How Does the Court Work out Property Division Between a Separating Couple?

Is Just and Equitable Just a Fancy Way to Say “Fair”?

The Court’s Process to Determine the Settlement of Property Matters

The Court has traditionally used a 4 step process to determine Property Settlement matters.  The Court first has to consider whether a Property Settlement would be “just and equitable” at all. That is a legal way of saying that it is a fair division of the former spouses’ property taking into account future needs such as looking after children, re-educating for employment, caring for a family member and just being able to move on.

The 4 step process remains a useful guide to outline the way the Court will approach settlement of financial matters in a Property Case:

a) The first step requires the Court to identify the property of the parties. It does not matter in whose name the property may be held, as property is defined quite broadly and includes legal and equitable interest of the parties. Each party provides evidence of the ownership and value of the assets, liabilities and superannuation of each of them (and any corporate structures in which they or each of them have an interest). It is sometimes necessary for the parties to engage an expert to provide a formal valuation if value cannot be agreed but often market appraisals can be agreed on to save that expense.

b) The second step is for the Court to assess the contributions made by each party to the assets available for division. Contributions as outlined in s 79(4) of the Family Law Act include financial contributions (e.g. who paid for property), non- financial contributions (e.g. did either party apply their labour to improve the property) and contributions as a parent and homemaker (e.g. who cooked meals, washed the dishes, did the laundry etc.). The Court usually expresses the contribution-based entitlements of the parties as a percentage range, but in some cases it may consider it is more just and equitable to assess contributions as a dollar figure.

c) The third step is for the Court to consider whether there should be an adjustment made to the contribution-based assessment having regard to the factors referred to in s 75(2) of the Family Law Act – future needs. These factors are primarily concerned with future needs, e.g. whether the income earning capacity of one party is affected by health issues or having the primary care of children. Usually (but not always) the adjustment is also expressed as a percentage range.

d) The fourth step is to assess whether the proposed outcome of the first 3 steps is just and equitable. For example, in some cases a proposed outcome may result in one party receiving all the parties’ combined non-superannuation assets and the other party all of the superannuation assets. This may not be just and equitable if the party retaining the superannuation is unable to access them for a significant period of time. In some cases, the Court may ultimately award one party more or less than they otherwise may be entitled to ensure a just and equitable outcome.

Negotiation, dispute resolution and Pre-Action Procedures

The Family Law Rules 2004 (Cth) impose on parties and their Solicitors a clear obligation to take all reasonable steps to explore all reasonable avenues for settlement without Court proceedings or even if Court proceedings are commenced, continue in their efforts to resolve matters by agreement. Parties must take various steps to try and resolve their dispute before they can commence Court proceedings. Those steps are set out in what are known as “pre-action procedures” which include full and frank disclosure as provided by the Family Law Rules (Rule 12.02 & 13.04). See our article “Do I have to go to Court Straight Away?” (4 September 2019)

Pre-action procedures reflect the overriding principle of the Court and Family law Rules to control costs, resolve issues quickly and avoid the need to go to Court. We always try to advise clients to keep in mind the principle of proportionality where legal costs can be disproportionate to the desired financial outcome.

In complying with pre-action procedure requirements you can have a voice in the negotiations and progress your matter without proceeding to a Court hearing. This reduces the financial and emotional costs of legal proceedings. Even if preliminary discussions and communications do not initially lead to all areas of dispute being resolved, they can be narrowed, to focus further settlement discussions.

Next step

When instructing a solicitor, you will need to provide a detailed list of the following:

History of Assets

1. Property owned by both parties at the time of commencement of cohabitation, for example, at the commencement of the cohabitation, I owned the following assets, my spouse owned the following assets;

2. History of employment of both parties and estimate of annual wages of each to date;

3. History of purchase of property by the parties, date of purchase, the amount purchased and mortgage statements including any documentation relating to your mother-in-law’s percentage ownership of the Paddington property;

4. Cash at bank, if known, value of spouse’s bank account(s) ;

5. Any investments/shares;

6. Any personal items ownership of which may be disputed such as sporting equipment, furniture, jewellery or pets.

Superannuation

7. Value of superannuation of each party;

History of Liabilities

8. Mortgages and or any other liabilities including any personal loan(s).

The Way Ahead

By being prepared with all your documentation, your history of the relationship and your contributions to the financial well-being of the family, you can help to expedite your matter by being well-prepared for negotiation and to present your case to get the best outcome whether via solicitor exchanges, mediation or if necessary going to Court. Each case is decided on its merits and factual circumstances. It is important to contact a lawyer specialising in family law who can bring knowledge of the latest cases relevant to your matter so that you can present your situation and your needs in a realistic framework.

Please do not hesitate to contact us for legal assistance.

Note: This is not legal advice and is provided for information only.