Property Settlement – Marriage and Defacto

Property Settlement – Marriage and Defacto

The team at Barclay Churchill are experienced in handling all marriage and defacto property settlements. Property settlement is a complicated area of law, involving identification of assets, contributions and needs. Our team is trained to get great results, we are determined to protect you and your family’s property, and our experience allows us to achieve these goals with minimum hassle and cost.


Property and Assets within Family Law

Commonly disputed throughout Family law proceedings, ideas surrounding property and the process of settlement are often misunderstood. The aim of this article is to outline the current approach taken by the courts, distilling what is required by each party throughout the settlement process.

What is property?

According to section 4(1) of the Family Law Act 1975 (Cth), property is broadly defined to include any assets acquired by either or both parties during the marriage, and may sometimes even extend to include those assets that were owned by either party prior to the marriage that have since been used for family purposes. It is important to understand that such assets need not only be physical, but may also include financial resources such as superannuation and any entitlements to benefits from a family trust.

The “Four-Step Process”

As outlined under section 81 of the Family Law Act, the main objective of the court in determining a property settlement is to “finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.” In light of this objective, the court developed an approach known as the “four-step process,” which is currently used when assessing property applications.

It is important to note that as outlined under section 71A of the act, this process does not apply to those matters and/or resources to which a financial agreement is binding upon the parties.

Step 1: Identifying the Assets, Liabilities and Financial Resources of the Parties

According to rule 13.04 of the Family Law Rules 2004, each party has a duty to the court and the other party to give “full and frank” disclosure of all information relevant to the case, including the honest identification of all assets, liabilities and financial resources.

In order to provide full and frank disclosure in regards to any assets or income, each party must notify the court of:

  • Gross weekly income;
  • Child support payments, whether paid or received;
  • Funds in any financial institutions;
  • Real estate, including the percentage and value of the share owned;
  • Motor vehicles;
  • Superannuation, including the gross value of each interest;
  • Furniture, including its estimated value;
  • Any interest in any business, including the gross market value of the interest owned;
  • Investments;
  • Life insurance policies;
  • Interest in any trust fund;
  • Any significant disposal of property in the twelve (12) months prior to separation.

In relation to liabilities, it is necessary that each party disclose to the court:

  • Mortgages;
  • Credit card debts;
  • Loans, including from both financial institutions and from family and/or friends;
  • Income tax;
  • Any current hire purchase or lease.

Step 2 Assessing the Contributions made by the Parties

Once the court is satisfied that all assets, liabilities and financial resources have been adequately disclosed, it is then necessary to assess the extent of the contributions each party has made to the acquisition and maintenance of this property.

According to section 79(4) of the Family Law Act, there are four primary modes of contribution that are recognised by the courts. Firstly, the court will consider any direct financial contributions made by each party for the acquisition of any property. For example, paying part of the deposit on a house or a motor vehicle. In addition to this, the court will also consider any direct financial contributions made for the maintenance or improvement of any property. This would include any renovations or repairs made to the family home.
As well as direct financial contributions, under section 79 of the Act the court also recognises any indirect financial contribution to both the acquisition and maintenance of property. This may occur where one party pays the bills which enables the other party to pay the mortgage.

Finally, when assessing the contributions made by each of the parties, the courts will also have regard to any non-financial contributions such as homemaking and parenting duties. Here, the court recognises the different roles each party plays within a relationship, where often one party performs home duties to enable the other to concentrate on work.

It is important to note that when assessing contributions, the court exercises discretion when determining the weight that is to be given to each contribution.

Step 3: Evaluating Each Party’s Future Needs so Far as They Are Relevant

In addition to assessing the contributions made by each party to the settlement, under section 75(2) of the Family Law Act, the courts are also required to evaluate the future needs of the party before negotiating a property settlement.

According to the Act, the court may consider the following when evaluating the future needs of each party. Again, it is up to the discretion of the court as to how much weight is placed on each relevant factor.

  • The age and state of health of each party;
  • The income, property and financial resources of each party;
  • Whether either party has the care of a child of the marriage under eighteen (18);
  • The commitment necessary for party to support him/herself;
  • Any responsibility to care for another person;
  • The eligibility of the party to receive a pension or allowance from the Australian government or form a superannuation fund;
  • A standard of living that is reasonable in all the circumstances;
  • The extent to which maintenance will increase a party’s earning capacity by enabling a person to undertake a course of training;
  • The extent to which a party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
  • The duration of the marriage and the extent to which it has affected the earning capacity of the party who seeks maintenance;
  • The need to protect a party who wants to continue his or her role as parent;
  • The financial circumstances relating to the cohabitation with another person;
  • Any child support that is payable;
  • The terms of any financial agreement binding on the parties.

Step 4: The Court Must be Satisfied, in all the Circumstances of the Case, that it is Just and Equitable to Make the Orders

Finally, once all the above has been completed, section 79(2) of the Family Law Act requires the court be satisfied that, in all the circumstances of the case, it is just and equitable to make the order it has deemed appropriate from the evidence that has been provided.