Holland & Holland: Excluding Post-separation inheritance is an error in principle

In August 2017 the Full Court in Holland & Holland [2017] FamCAFC 166 allowed an appeal by the wife against a property order in a case where the parties had cohabited for 17 years and had two children before separating in July 2007 and obtaining a divorce in 2012.

The husband inherited property in February 2011 from his late brother worth an estimated $715,000.  At first instance the Judge excluded the husband’s inheritance from the asset pool and the wife appealed.

In delivering its judgement the Full Court said:

“In our view it is wrong as a matter of principle to refer to any existing legal or equitable interests in property of the parties or either of them as ‘excluded’ or ‘immune’ from, consideration in applications for orders pursuant to s 79”.

The Full Court found that if the Judge at first instance adopted an ‘asset by asset’ or ‘two pools’ approach, they would be required to assess the contributions of both parties in respect of the property acrossboth the period of cohabitation and the period of separation.  The Judge would then needto assess the parties’ contributions to the property pool separately to ascertain each of their interests.

This case demonstrates that all existing legal and equitable property interests must be identified and valued for the purpose of obtaining orders in relation to property.