In some cases, a party who is forewarned of the impending separation or who feels angry, bitter and hurt, or for some other reason, may take steps to hide assets either in Australia or abroad in an effort to minimise the property pool and reduce the claim for property settlement by their estranged spouse. Regardless of the reason for engaging in such conduct, it is very serious and, if proven, can result in the Family Court taking a very negative view of that party and making adjustments favourable to the other party to ensure that fairness is achieved.
The first step in any property case, is for the property pool to be identified, valued and quantified. This means that all assets need to be identified and valued after which liabilities are deducted so that a “net asset pool” can be ascertained. It is at this step that there may be difficulties if a party has engaged in conduct designed to minimise or defeat the other party’s claim.
The innocent party will need to uncover evidence sufficient to demonstrate property has been disposed of and that action needs to be taken to address the situation so as to ensure that injustice is not caused to them.
The Courts have consistently found that if a party engages in conduct which is reckless and without regard to financial consequences, it can add back notionally into the property pool funds which have been wasted. This would be the case, for example, where significant funds have been gambled and lost, a business recklessly managed and “run into the ground” post separation.
Over a period of decades, the Court would notionally add back into the property pool such property which would have the effect of enlarging the property pool available for division between the parties. Of more recent years, this approach has been less favourable and considered the exception rather than the rule and instead the Court makes an adjustment under a different part of the Family Law Act (Section 75(2)(o)) to ensure that justice and fairness is achieved as between the parties.
There are certain situations where a party may transfer property to a relative or friend in an effort to remove it from the property pool. Under Section 79A, a Court has power to set aside such a transaction if it can be proven that it was designed to defeat the innocent party’s claim to a property settlement. This would involve the owner of the property being joined as a party to the proceedings and careful consideration needs to be given to this action as there could be adverse costs consequences. It is imperative that advice is sought and received from an experienced family lawyer so as to consider all possible consequences.
Pearsons Lawyers
This is general advice only. Pearsons Lawyers have a team of specialist family lawyers who can provide timely and accurate advice on all matters that need to be dealt with following a separation including parenting and property matters. To arrange your first appointment contact Pearsons Lawyers today on 1300 699 688 and “know where you stand”.
