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Property Settlements

The division of property between separated spouses (both married and de facto) is governed exclusively by provisions of the Family Law Act 1975

If the Court determines it is just and equitable for there to be a property settlement (which in most cases the court will), then the Federal Circuit and Family Court of Australia adopts a four-step process as follows:-

Step 1 – Identify and value all property of the parties

Under this step it is important for the Court to first of all identify all interests in property that parties have at the current date.  The parties then must agree on a value or have valuations conducted so that the Court is able to determine the proper value of an item of property. 

It is important to remember that all interests and types of property must be identified and valued in this first step regardless of when that property came into existence or how it came into existence.  For example, even a lottery winning three weeks after separation needs to be still identified and valued and included in this first step.

Step 2 – Assessing contributions of the parties

Under this second step, the Court must assess and evaluate both parties’ contributions throughout the relationship towards the acquisition, conservation and improvement of property.  Contributions can be both direct and indirect and they can also be financial and non‑financial.  Contributions also include contributions to the welfare of the family and contributions as a homemaker and a parent to children throughout the relationship.

In most cases, the Court takes a very general or broad brush approach to the assessment and evaluation of these contributions, especially in longer relationships.  Generally speaking, the shorter the length of a relationship, the closer the examination of the parties’ relevant financial contributions in a property settlement would be, particularly if there are no children involved.  The Court will specifically look at significant initial contributions, as well as financial contributions during the relationship (especially any lump sum contributions), when assessing the contributions of both parties to the relationship. 

Step 3 – Assessing the future needs of the parties

Under this third step the Court looks at its assessments and quantifications in Steps One and Two above.  The Court then asks itself the question as to whether the percentage division based on contributions (having regard to the nature and value of assets identified in Step One) is a just and equitable order.  The Court in making this decision must examine the various factors as set out in Section 75(2) of the Act (for married couples) or Section 90SF(3) of the Act (for de facto couples).

Some of these factors include factors relating to the ages of the parties, their health, the current and future income earning potential and capacity of each party and whether a party has the care of any children under the age of 18 years.

Step 4 – Determining the just and equitable nature of property division

An additional step that the Court takes in determining property settlement is to ensure that having regard to the relevant considerations of its assessments and quantifications under the first three steps, then the Court is to examine the practical effect of the Orders sought or the Orders which it will make to ensure that a just and equitable outcome is reached.

Formalising your Agreement

Where parties can reach an agreement in relation to property settlement there are 2 ways of documenting (or finalising) the agreement under the Family Law Act, specifically:-

  1. By incorporating the agreement in orders which are made by the Federal Circuit and Family Court with the consent of both parties (Consent Orders); or

  2. By incorporating the agreement in a Financial Agreement which deals with property settlement and/or maintenance and which is not filed with the Court.

Consent Orders

The documents required for the Court to make Orders by Consent are:-

(a) An Application for Consent Orders;

(b) Minute of Order.

These documents are then filed with the Court and are considered by a Registrar.  It is not necessary for the parties to attend Court, however a filing fee of $170 (as at 1 July 2021) is payable.  If the Registrar approves the Minute of Order then they will be made as Orders of the Court.

Consent Orders are binding on the parties and are enforceable in the Court in the event that either party fails to comply with their obligations under the Orders.

Financial Agreements

The Act enables parties to enter into private Financial Agreements.  These can be entered into at any time before, during or after the relationship.  Financial Agreements can deal with how parties intend to divide their property and superannuation in the event of separation.

Financial Agreements must comply with strict technical requirements as set out in the Act, including that each party must receive independent legal advice prior to entering into the Agreement and must obtain a certificate from their lawyer to this effect.

Before a Financial Agreement can be enforced, a party needs to make an application to the Court for a declaration that the Agreement is valid and enforceable.

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