As highlighted in my previous article “Why do I need a Family Lawyer?”, a failure to finalise your property settlement with your former spouse/partner as promptly as possible after separation can have drastic consequences on the outcome. No family law case highlights this more painfully – at least, for high-income parties – than the decision in Trask v Westlake  FamCAFC 160, delivered by the Full Court of the Family Court of Australia in August 2015.
The case is also notable for reaffirming the principle that a redundancy payment – even one accumulated and received post-separation – is matrimonial property and therefore able to be taken into account in determining the ultimate net pool for distribution.
Briefly, the facts of Trask v Westlake were as follows:
- The parties had been married for 11 years before divorcing, following a two year period of de facto cohabitation.
- They had four children who ranged in age from 9 to 15 when the parties separated in 2009.
- During the relationship the wife had been the traditional homemaker and primary carer of all four children, whilst the husband had successfully pursued his corporate ambitions and was the sole income-earner for the family.
- Proceedings were not commenced in the Family Court for property settlement until 2013, some four years after separation.
- In the intervening period, the husband, who was a corporate “high-flier”, earned taxable income – which included a large redundancy pay-out – of approximately $9M, which was in fact some $2M more than the totality of the net marital assets at separation.
- Based on his overwhelming post-separation contributions, he argued at trial that he should receive a larger percentage of the asset pool.
- Neither the husband nor the wife was employed at this time.
The decision at Trial
As expected, the Trial Judge held that after a 13 year relationship and having had four children together, the parties’ financial, non-financial, domestic and “family welfare” contributions should be considered as equal.
However, he went on to find that due to the massive disparity in income-earning capacities between the parties, the wife should be awarded a 10% “future needs” adjustment on an asset pool which, at the time of trial, exceeded $7M. This gave the wife a 60% distribution overall, or $4.2M.
The husband appealed on the following grounds:
- The total income he earned in the four years between separation and trial significantly exceeded the extent of the parties’ actual assets as existed at separation.
- That the Trial Judge made an error in assessing the parties’ post-separation contributions to the assets as equal. Specifically, the husband argued that his own post-separation financial contributions in earning around $9M should be given greater weight than the wife’s homemaker and parenting roles over the same period.
In dismissing the husband’s appeal, the Full Court considered that although the husband had been extremely successful through a combination of his skill, knowledge and determination, his earning capacity was not achieved in a vacuum and it had continued to be assisted and promoted by the wife’s domestic and parenting contributions since separation. Further, his capacity to earn a high income had been enhanced and fully supported by the wife, who had made significant indirect contributions towards his success by over the years relocating throughout Australia and internationally, and caring (often exclusively) for the children so that he could divert his time and energy to his career.
The Court held that the Trial Judge had quite appropriately “recognised that the wife’s post-separation contributions did not cease upon separation but, rather, continued in circumstances made more difficult by the fact of separation”. The Court refused to consider the wife’s ongoing parenting and domestic contributions made after separation as being less valuable than the husband’s $9M earnings over the same time.
Whilst it was easy to identify and assess the husband’s direct financial contributions after separation, and despite the wife’s homemaker/parenting contributions being “much less tangible”, the Full Court held that “the lack of tangible recognition, or the fact that they are not susceptible to a dollar calculation, does not render them less important”.
The Court also considered that the wife had made a substantial contribution to the husband’s retrenchment pay-out, notwithstanding that it was with a completely different Company and had been both accrued and received after separation.
The Court fully upheld the original decision to award the wife 60% of the $7M asset pool.
This case serves to highlight the importance – particularly for successful, high-earning parties – of settling property and financial matters as soon as possible after separating. As a general rule, once Final Orders have been made (either by consent or at trial) any property or financial resources acquired afterwards – whether via extraordinary incomes, redundancy payments, inheritances etc. – cannot be susceptible to a family law claim.
If you have any queries or wish to obtain advice in relation to any of the issues raised in this case please contact our Director, Ross Dunlop.
The above does not constitute specific legal advice but is general information only.