Assessing Contributions to a Property Settlement

A property settlement is an arrangement made for property division following the separation of a married or de facto couple. If the parties are unable to reach an agreement about how their property will be divided, it will be necessary to apply for a property settlement in Court.

The Family Court has a stepped approach to assessing property settlement entitlements. Having evaluated the property ‘pool’ available for division, they will assess each party’s contributions to the pool, consider their future needs and then consider if the proposed division would be fair or ’just and equitable’.

This blog will consider three particular issues: initial contributions, post-separation contributions, and the impact domestic violence can have on assessments.

Initial contributions

When a relationship commences, one party may have significant assets to contribute. In a short relationship, the initial contributions are likely to be heavily represented and identifiable in the property pool at the time of separation. If the relationship is short, particularly if there are no children, the Court will be principally concerned about the direct financial contributions made by each of the parties.

In longer relationships, this representation is likely to be diminished, with the pool being more of a blend of contributions by each party. In a longer relationship, the Court will often form the view that the parties have contributed equally.

Contributions can be both financial and non-financial such as those that benefit the family's welfare made in the capacity of homemaker. These factors can make the judgment of what is ‘fair’ far from straightforward.

Post-separation contributions

When they separate, the financial position of the parties can be very different compared to when the final property settlement order is made. If parties come into possession of significant assets after they separate, such as an inheritance, they may feel aggrieved that these assets will be shared at settlement.

Case example

The Family Court’s decision in Trask & Westlake (2015) involved an appeal against a property settlement made four years after separation. This was a long-term relationship of 13 years with two children. At the time of separation, both parties were not in employment with a property pool assessed at $7m. The husband found new lucrative employment earning $9m post-separation.

The husband subsequently appealed, contending that it was not just and equitable for the earnings he had received post-separation to be subject to division. The Court dismissed the appeal stating that contributions do not cease upon separation, but rather they continue until a settlement is reached.

The decision illustrates what can happen to post-separation contributions, particularly when settlement is postponed for a longish period.

Domestic violence and its impact

The case of Kennon & Kennon (1997) established that the contributions to a relationship by a victim of domestic violence would be made significantly more arduous as a result of a partner’s violent conduct.

Case example

In the recent case of Benson & Drury (2020), the Full Court of the Family Court considered the application of Kennon as to how contributions made more arduous because of the behaviour of their partner were to be assessed.

This couple had been in a long-term de facto relationship with two teenage children. The parties submitted that their contributions were equal except for two disputed matters: an initial contribution by the husband and the wife’s claim that his violent conduct had made her contributions significantly more arduous as in Kennon. The trial judge decided not to give greater weight to the initial contribution as to do so would not sufficiently recognise the contributions by both parties. Having found that the ‘Kennon claim was made out’, the trial judge adjusted the assessment of 5% so that the wife was to receive 55%.

The de facto husband appealed. The Full Court readdressed the question of how to take account of contributions made more difficult by the conduct of their partner. The answer they suggested was ‘a holistic approach’ in which contributions made more arduous have to be weighed along with all other contributions by each partner. The split of 55:45 in the de facto wife’s favour was confirmed as a ‘just and equitable’ division.

How will the Court make a decision?

In Trask, the husband was able to earn such a significant income because the wife took the important role of homemaker and carer. In effect, the Full Court recognised the principle that the responsibilities of homemaker and breadwinner can be considered equal. The husband’s contributions were tangible and quantifiable based on his income, whereas the wife’s were much less tangible, but this did not ‘render them less important’.

The assessment and weight to be attributed to post-separation contributions are not clear cut. Each case will be determined on its own facts with the need to consider the totality of post-separation contributions, ensuring no greater weight is placed on those of a purely financial nature.

Trask also demonstrates there are risks associated with postponing settlement. In most instances, it is advisable to resolve the settlement promptly.

The Benson case highlighted that contributions must be considered holistically and weighed collectively. The Court stated that the ... contributions which have been made significantly more arduous have to be weighed along with all other contributions by each of the parties, whether financial or non-financial, direct or indirect to the acquisition, conservation and improvement of property and in the role of homemaker and parent. All contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder.

It is important to be aware of the principles used by the Court to assess the division of a property pool, but there is no mathematical formula that the Court will apply. Each case has to be considered on its own merits. Ultimately it is a complex calculation based on a Court’s assessment of the facts of the case. 

Contact our Property Settlement Solicitors in Sydney, NSW

If you require advice or assistance with a property settlement matter in NSW or any other family law matter, please contact the family law specialists at Szabo & Associates. Call 02 9281 5088 or complete the online contact form.