Guiding You Through Separation

​​Family Law Property Matters

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The Court follows a four step process when determining a just and equitable property division in family law matters in Australia:
 

1. Step 1, section 79(3) of the Family Law Act 1975 (Cth) (“FLA”) (married) or section 90SM(3) (de facto): We identify and value “the existing legal and equitable rights and interests in any property of the parties to the marriage or either of them”. This includes jointly and solely owned assets such as real estate, funds held in bank accounts, shares, superannuation, notable personal belongings, boats and cars. We also identify “the existing liabilities of the parties to the marriage or either of them”. Liabilities may include mortgages, loans, and credit cards. At this stage, we also identify any financial resources of the parties. It is usual to exchange financial disclosure documents and information and to prepare a balance sheet, this assists with the next steps where we assess and calculate contributions-based entitlements and whether a current and future circumstances adjustment is appropriate.
    

2. Step 2, section 79(4) of the FLA (married) or section 90SM(4) of the FLA (de facto): Assess contributions to the acquisition, conservation or improvement of property. Both financial (eg income, savings, inheritances, gifts) and non-financial contributions (eg homemaking, child-rearing, career support) are recognized. No type of contribution is inherently more valuable than the other. Initial contributions are the assets and liabilities each party had at the commencement of cohabitation. In a short, childless relationship (eg a period of cohabitation for 5 or less years) initial and direct financial contributions may be given significant weight having a big impact on the outcome. The Court generally affords less weight to initial and early contributions as time progresses because the myriad of other ongoing contributions diminish the significance of initial contributions over time. Contributions continue post-separation and so we consider and divide the value of the property pool at the current date (not the date of separation). The Court will determine a percentage-based contributions assessment at this stage.
    

3. Step 3, section 79(5) of the FLA (married) or section 90SM(5) of the FLA (de facto): Assess each party’s current and future circumstances and needs. The Court may or may not make a current and future needs adjustment in favour of one party at this stage. Some of the considerations the Court will take into account at this stage include:
    

• the effect of any family violence, to which one party to the marriage has subjected or exposed the other party, on the current and future circumstances of the other party;

• the age and state of health of each of the parties;

• the income, property and financial resources of each of the parties to the marriage and the physical and mental capacity of each of them for appropriate gainful employment;

• the effect of any material wastage, caused intentionally or recklessly by a party, of property or financial resources of either of the parties to the marriage or both of them;

• any liabilities incurred by either of the parties to the marriage or both of them, including the nature of the liabilities and the circumstances relating to them;

• the extent to which either party has the care of a child of the marriage/de facto relationship who has not attained the age of 18 years, including the need of either party to provide appropriate housing for such a child;

• commitments of each of the parties that are necessary to enable the party to support themselves and any child or other person that the party has a duty to maintain;

• the responsibilities of either party to support any other person;

• if either party is eligible for a pension, the rate at which it is being paid to the party;

• if the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;

• the extent to which an alteration of the interests of the parties to the marriage in any property would enable a party to undertake education or establish a business or otherwise obtain an adequate income;

• the extent to which each party to the marriage has contributed to the income, earning capacity, property and financial resources of the other party;

• the duration of the marriage and the extent to which it has affected the earning capacity of each party to the marriage;

• the need to protect a party to the marriage who wishes to continue that party's role as a parent;

• if either party to the marriage is cohabiting with another person--the financial circumstances relating to the cohabitation;

• any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child of the marriage;

• any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
  
  4. Step 4 (section 79(2) of the FLA (married) or 90SM(2) of the FLA (de facto): The Court must be satisfied that the proposed orders and property division is “just and equitable”. The requirement for justice and equity permeates the entire decision-making process.
   

The duration of cohabitation and the period post separation, and whether there is a child or children of the relationship are features which generally have a significant impact on the outcome as they impact the assessment of contributions and current and future needs. A child or children of the relationship introduces the significant non-financial contribution of being a parent and may increase homemaker responsibilities.
 

The Full Court in Bushby & Bushby [1987] FamCA 63 makes it clear that in short relationships where there are no children of the relationship, the Court must place significant weight on the direct financial contributions of the parties. At [10] the following is stated “In a marriage of 4 years, with no dependent children being involved on either side, it ought to have been apparent to the parties’ legal advisers that each party’s actual financial contribution to the marriage was the primary issue”.

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The case of Stanford v Stanford [2012] HCA 52 (“Stanford”) is authority for the fact that the Court must first form a view that it is just and equitable to alter the parties existing property interests, in some situations, the Court may form a view that it is not just and equitable to make orders altering the parties existing property interests.

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In the High Court case of Mallet v Mallet [1984] HCA 21 the High Court rejected the suggestion that there is a presumption of an equal split and is authority for the fact that each case should be considered and determined on its individual facts (by applying the above 4 step process).

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The case of Hall v Hall [2016] HCA 23 explains what a “financial resource” is from [54], "The reference to "financial resources" in the context of s75(2)(b) has long been correctly interpreted by the Family Court to refer to "a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency".The requirement that the financial resource be that "of" a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee's discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation".
 

[55] Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.”
 

No Hierarchy of Contributions
 

The next key point is that there is no hierarchy of contributions. Financial contributions are not legally superior to homemaker, parenting or other indirect contributions. The assessment of contributions is holistic, considering all types of contributions (financial and non-financial such as homemaker, and parenting) over the entire relationship and post separation.
 

The Full Court in Fields & Smith [2015] FamCAFC 57 stated at [48] “If it is necessary to make the point again, and to highlight it for the purpose of this appeal, we add our endorsement to what has been made clear in the authorities referred and to the Full Court’s comments in [52] of Hoffman, that the words of s79 do not provide endorsement for any category of contribution related to any class of property (for example, high wealth) being, by virtue of that category or class, more valuable or important that another. In each case the contributions made by the parties must be evaluated in the context of the facts particular to that case.”
 

And at [148] “The task is to consider the contributions holistically over the whole period from the commencement of cohabitation to trial and the analysis requires the court to weight all of the contributions of all types prescribed by s 79(4) made by both parties across the entirety of the relationship until the time of hearing, including the post-separation period.”
 

In Hoffman & Hoffman [2014] FamCAFC 92, the Full Court held at [52]:

“…there is no principle or guideline (or, indeed, anything else emerging from s79), that renders the direct contribution of income or capital more important – or “special” – when compared against indirect contributions and, in particular, contributions to the home or the welfare of the family.”
 

The case of Marsh & Marsh [2014] FamCAFC 24 involved a significant increase in the husband’s wealth post separation. The parties had been separated ten years prior to property settlement proceedings. The husband lived overseas for work for a significant period and the wife continued in her role as primary parent and homemaker, they remained financially enmeshed. The Court said from [63] “The parties agreed that, up to separation, their contributions had been equal. What then had changed between separation and trial sufficient to warrant the Federal Magistrate’s conclusion that the husband’s post-separation contributions should be assessed at 70 per cent and those of the wife at 30 per cent? It seems that the issue operating on his Honour’s mind was the husband’s use of his very considerable earning capacity to support the family and to acquire assets after separation. For the wife’s part, she remained in the role adopted by her during the marriage, caring for the children and the home. It was not until 2008 that the youngest child completed final school exams.

[64] The assessment of parties’ contributions involves weighing the quality and extent of each contribution. It is accepted that the nature and character of those contributions may change, as here. During the cohabitation, the husband developed expertise and skills which have caused him to advance in his employment, skills and expertise which continued after separation. The wife has contributed to that ongoing earning capacity.
 

[65] Clearly then the husband’s submissions that the increase in property after separation should be regarded as being referrable to a contribution made only by him is to be rejected. It not only ignores the ongoing contribution of the wife to his income but further seeks, impermissibly, to confine contributions to a particular class or list of assets.
 

[66] The effect of the Federal Magistrate’s orders was to accept the husband’s argument that he had made the overwhelming financial contribution since 2000 but in which he failed to give effect to his findings that after separation the wife continued to make significant contributions both as to the home and children and also indirectly to the husband’s present earning capacity.”
 

Time Limits to Commence Property Matters

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If the potential proceedings arise out of a marriage, you must apply within 12 months of a divorce order taking effect (or decree of nullity being made) in relation to the marriage.

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If the potential proceedings arise out of a de facto relationship, you must apply within two years of the breakdown of a de facto relationship.

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These limitation periods do not apply to applications which seek only

• declarations of existing property interests, or

• to vary, set aside or revive existing property settlement or maintenance orders.​

Out of time applications require leave of the Court which may be refused. It is important to resolve your property matter within time.

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Spousal/De facto Maintenance

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Spousal and De facto maintenance can be sought, the legal test for maintenance is different to the four-step process used to determine property settlement matters. Spousal or de facto maintenance is financial support paid by a party to a marriage (or de facto relationship) to their ex-spouse in circumstances where they are unable to adequately support themselves.

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Under the FLA a person has a responsibility to financially assist their spouse, or former de facto partner, if that person cannot meet their own reasonable expenses from their personal income or assets.

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Where the need exists, both parties have an equal duty to support and maintain each other as far as they can. This obligation can continue even after separation and divorce. The Court considers the needs of an applicant, and the respondent's capacity to pay. The Court considers the following:

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• the age and health of the parties;

• each parti’s income, property, and financial resources;

• each person’s ability to work;

• whether they have the care of a child of the relationship, including the need to provide appropriate housing for the child;

• the effect of any family violence;

• what constitutes a suitable standard of living, and

• if the marriage/de facto relationship has affected either party’s ability to earn an income.
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The Court also takes into account with whom the children (under 18 years of age or adult children who are disabled) live.

The Full Court in Bevan & Bevan [1995] FamCA 95 at 81981 (“Bevan”) held, inter alia, that an award of spousal maintenance requires the Court to:

1. Make a threshold finding under section 72/90SF(1) of the FLA;

2. Consider the factors in sections 74/90SE and 75(2)/90SF(3) of the FLA;

3. There is no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permits; and

4. Exercise discretion in accordance with the provisions of section 74 with “reasonableness in the circumstances” as the guiding principle.

This process applies when the Court decides periodic and or lump sum maintenance matters.

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Formalising Your Property/Financial Matter

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If agreement is reached in relation to your property/financial arrangements, we can assist you to formally document your agreement by way of an Application for Consent Orders or a Financial Agreement. 

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