A recent Court of Appeal decision has caused considerable concern in relation to the certainty of the statutory provisions being applied to determine net family property equalization between legal married spouses.
Sections 4 and 5 of the Family Law Act have, to date, been viewed as all encompassing statutory direction in the division of net family property. The said provisions detail that all assets acquired by spouses from the date of marriage to the date of separation (save and except for certain assets which are excluded – i.e.: gifts from third parties, inheritances, life insurance proceeds and certain civil damages) are to be valued, reduced by outstanding liabilities, compared intra-spousally and any difference in value is to comprise the net family property equalization payment. Spouses receive a credit for the value of assets brought into the marriage and property acquired by spouses post separation are not to be considered in the equalization process.
As I have detailed in prior blogs, common law spouses who are not recognized for net family property equalization purposes in the Family Law Act have had to resort to the equitable principle of unjust enrichment in order to pursue property claims arising from common law family separation situations.
Family Law lawyers have not, in equalizing property between legally married spouses, considered or applied the unjust enrichment principle, but instead have relied on Sections 4 and 5 of the Family Law Act.
In the Macnamee case, the husband received shares of a company from his father by virtue of an estate freeze. The wife had, following the receipt of the husband’s shares, been actively involved in the operation and consequent growth in value of the corporation. The Court of Appeal held that the transfer of shares were, in fact, a gift from the husband’s father and, as such, were excluded from the husband’s net family property.
The Court of Appeal held that the unjust enrichment equitable principle was still available as a remedy for legally married spouses and remitted the case back to a re-trial on the issue of whether the wife’s contribution to the growth in value of the corporation should result in monetary relief to her from what would have statutorily been an excluded asset.
The Court of Appeal stated that in the vast majority of cases any unjust enrichment that arises as a result of the marriage will be fully addressed in the operation of the equalization provisions under the Family Law Act.
The decision has potentially opened the door for even more litigation in relation to net family property equalization.