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Financial Settlement After Divorce: Dividing Property When the Asset Pool Is Small

Divorce Property Settlement Guidelines

Financial Settlement After Divorce: How to Divide Property When There Is Insufficient Property to Distribute

There are few reported decisions that deal with the issue of dividing matrimonial property when there is little property to divide. This is mainly due to strong financial disincentives to proceed to a final hearing given the limited financial means available to the parties. When cases of this kind are determined by a judge, it seems that the spousal maintenance considerations set out in s 75(2) of the Family Law Act are of greater significance. That much is apparent from H & T [2002] FMCAfam 209, a first instance decision from 2002 that dealt with the issue of dividing property in relation to a small asset pool.

In H & T, the net value of the parties’ assets was approximately $59,000. This largely consisted in an unencumbered property that the husband had brought into the relationship, tools, equipment, savings and some modest chattels. The husband and wife also had $12,000 and $600 in superannuation, respectively.

The parties lived together for 4 years and were married for roughly 2 of those years. At the date of the trial, the husband was 39 years and employed full-time as a shearer. The wife was 45 years of age and employed as a wool classer and shearer. The parties had a 3 year old child and the wife had 2 children, age 15 and 12, from a previous relationship.

Financial Settlement After Divorce: The Court’s Decision

The court held that the assets should be divided 45/55 in favour of the husband. This decision was based on the following findings concerning the parties’ contributions and relevant spousal maintenance considerations.

In regards to contributions, the trial judge determined that the parties’ respective contributions were 80/20 in favour of the husband. The husband owned an unencumbered property when the parties began living together. This was the principal matrimonial asset. Both parties contributed financially, but the husband contributed more than the wife in this regard, The wife, on the other hand, was mainly responsible for raising the parties’ child.

In considering the relevant spousal maintenance factors, the trial judge held that: “[I]n some senses the smaller the asset pool the more critical the adjustment for other factors beyond contribution may be.” The relevant spousal maintenance considerations consisted in the disparity in the parties’ respective earning capacities and the husband’s superannuation. The wife’s earning capacity was limited by:

  1. her care of 3 children; and
  2. a court order requiring her to live within a 200 km radius of Hamilton.

Although neither party had significant superannuation entitlements, the husband’s superannuation entitlement was nonetheless substantially greater than the wife’s For these reasons, the trial judge adjusted the wife’s entitlement by 25%, giving her an overall entitlement of 45%.

Financial Settlement After Divorce: Concluding remarks

H & T underscores the significance of the net value of the parties’ property in taking account of any relevant spousal maintenance considerations. Because of the spousal maintenance considerations favouring the wife, she received an adjustment that exceeded her contribution based entitlements by 5%. This is partly explained by the fact that the parties total value of the parties superannuation and non-superannuation assets was approximately $71,600.