Recent Matrimonial Property Settlement Decision

Two hands signing agreement

In a recent decision of the Federal Circuit Court of Australia on 31 August 2018, Franklin & Ennis (No 2) [2018] FCCA 235, the case involved an interesting set of facts worthy of record.  The parties had been in a de facto relationship for eighteen years.  The “wife” had three children, two of whom were living with their mother and were thirteen and eight respectively.  The pool of assets was worth approximately $4,150,000.00 and there was no dispute that the wife brought all the significant assets to the relationship and owned almost one hundred percent of them at the date of Trial.  The husband was seventy-two years of age, had no superannuation and sought a property settlement whereby he would receive approximately $780,000.00, or almost twenty percent of the net assets. 

During the relationship, the husband had been declared bankrupt twice and the Judge found that he was not a satisfactory witness in the Trial as he had a number of problems with his evidence and the Judge therefore approached his evidence with caution.  The wife was sixty-three years of age and was found to be a satisfactory witness and her evidence was generally preferred to that of the husband.

In 1997, the husband signed a Cohabitation Agreement at the request of the wife.  The effect of the Cohabitation Agreement was that the husband would receive no property and was precluded from having any Orders made by way of property adjustment in the event of separation.  The Agreement was not a Cohabitation Agreement for the purpose of the New South Wales legislation but nevertheless the wife sought to rely upon it.  The wife did not contend that the Agreement precluded an Order being made in favour of the husband but argued it provided a compelling basis for a finding that it was not just and equitable to do so.  Ultimately, the factors that the Judge relied upon in supporting his conclusion included the fact that the husband was nine years older than the wife, had no assets, there was an enormous disparity in the wealth of each party, the husband would need to rehouse himself, the husband had made some contribution as a homemaker and had also made a contribution in helping to raise the wife’s children.

Ultimately, out of the net asset pool including superannuation of approximately $4,150,000.00, the husband received six percent, or $249,000.00.  The Judge was satisfied that the husband would also gain benefit from a company of which the husband’s son was sole director and shareholder and of which he was the sole employee and was the only person who derived income and benefits from the company.

The decision serves as a reminder of types of lop-sided decisions Judges will make when the facts support such a decision.

Ben Farmer

 December 2018