In Australia, couples married couples or living a de facto relationship are entitled to have a property settlement. The principles that are applied to determine or ascertain the appropriate property settlement to be made, are uniform.
If parties in a relationship own assets, liabilities or financial resources, either separately or jointly with any other person, then either party is able to request a property settlement.
The Family Law Act 1975 (Cth) governs property settlement for married couples and de facto couples, except in Western Australia. The Family Court Act 1997 (WA) governs property for de facto partners in Western Australia.
The wording of the Acts are similar in nearly all respects. If parties read the sections of the Acts that deal with a property settlement, they are not able to ascertain or determine what a fair property settlement will be in their case. The Acts set out the matters that the family courts must consider, but they do not state how the family courts shall exercise their discretion. There is nothing in the Acts that says property should be divided 50/50, 60/40 or on any other percentage basis, even though that may be the outcome in many cases.
There is significant body of family law case law dealing with the calculation of what is a fair settlement. However each case will turn on its own facts. Property settlement cases vary on case by case basis. It is not recommended that parties rely on previous cases or of advice from friends and family about their case, because the parties own circumstances will be different.
Property is broadly defined. Property includes assets owned by a party overseas. Property includes assets acquired solely by a party before and after the relationship. Superannuation is now treated likely property by the family law cases and able to be divided between the parties.
When parties have separated they will need to reach an agreement to formalise the division of the property of the parties. Property settlement orders seek to comply with the finality principle which seeks that financial arrangements of the parties be brought to a formal ending within a reasonable time.
Married couples have 12 months from the date of the divorce to apply to the family courts for a property settlement. For married parties the date of separation does not start the time running.
De facto couples have 24 months from the date of separation to apply to the family courts for a property settlement.
When making a decision on how to divide the assets following the breakdown of a relationship the Court will use the ‘four step’ approach as follows:
- First, identify and value the assets and liabilities of the parties. This may be a simple or complex task depending on the circumstances. The Family Court can have regard to assets held by a company or a third party in certain circumstances.
- Second, assess the financial and non-financial contributions of the parties before, during and after the relationship. The assessment of contributions can be difficult in cases involving significant initial contributions, inheritances, compensation payments or gifts. There is no presumption that an assessment of contributions will result in an equal division of the assets.
- Third, assess the parties’ Section 75(2) factors, sometimes referred to as “future needs”. The Court can make an adjustment in favour of one party if the circumstances permit. However, the assessment of these factors or needs is discretionary and the adjustments generally vary from case to case.
- Fourth, asses what orders, if any, are just and equitable in the circumstances of the case.
Some family law commentators have suggested that the decision of the High Court of Australia in the case of Stanford changed or amended the approach of the family courts to property settlement. However, there has been a significant elapse of time since Stanford and from a practical point of view it appears that the ‘four step’ approach is still used by most family law practitioners and the family courts across the board.
A property settlement is final and can be set aside or varied in only very limited circumstances. A party seeking to set aside a property settlement must establish one of the following grounds:
- There has been a miscarriage of justice due to fraud, duress, false, suppression of evidence or any other circumstance.
- Circumstances have changed and the orders made are impractical.
- Where a party has not complied with the property settlement.
- Due to a change in the care, welfare and development of the children the applicant will suffer hardship.
- A proceeds of crime order.
Obtaining a proper property settlement may be one of the biggest financial decisions that a party will have to make in their life time. Therefore parties should get advice from experienced property settlement lawyers before you agree to sign any documents or transfer any assets.
We have advised many people about their entitlements in relation to a property settlement and we have represented many people in the Family Court of Western Australia and helped them to conclude their proceedings for property settlement.
We will generally be able to advise you of your property settlement entitlements and prospects of success in relation to a proper property settlement after an initial consultation. Beacon Family Law has range of flexible finance option if parties need ongoing representation in relation to a property settlement.