Initial contributions that a party makes at the beginning of a relationship

In property settlement, it is a principle that the longer the de facto relationship the disparity of initial contributions becomes less significant. Parallel to that principle is that initial contributions have significant weight in the disparity between other types of contributions made in short de facto relationships.

The reason is that if the relationship is still in the early stages, say less than five years, property or asset of the parties has not yet fully integrated itself into the relationship’s joint asset pool of the parties. On the other hand, for a long relationship any property individually owned by the parties, owing to the long period, would already have been utilized and improved during the relationship.

A property settlement dispute in court involves a four-step process. It is in the second step that the initial contributions of a party to the marriage or de facto relationship will be identified and recognized.

There are two types of contributions that a party makes to the de facto relationship:

Financial and non-financial. Financial contributions include real estate property, investments, vehicles, and any other asset to which a monetary value can be attached.

What contributions each party had to the net asset pool

Non-financial contributions pertain to homemaker and parenting contributions or services rendered for the improvement of a property like renovating the family home or refurbishing a piece of furniture. With these in mind, the initial contributions which are the subject of this article concern the assets of a party that were brought into the relationship or those that were acquired by a party early in the relationship and mainly by his efforts.

The property settlement process involves:

• Determination of the net asset pool of the relationship – parties are required to make a full and frank disclosure of their assets, including those that they brought into the relationship. The full and frank disclosure requirement cannot be overemphasized since it is only by disclosing all of one’s assets that a court will be able to determine initial contributions.
• Assessment of the financial and non-financial contributions of the parties – The Court will consider the contributions of the parties in the acquisition, conservation and improvement of the properties. The Court will also determine whether the contributions were made, before and after the relationship and which properties belong to either of the parties.
   

Future Needs

• Determining the future needs of the parties – this is by Section 75(2) of the Family Law Act 1975
• Making an order that is of practical effect to both parties – the court will issue an order that is just and equitable to both parties.

In deciding a property settlement case, courts are not required to follow a strict formula in the division of properties. Rather, the four-step process will be followed, and the Court will be guided by the primary principles of fairness and equality.

Thus, operating under those principles, it is likely that a party who made an initial contribution in a short relationship will most likely be able to carry that contribution out of the relationship or at least a substantial part of it.

This is also because, in a short-lived relationship, an asset or property is presumed not to have been improved greatly through the joint efforts of the parties as compared to what happens in a long relationship.

The other party who did not make the initial contribution is presumed not to have made a significant contribution to the initial contribution in such a short time. It would be irregular and injustice if the other party who did not make the initial contribution will be given a substantial part of the initial contribution if he did nothing much to improve it.

This does not mean to say that a party is already guaranteed to be able to take back the initial contribution completely. The four-step process will be observed and in the third step thereof, the court will also be considering the future needs of the parties.

Considering the future needs of a party requires taking into account the ages and health of the parties, their employability or income capacity and whether the party has the care of the children.

Thus, the requirement of being fair to the party who made the initial contribution will be tempered with the need to provide for the less fortunate de facto partner who probably cannot financially provide for himself in the future.