Court Confirms Treatment of Property Acquired After Separation is Discretionary

Background

In a recent case of Calvin & McTier [2017] FamCAFC 125 (12 July 2017) the Full Court (Bryant CJ, Ryan & Aldridge JJ) heard the husband’s appeal against orders made by Magistrate Calverley of the Magistrates Court of Western Australia.

The trial magistrate included among the property of the parties to be divided by the court an inheritance received by the husband 4 years after separation (of which $430,686 was unspent) which comprised 32 per cent of the $1.3 million property pool for distribution. The parties had been married for 8 years and had one child who spent equal time with them.

It was found that initial contributions also favoured the husband. They comprised the proceeds of sale of two pre-marital properties of his used to buy two other properties the net value of which at trial was $580,000; a motor vehicle, shares and superannuation of unstated value. Contributions were found to have been otherwise equal, the trial magistrate assessed contributions overall as 75:25 in favour of the husband. A 10 per cent adjustment for the wife, taking into account the factors in section 75(2) of the Family Law Act, produced a 65:35 division overall.

Husband’s Submission

The husband appealed against the trial magistrate’s finding that the inheritance should be included among the property to be divided but did not contend that if the inheritance was properly available for division, the percentage division arrived at by the trial magistrate was erroneous.

Full Court’s Analysis

Both the relevant definition of ‘matrimonial cause’ and s 79 in the Family Law Act referred to all of the property held by the parties at the time of the hearing before the court. All of the property then held by both of the parties or either of them can therefore be the subject of orders under s 79, regardless of when particular assets were acquired. The fact that the court is to take into account the contributions of a party with respect to the acquisition, conservation or improvement of that property or to the welfare of the family makes this abundantly clear (s79(4)(a), (b) and (c)). Such contributions may, of course, continue long after separation.

In this matter, that property could include the inheritance. So much was accepted by senior counsel who appeared for the husband, who also accepted that there is a significant body of case law to the effect that, in the exercise of the court’s discretion, property acquired after separation could be the subject of division.

In conceding that this was senior counsel’s argument ultimately became a contention that while the court had the power to make an order relating to the inheritance, in this case it should not have, in its exercise of discretion, because there was no clear connection between the inheritance and the parties’ marriage. He submitted that the mere fact that the parties were married was not sufficient to justify the court bringing the inheritance into account.

Accordingly, the relevant question before the Court became one of whether the trial magistrate properly exercised his discretion in including the inheritance in the property to be divided between the parties. In answer to this question, senior counsel identified three propositions’ of law on which he founded his argument:

1. There was no High Court case that stated that all of the property owned by the parties was, without more, available for division under s 79.
2. That the decision of the majority in Farmer and Bramley (2000) FLC 93060 (‘Farmer and Bramley’) cannot stand in the light of Stanford and Stanford [2012] HCA 52.
3. Property acquired by the party after separation was available for division under s 79(1), but only if there was some nexus between the after acquired property and the parties’ marriage.

Court’s Conclusion

As the first two propositions advanced by senior counsel did not succeed, the third proposition was left without support. It was difficult to see how it could then be accepted. It was contrary to the extensive weight of case law.

Similar submissions in support of the dissent of Guest J were expressly rejected by the Full Court in Polonious & York. The Court did not accept the submission that the reasons in Stanford required reconsideration of Farmer and Bramley or any of the other authorities to the same effect.

Finally, the husband sought to draw support from the following passages in Bonnici & Bonnici (1992) FLC 92-272.

In Bonnici, the question of whether after-acquired property should be included in the property available for division was said to depend very much on the circumstances in each matter and the exercise of the discretion of the court. The court in Bonnici was, however, principally concerned with the reasons of the primary judge in that case and, in particular, the reasons why there had been a finding of equality of contributions by the parties notwithstanding the receipt of a significant inheritance by one of the parties after separation. The point being made was that if the inheritance was to be included in the property for division the introduction of that property would need to be reflected in the findings as to the parties’ financial contributions. Bonnici was not concerned with submissions akin to those made in this matter.

The husband particularly relied upon the first sentence of [44] of Bonnici above. The Court did not agree that in that sentence their Honours were purporting to lay down a guideline as to the approach the court should take to inheritances received after separation. It was clear from reading the passage as a whole that they were not doing so. Whilst the court did indicate in the case before them it would have been simpler for the primary judge to have dealt with the inheritance separately from the other property, it expressly said that there was nothing wrong with a global approach (i.e. dividing just one group of assets, including the inheritance), provided there was an explanation as to how the division was arrived at.

In short, the Court retained a discretion as to how to approach the treatment of after-acquired property. The trial magistrate could have included the inheritance amongst the property to be divided or dealt with it separately. The trial magistrate was not obliged to follow one course or the other.

Orders

The husband’s appeal was dismissed with costs.

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