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Matrimonial Property Notes

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This is an extract of our Matrimonial Property document, which we sell as part of our Family Law Notes collection written by the top tier of University Of New South Wales students.

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FL 5 Matrimonial Property

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FL 5 Matrimonial Property Table of Contents

Cases Readings:

* Kowalski o Even if parties marry, and then divorce, and then later reconcile, the court can consider under the FLA the entire relationship whether arising out of the contribution before during or after the formal marriage was entered into or dissolved.

* Mallet o Principles:
? Court required under s 79 to make order as it thinks fit when satisfied tat it is just and equitable that an order should be made
? Principle which court is expressly required to apply so far as practicable is that it will make such orders as will finally determined financial relationships between parties to marriage and avoid proceedings between them: s 81* Ferraro o

* Figgins o

* Omacini o

* Horsley o

* Waters and JUrek o

* MUllane o

* Ascot Investments o

* Taxation v Worsnop o

* Heath o

* Kennon o 1 of 24

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Fairchild o

System of reasoning for applying s 79:

1. Note validity of legislation on this topic and 'matrimonial cause' (Kowalski)

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para (ca) of Matromonial cause in s 4(1) of FLA -

(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings: (i) arising out of the marital relationship; (ii) in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; or (iii) in relation to the divorce of the parties to that marriage, the annulment of that marriage or the legal separation of the parties to that marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104; Was held in Fisher v Fisher that para (ca)(i) in context of s 79(8) valid.

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Note that once a marriage has been celebrated between the parties, the entire relationship between the parties whether arising out of the contributions before, during or after the formal tie of marriage wa entered into or dissolved, falls within the ambit of Pt VIIII of the FLA. Principle explains why contributions made between cohabitants who later marry are judged according to the criteria set out in the FLA and not property act: Kowalski

2. Consider first whether financial agreement - if binding then that takes the place of s 79: s 71A

3. Court has power to declare all interests in property between the parties to a marriage: s 78

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If out of time under s 44 to apply under s 79, may still seek court to investigate and declare any existing property interests under s 78

4. Have proceedings been instituted in time: 12 months: s 44(3) If out of time, need leave of court under s 44(3AA). Two grounds under s 44(4).

* Hardship would otherwise be caused to a party to the relevant marriage or a child if leave were not granted: s 44(4)(a) o See whitford OR

* S 44(4)(b) For spousal maintenance "the case of proceedings in relation

to the maintenance of a party to a marriagethat, at the end of the period within which the proceedings could have beeninstituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to

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support himself or herself without an income tested pension, allowance or benefit."

5. Power of court to redistribute property: s 79 FLA

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In property settlement proceedings, the court may make such order as it considers appropriate under s 79(1) FLA: a) Altering interests of parties: in the case of proceedings with respect to the property of the parties to the marriage or either of themaltering the interests of the parties to the marriage in the property; or b) Altering interests of bankruptcy trustee: in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriagealtering the interests of the bankruptcy trustee in the vested bankruptcy property; Including: c) an order for a settlement of property in substitution for any interest in the property; and d) an order requiring: (i) either or both of the parties to the marriage; or (ii) the relevant bankruptcy trustee (if any); to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.

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6. Two step process: (a) look at contributions retrospectively (b) current and prospective economic positions of parties

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Rule: court will not make order unless satisfied that in all circumstances it is just and equitable to make the order: s 79(2) FLA. o (What is just and equitable cannot be determined unless the court considers the s 79(4) two steps: Neale) Process: After determining what interests are held by the parties, there are two steps in determining what order should be made about property interests: first, the court considers contributions retrospectively (s 79(4)(a)(c)); and second, the court considers the current and prospective economic positions of parties (s 79(4)(e) and thus s 75(2); s 79(4)(d)(g) including s 79(4)(e) and thus s 75(2)). (Mallet)

Principles:

* Consider entire relationship: Kowalski. "A more logical and consistent approach is one which is based on the proposition that once a marriage has been celebrated between the parties, the entire relationship between the parties whether arising out of the contributions before, during or after the formal tie of marriage wa entered into or dissolved, falls within the ambit of Pt VIIII of the FLA. Principle explains why contributions made between cohabitants who later marry are judged according to the criteria set out in the FLA and not

* No rule as to whether to take a global approach or assetbyasset approach - but often make more sense to take a global approach: Act doesn't tell the trial judge what to do. TO that extent it's up to the trial judge's discretion as to what is the appropriate way to proceed. BUT the HCA said that a global approach would make more sense unless there is some reason to single out particular assets: Norbis o For example: if someone had a considerable amount of money before marriage that would be significant or sometimes things happen after separatin that would have significance. Or in doctor and nurse case the fact that he had an inheritance tipped the balance.

* Parties have a duty to disclose: Weier. If someone fails in their duty to disclose all assets that could be a reason to overturn an order if it's already been made or if its during the trial judge's proceedings and it's fairly clear that one is lying the court can take a robust view in making an assessment of what assets exist and making orders accordingly.

* Time of valuation is generally at time of hearing: Wardman.

* Short marriages: if short marriage and nothing much happened in terms of acquiring assets then court may try to put parties back before they were married: Anastasio . However there is no definition of a short marriage and this is just a common sense approach.

* Orders can be made for children: Doughterty. (Rare case where there is a family farm and 1 children forwent job and education to stay on farm so court considered it just and euiqtable to make an order to split property for H and W and adult child.) Cases:

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Informal agreement doesn't prevent later proceedings: Neale . Although may be unfair have to consider s79(4).

Step (1): look at contributions retrospectively: S 79(4)(a)-(c) Statute:

* Financial contribution to acquisition or improvement to property: the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that lastmentioned property, whether or not that lastmentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them: s 79(4)(a) and

* contribution other than financial contribution to property: the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last
mentioned property, whether or not that lastmentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them: s 79(4)(b)

* and

* contribution to welfare of family: the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent: s 79(4)(c) Principles:

* Equality? Court cannot presume that contributions are equal. Court could conclude on the evidence that what she did was equal to what he did: Mallet

* Domestic contribution under s 79(4)(c) domestic contribution has to be given substantial and not token weight: Mallet o The fact that one spouse stays home lets the other go out to the workforce.

* Special skills with an entrepreneurial H? in Ferraro where the H had entrepreneurial skill, and together the couple amassed $12million, it can sometimes appear that the more money made, the more the breadwinner has done fantastic things that should be rewarded. Each case must be determined on its own facts but in ferraro it was held that the W was entitled to 37.5% of the pool.

* Whole question processed: Note that the whole question of special contributions and the contribution stage has been questioned in Figgins although not decided.

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Gifts? Gosper : isn't a legal but a common sense presumption that a gift given to child is indirectly intended to give to the child and not the child's spouse. Only in specific circumstances will it be a gift to both of them. o If the gift was received before marriage then it would be something brought into the marriage Family property: Lee Steere . Dynastic farm not quarantined from jurisdiction. This property a significant contribution by H. but if it as the major asset then we have to give a result fair from W's viewpoint as well. S 79 (4)(D) - court said -that in making an order should consider the effect of the order on earning capacity of parties. o Ie hestiatte to sell assets as to do so would be to destroy earning capacity. o Court decided not to sell farm unless they had to, on the other hand W has to receive whatever is a fair result. By referring to s 79(4)(d) court framed orders such that W's share paid by several installments over several months. Up to husband to decide how to get that money (eg sell off a few paddocks). o Court concluded that if husband did not cooperate then would have to put farm up for sale. Damages awards: O'Brien . Damages not quarantined and subject to step 1 and step 2 of the s 79(4) considerations: O'Brien. However clearly a major contribution from person who received damages. Inflation: If it's just luck in the sense that market values have gone up then it's the inflated value that the court applies the step 1 and 2 approach to. Contrast that with situatin where one of the spouses have done extensions and improvements - and that has led to an increase in the value. That would be regarded as the contribution of the person who did the improvements: Zappacosta Lottery winnings: (a) If one of them wins lottery before marriage, then it's what they bring in, so it's their contribution. (b) If they win lottery during marriage or shortly after separation, probably joint contribution. Might be some special facts. But starting point would be to regard it as a joint contribution. Eg ticket bought from household expenses. Wouldn't matter about who's name is on the ticket. (c) Unless argument was that person who bought it was ivolved in some kind of skill in using the argument (d) even years later after separation like in Richardson the spouse might be entitled to some share: Zyk. Conduct leading to diminution of assets: Kowaliw(newsagency reckless losses) and Mead (gambling and alcoholism) and Omacini. o Under s 75(2)(o) the court can take into account any fact or circumstance which in its opinion the justice of the cae requires to be taken into account. This includes conduct that affects the financial status of the parties: Soblusky's case. Where losses are incurred by parties or either of them in course of marriage whether such losses result from a joint or several liability the losses should be shared. EXCEPT in following circumstances: where (a) one of parties has embarked upon a course of conduct designed to reduce or minimize effective value or worth of matrimonial assets or (B) where one of the

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parties has acted recklessly negligently or wantonly with matrimonial assets overall effect has reduced or minimized their value. (Kowaliw)
? Example: in Kowaliw first set of losses during ordinary course of business shared between W and H, but on second set of losses H was acting recklessly. Thus Court notionally increased pool of assets wasted then applied step 1 and step 2 and adjusted shares reflecting fact that one spouse was responsible for some loss. Debts and liabilities: Biltoft ; Worsnop o Note that uner s 75(2)(ha) the court must have regard to the effect of any proposed order on the ability of a creitor of a party to recover the creditor's debt so far as that effect is relevant. Thus the Court must recognize the claims of the tax office. Where there are unsecured liabilities, and W is not implicated, then at step 1 her contributions won't be affected (such that the property is divided 50/50 if possible). However W will not receive any step 2 adjustment. Violence: kennon's case; Fairchild. Violence is relevant at step 1 of the process because the Court can take into account the fact that H's violence towards W made W's contributions more arduous because of H's conduct. Violence also relevant to step 2 if the violence causes PTSD or other inhibitions of earning capacity. Eg in Fairchild because of her PTSD her split of the property went up by 10%. Omacini > when the court has determined that it is appropriate to notionally add back to the pool of assets between parties when dividing up the matrimonial property: three following principles are guidelines for use in exercise of discretionary jurisdiction. o First, where the parties have expended money on legal fees, the costs should be notionally paid back into the pool. o Second, where there has been a premature distribution of matrimonial assets (Eg where H distributes to self assets in which W has a legitimate interest it should be brought into the pool of assets on a notional basis and distributed accordingly) o Third, where losses are incurred by parties or either of them in course of marriage whether such losses result from a joint or several liability the losses should be shared. EXCEPT in following circumstances: where (a) one of parties has embarked upon a course of conduct designed to reduce or minimize effective value or worth of matrimonial assets or (B) where one of the parties has acted recklessly negligently or wantonly with matrimonial assets overall effect has reduced or minimized their value. (Kowaliw) o

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