MEDICUS May 2022

Time trap A longer period between separation and final property settlement usually adds a layer of complexity to the matter, writes Framy Anne Browne F ormer spouses in family law disputes are often challenged with the uncertainty of how income, expenditure and accumulated assets and liabilities post separation, will be treated at final property settlement or at trial. It is not uncommon to find that the financial position of former spouses when they first separate may differ significantly at the time of trial, particularly if the period between separation and the date of trial is lengthy. It is also not uncommon for one of them to argue that an asset acquired post separation should be quarantined or excluded from the rest of the property pool available for division. As assets are usually valued as at the time of trial, it is not uncommon for parties who come into possession of significant assets post separation, to feel aggrieved that these assets will be shared at property settlement, and even more aggrieved if they hold the belief that an agreement has been reached with their former spouse without the need for Orders or a Financial Agreement. Longer periods of separation only serve to increase the chances of various transactions being made, without any guarantee to the separated parties as to how such transactions are treated. The Full Court of the Family Court (Full Court) confirmed that the post-separation period cannot be ignored in Maine & Maine [2016] FamCAFC 270. “In determining s 79 applications in circumstances where there has been an earlier agreement, it will often be necessary to consider what was the value of the parties’ assets at the time of the agreement, what their various contributions were to that time, and what might have been an appropriate s 75(2) adjustment. A consideration of these matters might well be necessary in order to provide a background to the parties’ understanding of what was a just and equitable settlement at the time. However, and perhaps more significantly, it would generally be necessary for the court to acquaint itself with changes in the composition and value of the property pool, so that post-separation contributions can be assessed.” Determining how assets and liabilities acquired post separation will be treated, and what weight will be given to post-separation contributions is not always straightforward. Upon review of recent Full Court decisions, it is possible to discern how the Court has treated the application of funds, accumulation of assets and liabilities during the interval between separation and finalising a property settlement in different cases. In circumstances where in some cases, post separation debts such as tax debts, are ignored and when in others, such debts are not, the very wide discretion of the Family Court is evident. While parties have a right, recognised by the Court, to properly get on with their lives and to provide for their reasonable needs post separation, it is not always clear how post separation transactions will be treated and to that end, it is always sensible to carefully record the nature and quantum of income received, payments made, and how assets and/or liabilities are acquired or disposed of. A full and accurate recording of the sources and destination of all movements into and out of the parties’ property pool is essential, so as to accurately reflect the value of any specific contributions of one party over the other. Keeping things simple as much as possible reduces the need to embark on complex asset and income tracing exercises. The assets in the property pool clearly include all assets at the time of separation, and any growth in the value of those assets. Where a “natural” growth in the value of the pool occurs, that value normally will be shared. While it may be argued that the application and diligence of one party in nurturing the value increase might have exceeded that of the other, clients should be properly informed of the Court’s clearly established principles regarding the assessment of contributions as a homemaker and parent. “Keeping things simple” in family law disputes is often the answer to avoiding protracted litigation and conflict, and a longer period between separation and final property settlement, for all intents and purposes, has the opposite effect and usually results in adding complexity to a matter by virtue of time. ■ M AY 2 0 2 2 M E D I C U S 47 F A M I L Y L A W