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My Partner and I Kept Our Finances Separate…

In most cases, it is easy to assume that where parties have been in a long recognised legal relationship, whether married or de-facto, that the parties had embarked on a joint endeavour which included their respective financial affairs. It then follows that upon separation, a property settlement should occur. In the majority of cases this will be the approach taken by the Court.

However, following the High Court decision of Stanford v Stanford [2012] HCA 52, when determining property matters, the Court must first determine that it would be just and equitable to make a property adjustment between the parties. The recent Full Court decision of Chancellor & McCoy [2016] FamCAFC 256 has helped to clarify situations where it may not be appropriate, or in other words not just and equitable, to make any adjustment. This decision involved a same sex couple who had been in a de facto relationship for approximately 27 years. At the end of the relationship, the Applicant had net assets of $720,000, whilst the Respondent had net assets of $1,700,000. The Applicant submitted that the relationship was a long relationship and that both parties had contributed to the de-facto matrimonial pool.

In finding that it was not just and equitable to make any division, Judge Turner relied on the following facts:-

  • The parties had not intermingled their respective finances;
  • The parties did not have a joint bank account;
  • Each party had acquired property in their own name with little information being exchanged with the other party;
  • Each party had remained responsible for their own debts during the relationship;
  • Each party could use their own wage with little consultation with the other party;
  • There was a lack of joint financial decision making;
  • There was an absence of information sharing;
  • Neither party had provided for the other party under their respective Wills;
  • At the time of separation, both parties were unaware as to the value of the other party’s assets and liabilities.

Interestingly, Judge Turner noted “the payment of monies by [the appellant] to [the respondent] of $100 to $120 per fortnight for most of the relationship, whether classified as mortgage repayments [the appellant’s terminology] or rent or board [the respondent’s terminology], I find, given the small amount of payment in respect to the overall size of the pool accumulated by [the respondent], cannot be viewed as financial intermingling, but as financial assistance to the other party as the home owner who provided housing for the parties to live during the entirety of the relationship.” [paragraph 27 c]

Judge Turner also noted that whether the separation of finances was initially conscious or subconscious was irrelevant, what was important was that the parties continued to conduct their relationship without intermingling their finances for the entirety of their relationship.

The decision of Chancellor & McCoy [2016] FamCAFC 256 is an example of where parties have able to retain their respective assets without a Financial Agreement.It should be noted that this fact scenario is rare. In most cases, the Court will likely find that it is just and equitable to make a property adjustment between the parties. As a family lawyer, I advise my clients to consider the ramifications of intermingling financial affairs with their partners. Parties who wish to retain control over their respective property and assets after they separate should still consider entering into a Financial Agreement. A Financial Agreement is a legally binding document that outlines how a couple would like their assets divided in the event of separation. A key benefit to a Financial Agreement is that it removes the Court’s power to determine how your assets will be divided.

Image Credit – Olegdudko ©

Written by Anne-Louise Pham on June 17, 2017

Anne-Louise has a passion for complex parenting matters and she has worked with clients in matters involving issues such as domestic violence, drug addiction and relocation. She has also represented clients in other complex matters involving the welfare of children. View Anne's profile

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