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Husband’s incentive payment negotiated 3 years after separation possibly relationship property…

A recent decision of the Family Court considered an application by a husband to dismiss the wife’s claim on the grounds that it had no chance of success.  The wife had applied to the Court for it to consider whether the husband’s entitlements under an incentive scheme were relationship property.

The husband argued that the incentive agreement with his employer (of ten years) was negotiated two years and nine months after separation.  He argued that it was therefore his separate property.  The Court noted that the husband’s evidence suggested:

  • His understanding of entitlement to an incentive scheme from 2004 (i.e. during the relationship) was mistaken; and
  • He had no enforceable rights to incentive entitlements at separation.

The wife argued that, even if this were the case, the husband’s present entitlements were partly built on two pre-separation features:

  1. The negotiations with his employer before separation (and which led to his mistaken belief that he was entitled to an incentive from 2004); and
  2. His pre-separation performance.

The Court agreed with the wife, concluding that the post-separation entitlements, “…were the product of ground-work that was considerably laid down during the period before separation.”  The Court dismissed the husband’s application, holding that the wife could argue that she had entitlement to the husband’s incentive that had been confirmed almost three years after the couple had separated.

If the wife’s argument is successful, then the Court has the jurisdiction to award her a share of what would otherwise normally be the husband’s separate property.

This scenario could have been avoided if the parties had entered into a contracting out agreement prior to separation that dealt with the ownership and separation of assets in the event of separation.

If you have any questions about your entitlements upon separation, or simply wish to know more about the property of your relationship, feel free to give one of our expert team a call on (04) 473 6850.