‘Calvin’ up the inheritance12 October 2017 | Separation & Divorce
In Calvin & McTier the Full Court of the Family Court of Western Australia grappled with one central question: Should a significant inheritance received by one party long after the breakdown of the relationship be included in the property pool for division? The following is an analysis of the decision.
Mr Calvin and Ms McTier were in a relationship for approximately eight years, during which, they had one child together. Following separation, the child spent equal time with the parties.
Mr Calvin made superior initial contributions consisting of two real properties, a motor vehicle, investments, superannuation entitlements and personal effects. To the contrary, Ms McTier owned little at the commencement of the parties’ relationship.
During the relationship, the parties sold Mr Calvin’s real properties and purchase two further real properties from the sale proceeds. They otherwise contributed to the best of their respective abilities.
At trial, the net value of the parties’ assets was found to be $909,633. However, following separation, but prior to trial, Mr Calvin received a substantial inheritance from his late father. Of that inheritance, $430,686 remained at trial.
There was dispute between the parties as to how Mr Calvin’s post-separation inheritance was to be treated. Ms McTier sought to include the inheritance in the parties’ property interests available for division. Mr Calvin submitted that the inheritance ought to be excluded from the parties’ property interests.
The trial Judge (Federal Magistrate Calverley as His Honour then was) delivered Judgment on 17 November 2016. He concluded inter alia that:
- Mr Calvin’s inheritance formed part of the parties’ property interests available for division;
- the parties’ contributions were assessed as to 75% to Mr Calvin and 25% to Ms McTier; and
- Ms McTier should receive a 10% adjustment having regard to the parties’ competing prospective factors.
The trial Judge therefore divided the parties’ property interests (inclusive of the inheritance) as to 65% to Mr Calvin and 35% to Ms McTier. Mr Calvin appealed this decision.
The central issue on appeal was whether the trial Judge erred by including Mr Calvin’s post-separation inheritance within the parties’ property interests available for division.
The Full Court commenced consideration of Mr Calvin’s central contention by noting that the Court undoubtedly has the power to make an order dividing post-separation acquired property virtue of the definition of ‘matrimonial cause’ and s 79 of the Family Law Act 1975 (Cth). The Court’s focus therefore shifted to consider whether the trial Judge erred in the exercise of his discretion by including the inheritance in the parties’ property interests.
Mr Calvin submitted that decisions such as Farmer & Bramley, in which post-separation property was deemed available for division, needed to be reconsidered in light of the High Court’s reasoning in Stanford v Stanford. He further contended that, whilst the trial Judge had established that it was just and equitable to alter the parties’ property interests, His Honour did not provide adequate reasons to include the inheritance in the asset pool.
In relation to Mr Calvin’s various arguments concerning Stanford, the Full Court:
- noted that the inheritance in fact constituted part of the parties’ property interests at the time of the trial;
- rejected the proposition that after-acquired property ought be dealt with differently to any other species of property; and
- denied the necessity of a reconsideration of long-standing authority such as Farmer v Bramley.
Mr Calvin then sought to rely on paragraphs  to  of the decision in Bonnici & Bonnici. There, the Full Court considered whether an equal division of property interests was appropriate in circumstances where a substantial inheritance received by the husband toward the end of the marriage was assessed as available for division. In Bonnici the Full Court held that the party not in receipt of the inheritance could not be taken to have contributed to that inheritance except in extraordinary circumstances and that it would therefore have been open to the trial Judge to quarantine the inheritance given the specific fact pattern.
The Full Court in the present case disagreed with Mr Calvin’s proposition that Bonnici should be viewed as a guideline for the treatment of inheritances. To that end, the Full Court opined that Bonnici simply confirmed the Court’s broad discretion in determining the inclusion or otherwise of certain property interests, including inheritances.
Having regard to the above, the Full Court held that the trial Judge properly exercised his discretion and gave adequate weight to the inheritance as a contribution by Mr Calvin. The Appeal was therefore dismissed and Mr Calvin was ordered to pay Ms McTier’s reasonable costs.
In light of Calvin & McTier family law practitioners ought be cognisant that:
- Bonnici appears to have been less weight in the era post-Stanford;
- property acquired in the late stages of a relationship or following separation may rightly form part of the parties’ property interests as assessed at the date of hearing; and
- inheritances will ordinarily be dealt with as a contribution by the party who is the beneficiary of the inheritance.