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Recent Decisions - Property – How will a Court take into account the proceeds of a personal injury compensation payment - How will the Court regard gambling by the husband or the wife?

08/09/2020

In the case of Manion v Manion (2) the Federal Circuit Court of Australia had to determine the division of assets between the husband and the wife where cohabitation commenced in 1988 and ended in or around 2015 such a period is considered by the Court to be a long marriage.  By the time the matter came to hearing the asset pool was modest and consisted of an apartment in Queensland and money. 

Background

The husband was aged 58 by the time of the judgment.  He had significant health issues and was unable to work and had no earning capacity. 

The wife was younger and running her own business in Sydney.  She was in good health.

During the course of the marriage the husband had received two redundancy payments and share options, an inheritance as well as an early payout from his superannuation.  In 2013 the husband developed the first symptoms of what became a degenerative illness.  The Federal Circuit Court of Australia accepted that the husband was not employable and would be disabled for the rest of his life.  After contracting the illness the husband received a payout from a TPD insurance policy of $1,100,000.

The wife had also received an inheritance during the marriage.

The Federal Circuit Court of Australia found that the wife’s gambling was more extensive than the husband’s gambling to a significant extent.  The Federal Circuit Court referred to the decision of the Family Court in the marriage of Kowaliw which is precedent for the principle that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:

  1. Where one of the parties has embarked on a course of conduct designed to reduce or minimise the effective value or worth of the matrimonial assets; or
     
  2. Where one of the parties has acted recklessly, negligently with matrimonial assets the overall effect of which has reduced or minimised the value. 

In the case of Manion the Federal Circuit Court of Australia came to the decision that the wife’s gambling should not be taken into account in contributions but rather should be taken into account pursuant to Section 75(2)(o) and that it should result in an adjustment to the husband of 10% of the pool.

Section 75 of the Family Law Act sets out matters to be considered by the Court hearing the matter.  Section 75(10) is a section which allows the Court to consider “any fact or circumstance” which in the opinion of the Court, the justice of the case requires to be taken into account.

Outcome

The Federal Circuit Court of Australia dealt with the husband’s receipt of the insurance moneys on the basis that whilst the insurance policy premiums had been funded jointly by the parties by reason of the husband’s illness, the wife had made contributions towards the maintenance of the family. The principle in the case of Aleksovski was adopted which is the proposition that proceeds of a claim for damages for personal injury is treated as a contribution by the party who suffered the injury, but not in isolation, as the contributions must be weighed and considered at the same time. 

The Federal Circuit Court of Australia accepted that the other spouse was found to have contributed to the compensation but not necessarily on an equal basis.

On balance, the Federal Circuit Court of Australia found that the contributions of the husband were 65% and that the husband should receive an additional adjustment by reason of the wife’s gambling at 10%. 

If you are proposing to enter into financial/property settlement discussion with your spouse or de facto partner please contact Watson & Watson Lawyers to discuss all issues including gambling or compensation payment/s and the factors to be considered.  If you are unsure of your rights and entitlement or need assistance in navigating an equitable outcome in relation to your financial settlement, please contact Richard Watson Senior Family Lawyer or Shereen Da Gloria his Personal Assistant to discuss your matter and seek the appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.

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