When a couple separate, and cohabitation ends, disputes can arise over who should occupy the home and who should pay the related expenses on the home.
In cases where the separating couple can’t resolve the matter, either on their own or with the help of lawyers or mediator, the Family Court can often do so.
The Family Court often can use its injunctive powers and maintenance powers, at an interim hearing, to determine who gets to stay and who must pay.
Regardless how it happens, if one party has the use of the home after separation and the other doesn’t, this will almost certainly feature in the asset division discussions between the parties.
Issues such as who has paid the mortgage and rates, or the costs of the party who has moved out, will often be raised as part of claims that one party contributed more and should get more in settlement than the other.
In most cases, the Court will make property orders using the asset pool as at the current date using current values. if the property has increased in value, if there’ve been renovations, or the mortgage debt substantially reduced, the contributions discussions can get even more complex.
For better or worse, there is no precise mechanism to weigh up and determine these claims. Since its creation in 1976, the Family Court has consistently avoided mathematical or formulaic approaches in determining entitlements.
The following cases, however, often feature in disputes where one party is living in the home, and maintaining the property and mortgage without the other party.
Jabour & Jabour [2019] FamCAFC 78 at paragraph 84 is authority for the proposition that an increase in the value of an asset unrelated to the efforts of the parties is to be treated as a contribution by both parties or neither of them. In other words, if the property equity has increased due to market forces alone, then neither party may be claiming a greater share to the value increase.
Dickons & Dickons (2012] FamCAFC 154 at paragraph 17 is authority for the proposition that contributions should be given a broad meaning, and should be assessed holistically rather than through a mathematical or item-by-item approach:
“It is self-evident that financial contributions (whether direct or indirect) can be made to a relationship that have an effect on the property of the parties without those financial contributions finding their way directly into, or being directly linked to, specific property or, indeed, directly to the totality of the property available for distribution at the time of trial. Financial contributions can be made to the “acquisition, conservation or improvement of property (directly or indirectly). A financial contribution can be made indirectly by, for example, the use by parties of income or assets for purpose A freeing up the use of other income or assets for purpose B. Moreover, a particular financial contribution might have been used wholly in discretionary expenditure which, but for that contribution, would not have been available to the parties or would have required borrowings or a diminution of capital. Such a contribution can also, in that way, be seen, for example, as an indirect contribution to the conservation of property.”
In Singerson & Joans [2014] FamCAFC 238 at paragraph 66 The Court warned against linking specific contributions to specific assets:
“There is nothing to suggest that any category of contributions needs to be quarantined and applied solely to particular assets. The court is mandated to look at the totality of what the parties have contributed to a financial and non-financial sense, including contributions to the welfare of the family and to the acquisition, conservation and improvement of assets. The court is required to evaluate the significance of all the various contributions to the property, notwithstanding there may be different categories of that property“.
In Blandford v Enmore [2022] FedCFAmC1A, the Full Court said at paragraph 14:
It is not possible to minimise the “leap” from the qualitative to the quantitative by scoring each factor and then somehow calculating totals, as to do so would result in a process that is not a holistic assessment of the relevant matters. [Such] an “accounting” or “scoring” approach is necessarily flawed as it would not only require detailed actuarial calculations with respect to financial contributions (which would rarely be possible on the evidence generally available in property settlement cases) but it would still leave the significant problem of how to convert the qualitative factors [as set out in legislation] to a quantitative value. As a result, such an accounting approach has been consistently disapproved.
Outcomes in family law trials are notoriously difficult to predict, due to the wide discretion given to judges and magistrates that determine the cases, and due to the fact that each family is unique with its own history and set of arrangements; the settlement outcome will largely turn on the individual facts, and what the Court considers is a just and equitable result, in that particular case.
Having said, homeowners in occupation should be aware of the following arguments:
- Paying the mortgage on the house, arguably, doesn’t give you any special right to keep that asset in settlement;
- If you contribute extra to the property after separation by additional mortgage payment or renovations, there is no guarantee this will be refunded to you in settlement;
- Living in the property and maintaining the property may not be enough to insulate you against the effect of rising property values – the other party be found to have contributed equally to the capital increase;
- Similarly, paying the rates, insurances and interest-only mortgage repayments on the property may not be enough to insulate you against the effect of rising property values; and
- The other party’s circumstances and contributions (of all types) will be relevant and could have an impact, and this may include if they have remained exposed as a liable borrower on the mortgage.
The information provided in this article is for general information purposes only. BBV Legal accept no responsibility for any actions taken based on this information, and users do so at their own risk.
For further information contact Daniel Loreck at BBV Legal on 9325 9644 or by email at enquiries@bbvlegal.com.au.
