The Family Law Act provides the court with the power to make an alteration of property interests arising out of a relationship. Although governed by separate sections of the Act, the general principles are much the same for property settlements arising out of de-facto relationships as it is for those arising out of a marriage.
The High Court in Stanford v Stanford  HCA 52 established that prior to exercising the power conferred under section79(4) to make any alteration to property interests, the court must first consider whether it is “just and equitable” to make an alteration in the first place.
The four step Process
Once the court is of the view that it would be just and equitable to make an alteration of property interests, a four step process is used to determine how that alteration should occur.
Originally set down in the Full Court’s decision of Hickey v Hickey and the Attorney General for the Commonwealth of Australia (Intervenor) 2003 FLC 93-143 this four step process involves:
- Identifying and valuing the net asset pool of the relationship;
- Assessing the financial and non-financial contributions of each party to the relationship;
- Considering the consider the factors outlined in section 75(2) to determine if there should be any adjustment in favour of a party; and
- Whether after considering the above the end result would be “just and equitable”.
The way that assets and debts will be altered will depend on the individual circumstances of each family.
Any kind of private settlement agreement that does not involve the provision of legal advice is inherently risky. This is particularly so because these types of agreements:
- Often fail to take into consideration the future needs of the parties;
- Can involve intimidation or coercion based on untruths leading to an unfair or unjust resolution;
- Are not legally enforceable; and
- Do not prevent the other party from seeking a property adjustment from the court at a later point in time.
Agreement by Consent
If parties agree how their property interests should be altered, an agreement can be made by consent. This is achieved by making an application for Consent Orders with the court and filing proposed orders that they seek the court to make.
These types of agreement work well for parties that have remained amicable post separation and where there is no disagreement as to what property constitutes the net asset pool of the relationship and how that property is to be divided.
Effectively this application asks the court to make a finding that the agreement reached between the parties is Just and Equitable thus making it legally binding and enforceable.
Going to Court
As mentioned above, when determining how the assets of a relationship should be divided between the parties, the court’s primary concern is to achieve a result that is just and equitable in all the circumstances. This means that the court has the power to equalise the parties’ positions through the alteration of property interests and in some cases awarding payments of spousal maintenance.
Although property settlement proceedings may be commenced out of time with the permission of the court, the general time limitations for proceedings are as follows:
For matrimonial property settlements– proceedings can be commenced from the first day post separation. This window then remains open until the parties are divorced. Once a divorce order has been made the parties must make their application for property settlement within 12 months of the date of divorce.
For De-facto property settlements– property settlements must be commenced within 2 years from the date of separation.
Our expert family lawyers at Williams Barristers and Solicitors can assist you with advice and management of your property settlement.
Call us on 84519040