What date are assets valued at in Family Law Property Settlements?
Family law property settlement negotiations and court proceedings can often run for lengthy periods of time. Sometimes there are delays that are outside of the parties’ control. These delays can cause issues when it comes to the time for valuation of the parties’ assets.
It is important to note that it is not the date of separation that is relevant, it is the value of assets at the current point in time that the negotiations or proceedings are occurring.
Pursuant to the Family Law Act (FLA), when court proceedings have been issued, the date of valuation of assets is generally to be a date as close as reasonably practicable to the date of trial or final orders being made.
That can present a problem when the parties are conducting negotiations either before court proceedings have been issued, or during the court process prior to reaching a final hearing date. In those circumstances, multiple valuations of the same assets may be required.
It is well-settled in case law that the property pool of the parties available for division should be as at the time of trial, and therefore valuations should take place as close to trial as practicable. For example, in the case of Woodland & Todd,[1] the parties had previously divided their assets pursuant to an informal agreement which was reached in 1997. By the time the parties went to trial in 2005, the real property had increased in value by around $1.6 million. However, the trial judge elected to refer to the parties’ asset pool as it stood at the date of the informal agreement. This resulted in a significant increase in the real property’s value being excluded from the property pool available for division. This decision was ultimately overturned on appeal by the Full Court of the Family Court (as it was then known) who held that the trial judge erred in failing to have regard to the property pool and the relevant factors as they existed at the time of the trial.
In 2019, the Australian Law Reform Commission (ALRC) released its final report titled Family Law for the Future – An Inquiry into the Family Law System. The ALRC endorsed changing the time at which the property pool should be assessed, and therefore when valuations of assets should occur. The report recommended that the FLA “be amended to provide that the relevant date to ascertain the value of the parties’ rights, interests, and liabilities in any property is the date of separation, unless the interests of justice require otherwise”. However, this amendment to the FLA has not occurred.
More recently, in June 2022, the appellate division of the Federal Circuit and Family Court of Australia, handed down its decision in Halstron & Halstron[2] regarding the provision of updated valuation evidence when there has been a delay.
In this case, there was a delay of almost 12 months between the hearing of the matter by the court at trial and delivery of the initial judgment. Prior to the delivery of the judgment, the husband applied to adduce further evidence regarding an increase in share values, and the wife made a similar application to produce updated valuation evidence of the former matrimonial home. But while the husband’s application was allowed, the wife’s application was refused.
On appeal it was found that the primary judge erred in refusing the wife’s application on the basis that the risk of undervaluing the former matrimonial home (which the husband was to retain) would allow him a “fortuitous windfall” which the wife would not share in the benefit of.
This recent decision can be referred to by parties to a family law property settlement to seek to ensure that they are not unfairly disadvantaged by dramatic changes in the value of their assets which have arisen while the parties endure delays in the family law system.
Natasha Vassallo
Lawyer
T 03 5225 5237
E nvassallo@ha.legal
Tara Paatsch
Special Counsel
M 0412 660 842 | T 03 5225 5254
E tpaatsch@ha.legal
