How Does the Court Deal With Property Acquired After Separation?

 Calvin & McTier [2017] FamCAFC 125

Ordinarily, the first step that the court  takes in determining a property application is identifying and valuing the property of the parties. In this particular context, “property” has a broad definition and would typically include assets such as:

• real property;
• motor vehicles
• shares in public or private companies
• bank accounts; and
• superannuation, etc.

But what happens when property  is acquired after the parties have separated?

For example, in the recent Full Court decision of Calvin & McTier [2017] FamCAFC 125, the husband acquired a substantial inheritance 4 years after the parties had separated. At trial, the magistrate determined that the inheritance should be included among the assets to be divided between the parties. The husband appealed against the magistrates’ orders on the basis that he had erred in relation to that finding.

After Divorce Financial Settlement: The Full Court’s Decision

The basis for the husband’s appeal was that the magistrate should not have included his inheritance among the property to be divided between the parties. This claim was predicated upon 3 separate grounds:

1. There is no High Court authority in support of the proposition that all of the property of the parties is available for division;
2. For an asset to be included among the property to be divided between the parties, the parties’ respective contributions must be contemporaneous with the existence of the relevant asset; and
3. Property acquired post-separation is available for division only if there is some nexus between the relevant property and the parties’ relationship.

With regards to the first ground, the Full Court determined that it must fail. The absence of High Court authority cannot be marshaled as an argument either for or against a legal proposition concerning the application of the Family Law Act. In such cases, the legislation will “speak for itself.”

Ground 2 failed on the basis that it was contrary to established authorities, namely, the High Court’s decision in Stanford v Stanford [2012] HCA 52. There is nothing in Stanford to indicate that property acquired post-separation should be treated differently. Instead, it indicates that all property is be brought into account without any reference the timing with which the relevant property was acquired.

Finally, the third ground failed for fundamentally the same reasons for which the second ground failed.

The Full Court did, however, find that the trial magistrate had erred in relation to the following finding. Namely, that had the inheritance been treated separately, the trial judge would not have been able to undertake the relevant inquiry under s 79(4) of the Family Law Act. The Full court determined that the relevant inquiry could be undertaken. The only difference would be that the inquiry would have been undertaken with respect to the inheritance and the remaining property. Regardless, the Full Court concluded that this was not a material error and the husband’s appeal was dismissed.

After Divorce Financial Settlement: Concluding Remarks

Calivin may be regarded as authority for the proposition that the assets acquired post-separation may be brought into account in identifying the property to be divided between the parties. That being the case, it should be borne in mind that inheritances acquired post-separation should be carefully considered when assessing contributions. This is because the spouse who did not receive the benefit of the inheritance is unlikely to have contributed to it.