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Property – disability income insurance a financial resource, not ‘property’

In Tomaras [2021] FedCFamC1A 82 (13 December 2021), the Full Court (Ainslie-Wallace, Aldridge & Watts JJ) dismissed an appeal from Judge Purdon-Sully’s decision in Tomaras & Tomaras & Anor (No.2) [2019] FCCA 2830.

At first instance, the court dismissed the wife’s application for a property adjustment where there was no property other than the husband’s total and permanent disability insurance policy (TPD policy). The court held that the TPD policy was not property, where the husband’s monthly payment under the policy was contingent upon his establishing an entitlement to payment each month.

Ainslie-Wallace & Aldridge JJ cited Crapp [1979] FamCA 17, Mullane v Mullane [1983] HCA 4, Marchant [2012] FamCAFC 181 and Pates [2018] FamCAFC 171 and said (from [80]):

“ … [T]he capitalised value of the pension is not property capable of division because no such property exists in that sum … The pension can only be regarded as a financial resource or income. … [T]here is no more than a right to receive the next payment provided the relevant disability continues (…)

[82] A … difficulty arises in this case because there was no other property to be divided. If there was such property, then … the expected receipt of the payments could properly be taken into account as a financial resource in any property division under s79 of the Act so as to allow the other party to receive more of that other property.

[83] The appellant submitted that as the TPD policy could be commuted and the respondent’s entitlements assigned, this case could be distinguished from those just discussed.

[84] … [S]uch a course would require the respondent and the insurer to agree. … The evidence indicated that the insurer was amenable to such a course … However, as the respondent’s position was that he would never agree to such a course, there is no possibility of commutation (…)

[93] … [W]e think that the husband’s insurance payments, when considered in light of the meaning of ‘property’ under the Act, should best be categorised as income.”

Craig Nicol and Keleigh Robinson are co-editors of The Family Law Book. Both are accredited specialists in family law (Queensland and Victoria, respectively). The Family Law Book is a one-volume loose-leaf and online family law service (thefamilylawbook.com.au).

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