This is the standard approach followed by the Court in determining family law property matters:
The four step process
- Identify and value the pool of assets,
- Determine the parties’ contributions (s 79(4)),
- Consider s 75(2) factors, and
- What is a likely just and equitable result (s 79(2)).
Step one – identify and value the net property
- Typically, the Court will look at the current value of the assets and liabilities, rather than the date of separation, however this is not universally the case.
- The Court may hold that add backs are appropriate:
- Where the parties have expended money on legal fees;
- Where one of the parties has embarked upon a course of conduct designed to reduce or minimize the effective value or worth of matrimonial assets;
- Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimized their value.
You may wish to seek expert accounting advice about the value of property or potential liabilities such as capital gains tax.
Step two – contributions – Section 79(4) (a) to (c)
Consideration is given to:
- Direct and indirect financial contributions
- Non-financial contributions
- Contribution to the welfare of the family, including contribution in capacity of homemaker or parent
Direct financial contributions
The assessment of financial contributions is not a meticulous mathematical formula. In short marriages of less than 5 years – noting that 5 years is not a definitive time period, but a general guide – direct financial contributions take on more significance.
Indirect financial contribution
A party who is paying household expenses has made an indirect contribution to the conservation of the property, as they allow the other party to direct all of their income to mortgage payments.
- Can include a party’s abilities as a money manager
- Can include inspiration to other party’s contributions
- Can include providing nursing/care to a partner
- Some practitioners will seek to run a “negative contribution” argument based on the conduct of one of the parties – for instance, where a party has perpetrated domestic violence or suffers from alcoholism. However, this is a very limited area, and generally difficult to argue and prove.
Step three – section 75(2) factors
The Family Law Act 1975 (Cth) provides an extensive list of justice and equity factors which can affect your entitlements. The relevance and impact of each factor will depend on the circumstances of your case, so legal advice is recommended to assess the extent of your entitlements.
Step four – just and equitable outcome
This is reflected in parties having an instinctive sense of a fair result.
Spousal Maintenance Issues
Aside from division of property, the Court may order a party to pay spousal maintenance to the other if:
(a) the first party is reasonably able to pay; and
(b) the other is incapable of supporting themselves adequately, for example, by reason of having the care of a child of the relationship under 18 years of age.
The Court will take into account the 75(2) factors above, the parties’ standard of living, and the justice and equity of the parties’ circumstances. Again, the relevance and impact of the factors is a complex issue, and will depend on the circumstances of your case. There are strict timeframes to file a Court application for spousal maintenance, with limited exceptions (for example, hardship).
How we can help
If you require assistance in a family law property matter, please contact us to make an appointment to discuss how these considerations apply to you.