We own property overseas. What is the geographical requirement for property settlement?

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You may not be aware that the place where a de facto partner makes contributions to the relationship has a bearing on property settlements. The Family Law Act provides that contributions must be made in Australia. This is known as the geographical requirement. The case of Harriott & Arena[1] discussed whether contributions used to acquire property in Vanuatu met the geographical requirement.

The geographical requirement

Section 90SK(1) of the Family Law Act 1975 (Cth) provides:

(1)   A court may make… an order under section 90SM, in relation to a de facto relationship only if the court is satisfied:

(a)   that either or both of the parties to the de facto relationship were ordinarily resident in a participating jurisdiction when the application for the … order was made…; and

(b) that either:

(i) both parties to the de facto relationship were ordinarily resident during at least a third of the de facto relationship; or

(ii) the applicant for the declaration or order made substantial contributions in relation to the de facto relationship, of a kind mentioned in paragraph 90SM(4)(a),(b) or (c);

in one or more States or Territories that are participating jurisdictions…

The Story

The parties met in Sydney in April 1999. The appellant was living in Sydney at the time and the respondent was visiting from Vanuatu. In January 2000, the parties commenced living together in Vanuatu. Before moving to Vanuatu, the appellant sold her home in New South Wales from which she received $80,000 in net proceeds. The appellant also altered her parenting orders for a child from a previous relationship and had her job ‘put on hold’ though she later resigned three years later. The parties acquired a business about a year after they commenced cohabitation in Vanuatu. The appellant contributed her half share ($30,000) from the sale of her home towards the business. The appellant also contributed a further $30,000 in 2003 to the purchase of a home in Vanuatu. The couple separated in 2011. On her return to Australia following separation, the appellant brought proceedings in the Family Court seeking a property settlement between herself and the respondent.

Trial decision

Judge Scarlett dismissed the application finding that the appellant had not made a substantial financial contribution to the relationship in New South Wales. Rather the contributions had been made in Vanuatu and therefore did not meet the geographical requirement. The appellant appealed to the Full Court.

The issue on appeal

Was the trial judge wrong in finding that the contributions had not been made in Australia?

The Full Court’s decision

The meaning of ‘in relation to the de facto relationship’

The Court considered that the trial judge in assessing the contributions had asked the wrong question. The question was not whether the contributions had been made during the relationship but whether they were made in relation to the relationship (at [40]). ‘In relation to’ means that the contribution had a ‘sufficient nexus’ or ‘proper association’ to the relationship (at [49]).

Were contributions of the requisite kind made in NSW?

The Court held that the proceeds of the sale from the NSW property were considered a contribution made at the commencement of the relationship. It can be likened to an ‘initial contribution’ that is made before a marriage is entered into. Therefore the proceeds were sufficiently ‘contributed’ in a participating jurisdiction. The fact that the proceeds were later used to acquire property in Vanuatu was immaterial (at [55]).

Whether the proceeds of sale of the appellant’s home were ‘substantial’?

In making this determination the Court turned to the decision in Webb & Douglas[2]  where it was held that for a contribution to be ‘substantial’ it must be more than usual or ordinary. The Court acknowledged that this test is particularly vague but was satisfied in its subjective view that a contribution of $80,000 was substantial.

Therefore as a substantial contribution was made and the geographical requirement was satisfied, the trial judge was wrong to dismiss the appellant’s application for the alteration of property interests. The appeal was allowed.

Lessons

The Court’s decision here is an important one as it widens the scope of a couple of key phrases in the legislation. The phrase ‘in relation to the de facto relationship’ not only includes contributions made during a relationship but also contributions made in relation to the relationship. In addition, even if these contributions are dealt with in a non-participating State or Territory, as long as they were initially contributed to in the State, the geographical requirement is likely to be met.

For more information regarding the geographical requirement

Please contact our Business Development Team or call us on (07) 3252 0011 to book an appointment with one of our Family Lawyers today.

Please Note: This is not legal advice but it may help you understand the law. Read more.

[1] [2016] FamCAFC 69
[2] [2012] FMCAfam 1049.