G is for global – A-Z of Family Law

Figuring out what the parties to a property settlement own is a fundamental part of the process. There will always be a balance sheet (sometimes also referred to as the net asset pool) that sets out the assets, liabilities, superannuation entitlements, and financial resources of the relationship.

However, there are then a few different ways to go about applying the circumstances and history of the relationship (the contributions) as well as the current and future circumstances considerations to the net asset pool.

The global approach considers the totality of the net asset pool on a holistic basis, and each parties’ contributions to the items therein. Contrastingly, the other approach is to look at assets individually, or by way of segregating different assets into different pools. This could be an asset-by-asset approach, where the parties’ contributions to each individual item is considered; or, a two-pool approach where many items of the net asset pool are sequestered into one pool, whilst other items are kept in a separate pool. Contributions are then considered to the items within each pool.

For example, assets acquired during a relationship may be divided into one pool, whilst an inheritance received around the time of separation may be divided into its own pool.

The rationale behind which approach to use is not always clear, but will always turn on the facts and circumstances of the relationship.

Judge Carty of Division 2 of the Federal Circuit and Family Court of Australia faced such a deliberation within the matter of Deen & Deen [2023] FedCFamC2F 1106. The judgment was extensive and traversed many areas, in particular a lengthy assessment of when the de facto relationship commenced.

However, for present purposes, Judge Carty’s consideration of whether to utilise the global approach or a two-pool approach is relevant.

The husband submitted that a two-pool approach should be preferred, with one pool containing largely those assets with which each party entered the relationship, and the other pool containing assets that the parties each contributed to, including the marital property.

The wife adopted a contrarian view, being that the Court should instead prefer a global approach. A guiding decision as to the various approaches, Norbis v Norbis, was thoroughly considered.

Some helpful excerpts from Judge Carty’s judgment provides a helpful analysis of the issues at hand:

• Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient (directly citing Norbis) [155].
• The Family Court has rightly criticised the practice of giving over-zealous attention to the ascertainment of the parties’ contributions, and we take this opportunity of expressing our unqualified agreement with that criticism (directly citing Norbis) [155].
• The adoption of a two-pool approach will not impede the Court assessing, in a holistic way, the contributions that each of the parties has made to the assets in each of the separate pools [155].

Judge Carty deliberated upon each approach, the parties’ submissions, and the relevant case law, and concluded that a two-pool approach was preferable in the circumstances. The following factors were identified:

• That the length of cohabitation, which was less than 10 years.
• That there were no children to the marriage.
• That much of the value of the net asset pool was brought into the relationship by the husband.
• That the party’s kept their respective assets separate for the most part, and no assets were acquired jointly.
• That there were minimal contributions to the other party’s assets

After an exploration of each parties’ contributions to each pool was had, an overall assessment to each pool was then applied. The husband’s contributions to Pool A, being the matrimonial property, was 70% and his contributions to Pool B, being all other assets, was 71%. No adjustment for future needs was submitted by either party. Therefore, the overall division of property was ultimately near to a 71/39 split in the husband’s favour.

Some take-aways are:

Parties should be prepared to make submissions on their preferred approach, but to also ensure their submissions are equally applicable to the alternative.

There is no hard and fast rule about which approach must be taken, though the court has previously indicated that a global approach will likely be most suitable.

Consider the actual circumstances and facts of the relationship as to why either approach may be suitable.