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How Do Legal Firms Use AI?

With AI bringing rapid revolution to the world of research.

 

There is some fast development occurring with Legal research tools that exist to aid lawyers in obtaining an accurate up-to-date overview of specific legal questions asked of them by their clients.

 

Below are 3 questions relating to the issue of property settlement upon separation where the question was asked of the AI research tool and the answer and case references were then supplied.

 

Using this tool, the answers that are received are based on the wording of the question and are very accurate most of the time, however during this early phase of development some responses can go off the rails and require verification.

 

As a lawyer, it is still very important to rely on verifying the information received along with adopting some common sense.

 

Here we present 3 common questions that arise in relation to property settlement, often creating a source of dispute.

 

Read on to form your own view of the AI reply received for each of them.

Question 1

 

In a family law property settlement, in relation to the issue of future needs what has the court considered appropriate where one party has elected to take a lesser paying job going forward. If possible, make reference to any case authority.

Property Division in Australia

Verified Answer

 

In property settlement proceedings, the court considers the future needs of both parties when determining a property settlement under section 75(2) of the Family Law Act 1975 (Cth) for parties to a marriage or section 90SF for parties to a de facto relationship.

This includes the parties’ age, health, income, property, financial resources, their capacity for appropriate gainful employment, whether a party has the care of a child, the commitments of each of the parties that are necessary to enable the party to support him/herself and a child that the party has a duty to maintain, the duration of the relationship and the extent to which it has affected the earning capacity of a party.

When assessing a party’s earning capacity, the Court would consider the relevant facts of each case such as whether a party is of an employable age and in good health, employment history, historical income, how long the party has been out of the workforce, qualifications, and the circumstances behind the decrease in income.

 

1.   In Bolton & Bolton [1992] FamCA 48, the husband was employed full-time for 15 years and earned $400 per week however after the parties’ separation, the husband received a child support assessment and in order to avoid payment of child support, the husband left that employment.


Judge Cohen found “the fact that the husband is not now earning a proper income is due to his own default… to avoid payment of child support… in that circumstance, he should not be regarded as having any capacity to work less than he had while in employment… I regard the husband as having more than average capacity to earn…”

 

2.   In DJM & JLM [1998] FamCA 97, the parties were married for 14 years, and the husband was employed full-time as a management consultant earning $200,000 per year. Approximately 2 years after the parties had separated, the husband reduced his management consultant activities and became involved in academia which reduced his income to approximately $100,000 per year. The trial judge (Judge Purdy) ordered a division of property of 80:20 in favour of the wife. 

The husband appealed the decision.


The Full Court (Baker, Kay & Morgan JJ), granted the appeal but upheld the trial Judge’s findings that “the husband would have not left active commercial life, at any rate until many years had passed, unless he felt that his financial responsibility towards his wife and children had been significantly diminished by the separation…I am by no means convinced that the husband’s intention is to accept permanently the lower income available from his academic post.”


The Full Court then commented at [17.45-17.47] “in this case the trial Judge found that the husband was highly manipulative. 

He found that the wife had never heard of the husband’s long-term plans to become an academic. 

He found the husband had exhibited a capacity and a willingness to work long hours previously and to earn at a higher rate. 

He effectively did not accept the bona fides of the husband in choosing to adopt a new career path which led to a significant drop in his earnings… 

It is open to a court to give weight to the ability of a party to earn income especially where the opportunity clearly exists to utilise that ability…”

 

3.   In Stojanovic & Stojanovic [1990] FamCA 13, the husband was previously employed as a bricklayer but ceased work due to back problems. 

The husband became unemployed, enrolled in a course to become an architectural draftsman and was reliant on government benefits. 

The wife brought an application for maintenance of the children. 

The Court (Judge Kay) ordered that the husband pay the wife maintenance in the amount of $40 per week per child.
The Court held at [15] “It is my view that the husband has a present capacity to earn at least average weekly earnings in a clerical position. 

He is qualified HSC, he is physically presentable, and it is my view that he is choosing with some quixotic views about life to create a golden future for himself. 

He is prepared to sacrifice his children’s present support. 

Whether it is malingering, I do not know. 

I will not comment beyond that other than to say I find that he has a current earning capacity has financial resources available to him namely the capital which he has chosen to spend on a house. 

It seems to me that he has an obligation to support his children at this stage. 

He could find housing through means other than ownership and it is not necessary, in my view, for the husband to provide himself with a virtually unencumbered house albeit as modest as it is.”

 

In summary, the Court will consider the reason/cause of the reduction of a party’s income and the party’s employment history, skills, and employability. 

Should the Court find that a party’s income has been voluntarily reduced, it is likely the Court will consider the party’s history of employment and higher earning capacity when assessing future needs.

Question 2

 

In a family law property settlement explain how a late inheritance during a lengthy marriage may be assessed by the court. Provide case examples of where this has occurred.

Verified Answer

 

As to how much weight the Court places on an inheritance depends on the individual facts of each case such as the timing of the inheritance, the duration of the relationship, the size of the inheritance and the overall contributions made by the respective parties throughout the relationship.

An inheritance does not fall into a protected category merely because it is an inheritance.

Inheritances are treated as a financial contribution made on behalf of the party receiving it under section 79(4) of the Family Law Act 1975 (Cth) for parties to a marriage and section 90SM(4) for parties to a de facto relationship.

In a long marriage/relationship, the Court may exercise its discretion to separately deal with inheritances received late into the relationship or after separation provided the existence of other assets allow for a ‘just result’; Bonnici & Bonnici [1991] FamCA 86.

Whether the Court adopts a global or ‘asset by asset’ approach when assessing the parties’ respective contributions is a question of ‘convenience’ and practicality and would depend on the facts of each case; Norbis & Norbis [1986] HCA 17.

1.   In Bonnici & Bonnici [1991] FamCA 86, the Full Court (Nicholson CJ, Nygh and Tolcon JJ) held at [42-44] “…If, for example, in the present case, there had been no other assets than the husband’s inheritance, but the wife had… clearly carried the main financial burden in the support of a family and… performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance…


A property does not fall into a protected category merely because it is an inheritance… if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question. 

 

The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. 

 

Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property…”

 

2.   In Calvin & McTier [2017] FamCAFC 125, the Full Court (Bryant CJ, Ryan and Aldridge JJ) upheld the trial Judge’s decision that the inheritance of $430,686 received by the husband 4 years after separation is to be included in the asset pool and that the contributions of the husband and wife were assessed at 75% and 25% respectively having taken into account the substantial initial and post-separation contributions made by the husband.


The Full Court said at [50] “we do not agree that… [Bonnici [1991] FamCA 86] were purporting to lay down a guideline as to the approach the court should take to inheritances received after separation. 

 

It is clear from reading the passage as a whole that they were not doing so. 

Whilst the court did indicate that in the case before them it would have been simpler for the primary judge to have dealt with the inheritance separately from the other property, it expressly said that there was nothing wrong with a global approach… provided there was an explanation as to how the division was arrived”.

 

3.   In Singerson & Joans [2014] FamCAFC 238, the Full Court (Bryant CJ, Ainslie-Wallace and Crisford JJ) held that given the 15-year relationship and the greater contributions made by the wife throughout the relationship from both financial and non-financial aspects, the inheritance received by the husband after separation was to be included into the property pool. 

 

The Full Court accordingly ordered a property division of 52.5% to the husband and 47.5% to the wife after having considered the husband’s initial contributions and post separation inheritance.

Question 3

 

Please explain why property settlements aren’t considered an exact science. Use case law.

Verified Answer

 

Property settlements in family law are not considered an exact science due to the discretionary nature of the process and the unique circumstances of each case. 

The courts aim to achieve a just and equitable outcome, but this involves a range of factors and subjective judgments. 

Here are some key reasons why property settlements are not an exact science, supported by case law: 

1. Discretionary Nature of the Court’s Power

The court has broad discretion under sections 79 and 90SM of the Family Law Act 1975 (Cth) to alter property interests. 

This discretion allows the court to consider a wide range of factors, including financial and non-financial contributions, future needs, and the overall circumstances of the parties.

Case Law:

  • Norbis & Norbis [1986] HCA 17: The High Court acknowledged that there is no single correct approach to property settlements. The court can adopt either a global approach or an asset-by-asset approach, depending on the circumstances of the case. 
  • The choice of approach is a matter of convenience and does not amount to an error of law.

2. Individual Circumstances

Each case is unique, with its own set of facts and circumstances. 

The court must consider the specific contributions and future needs of the parties, which can vary significantly from one case to another.

Case Law:

  • Zaruba & Zaruba [2017] FamCAFC 91: The Full Court noted that the characteristics of the property and the circumstances of its acquisition, improvement, and the like can differ significantly. This means that the court’s approach may vary depending on the unique facts of each case.

3. Subjective Judgments

The court’s assessment of contributions and future needs involves subjective judgments. 

For example, the value of non-financial contributions, such as homemaking and parenting, can be difficult to quantify precisely.

4. Evolving Legal Principles

The principles and guidelines for property settlements can evolve over time through case law. 

This means that what is considered just and equitable in one case may not be the same in another, as legal interpretations and societal values change.

Case Law:

  • Anson & Meek [2017] FamCAFC 257: The Full Court highlighted that the nature of a particular interest in property and when and how it was acquired, utilized, improved, or preserved may be very relevant to the court’s decision. 
  • This indicates that legal principles can evolve and adapt to different circumstances.

5. Complexity of Financial Arrangements

The financial arrangements of the parties can be complex, involving various types of assets, liabilities, and financial resources. 

The court must navigate this complexity to arrive at a fair settlement.

Case Law:

  • Scriven & Scriven [2020] FamCAFC 236: The Full Court noted that the court might adopt an asset-by-asset approach in some cases, particularly where the financial arrangements are complex and involve significant new assets or liabilities accumulated post-separation.

CONCLUSION

Property settlements are not an exact science due to the discretionary nature of the court’s power, the unique circumstances of each case, the subjective judgments involved, the evolving legal principles, and the complexity of financial arrangements. 

The court’s primary aim is to achieve a just and equitable outcome, but this involves a range of factors and considerations that make the process inherently flexible and case-specific.

FINAL COMMENT

At Your Online Legal Group we use AI tools to enhance our years of practical legal experience and assist in providing the most updated accurate information, better processes and quicker response times.

 

A proven mix allowing us to provide the best possible service for the lowest possible price.

 

To learn more, contact us at help@your-divorce.com.au about assisting with your divorce application or property and superannuation consent agreements.