Parties can seek orders for division of matrimonial property under Part VIII (married couples) and VIIIAB (de facto partners) under Family Law Act. The court had a broad discretion to make ‘such order as it considers appropriate’ to alter the parties’ interests in any property owned by them, taking into account certain prescribed factors and provided it is ‘just and equitable’ to make the order.
Since the recent High Court case of Stanford v Stanford, the Court must first ensure that it is just and equitable to do so before making an order for property division. However in the vast majority of cases this threshold requirement will be satisfied by the fact that the parties’ existing arrangements have been terminated due to their voluntary separation.
Typically, the Court will then apply a ‘four-step approach’ in determining what order should be made:
Firstly, the Court will identify the net value of the property of the parties, normally as at the date of the hearing. Property is broadly defined and includes all real and personal property of the parties. In theory, foreign property also forms part of the matrimonial pool, though in practice there may be difficulties in enforcing any order in relation to such property. Even the assets held by a trust may be considered property of the parties where a party has effective control over the trust.
Potential sources of financial support that do not amount to property (such an expectation of receiving monies from a personal injury claim or through an inheritance) can sometimes constitute a ‘financial resource’ to be taken into account by the Court in determining what orders are just and equitable.
The second part of the ‘four-step approach’ is for the Court to consider and assess the contributions that each party has made either towards any property of the parties, or to the welfare of the family. Contributions may be financial or non-financial, with the latter including childcare and homemaking.
Rather than approaching it like a meticulous accounting exercise, the Court will broadly evaluate the parties’ respective contributions while applying certain established principles. One such principle is that the duration of the marriage will tend to even out the parties’ contributions, or reduce the weight to be given to any initial contributions of a party (i.e. assets that they brought into a marriage). Another is that homemaker contributions must be recognized in a substantial rather than token way.
Certain negative behaviors by a party, such as the dissipation of matrimonial assets through gambling or even domestic violence, may also affect the Court’s evaluation of contributions on the basis that such conduct has made the innocent party’s contributions more onerous.
Once the Court has identified and valued the matrimonial property and determined the proportion of the contributions that each party has made towards this, it will consider a large number of prescribed matters often referred to as the ‘needs factors’. These include matters such as the age and state of health of each party, their earning capacity, and whether either party has the care of a child of the relationship. There is also a catch-all provision allowing the Court to consider ‘any fact or circumstance which … the justice of the case requires to be taken into account’ at this stage. The Court may use this factor to take into account any financial resources, dissipation or premature distribution of funds, or any deliberate failure by a party to disclose their financial affairs.
Just and equitable
As a final step, the Court will revisit the ‘just and equitable’ factor by standing back after considering the foregoing to check whether the orders proposed as a result of its assessment is ‘just and equitable’. This is known as the ‘overriding requirement’ and is based on the truism that ‘the whole is not necessarily the sum of its component parts’ and the need for the Court, having decided that the parties’ interests in property should be altered, satisfy itself that the alterations ordered go no further than the justice of the case demands.