Windfall received after property orders sealed: Can my ex claim a share?

Friday, 2 June, 2023

Windfall received after property orders sealed: Can my ex claim a share?

Finally, the Property Orders are sealed, you are getting on with your life and then out of nowhere you have the good fortune to come into a windfall. Can your ex-partner make a claim for a share of the funds you received?

What is a windfall?

A windfall is money, or a gift received, sometimes unexpectedly, but not necessarily earned. A windfall may be a win on the horses or other events through organised betting, a lottery win, or an inheritance.

Is a redundancy payout considered a windfall?

For the purpose of section 79 of the Family Law Act, redundancy is an accruing potential financial resource of the employee which is transposed into property where the conditions for its payment arises: In the Marriage of Burke [1992] FamCA 64.

What this means is that until the redundancy is accepted, a redundancy package is not property. A redundancy payment becomes a form of property once the offer of redundancy has been accepted and/or after the payment has been received, which means it would then be included in the pool of assets to divide between the separating parties.

If your redundancy payment includes a component for loss of future wages and the loss of benefits (e.g. sick leave or annual leave), a court may find that an aspect of the redundancy should be classified as income instead of property. If a portion of the redundancy is classified as income it would not be included in the property pool but it may be taken into account when assessing each party’s future needs and considered as taxable income in Child Support calculations.

Consequently, full disclosure of any documents relating to a pending redundancy is essential in the process of property settlement.

If the redundancy was received after separation while orders are pending, disclosure should include documents which identify the nature and amount of the redundancy payment received and any payment that is likely to be received in the future.

Is your ex entitled to a share?

In general, once property orders are sealed by the Court, they are intended to end the financial relationship of the parties and there is reluctance from the Court to re-open a case. Provided you made full and frank disclosure of your assets, liabilities and financial circumstances at the time the property orders were made, it is unlikely your ex-partner would have any future claim against you.

In specific regard to a redundancy payment; if the redundancy was received after orders were sealed, and was not pending or anticipated at the time of settlement, then your ex would not be entitled to a share - in much the same way that any other financial transaction unrelated to your fully disclosed property pool is not revisited by either party after orders are sealed.

Are there any circumstances where orders can be overturned?

There may be circumstances where final property orders can be overturned, such as;

Where there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), or the giving of false evidence;
Where circumstances of a party have changed so significantly since the order was made that it is impracticable for the sealed orders to be carried out;
Where a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order;
Where exceptional circumstances have arisen since the making of the order relating to the care, welfare and development of a child of the marriage/de facto relationship and the applicant has caring responsibility for the child;
Where a proceeds of crime order has been made covering property of the parties to the marriage/de facto relationship or either of them; and
If you were negotiating your redundancy during the property settlement process, you were still required to disclose this fact and the anticipated payment. If you failed to disclose your anticipated redundancy payment, there is a risk that your sealed orders could be contested.

It may be possible for one party to make a claim for a share of the windfall amount received by the other party after finalising a property settlement, but only if one of these grounds can be established. The party wishing to make a claim must apply to the court within 12 months of becoming aware of circumstances that justify setting aside or varying the orders.

Published by:

Christine Weston Divorce Australia