Like in parenting matters, there are many misconceptions which continue to circulate about what you may be entitled to at the end of a relationship.
Statements such as, “the wife always gets the house”, “don’t all women with kids get 80/20?” or “he’s not touching my super, super doesn’t count, does it?”, are all too common.
Every case is different and decided on its individual circumstances. It is important to get expert family law advice early so that you have realistic expectations of what an equitable division of your property pool might look like.
What others may have achieved in their own settlement is unlikely to be the same outcome in your settlement as each case outcome is determined by its own facts and circumstances.
The court is empowered to make orders which alter the interests of each of the parties of a marriage or de facto relationship in property held by one or either of them, in order to achieve such an outcome, but only if it is considered just and equitable to do so.
The Family Law Act 1975 (“the Act”)
therefore provides a legislative framework in which property disputes can be determined. Lawyers often refer to this as
“The Four Step Process”
The Four Step Process
Generally speaking, the Court will adopt the following four stage process:
It would generally not be regarded as just and equitable for one party to end up with all of the superannuation, and the other party to be left with all of the cash assets.
1. Identify The Current Assets And Liabilities
This step is not always as straightforward as it might seem, particularly where the property pool includes interests in trusts and corporate structures.
Alternatively, the inclusion of loans or other debts may not be straightforward, or are disputed. What to one party may have been a gift from a family member, was to the other party a loan which is repayable and should be included in the pool as a debt.
The court may proceed by way of a global approach to your asset pool (assessing your contributions to the entire pool, valued as a whole), or an asset-by-asset approach (assessing contributions to individual assets).
An asset-by-asset approach is often used in a short relationship.
Either approach is acceptable, and it is important that you seek out expert advice as to what is likely to apply in your case.
Parties to proceedings brought under the Act have a duty to make “full and frank” disclosure of their financial circumstances. The obligation is ongoing.
You may not want to provide your former spouse with copies of your post separation bank account statements, previous tax returns or superannuation statements, however if you find yourself in proceedings brought under the Act, you will be obliged to provide same failing which there can be costs orders made against you, or other adverse inferences drawn against you.
Similarly, if you seek to formalise your property dispute by way of consent orders or a financial agreement (see below) you have an obligation to make full and frank disclosure as to your financial circumstances at the time of entering into such an arrangement. Failing this, you leave yourself open to an application to have your orders or agreement set aside at a later time due to misrepresenting your financial circumstances, along with an application for costs.
The Court is required to determine the value of assets in dispute and the relevant date for valuation purposes is the time of hearing.
In the absence of agreement as to value, the court will have regard to the evidence of a single expert.
Accordingly, in order to properly identify the pool available for distribution, it may sometimes be necessary to appoint an expert valuer in relation to certain assets such as the former shared residence, a company or an interest in a trust.
2. Identify And Assess The Parties’ Contributions To The Assets
The court will consider financial contributions (eg, wages, gifts, inheritances, windfalls) and non-financial contributions such as homemaking and parenting from before, during and post your relationship.
The weight provided to contributions from prior to your relationship will erode over time, and regard must therefore be had to the timing of the contribution, as well as the length of the relationship.
Contributions as homemaker and parent are in ordinary circumstances equally equated to the efforts of the sole income earner who is freed to pursue direct outside employment.
3. Consider The Section 75(2) Factors
The question of how much weight is placed on each of these factors is a matter of discretion for the Court. Again, specialised advice is required.
Section 75(2) Factors to consider:view Factors
The relevant matters include but are not limited to issues such as:
- The age and state of health of each of the parties; and
- The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
- Whether either party has the care or control of a child of the relationship who has not attained the age of 18 years; and
- Commitments of each of the parties that are necessary to enable the party to support himself or herself and/or a child or another person that the party has a duty to maintain; and
- The responsibilities of either party to support any other person; and
- The eligibility of either party for a pension, allowance or benefit under a law of the commonwealth or state, or a superannuation or pension plan; and
- Where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
- The extent to which payment of maintenance to a party would assist them to undertake further education or training and therefore increase their income;
- The effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
- The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
- The duration of the marriage and the extent to which it has affected the earning capacity of either party; and
- The need to protect a party who wishes to continue that party’s role as a parent; and
- If either party is cohabiting with another person–the financial circumstances relating to the cohabitation; and
- Any child support payable by either party under the Child Support (Assessment) Act 1989 and the amount that is actually paid by that party;
- Any fact or circumstance which, in the opinion of the court the justice of the case requires to be taken into account; and
- The terms of any financial agreement (such as a spousal maintenance agreement) that is binding on the parties.
4. Justice And Equity
After considering all of the relevant factors, and coming up with a percentage division of the available property pool, the Court must determine if the overall division is just and equitable.
The Court will need to determine the form of the orders to be made in terms of who will retain what assets and whether assets will need to be sold.
Should you wish to commence court proceedings regarding parenting and/or property matters, you should immediately seek legal advice.
As you can see from the short summary provided above, whilst the Court applies the same legal framework to each property dispute, the jurisdiction is discretionary, and there are many important steps to be analysed along the way which could have a significant impact on the outcome of your matter if overlooked.
What If My Former Spouse And I Have Reached An Agreement Regarding Property Matters?
Irrespective of the law outlined above, separated couples remain at liberty to resolve their property matters any way they see fit if it is by agreement between them.
Such agreements can be formalised by way of consent orders or financial agreements (and such financial agreements might also include provision for spousal maintenance or child support issues).
Specialised legal advice will be required to determine which combination of orders and/or agreements will best formalise your intended agreement(s).
Three good reasons
to formalise your property settlement agreement with your spouse by way of consent orders or a financial agreement
Other than in very limited circumstances, neither party can seek to change the agreement later, or come back for a greater share of the pool;
2. Superannuation Splitting
Superannuation is treated just the same as any asset and often it is necessary to split and provide a share of one spouse’s superannuation to the other spouse in order to achieve a just and equitable outcome overall in the distribution of the property pool;
3. Stamp Duty Exemptions
Any transfer of property between spouses which would otherwise normally attract stamp duty is exempt from stamp duty if the transfer is pursuant to a consent order or financial agreement. The most obvious example is the transfer of the former shared residence from one spouse to the other. In the absence of such transfer being pursuant to the terms of a consent order or financial agreement, the transfer of one spouse’s share to the other would ordinarily be subject to stamp duty.
The exemption which is provided by virtue of the consent order or financial agreement can be considerable and far outweigh the costs of preparing a consent order in any event in many cases.
De facto property matters
when can a de facto make a claim?
The most common myth which we hear from clients is their fear that their de facto partner may make a claim against their property if they live together for 6 months.
In fact, in order to make a de facto property settlement claim, you must be able to establish at least one of the following:
- Did the relationship last at least two years? If not:
- Is there a child of the de facto relationship; or
- Did one party make substantial contributions, and a failure to make an order would
- result in serious injustice; or
- Did the parties register their relationship under an Australian law?
Like marital property settlements, the outcome is discretionary and subject to consideration of the contributions (both financial and non financial) and future needs of the parties, and it should not be assumed that just because you have been together for two years, that you have a strong case for property adjustment.
This is because in very short relationships the court will often closely examine the contributions by each party to the property pool on an ‘asset by asset’ basis.
Again, a full consideration of all facts and circumstances relevant to your particular case is required to assess whether you, or your former spouse, have a claim.
Sometimes it is unclear whether what you have experienced is in fact a de facto relationship.
The Family Law Act 1975 (Cth) defines what a de facto relationship is, namely:view the Act's definition of "de facto"
A person is in a de facto relationship with another person if:
- The persons are not legally married to each other; and
- The persons are not related by family; and
- having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis
In order to establish whether the parties are living as a couple, the Family Law Act requires the Court to consider the following matters
- the duration of the relationship;
- the nature and extent of their common residence;
- whether a sexual relationship exists;
- the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
- the ownership, use and acquisition of their property;
- the degree of mutual commitment to a shared life;
- whether the relationship is or was registered under a prescribed law of a state or territory as a prescribed kind of relationship;
- the care and support of children;
- the reputation and public aspects of the relationship.
Interestingly, the Act provides that a person can be in a de facto relationship with one person at the same time that they are married or in a de facto relationship with another person!
Again, each matter is subject to its own particular facts and circumstances and you should seek out advice as soon as possible should you have concerns in relation to:
- A de facto property claim to be brought by you, your partner, your partner’s former or new spouse, or your partner.