How Do Initial Financial Contributions Affect A Property Settlement?

In the 2019 case of Jabour v Jabour,1 the husband acquired a part interest in two blocks of land well prior to marrying the wife in 1991.

During the marriage, one block of land was subdivided so that the husband and the other owner each owned one of the two small blocks. The husband later sold his smaller block of land and used the proceeds to buy out the other owner’s interest in the larger undivided block of land. In 2010, the property was rezoned from non-urban land to an urban-growth zone permitting the land to be used for residential purposes and significantly increasing its value.

At the time of the trial the rezoned land was valued at $10,350,000 and constituted the majority of the value of the asset pool. The trial judge ordered that the husband receive 66% of the non-superannuation assets and the wife 34% taking into account the husband’s initial financial contributions.

The wife appealed the decision to the Full Court of the Family Court of Australia. On appeal the Full Court overturned the trial judge’s decision in order that the wife should receive 47% and the husband 53%. The Full Court rejected the trial judge’s approach to give the husband significant credit for the sudden increase in value of the land as a result of the rezoning.

The Full Court was of the view that the trial judge’s approach minimised the other contributions made by the parties during the lengthy marriage. It was of the view that the husband should not have been given credit for the sudden increase in value of the property as a result of its rezoning. The Full Court confirmed that the weight to be attached to an initial contribution must be assessed against all of the contributions made by the parties during the relationship. It stated that the approach of the trial judge had the effect of overlooking the parties’ decision to use the proceeds of sale of the small block to gain ownership of the larger block that was ultimately rezoned. The trial judge’s approach also overlooked the decision not to sell the rezoned land at an earlier stage prior to the rezoning.

If you would like to discuss how initial financial contributions affect property settlements, contact one of our experienced family lawyers on 8393 0144.

[2019] FamCAFC 78 (10 May 2019).