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The Courts Approach to a Family Law Settlement

When considering an adjustment of the parties (husband, wife or de facto) assets and liabilities, whether in a marriage or De Facto relationship, the Court considers the following 4 steps: –

  1. Identify the parties’ property, liabilities and financial resources and the parties existing legal and equitable interests in property;
  2. Determine whether, in all the circumstances, it is just and equitable to make an order adjusting the legal or equitable ownership in the property;
  3. If it is just and equitable to make an order, consider the parties contribution, including financial contributions, non-financial contributions, contributions as homemaker and parent;
  4. Consider the factors listed under section 75(2) in the case of a marriage and Section 90SF (3) in the case of a De Facto relationship of the Family Law Act (“the Act”).

Steps 1 and 2: – Identify the parties’ property, liabilities and financial resources and the parties existing legal and equitable interests in property and determine whether, in all the circumstances, it is just and equitable to make an order adjusting the legal or equitable ownership in the property.

The Court must consider the property, liabilities and financial resources (“asset pool”) of the parties whether married or in a De Facto relationship before, during or after separation and ascertain who has legal ownership of the property and how the assets are to be divided.

The Assets that are considered include real estate, chattels, motor vehicles, shares, superannuation, interest in companies and trusts.  The Liabilities include a mortgage over the family home, car loan, loans from third parties such as parents or personal loans.   In this circumstance, the parent lending the money should have a loan agreement in place, keep a record of the money advanced to the child or consider registering a mortgage over a property.   The child receiving the money must have proof of the repayments.

The assets, including real estate and superannuation, must be valued as at the date of the parties are negotiating a settlement and not at the date the parties separated.

Step 3 :- If it is just and equitable to make an order, consider the parties contribution, including financial contributions, non-financial contributions, contributions as homemaker and parent.

Lawyers and Judges rely upon the Family Law Act when assessing the contributions of each party to the assets and liabilities.   The contributions identified in the Act are as follows:-

  1. Financial contributions;
  2. Non-financial contributions; and
  3. Contributions made to the welfare of the family.

Financial Contributions

Financial contributions include contributions made directly or indirectly to the acquisition, conservation or improvement of any of the property of the parties or either of them.   This includes a party’s income, any money or assets they brought into the marriage (initial contributions) and any other financial contributions such as an inheritance received and a monetary gift.

Non-financial Contributions

Non-financial contributions relate to things each party during the relationship such as to maintain or improve the property or a business.

When considering non-financial contributions, the Court will generally consider the value that the non-financial contribution has added to the net asset pool and/or the cost of hiring someone to complete that task.

Contributions to the welfare of the family

This includes daily homemaker duties such as domestic duties and caring for the children.

Some examples of contribution to the care and welfare of the family include:

  • Looking after children;
  • Taking children to medical appointments;
  • Taking the children to extra-curricular activities;
  • Taking the children to school; and
  • Picking the children up from school;

The Court will place weight on each contribution by the parties as it sees appropriate in the circumstances of the case.

Step 4 – Consider the factors listed under section 75(2) in the case of a marriage and Section 90SF (3) in the case of a De Facto relationship of the Family Law Act (“the Act”).

The Act lists a number of factors that the Court will consider in deciding whether to adjust the parties’ asset pool.   The factors include:

  • The age and health of each of each party;
  • The income, property, and financial resources of each party;
  • The physical and mental capacity of each party and if they are to work;
  • Whether either party has the responsibility or care or control of a child of the marriage who is under 18 years of age;
  • Commitments of either party to supporting himself/herself and a child;
  • The responsibilities of either party to support any other person;
  • The eligibility of either party to obtain a pension, allowance, or benefit;
  • Reasonable standard of living in all circumstances;
  • Whether payment of maintenance would allow a party to increase their earning capacity by undertaking an educational course or training;
  • The extent of contribution to the income, earning capacity, property of the other party;
  • If either party is cohabitating with another person, the financial circumstances of this;
  • The need to protect a party who wishes to continue that party’s role as a parent;
  • Terms of any orders made in relation to the property of the parties or vested bankruptcy property;
  • Any child support that a party to the marriage has provided or might need to provide in the future; and

Not all the above factors are relevant to all property settlement matters. At times, more than one factor is considered.   At other times, none of these factors may be relevant.