Considerations of the Court in property settlements
One of the most common questions from clients going through a family law property settlement is “Why isn’t the property split 50/50?” While this might initially seem fair just to divide everything equally, it is almost always far more complex than that.
The Family Law Act 1975 (Cth) prescribes the numerous considerations the Court must consider when determining a party’s entitlements in a property settlement. What is fair will differ from one matter to the next because property settlements are based on the unique circumstances of the parties.
The starting point for the Court is Section 79(4) of the Family Law Act. This section requires the Court to take into account the following when considering what alterations should be made: -
The financial contributions of the parties. This might include things like purchasing property, paid employment and inheritances.
The non-financial contributions of the parties. Non-financial contributions may include renovations and improvements to property.
The non-financial contributions of the parties in their capacity as a parent or homemaker. This includes looking after children, cleaning and tidying the home, gardening, cooking.
The additional considerations set out in Section 75(2) of the Family Law Act.
When reading the Family Law Act the last consideration may seem a little confusing. Section 75(2) of the Family Law Act provides a long list of factors the Court can consider when deciding on an application for spousal maintenance. A property settlement is different from spousal maintenance, so how does this work?
Section 79(4)(e) requires the Court also consider all those factors listed under s75(2) when they are determining a party’s entitlements for property settlement.
What are the s75(2) factors?
The list of factors included at Section 75(2) include: -
The age and health of the parties.
The income, property and financial resources of the parties.
The physical and mental capacity of the parties to obtain gainful employment.
Whether either of the parties has primary care of a child under the age of 18.
Whether the parties have any commitments or responsibility to support themselves or any dependents.
Whether the parties are eligible for a pension or other benefit.
The standard of living of the parties.
The extent to which payment to a party might enable that party to increase their earning capacity through training or education.
The effect of any Order on the ability of a creditor of a party to recover the creditor’s debt.
The extent to which a party has contributed to the income, earning capacity, property and financial resources of the other party.
The duration of the marriage and the extent to which it has affected the earning capacity of the parties.
The need to protect a party who wishes to continue their role as a parent.
If either party is living with another person, the financial circumstances of that arrangement.
Any Orders made under Section 79 of the Family Law Act.
Any child support either party is liable to pay.
Any other fact or circumstances which, in the opinion of the Court, the justice of the case requires consideration.
The terms of any financial agreement or binding financial agreement the parties have entered into.
In future articles we will look in depth at some of the s72(5) considerations.
The Court have to weigh all these factors against the party’s contributions, both financial and non-financial, to come up with a percentage that each party is entitled to. This is a very complex exercise and requires a good understanding of the legislation and the case law. Because of this, we strongly recommend people obtain expert legal advice when going through a property settlement.
If you are going through a property settlement, or need some advice, make an appointment with one of our solicitors by calling our office on (02) 6800 2660 or using our Online Service Portal.
Please note: the information in this article is general in nature. For specific advice about your circumstances, contact us to make an appointment with one of our solicitors.
