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Property Settlements: Position in Australia and Foreign Jurisdictions

A key concern for most people following the breakdown of a relationship is how the property will be divided between the parties. Where parties can reach an agreement as to the property settlement out of court this is usually the preferred option as it will avoid the delay and expense associated with court proceedings.  The agreement can then be formalised by the Family Court by way of Consent Orders.

Yet where necessary the Court will make property orders that it considers to be appropriate in all the circumstances. Notably, the Court can make orders in property settlements in relation to both married and de facto couples, whether same sex or not. The Family Law Act 1975 (Cth) sets out the factors to be taken into account by the Court when making such orders.

These include factors like the respective financial contributions of each party to the marriage or de facto relationship, any non-financial contributions made by the parties, the effect of any proposed orders upon the earning capacity of either party, and the impact of the proposed orders on either party’s responsibility in relation to children of the marriage or de facto relationship. The property that can be divided amongst the parties ranges from motor vehicles and household chattels to company shares and trusts.

The seminal High Court case of Stanford v Stanford [2012] HCA 52 examined the court’s power to divide a couple’s assets when the couple has separated involuntarily. Comments made by the judicial majority indicated that the suggested approach is for the Court to:

  1. Look at the parties’ existing legal and equitable interests, being their individual interests rather than the joint property of the parties;
  2. Decide under s 79(2) whether it is just and equitable to make an order altering the parties’ existing legal and equitable interests; and
  3. Examine the matters in s 79(4) including factors in s 75(2) . These sections list several matters to be taken into consideration in relation to alteration of property interests and spousal maintenance.

In this case, the Court found that it was not just and equitable to adjust the assets of an elderly married couple just because they had involuntarily separated when they moved into a nursing home.

The process of the Family Court when reaching a decision as to the appropriate division of property between the parties can therefore be summarised into the following four steps:

  1. Calculate the net asset pool
  2. Determine the parties’ contributions throughout the relationship (financial and non-financial)
  3. Determine the parties’ future needs following separation; and
  4. Determine (based on the preceding steps) whether the property settlement is just and equitable between the parties.

However, different property settlement processes exist in different overseas jurisdictions. In some countries such as England and Singapore, a divorce petition must be filed first and property settlement is ancillary to the divorce application. By contrast, in Australia, divorce is a separate application from that of property settlement which can be filed first.

Same sex marriages and civil partnerships are not legally recognised in India. Further, in certain Islamic States the way in which property settlements are treated is intrinsically linked to the rights of the parties under Islamic law. In Egypt, for example, personal status laws give priority to Islamic rules regarding marriage and divorce except where the husband and wife are non-Muslims and belong to the same religious group.

Nicholes Family Lawyers aims to help parties settle property matters without recourse to Court.  In the event that our clients can agree to a property settlement outside of Court, we provide advice and assistance with preparing Consent Orders to be filed with the Family Court of Australia, as well as Binding Financial Agreements. In the event that parties cannot agree to a property settlement and the matter proceeds to Court, Nicholes Family Lawyers is experienced in providing representation to clients throughout the process and can provide advice in relation to the relevant consideration by the Court when determining the division of property between parties.

By Nicholes Family Lawyers

 

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