Post-separation domestic contributions are given a real, and not token, weight

Post-separation domestic contributions are given a real, and not token, weight

Introduction

Oftentimes, the parties to a broken relationship will continue to make contributions after separation. The weight attributed to such contributions can be a difficult question. This is particularly so when one party’s financial contributions are to be assessed against the other party’s contributions in the capacity of a homemaker or parent. Trask & Westlake [2015] FamCAFC 160 is a recent decision of the Full Court goes about assessing the parties’ respective financial and non-financial contributions in the post-separation context.

Background

The parties had been married for 13 years and had four children. Throughout the marriage, the parties agreed that the wife would be responsible for parenting/homemaking responsibilities whereas the husband would be the breadwinner. Once the parties had separated, the husband’s income had increased considerably. This resulted in earnings of approximately 9 million dollars from the date of separation until the date of trial. The wife, on the other hand, resumed her home-making responsibilities in relation to the parties 4 children. At trial, Aldridge J assessed the parties’ post-separation contributions as equal. The husband appealed.

The Full Court’s Reasoning

There was no error in the trial judge’s assessment that the parties’ post-separation contributions were equal. After separation, the wife had continued her role as parent/homemaker under difficult circumstances. The husband’s increased earnings were in part attributable to his hard work and dedication. But the wife also deserved credit given that her dedication to her family enabled the husband to advance his career. The mere fact that wife’s contributions are not susceptible to a “dollar representation” shouldn’t prejudice her claim or render her contributions less important.

Final Thoughts

This case is illustrative of the notion that a party may not be credited for assets accumulated from their post-separation efforts under the following circumstances. Namely, the other party has made indirect contributions to the acquisition of the assets in question.
How Debts Primarily Incurred during the Relationship by One of the Parties are Treated

Introduction

Valuing the property of the parties in the context of proceedings under s 79 of the Family Law Act involves deducting the value of the parties liabilities from the gross value of their assets. Accordingly, issues sometimes arise as to whether certain liabilities should be discounted. The decision in Adair & Milford [2015] FamCAFC 29 examines this issue in the context of a tax debt that could have been retired had the party who incurred the debt chosen to do so.

Background

After a 15 year relationship, the parties’ liabilities exceeded the value of their gross assets. The trial judge ordered that the husband be solely for a tax debt of $419,000 and that the wife receive the net proceeds of sale of the parties’ properties, if any. The husband appealed on the basis that more than half of the tax debt had been incurred during the course of the relationship.

The Full Court’s Reasoning

The Full Court dismissed the husband’s appeal. There are no authorities in support of the proposition that a tax debt incurred during the relationship must be treated as a joint matrimonial liability. Further, the facts of the instant case constitute “compelling circumstances” that would justify the court in allocating the debt to the Husband. Upon orders being made, the wife was left with negligible assets and poor economic prospects in comparison to the husband. The husband had a significantly greater earning capacity than the wife, with gross earnings ranging from approximately $320,000-$565,000 per annum. The wife was burdened with substantial liabilities in excess of $250,000 which we incurred during the course of the proceedings. The husband, on the other, had managed to pay for his legal fees from his income.

Additionally, the husband had the capacity to retire his tax debt, but made “a conscious choice not to pay it.” The trial judge found that had the husband been unable to retire his tax debt, as he had alleged, then he would have followed through with the sale of the parties’ real properties in accordance with the agreement they had achieved. After all, had the properties been sold, the husband would have been in a position to retire substantial debt. Instead, he reneged on the agreement he had struck with the wife.

Final Remarks

An account of the above, it would appear as though a party’s commercially nonsensical decision to refrain retiring substantial debt has a role in determining the allocation liabilities during the relationship under the following circumstances. Namely, the value of the property exceeds the value of the assets otherwise available for division so as to seriously prejudice one of the parties.