By Antony Kahn, Principal and Sophie Buckland, Law Clerk

Claim for property adjustment brought on behalf of deceased husband in relation to property covered by a financial agreement and property not covered by the agreement

In part one of this case before Altobelli J in the Federal Circuit Court of Australia, Mr Delrio (‘the husband’) had sought to challenge the financial agreement he entered into with Ms Jindra (‘the wife’) during their marriage on the basis that the agreement was not binding or in the alternative that it ought to be set aside or declared void. Altobelli J upheld the financial agreement, but found that it was limited to certain property – namely property owned by each party (and identified in the agreement) at the time they commenced living together. Accordingly, Altobelli J allowed the husband’s application for property adjustment to proceed in relation to the property of the parties that was not covered by the agreement.

Between part one and the part two resumption of this case before Altobelli J, the husband tragically died by his own hand. The husband’s case was continued by his new wife, Ms Gray, who was appointed as his personal legal representative.

The only significant property not covered by the agreement was a real property referred to in the judgment as the W Street property. The parties were in dispute as to the date of their separation. On the husband’s case, W Street was purchased shortly prior to the parties’ separation. On the wife’s case, it was purchased by her following separation. Altobelli J noted that little turned on this issue in circumstances where the court takes into account contributions made by a party, whether during the marriage or following separation, in determining the appropriate adjustment of property interests.

Once Altobelli J had determined that the only relevant property for the purpose of the husband’s application was W Street, His Honour was required to give consideration to the husband’s purported contributions both to W Street and to the properties owned by the wife that were covered by the provisions of the agreement (and therefore excluded from division). Altobelli J placed significant weight on the husband’s acknowledgement recorded in the financial agreement that he had made no contribution to the wife’s assets identified in the agreement.

Altobelli J examined the interrelationship between section 71A of the Family Law Act 1975 (‘the Act’) and section 79 of the Act in relation to alteration of property interests. Section 71A provides that part VIII of the Act (the part that deals with financial matters) does not apply to financial matters covered by a binding financial agreement. Altobelli J accepted the wife’s submission that the husband’s contribution to the various properties covered by the agreement could not be considered in the context of his contribution to the property that was not covered by the agreement – namely the W Street property. Altobelli J further noted that the terms of a financial agreement was a relevant factor for the purpose of alteration of property interests under section 79 of the Act, and that there would need to be a principled reason for the court to interfere with the intentions of the parties as recorded in a financial agreement.

Accordingly, for the purpose of the proceeding, the only relevant contribution made by the husband was his contribution to the W Street property. The purchase of the W Street property had been funded by the wife without contribution by the husband. The husband’s case was that he had undertaken repairs and improvements to W Street during the brief period between when the property was purchased and when, on the husband’s case, the parties’ separated.

Given the husband’s limited contribution to W Street and his non-existent future needs, Altobelli J did not consider it was just and equitable for the court to make any order adjusting the interests of the parties in W Street. In dismissing the husband’s application, His Honour also noted the additional threshold requirement applicable in cases where a party has died and a legal personal representative has been appointed. The court not only needs to be satisfied that it would have been just and equitable to make an order under section 79 of the Act had the deceased party still been alive, but also that the order is “still appropriate” in circumstances where the party has died.

Delrio provides useful guidance as to the court’s likely approach to adjusting property in a case where by design or otherwise a financial agreement does not “cover the field” in terms of the property and financial resources of the parties to the agreement.

Delrio & Jindra (No. 2) [2020] FCCA 2234