You Don’t Always Get Out What You Put In

People often assume that property they own before a relationship commencing will remain their own should the relationship end. However, as the recent case of Jabour & Jabour demonstrates, an initial contribution of property is only one factor considered when assessing the division of assets upon separation.

In Jabour, the Wife appealed a decision of the trial judge who gave significant weight to the initial contribution of the Husband who owned a parcel of land prior to the parties’ marriage in 1991. The Husband received a gift of land from his father at age 12, being a half share in three large blocks of farmland. Seven years into the marriage, the Husband sold his share in two of the blocks to acquire 100% of the largest block and used the remaining proceeds for family purposes.

In 2010, the land in question was rezoned by the council from agricultural use to residential use and, as a result, the land skyrocketed in value from $210,000 to in excess of $10,000,000. It was not disputed by the Wife that she had not made any direct financial contributions to the property, and only the Husband owned the land. The parties did not enter into a Binding Financial Agreement prior to their marriage.

The Full Court made three important findings:

1. The initial contribution of bringing in the property to the marriage must be considered as one of a “myriad” of other contributions both financial and non-financial (including contributions as homemaker and caregiver to children) over the 27 years of marriage, which were otherwise roughly equal.
2. The decision by the parties to retain the land rather than sell it should be considered as a significant contribution by both parties.
3. The increase in value of the land by rezoning is a windfall, and should be treated as a contribution of both parties or neither party.

As a result, the Full Court reduced the Husband’s share of the property pool from 66% to 53%.

One “take home” from Jabour is that legal advice should be sought as to the best protection for assets that a spouse brings into a marriage or de facto relationship (such as a Binding Financial Agreement).