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A property rezoned during a long marriage - what did the Full Court say about contributions in Jabour [2019]?

Friday 15th November 2019

By: Melanie Wilson

Jabour was an appeal from property settlement orders made in the Federal Circuit Court of Australia, the effect of which was to divide the net asset pool of the parties worth $9,033,912 (34% to the wife and 66% to the husband). 

The parties had been in a relationship for 27 years and had three adult children together.  

The pool included a real property partly owned by the husband at the commencement of marriage in 1991.  The husband had half-interests in two 30 acre blocks of land and a half interest in a 44 acre block.   In 1998, the husband and the co-owner of the land divided the 30 acre blocks between them.  In 2001, the husband sold his half share in the 30 acre blocks and the funds were used partly to support the family, and partly to acquire the other half interest in the 44 acre block.  That 44 acre block was fortuitously rezoned in 2010 and was valued at $10,350,000 at the time of final hearing.

Aside from the block of land, the primary judge accepted the parties’ concession that their contributions during the relationship ought to be regarded as equal.  In addition to raising their family, each of the parties worked hard in their respective occupations. They also participated in a number of businesses and investments that did not produce significant returns.  It was on the basis of the husband owning the block of land at the commencement of the marriage which resulted in such a significant adjustment in his favour.

The wife appealed on the grounds that, among others, the primary judge had misdirected herself on the case law regarding assessment of contributions, and that the conclusion was manifestly unjust and not open on the evidence.

In upholding the appeal, the Full Court rejected the husband’s submission that the case law required the Court, when assessing initial contributions, to have regard to the value of the asset when it was sold or at the time of trial, rather than looking at the value of the asset at the time the parties commenced cohabiting .  The Full Court found the husband’s submissions wrong and misleading and referred to  subsequent case law where it was noted that the party who owns the family home or other property at the commencement of the relationship may be able to retain that property because “of joint efforts of wage earning, homemaking and parenting, and mutual support” of the other party. In effect, the Full Court said that the husband was given credit for the serendipitous revaluation of the property by having regard to its value at the time of the hearing, rather than it being merely the springboard for its later value.

The Full Court found error in the primary judge’s approach to assess the parties’ contributions to the property separately (in effect, quarantined) to the contributions during the rest of the marriage which the parties agreed were equal.  The primary judge noted that the property “largely sat idle for the duration of the marriage” and that the costs to maintain it were not significant. Neither party made a significant contribution to its upkeep or to the eventual increase in its value.  The Full Court found that it was apparent that the approach of the primary judge was to search for a nexus between the contributions by the parties to the property and its present value. The only contribution of that kind she could identify was on the part of the husband bringing the property to the relationship.  However, the parties’ decision not to use all the funds from the 2001 sale for family purposes enabled the husband to gain sole ownership of the block.  The parties’ other investments and businesses did not go well and funds were scarce.  The parties lived a modest lifestyle.  Thus, the decision not to sell the land at an early stage can also be seen as a significant contribution.  The parties became aware of the possibility of rezoning 2-3 years before it occurred and deferred selling the property on this basis.  The Full Court found that the approach of the primary judge had the effect of these considerations being overlooked, and minimising the myriad of other contributions that were made in the course of a long marriage during which both parties worked very hard and raised a family.  

The Full Court found that the primary judge acted on a wrong principle and that the exercise of her discretion clearly miscarried. Although not necessary to determine, the Full Court said that there considerable force in the wife’s argument that the outcome of the primary judge’s decision was so plainly unreasonable that had an error of application of principle not been identified, one would have had to have been inferred .

The Full Court varied the property settlement orders such that the wife received 47% of the net asset pool and the husband 53%. 

In reaching its decision, the Full Court said that:

  • “Whatever was the value of the property at the commencement of the relationship its significance has been largely lost given the myriad of the contributions by each of the parties to their various business ventures, through their employment and care of the family over a long relationship, including the contributions made to the retention of the property... There is no doubt that they both worked hard and over many years they both contributed to the full extent of their capacity within the roles each took within the marriage.”
  • “The reason that there is significant property to be divided is that the property was fortuitously rezoned which caused its value to skyrocket…this increase in value does not favour one party over the other. Thus although the property was introduced by the husband it was merely the springboard for the events which followed and relevantly the revaluation.  Throughout the relationship the parties’ contributions to this property were no different to their other contributions.”
  • “The only contributions that point away from a finding of equality of contributions where both parties worked very hard to support and maintain their family over 27 years, are the initial contributions made by the husband of the former matrimonial home and the half interest in the three blocks of land. Although the former was not the subject of the final division, it nonetheless was a contribution of some utility as it served as the family home for many years.”
  • “Giving the appropriate weight to these contributions, we consider that they are properly reflected by finding that the contributions favour the husband by 53 per cent and the wife 47 per cent. As there are no other [future needs] matters to be taken into account, this will be the division of their non-superannuation property. This leads to a differential of $542,035 which appropriately reflects the various contributions.”

The husband was ordered to pay the wife’s costs of the appeal.  

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