If your marriage or de facto relationship irretrievably breaks down, it can be one of the most emotional and stressful events in your life. In such circumstances, it is crucial that you receive the appropriate advice and support to guide you through your difficult times. This article will provide you with a preliminary overview of how a property settlement occurs in Australia pursuant to the Family Law Act 1975 (Cth). You will understand that the property settlement process in Australia involves judicial discretion and a just and equitable result may not be achieved by simply dividing the matrimonial property pool equally. Our goal is to negotiate the best possible result for you, within the parameters of what is just and equitable in accordance with family law, in the most timely and cost effective manner available.

JURISDICTION

The Court must have jurisdiction to be able to determine a property settlement. The Court will have jurisdiction if there is property in Australia and a party to the proceedings is one of the following:

• An Australian Citizen; or
• Ordinarily a resident in Australia; or
• Is present in Australia when the application is made to the Court.

In property settlement proceedings after the breakdown of a marriage or de facto relationship, the Court has the power to make the Orders that it considers appropriate in respect to the property of the parties. Such Orders are made with the intention of separating the financial interests of the parties.

FINANCIAL DISCLOSURE

Before parties can negotiate a property settlement, the parties must exchange what is called full and frank financial disclosure in accordance with the Family Law Rules. Such disclosure includes a list of your assets and liabilities, your recent tax returns, bank statements and other financial documents. This step allows the parties to assess what comprises the property pool for the purposes of the negotiations.

Often valuations will need to occur in this step to determine the value of any assets or financial resources that form part of the matrimonial property pool.

If parties fail to provide full and frank financial disclosure, there is a basis for the disadvantaged party to seek to set aside any agreement that was based on the incomplete financial disclosure. The Court also can punish a party for failing to provide full and frank financial disclosure.

Once the property pool has been determined the parties prepare a joint balance sheet that contains the financial position of the parties. The contributions that the parties have made can then be more accurately assessed.

SECTION 79(4) OF THE FAMILY LAW ACT – CONTRIBUTION ASSESSMENT

The Court looks at three snap shots in time of the parties financial position:

• The commencement of cohabitation;
• Separation; and
• The time that the Court determines the matter.

The Court will weigh up all of the contributions that the parties made to the relationship which includes financial and non-financial contributions.

Financial contributions include the financial contributions made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them.

Non-financial contributions are contributions (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them. For example, non-financial contributions include parenting and homemaker contributions.

The Court will assess all of these contributions to make a determination of the proportion of contributions that each party made to the relationship. The longer the relationship, the greater the presumption is that the contributions should be assessed as being equal.

SECTION 75(2) OF THE FAMILY LAW ACT – CONSIDERATIONS

The Court then considers the future needs to the parties. This includes the Court considering a list of factors which includes the following:

• Age and health of the parties.
• Income, property, finances and ability to earn an income.
• Whether the parties are caring for a child under 18.
• Any commitments relating to support of themselves, a dependent or other person.
• Pension entitlements.
• Whether the parties have separated or divorced.
• The extent to which payment of maintenance could enable further education and increase their earning capacity.
• Effect of any proposed Order on the ability of a creditor to recover a debt.
• Extent to which one party has contributed to the income, earning capacity, property and financial resources of the other party.
• How the length of the marriage affected the earning capacity of the party seeking maintenance.
• The need to protect a party who wishes to continue their role as a parent.
• Financial circumstances of any current cohabitation by either party.
• If either party is liable for child support payments.
• Any of fact or circumstance which the court feels needs to be taken into consideration.

Once the Court has considered these factors it may adjust the property division percentage amount that it determined on the 79(4) contributions. The Court has a broad discretion under this part which can result in no adjustment or as much as a 20% adjustment.

IS THE PROPOSED RESULT JUST AND EQUITABLE?

Once the Court has assessed the section 79(4) contributions and then allowed for any adjustment for the relevant section 75(2) factors, the Court has discretion to make a further adjustment to the settlement if it feels that the result is not just and equitable. This may result in a further adjustment to the settlement of approximately up to 10%.

HOW IS A SETTLEMENT FORMALISED?

A property settlement in family law can be finalised in one of the following ways:

• Binding Financial Agreement;
• Consent Orders of the Court; or
• Contested hearing.

A Binding Financial Agreement is an agreement that provides how parties wish to divide their assets in the event of a separation. Financial agreements can be prepared before cohabitation (commonly referred to as a prenuptial agreement), during the relationship, or post-separation. The agreement is prepared by your Lawyer and requires an independent advice certificate to be provided by each parties’ Lawyer for the agreement to be binding. A Financial Agreement does not require the intervention of the Court for the settlement to be resolved. Although the Court is not involved in the settlement process, your Lawyer should still advise you on the settlement process outlined in this article to ensure that a just and equitable result is negotiated and represented in the Financial Agreement. We note that Binding Financial Agreements are frequently challenged in Court.

Consent Orders can be made without the parties ever being required to attend Court. In some matters it is sometimes necessary to commence proceedings. This does not mean that the Court will always make the final determination as settlements are often negotiated after proceedings have been commenced, which often involves the utilisation of an independent mediator. In such circumstances the Court can then make Consent Orders agreed to by the parties to finalise the matter.

If a settlement cannot be negotiated, the matter may be determined by way of a final hearing. At the hearing, the Court will apply the assessment process that is outlined in this article and then make the appropriate Orders.

CONCLUSION

There are a number of factors that need to be considered in order to achieve a just and equitable property settlement in family law. Whether your family law matter is an amicable separation or a complex matter involving litigation, our Lawyers have the knowledge and skill necessary to lead you through the process of your family law matter in a caring and practical manner.

If you have any questions please do not hesitate to contact a member of our team.

John Holt

Principal Solicitor

Lexington Law