A recent case illustrates the need to settle relationship property matters sooner rather than later when parties go their separate ways.

The parties had separated in 2004.The husband moved out while the wife continued living in the former family home.

At the time of separation, the relationship property assets to be divided included the family home worth approximately $1.55 million and four businesses worth over $1.7 million.

The Family Court valued relationship property from the date of the separation. The wife was to take the home, and the husband was to take the businesses, and they were to pay adjustments to one another accordingly.

After appeal to the High Court, it was held that the correct valuation date was the date of the hearing in 2012.

From the date of separation until the date of the hearing the businesses had sustained losses and their value had fallen to $973,000.

Ultimately the wife received significantly less with the new valuation date as she had to share those losses. She also lost the benefit of the increased value on the family home which also became relationship property.

This decision was appealed to the Court of Appeal.

The Court of Appeal confirmed that the High Court correctly determined the valuation date as the date of the hearing. It commented that the basic premise for the Court was that the couple ought to share in the products of the relationship. The increased value on the family home was not due to the wife’s actions, but was a result of a rising property market. Meanwhile, the husband had not deliberately run down the value of his businesses.

The wife appealed again to the Supreme Court, on the basis that the approach taken was too commercial and not consistent with relationship property laws.

The Supreme Court confirmed that the value of the couples’ relationship property was to be determined at the date of the Court hearing rather than the date of the separation. The hearing date was the default valuation date, and no special circumstances justified an earlier valuation date.

The expense of litigation could have been avoided for both parties, had they resolved relationship property issues soon after separation.

It is not unusual where couples have put off formally dissolving their marriage to find relationship property matters being sorted out 5 or even 10 years down the track. In those circumstances, the date at which the relationship property is valued can have significant consequences for one or both of the parties.