The Facts
Differing individual contributions to marriage
A husband and wife were married on 2 February 2002, separated on 9 April 2010 and got divorced on 2 August 2011.
They had one child, who was born in 2005 and was cared for equally by the two parents after the separation.
At the beginning of the marriage, the wife had a small amount of assets. The husband, on the other hand, owned two properties, shares, a vehicle and substantial superannuation.
During the course of the marriage, the two properties that the husband contributed to the marriage were sold and two other properties were acquired. At the time of the family law proceedings, those properties were valued at a total of $691,833 and subject to a mortgage of $111,115.
The couple’s superannuation equalled $289,816 at the time of the proceedings, with only $5,606 being in the wife’s super fund. The parties also held other assets equalling $39,099 as an agreed value.
Husband receives substantial inheritance forming 32% of asset pool
In 2014, some four years after the couple separated, the husband inherited $430,686 from his father.
In 2016 the trial magistrate found that the net value of the parties’ assets was $1,340,319. The inheritance accounted for around 32% of the asset pool. Because of this, the husband was seen to have contributed 75% of the pool of marital assets, while the wife was seen to have contributed 25%.
Because of the disparity in income, the wife was ultimately held to have contributed 35%. She therefore received 35% of the $1,340,319 and the husband received 65% of it.
When the husband appealed the trial magistrate’s decision, it was up to the appeal court to determine whether the ruling should stand.
Expert commentary on the court's decision
Family Law Court of Australia finds in favour of the wife
In the case Calvin & McTier [2017] FamCAFC 125 the Full Court of the Family Court of Australia dismissed the appeal of the husband, Mr Calvin, and found in favour of the wife, Ms McTier.
The trial magistrate in the lower court had reasoned that the inheritance received four years after separation was property available for division under section 79(1) of the Family Law Act (Cth) 1975 (“the Act”).
Section 79(1) of the Act gives the court power to alter property interests of people from a marriage.
The magistrate also determined that in order to properly access the matters he is required to access under section 79(4) of the Act, he must include the inheritance in his calculations.
Section 79(4) sets out what needs to be taken into consideration when making a decision to alter property interests. This includes financial contributions made directly or indirectly by or on behalf of a party to the marriage.
Husband’s appeal against trial magistrate’s decision
The appellant husband appealed on three grounds – that the inheritance should not have been available for division between the parties, that section 79(4) of the Family Law Act does not require the inheritance to be included and that the trial magistrate erred in requiring the husband to comply with the orders within 28 days.
After reviewing the trial magistrate’s decision, the appeal court stated that he did not make a mistake in determining that the inheritance, acquired some time after separation, formed part of the asset pool.
Chief Justice Bryant stated that contributions may be included in the pool of assets long after separation. Multiple cases were referenced to support this premise.
The court noted that when this was put to senior counsel for the husband, their argument changed from saying that the inheritance was not available to be included, to saying that the inheritance had no causal connection to the marriage.
The question was therefore whether or not the trial magistrate used his discretion correctly.
Arguments that trial magistrate did not use his discretion correctly
Senior counsel for the husband provided three lines of argument in an attempt to persuade the appeal court that the trial magistrate had not used his discretion correctly.
The first was that there is no High Court case stating that all property owned by the parties is available under section 79.
The second appeal point was based on case law. The gist of it was that, in order to make a decision under section 79 of the Act, a court must first determine if it is just and equitable to do so, given the type of property in question.
That is, any discretion used by the court must be applied in accordance with well-founded legal principles. To determine whether or not the division is just and equitable, the considerations in the law are set out in section 79 of the Act.
Importantly, the judiciary must exercise its power with due recognition of the need to preserve and protect the institution of marriage. This is set out in section 43(1) of the Act. It follows that it is a necessity of the court to accommodate these implied principles of a marriage.
The third appeal point made by the husband was that property acquired after separation is up for grabs, but only if there is some nexus between the property and the marriage.
No need for nexus between property and marriage
In determining the appeal, the Full Court of the Family Court of Australia rejected all three arguments put forward by the husband.
The court stated in relation to the first argument that the absence of authority on a particular issue does not establish that issue or the opposite of it.
In relation to the third argument, the court noted that there was no case law supporting the proposition that there had to be a clear connection between the marriage and the type of property that was being divided.
Divorcing and anticipating a large inheritance? - Focus on timing
The salient lesson from this case is that if you are due to receive a large inheritance and have separated from your spouse, it may be wise to seek urgent legal advice to resolve property interests prior to receiving the inheritance.
The key consideration is timing. That is, up until the time when a court makes property orders and thereby seals the divorce property settlement, any property coming to you is likely to be up for grabs by your ex.
The inverse also applies. Anything your ex inherits before property orders are made may be available for division between the two of you as property of the marriage.