How the Family Court Approaches Property Settlement Proceedings

Under the Family & Relationship Law Act the Family Court and the Federal Circuit Court are given power to make orders for property settlement in relation to marriages and de facto relationships, including same sex relationships.  In proceedings relating to property, the Court can “make such order as it considers appropriate…altering the interests of the parties…in the property”.

The Court must not make such an order unless it is satisfied that in all the circumstances it is “just and equitable” to do so.  For this purpose the Court must consider the legal and equitable interests of the parties when considering what, if any, order is to be made.  In making an order that it considers appropriate the Court must be satisfied that any such order is not only fair, but fair to both parties.  This obligation applies even if the orders being sought are by consent.

In considering what order is appropriate, the Court must proceed to consider the following three steps:

• Identify and value the asset pool of the parties or either of them;
• Assess the contributions made by the parties towards the acquisition, conservation and improvement of the asset pool; and
• Take into account any other relevant matters that may affect the future prospects of the parties.

Each of these considerations is dealt with in turn.

The Asset Pool

The first step is to identify and value the asset pool.  This comprises the assets and the liabilities of the parties arising out of their relationship.  The Courts have given the term “property” the widest possible interpretation and, generally speaking, includes such things as real estate, motor vehicles, bank accounts, superannuation entitlements, furniture, artworks and the like.  Liabilities can include mortgages, credit card debts, car loans, hire-purchase and debts due to family members.

The asset pool is that which exists at the time of the final separation between the parties but the Court is entitled to take into account any changes that have occurred since the separation.  The value of the asset pool is the value at the time of the Court hearing.

The ascertainment of the asset pool enables the Court then to consider what adjustments, if any, need to be made thereto for the purpose of finally resolving the property issues between the parties.

Contributions

The second step is to consider the contributions that each party has made towards the accumulation of the asset pool.  There are different types of contributions that can be taken into account under this step.

For example, contributions may be financial as where the parties have injected capital or income into the marriage for the acquisition, conservation or improvement of property.

Alternatively, contributions can be other than financial and can include actual physical work carried out renovating or restoring property.

Contributions can also be made towards the welfare of the family in the capacity of homemaker and/or parent.  This includes the performance of household duties such as cooking, washing, cleaning, and attending to the needs of the child or children of the relationship.

Contributions can be made directly or indirectly and can also be made on behalf of a party.  For example, contributions made by a relative of one of the parties may be taken into account as a contribution made by that party.

Dealing with this second step the Court must hear evidence and make an assessment of the relative contributions made by each party.

Other Relevant Matters

Matters of contribution are essentially a consideration of the history of the marriage culminating in the asset pool as at the date of the final separation between the parties.  Thereafter, the third step is to consider such relevant matters as may reflect upon the future prospects of the parties.  In this regard, the Court can take into account, among other things, the age and state of health of each of the parties, their capacity for appropriate gainful employment, whether they have the care or control of a child who has not attained the age of 18 years, any financial resources such as an entitlement to an inheritance and other facts or circumstances which, in the opinion of the Court, the justice of the case requires to be taken into account.  In effect, this particular step requires the Court to weigh up the relative future prospects of the parties.

A consideration by the Court of these three steps requires a balancing of all of the relevant factors to determine what order is appropriate.

Once the Court has determined the relative entitlements of the parties to a property settlement, it is given a broad power under the Family & Relationship Law Act to make orders for the purpose of giving effect to its findings.  In this regard, the Court may order that one party transfer their property to the other, it may order the payment of a lump sum whether in one amount or by instalments, it may order that any necessary deed or document be executed and that any title document be produced to complete and record the transfer of property.  It may impose terms and conditions and appoint or remove trustees.

The orders that are made are intended to finalise and sever once and for all the financial relationship of the parties so that, thereafter, they are able to go their own separate ways without any further connection between them in relation to property.  In this regard, the Court has a duty to make such orders as will finally determine the financial relationship between the parties to avoid any further proceedings between them.