When a relationship breaks down, even in circumstances where parties are amicable and able to agree on a division of their asset pool, negotiation and discussions can often take many months to result in a final settlement.
Should a matter require the intervention of the Family Court it is not unusual for litigation to continue for some time, perhaps years. As a result, parties’ financial circumstances may be significantly different at the end of negotiations or litigation than they were at the date of their separation.
Wealth gained after separation
What happens when one party substantially improves their asset position after separation but before the conclusion of their property settlement? They may well feel unhappy at the prospect of having to share their post separation “new wealth” with their former partner – but it is very likely that will be the outcome.
The issue of parties’ “post separation contributions” and how the Court will treat assets accumulated after separation was dealt with in the recent appeal case of Trask & Westlake  FamCAFC 160.
In this case a period of approximately 4 years passed between the parties’ separation and the conclusion of their trial in the Family Court. Over that time the husband submitted that he had made very significant post separation contributions. At trial the Court found the parties’ had net assets of about $7 million. However approximately a year following the parties’ separation the Husband had obtained a new role with a much higher salary. The Husband’s taxable income for the three years immediately before trial was $2 million, $3.5 million and $1 million, plus incentive payments and sign on fees totalling $2.6 million over that period.
Despite a large portion of the parties’ asset pool being comprised of financial contributions by the Husband after separation, the Court found that the parties had made equal post separation contributions. Why? The Court held that the Husband was only able to obtain his new, highly paid position because of the experience and opportunities he had been able to pursue while supported by the Wife in her role as primary carer to the parties’ four children throughout their relationship and following their separation.
The Husband was unsuccessful in an attempt to appeal the decision of the Trial Judge to the Full Court of the Family Court.
Implications for property settlements
The case outlined above demonstrates one of the perils of failing to quickly resolve financial matters following the breakdown of a relationship. While there is a requirement in Australia that married parties are required to have separated from each other for a period of 12 months before they apply for divorce, there is no such requirement before they apply for a property settlement.
This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.