributions together. What happens in respect assets, income or other monetary payments being received after separation? How can it be consider that a husband has contributed to a matrimonial asset or a wife has contributed to a matrimonial asset if they are no longer involved with that asset or with the accumulation of that asset? The Court has in the matter in Trask and Westlake [2015] FamCAFC160 (Trask) considered that question.
In the matter in Gollings and Scott (2007) FLC91-507 the Court considered there was no further obligation on a party to continue to accumulate assets during the post separation period and that each party is free to do with his income as he pleases. Further the Court held each party is entitled to get on with his or her life independent of each other (That case had regard to an add back).
The Court in the Trask case considered that the contribution of homemaker and parent ceasing upon the separation of parties was a serious misreading of the Act (Section 79)(4)(c)see Ferraro and Ferraro (1992)FamCA64. In the matter of Trask the history of the matter involved the husband travelling and shifting home numerous times to achieve a greater income the majority of which was received post separation.
The Court considered this upheaval to the wife during the relationship was such that her contribution as homemaker and parent necessarily continued after separation. The Court considered the direct financial contributions of the husband were compared to the contributions of the wife in maintaining a home as a single parent to four children and that one was of the same importance as the other.
The Court held the wife’s contributions did not cease upon separation and was made more difficult by the separation. The accumulation of the husband’s change of employment and change of home over the length of the relationship lead to the husband’s significant post separation income and which the Court considered was intrinsically linked to the prior actions of the husband and the wife during the relationship.
On that basis the actions of the wife throughout the term of the relationship in changing homes, caring for four children whilst the husband earn’t an income was as significant as the income production itself and was a significant factor in the husband obtaining the position of employment which he engaged in following separation.
Does that mean all income post separation is then available as a contribution to the matrimonial pool and therefore available for distribution. To obtain an alternative position or to obtain a wind fall, increase in income or increase in assets post separation is it included as part of the matrimonial pool and therefore available for distribution.
The significant factors however which led to this decision and which differentiate it from the ‘normal’ matter (where post separation income remains fairly similar albiet positions may change and the assets are of a similar nature post separation as they were pre-separation)are as follows:
1. The increase in assets or increase in income was directly related to the actions taken during the course of the relationship and accordingly the consideration flowing for the new employment , increase in income or gaining of asset value is directly attributable to the actions of both the husband and wife during the term of the relationship;
2. There was an ongoing obligation of the wife to continue her role as homemaker and parent and the factual circumstances demonstrated a level of inconvenience during the relationship the fruits of which were not achieved until post separation.
WHAT CAN BE DONE
Some of the actions which could assist to avoid this issue would be as follows:
1. Undertake the property settlement or undertake a divorce and not undertake any new job or increase in income until twelve (12) months after the divorce(ensuring there has been complete disclosure) prior to the creation of the new job;
2. Where there is a discretion which exercised would cause income to escalate quickly, avoid exercising that discretion and have the income extended over a longer period of time post separation;
3. If income was dependant upon an event which occurred post separation can you delay the event;
4. Seek advice early from a Family Law Practitioner.
Ask yourself has my income been reduced during the marriage and will it increase post separation, has my wife lived a non static life during the marriage the fruits of which will flow after separation, will I receive a payment for work performed or actions taken during the marriage after separation. If so you should call Joe O’Hare to assess your rights and get advice early so you can protect yourself.
THE IMPACT OF A DISPARITY IN INCOME EARNING CAPACITY is a significant factor in determining entitlement under the Act (Section 79)(4)(e). The Court in the matter of Trask considered the evidence of an independent expert (an employment placement professional) when the husband was at the time of the hearing unemployed in determining whether the factor of disparity in income earning capacity was available to the wife.
Whilst there is unemployment that occurs at the time of trial or agreement ,that unemployment does not of itself avoid the factor of disparity in earning capacity of the party who is at that time unemployed.
Evidence from a placement officer was sufficient (in Traske)to convince the Court of the time and likelihood of further employment and thereby include in the wife’s entitlement the disparity in income earning capacity.
In determining earning capacity the Court had regard to the age of the children, the standard of living having regard to their pre-separation circumstances, the duration of the marriage and the extent that that duration has affected the wife’s capacity to earn.
That is the wife did not have an opportunity to develop her career or significantly affect her earning capacity during the relationship as a result of the requirements of the husband.
Early advice from a Family Law practitioner is critical
Call Joe O’Hare for that early advice.