When a marriage or de facto relationship breaks down, financial assets are not the only thing up for division—debts, too, must be split between the parties. In some cases, these debts can significantly outweigh the couple’s assets, making the property settlement process more complicated. The division of liabilities is not always straightforward and depends on various factors, including each party’s contributions and the nature of the debts. The way debt is handled in family law settlements as well as how the Court approaches such matters is demonstrated in the Chan v Lee [2022] FedCFamC1A 85 case.
Rowan Skinner is an expert Melbourne family lawyer who can assist your family law matters, specifically complex property settlement cases. With over 30 years of experience, Rowan can help you navigate what can be a challenging time in your life.
The Case | Melbourne family lawyer
Ms. Chan and Mr. Lee were married for 8 years. At the beginning of their marriage, they had minimal assets. By the time they reached court, their net asset pool consisted of a $570,000 property, which was mortgaged for $440,000. They also owed $92,000 to the wife’s parents through a deed of loan agreement and another $30,500 for various living expenses. Additionally, the wife had a $26,826 student loan debt.
The primary judge found that the financial contributions favoured the wife, with an 80/20 split. By the time the couple separated and reached court, their liabilities outweighed their assets.
On appeal, the wife sought that the husband be responsible for the mortgage of the marital property. The court found this was “is not a sustainable position” as the husband would effectively be required to “bring property into existence that does not at present form a part of the parties pool of property”. The wife also asserted that the trial judge had made an error in ordering her to indemnify the husband as to her parents’ loan. On appeal the court held that the 100 per cent adjustment to the wife “does not warrant an indemnification in relation to debts from the relationship that exceed the pool of property where those debts are truly those of both parties”.
The judge described the parties’ financial circumstances as “parlous” with the little equity in property that they had acquired during their marriage being outweighed by outstanding personal debts. You would be right to question why the parties brought their case to court with such minimal assets to distribute between the parties. A separation between two parties does not always have to result in expensive litigation.
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At Rowan Skinner & Associates Lawyers, we consider our client’s assets and advise of the most efficient way to receive the best possible outcome for you. If you want to discuss your property case with an expert Melbourne Family Lawyer, please contact Rowan Skinner at our office on (03) 9995 9155 for a non-obligatory consultation. We service clients in Melbourne, Melbourne Northern Suburbs, such as Northcote, Alphington, Carlton, Fitzroy, North Fitzroy, Kew and Heidelberg, as well as South Melbourne and South Yarra. Alternatively, if you would also like to understand how spousal maintenance is calculated in Australia check out our latest blog for more information.
Rowan Skinner is a highly skilled family lawyer with over 35 years of experience across various legal roles and jurisdictions. Rowan specialises in resolving family law disputes such as divorce, financial settlements, child custody and domestic violence cases. Through his diverse and extensive experience, Rowan has a deep understanding of the complexities and nuances involved in family law. Rowan is a skilled negotiator and litigator who follows a compassionate and client-focused approach which prioritises helping you navigate what can be an emotional and challenging time.