Property Settlement

Whether you have been married or living as a de facto couple, whether you have been living together for many years or only months, the journey of property settlement could be painful and disruptive.

Finalising arrangements for property can be complex and emotionally draining. The majority of couples resolve things satisfactorily and move on with their lives, yet it does take time.

Property of a relationship will include all assets held by you and your former partner in joint or separate names such as:

• family home.

• holiday home.

• cars and boats.

• household effects.

• personal items like jewellery and clothing.

Resolving a Property Dispute

In resolving a property settlement dispute, the High Court in Standford v Standford [2012] HCA 52 considered, inter alia, the manner in which courts are to determine whether it is just and equitable to make an Order pursuant to section 79 and the approach to be adopted in doing so.

The High Court in Stanford indicated that the following steps are to be adopted when determining what is just and equitable:

• Identify the existing legal and equitable interests of the parties in the property;

• Pursuant to s.79(2) consider whether it is just and equitable having regard to those legal and equitable interests to make an order;

• If an order is to be made, consider the matters pursuant to s.79(4) including contributions and future needs; and

• Make such an order as appropriate pursuant to s.79.

Pursuant to s.79(2), the Court, by looking into the existing and equitable interests in all the current assets and properties, will determine if it would be just and equitable, having regard to those legal and equitable interests, to make an order for the division of the assets.

An order under s79(2) will not be made unless the Court is satisfied that it is just and equitable to make the Order, after taking into account the factors mentioned in (a) to (e) of s.79(4). The Court must evaluate the respective contributions of both spouses under paragraphs (a) and (b) of sub s.(4) of the Act.

At the Commencement of the Cohabitation

The Court will look at the commencement of the cohabitation, and how much each party contributed (financially and/or non-financially) to the properties and assets of the relationship.

Then the Court will then decide the percentage of the direct and indirect financial contributions made, at the commencement of the relationship, and allocate a percentage figure for each party.

During the Cohabitation (Direct and Indirect Financial Contributions – section 79 (4) (a) of the Family Law Act 1975 Non-financial contributions – (s 79(4)(b) or s 90SM(4)(b))

The Court will further look into the period of the cohabitation and enquire about how much each party contributed (financially and/or non-financially) to the property and assets of the relationship. Things such as who paid the mortgage/rent, school fees, and other bills will be considered. The Court will also look into who maintained the property and assets such as mowing the gardens and general cleanings.

Contributions to the welfare of family – (s 79(4)(c) or s 90SM(4)(c)

The Court will further look into whether both parties contributed equally to the welfare of the family (the children) during the cohabitation.

The Court will then decide the percentage of the direct and indirect financial contributions made by the parties, by taking into account the contributions made at the commencement of the relationship and during the relationship, this time, the percentage figure will be adjusted for each party according to their contributions.

Contributions Made Post Separation (Direct and Indirect Financial Contributions – section 79(4)(A) and Non-financial contributions – (s 79(4)(b) or s 90SM(4)(b))

The Court will further look into the post-separation period and make a finding about how much each party contributed (financially and/or non-financially) to the property and assets of the relationship. Again, things such as who paid the mortgage/rent, school fees will be considered. And again, the Court will also look into who maintained the property, such as mowing the gardens and all other maintenance and general cleanings.

The Court will then decide the percentage of the direct and indirect financial contributions made by the parties, by taking into account the contributions made at the commencement of the relationship, during the relationship, and post-separation, this time, the percentage figure will again be adjusted for each party in accordance with their contributions.

Section 75(2) Factors

After arriving at a certain percentage figure at the end of the post-separation contributions, the Court must consider the section 75(2) factors to make further“minor” adjustments to the percentage of the distributions. Some of the factors to be considered by the Court to make further/minor adjustments to the overall division-based contributions are:

• the age and state of health of each of the parties;

• 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;

• whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

• commitments of each of the parties that are necessary to enable the party to support:

  • himself or herself; and

  • a child or another person that the party has a duty to maintain

  • the responsibilities of either party to support any other person.

• You can access all the factors under section 75(2) of the FAMILY LAW ACT 1975.

The Court will then revisit the last percentage figure of the direct and indirect financial contributions and apply the relevant factors under section 75(2), and then make a final adjustment to the overall percentage.

The result would further change the allocated percentage given to each party. However, the adjustment that results from section 75(2) factors will only range between 1% and 3%.

Binding Financial Agreement

A binding financial agreement is a document that sets out how you and your former partner will divide up your property.

The advantages of negotiating a binding financial agreement

• It minimises the cost of lawyers and avoids an adversarial court process.

• It allows you to be part of the process rather than having a decision imposed on you by a court.

• It can provide a speedy resolution.

• There is likely to be less emotional toll or impact on children.

• It is an important step towards ending the financial relationship between you and your former partner.

How do we negotiate a binding financial agreement?

At Daniel Legal Group, we can negotiate with the ex-partner (or their lawyers) a property agreement. You do not have to be totally alone; we will help you in every step of the way.

The negotiation process will involve the following steps;

• identifying what is included in the property pool.

• negotiating the division of the pool by way of a property agreement.

• formalising the agreement to achieve a property settlement.

The Advantages and Disadvantages of this Binding Financial Agreement

One of the main advantages of a binding financial agreement is that it would give you control over how you want the assets to be distributed at the date of separation, whether it is a separation of a de-facto relationship or a separation as a married couple.

Circumstances which Could Lead to the Setting Aside of a Binding Financial Agreement – Sections 90K and 90UM

One of the main disadvantages of entering into a binding financial agreement is that there is an inherent risk of having this binding financial agreement set aside by the Court.

Some of the circumstances of a Court setting aside a binding financial agreement would include the following:

• the agreement was obtained by fraud,

• non-disclosure of a material matter,

• for the purpose of defrauding or defeating a creditor,

• with reckless disregard of the interests of a creditor,

• for the purpose of defrauding another person who is a party to a de facto relationship with a spouse party,

• for the purpose of defrauding another person who is a party to a de facto relationship with a spouse party,

• for the purpose of defeating the interests of that other person in relation to any possible or pending application for an order under section 90SM,

• the agreement is void, voidable or unenforceable,

• in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out,

• since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child, a party to the agreement will suffer hardship if the court does not set the agreement aside,

• a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable.

Marrying Soon After Signing the Binding Financial Agreement - “a Red Flag to be Avoided”.

A wedding date which is very close to the date of signing a BFA agreement could be used as a ground to set aside the BFA as a party may allege that he/she was pressured by the other party to sign the BFA in a haste and without being given the opportunity to consider their legal positions and alternatives.

A wedding date that is close to the date of signing the BFA could give raise to allegations of undue influence or unconscionable conduct against a party. In the High Court case of Thorne v Kennedy [2017] HCA 49, it was held that a binding financial agreement can be set aside on the basis of unconscionable conduct and undue influence.

Binding Financial Agreement Targeting Two Scenarios: (a Current De-facto Relationship and a Future Marriage)

If you and your partner were in a genuine de-facto relationship for at least 2 years, whether you were living together in the same home or not, and you intend to get married in the future, then you should enter into an agreement under section 90UC (BFA during a relationship) in addition to the agreement under section 90B (BFA before marriage).

Both agreements (90UC and 90B) can be insert into the same Binding Financial Agreements as both agreements will cover your circumstances, during two separate occasions, during the de-facto relationship and before your marriage.

The Full Court of the Family Court of Australia in Piper and Mueller [2015] FamCAFC 241 confirmed the validity of a BFA containing the two provisions. It confirmed that the de-facto provision would cease to operate upon the marriage of the parties, as far as it formed part of the Part VIIIAB financial agreement, but would simultaneously spring to life as part of the Part VIIIA financial agreement upon the marriage.

Superannuation Treatment under a BFA

If you and your partner lived together, as a de-facto couple for at least 2 years, you may also need to insert section 90 XHA of the Act which is in relation to the superannuation agreement to be included in a BFA if about a def-facto relationship. This would be in addition to section 90XH of the Act which is in relation to superannuation agreement to be included in a BFA if about marriage.

So, Can You be De-facto Couple Even If You Don’t Live Together?

The short answer is, yes.

You do not need to live together on a full time basis to be considered a de-facto couple for the purpose of the Act.

Section 4 AA of the Act introduces factors which a Court will take into account when deciding if a de-facto relationship exists, factors such as:

• the duration of the relationship;

• the nature and extent of your common residence (which is just one factor and cannot be the only determining factor);

• whether a sexual relationship exists;

• the degree of financial dependence or interdependence, and any arrangements for financial support, between both of you;

• the ownership, use and acquisition of your property;

• the degree of mutual commitment to a shared life;

• the care and support of children;

• whether the relationship is or was registered under a

  prescribed law of a State or Territory as a prescribed

  kind of relationship;

• the reputation and public aspects of the relationship.

The legislation also confirms that no particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the persons have a de-facto relationship. It further confirms that a de-facto relationship can exist even if one of the persons is legally married to someone else or in another de-facto relationship.

The decision of the High Court in Fairbairn v Radecki[2022] HCA 18 confirmed that cohabitation of a residence or residences is not a necessary feature of "living together". That phrase “de-facto relationship” must be construed to take into account of the many various ways in which two people may share their lives together in the modern world. That two people, for any number of reasons, may not reside in the same residence, but nonetheless be in a de-facto relationship in the sense required by section 4AA of the Act.

Parenting Matters

The best interests of the child are the paramount consideration for the Court before making a parenting Order. The Court takes into account other factors to determine where the child should live and which parent should make important decisions in the child’s life like educational, religious, and medical decisions. 

Factors the Court May Consider:

• personal views of the child;

• competing proposals of the parents;

• physical or mental health issues of all parties involved;

• history of violence by either of the parents;

• the relationship between the child and the parent;

• home environment each parent can provide for the child, and

• recommendation by any expert social workers and psychologists.

Significant Changes to the Family Law Act 1975

There are significant changes to the operation of the Family Law Act 1975 concerning the living arrangements of children.

Section 60B (1) – Objects of Part VII and the principles underlying it

The previous objective of Part VII – has been overhauled and simplified as follows:

• it ensures that the best interests of the child are met, including by ensuring their safety, and

• it gives effect to the Convention on the Rights of the Child (CRC).

Section 60CC – Best interests of the child

Section 60CC has been amended and simplified as it now sets out a new list of factors that a Court must consider when determining the best interests of the child.

The new list starts with the Primary Considerations (but it is no longer called primary considerations under the new amendment). This list concerns the safety and wellbeing of the child which is still a paramount consideration. The other factors are also added from the previous “secondary considerations” (however, they are no longer called secondary considerations).

All the considerations (including those concerning the safety of the child) are now inserted in one list to make it simpler for the litigating parties.

The new simplified considerations are:

1. what arrangements would promote the safety (including safety from family violence, abuse, neglect, or other harm) of the child; and each person who has care of the child (whether or not a person has parental responsibility for the child),

2. any views expressed by the child,

3. the developmental, psychological, emotional, and cultural needs of the child,

4. the capacity of each person who has or is proposed to have parental responsibility for the child to provide for the child’s developmental, psychological, emotional, and cultural needs,

5. the benefit to the child of being able to have a relationship with the child’s parents, and other people who are significant to the child, where it is safe to do so, and

6. anything else that is relevant to the particular circumstances of the child.

Further, under the old system, the primary and the secondary considerations overlapped to some extent, especially in the issue of the child’s safety, which was considered in each of the primary and secondary considerations. Under the current system, there is no overlapping between the issues to be considered by the Court.

The Removal of the Presumption of Equal Shared Parental Responsibility in Section 61DA

This is the most significant change which took place on 6 May 2024. There will no longer be a presumption under the Family Law Act which a judge will be bound by. Any decision made by the judge, concerning the living arrangement of a child, will be considered under the principles determining the best interests of the child.

Previously, the presumption related to the joint making of major long-term decisions, however, litigants would often misunderstand the presumption and how it applied in relation to any order of equal time.

Under the new/current system, the judge is no longer legally required to presume that it is in the best interests of the child for the child’s parents to make joint decisions in relation to any major long-term issues.

The presumption would have been rebutted if it was not in the child’s best interests or if domestic violence did exist in the case.

Although the presumption of equal shared parental responsibility was abolished, the Court is still able to make an order for a joint decision making, if it is in the child’s best interests for the order to be made. In the new system, the Order about parental responsibility should be based on what is in the best interests of the child, and the particular circumstances of each case.

The Ramification of Removing the Presumption of Equal Shared Parental Responsibility on Section 65DAA (Considerations for Equal Time)

Under the old law, section 65DAA (Considerations for Equal Time if the presumption applies) was abolished.

In the old system, the presumption of equal shared parental responsibility required the Court to consider equal time as a consideration for the child’s living arrangements. This was a legal consideration that the judge was required to consider as the next step after determining that the presumption of equal shared parental responsibility applies.

This legal consideration was abolished under the new /current system. By removing the presumption of equal shared parental responsibility, the judge is no longer required to consider equal time unless such an order is based on the child’s best interests.

The Court now has to decide (after considering all the circumstances of the case) if it would be in the child’s best interests for his/her parents to jointly make long-term decisions concerning the child.

New Terminology, Legal Framework, and Guidelines

When it comes to drafting and making an Order for joint decision-making, section - 61CA now requires the following:

• unless there are court orders stating otherwise, and if it is safe to do so, parents are encouraged to consult each other about major long-term issues in relation to the child, having regard to the best interests of the child as the paramount consideration.

• The new subsection - 61D(3) requires the Court and all parties involved to use the terminology of “joint decision making on major long-term issues”, and

• The new section - 61DAA requires the Court to add the following terminology when making an Order for a joint decision making, “the parties are required to consult with each other and make a genuine effort to come to a joint decision.”

New Obligations on Legal Practitioners

Due to the significant changes in removing the distinctions between the primary and secondary considerations under section 60CC, the lawyer is now required to advise that when seeking any Order concerning the child’s living arrangements, the lawyer must advise of the following:

• the best interests of the child are of paramount importance and that before a parent seeks any parenting order, the parent must consider the child’s best interests,

• the lawyer must encourage the parent to act in the child’s best interests by applying the considerations set out in subsections 60CC(2) and (3),

• the lawyer must further advise that, due to the repeal of the presumption of equal shared parental responsibility, the lawyer is no longer required to advise the client to consider the possibility of the child spending equal time with each parent, and if equal time is not reasonably practicable, substantial or significant time with each parent. However, the lawyer can only advise that any parenting order the parent is seeking should always be based on the child’s best interests.

Divorce

The granting of a divorce does not determine issues of financial support, property division or arrangements for children.

Divorce is the legal end of a marriage, the marriage broke down and there is no reasonable chance that the parties will get back together.

To be granted a divorce, the marriage must be recognised in Australia and you must meet the requirements for divorce under the Family Law Act 1975.

To be granted a divorce, you and your spouse must have lived separately and apart for at least 12 months and must prove that there is no reasonable likelihood of resuming married life. Having said that, it is possible to live together in the same home and still be separated.

You can apply for a divorce in Australia if either you or your spouse:

• regard Australia as your home and intend to live in Australia indefinitely, or

• are an Australian citizen by birth, descent or by grant of Australian citizenship, or

• ordinarily live in Australia and have done so for 12 months immediately before filing for divorce.

Spousal Maintenance

The Family Law Act 1975 and the Family Court Act 1997 (WA) give the court the power to make orders for a person to pay financial support for their spouse or former spouse. The Court may also order a person to pay maintenance to a de-facto partner, or former de facto partner.

A party to a marriage can apply for spousal maintenance, even if the marriage has been dissolved or is void. A court can vary a spousal maintenance order in further proceedings between the parties about spousal maintenance.

Section 18(1) of the Child Support (Registration and Collections) Act 1988 provides that a spousal maintenance order made by a Court is a registrable maintenance liability.

When does a spousal maintenance order end?

A spousal maintenance order ends:

• when the payee dies, or

• if the payee remarries (unless the court orders that payments should continue because of special circumstances), or

• when the payer dies (unless the court made an order for lifetime maintenance before 1983).

De-facto maintenance

Section 18(2) of the Child Support (Registration and Collections) Act 1988 provides that an order made by a Court for a party to a de-facto relationship to pay a periodic amount for the maintenance of the other party to the de facto relationship is a registrable maintenance liability.

A de-facto maintenance order ends:

• when the payee (i.e. the party entitled to receive the maintenance) dies, or

• if the payee marries (unless a court orders that payments should continue because of special circumstances), or

• when the payer dies.

Child Maintenance

A child maintenance order, under the Family Law Act 1975, can be made by consent of the parties or by a judgment of the Court. The Court can also register agreements about child maintenance.

However, most child support matters are dealt with under the Child Support (Registration and Collections) Act 1988, when the Registrar makes a child support assessment for the child.

The Court, however, is able to deal with applications for maintenance for children and from parents/carers who are not eligible for a child support assessment.

Who can apply to a court for a child maintenance order?

• a parent of the child (including an adoptive parent),

• the child in their own right,

• a grandparent of the child, and

• any other person concerned with the care, welfare or development of the child.

Either or both of the child's parents can be ordered to pay child support, including a child’s step=parent.

When does an order end?

A child maintenance order may contain a provision that says it will end at a specified time, or when a particular event occurs.

Furthermore, a child maintenance order ceases to be in force if the Registrar makes an administrative assessment of child support for the payer, payee and child concerned.

Under the Family Law Act 1975, a child maintenance order will end:

• if the child dies,

• if the payer dies, unless the order expressly provides for it to continue after the death of the payer,

• if the payee dies, unless the order expressly provides for it to continue after the death of the payee and nominates a person to whom those payments are to be made,

• if the child is adopted, marries or starts a de facto relationship,

• where the child maintenance order is for a child under 18, when the child turns 18 unless the order says that it will continue after that,

• where the child maintenance order is for a child aged over 18, which was made to enable the child to complete his or her education, when the child ceases education, or

• where the child maintenance order is for a child aged over 18, which was made because the child has a physical or mental disability if the child ceases to have the disability.