In Stanford v Stanford (2012) HCA 52 the High Court stated clearly that when determining property settlements, the first thing to do is to determine if it would be just and equitable to make a property adjustment between the parties. What constitutes “just and equitable” will depend on the individual circumstances of your relationship.
In the majority of long-term legal relationships, marriage or de facto, one could easily assume that the partners managed their financial affairs jointly. If this was the case during your relationship, it would follow that you would need a property settlement upon separation.
The court will also be inclined to take this approach, but you might argue that you and your partner kept your finances separate for the duration of your relationship. Would an adjustment then be just and equitable?
In the case of Chancellor & McCoy (2016) FamCAFC 256, the partners in a same-sex de facto relationship separated after 27 years. The parties had no Financial Agreement and kept their finances separate throughout the relationship. The values of their respective net assets were $720,000 and $1,700,000.
The Appellant applied for a property adjustment and argued that the relationship was a long-term relationship and that both parties contributed to the de facto financial pool. After considering all the facts, the court concluded that it would not be just and equitable to make a financial adjustment.
In deciding that it was not just and equitable the Judge considered the following facts:
The court found that a small contribution every month to the homeowner (the respondent) who provided housing for the partners, did not constitute financial mingling. It was merely financial assistance. It was quite clear from the facts that for the entire duration of their relationship, the parties did not intermingle their respective finances. The court considered whether this was initially conscious or subconscious, as irrelevant. No property adjustment was ordered.
This was an unusual set of circumstances. In most cases, the circumstances will be such that the Court will find that it is just and equitable to make a property adjustment between the parties.
If you wish to keep control over your assets and finances after separation, you should consider entering into a Financial Agreement. A Financial Agreement is legally binding and you and your partner can stipulate how you would like to divide your assets after separation.
This way you will determine what happens to your assets after separation, and not the court.
Do you need legal advice?
A lawyer will always advise you to consider all the implications of joint v separate financial affairs during your relationship. A good lawyer can advise you on both scenarios and assist you in making the best decision for your relationship.