Courts encourage caution when dividing assets with uncertain value
In recent years, the Family Court has ruled that when dividing property in a dispute, using a percentage rather than a fixed sum allows for a more accurate and fair division. However, recent cases have found that where the Family Court is often dependant on uncertain figures, a more complicated formula is needed to allow for changes in the value of assets.
In the case of Trask & Westlake, the Full Court discussed that a deliberate calculation in the division of property made by the trial judge was made in error, because it applied a percentage of the value of each property to the respective parties, without consideration of the impact the properties selling above their predicted value would have on the amounts received. It was determined in this case that the miscalculation would have resulted in a variance of over $2 million in favour of the wife, taking her share of the asset pool to approximately 3% over the percentage intended originally by the court.
Property settlements are becoming increasingly complex, and often the value of real property and other assets remains uncertain at the time court orders are made. In addition, the court does not always have the power to intervene, particularly in matters where the variance is not of an amount the court would find significant. Therefore, parties should be mindful of estimates and valuations during property disputes, and seek orders that divide assets once the value of those assets become certain to avoid potentially unfair discrepancies.