When deciding what percentage of the available assets each party is entitled to, the Court adopts a four-step process.
When deciding what percentage of the available assets each party is entitled to, the Court adopts a four-step process. Your Family Lawyer will provide you with advice in relation to your entitlements using the same process as follows:
Step 1: What is the property pool available for division?
Step 2: What contributions has each person made to the property pool?
Step 3: Which person has the greater future needs?
Step 4: Determine whether the proposed division of property is just and equitable
The Property Division process starts by working out what each spouse owns. This includes items like cars, bank accounts and real estate and also businesses and trusts. All the property to which the couple is entitled to is in the property pool for division between them. The property may be owned by a spouse individually, jointly with the other spouse or jointly with other people.
Parties have a duty to the Court and to each other to make full and continuing disclosure of their financial circumstances that are relevant to an issue in dispute. If you and your ex-partner reach an agreement, or the Court makes Orders, where full financial disclosure has not been made, there is a risk of a penalty for the non-disclosing person or that the agreement or Orders will be set aside by the Court. In addition, a Family Lawyer cannot assist a client to hide assets or to continue to act for a client where they know the client is not making full disclosure.
Even where a person does not provide full financial disclosure, any transfers of money or property can generally be traced by obtaining the relevant documents under Subpoena. Where assets have been transferred to other people to defeat a Family Law property claim, the law provides that these assets can be “clawed back” into the property pool available for division.
The exception to this is cash: dealings in cash are difficult to trace and therefore difficult to claw back. If you are aware that your ex-partner has dealt with cash, photographic evidence of large amounts of cash, such as cash that they have stored in a box in the home, can assist you to prove this later.
For the purposes of a Property Division, assets are valued at the current market value at the date of the division. Therefore, the value of the assets must be at the current market value at the time they are being valued, not their value at separation or some other date.
Where each party wishes to retain certain assets from the property pool, it stands to reason that they want to keep the valuation of that asset as low as possible – the lower the value of the assets they are keeping, the more they will get of the remaining property pool to make up the percentage they are entitled to.
Where significant assets, such as real estate or business interests, are part of the property pool, there can be a difference in the respective positions of each party of hundreds of thousands of dollars.
When parties do not agree on the value of an asset, an indication of value (such as a real estate market appraisal, a Red Book valuation, or a receipt (for smaller items such as furniture or jewellery), will often resolve the dispute.
If the dispute continues, an expert valuation report may help to settle the dispute, but not always. Occasionally, each party will have expert valuation reports that give differing values. Therefore, before ordering a valuation report, the parties should agree on the valuer to be appointed, pay equally for the report and agree to be bound by the value provided in their valuation so as not to waste money on valuation reports which are disputed by the other party.
Even where the parties have obtained a joint valuation report, disputes about value can continue on the basis that the valuation report was not properly prepared. Sometimes, a valuation dispute will not be resolved until a final Court hearing where a Judge will make a decision, based on the evidence, of the current market value of the asset.
Work out what each person has contributed to the acquisition, conservation and improvement of the property pool. Contributions are relevant in relation to all property the parties have owned at cohabitation, during the relationship and since separation, including assets that are no longer owned. Contributions must be one (1) or more of the following types of contributions:
A direct financial contribution is a payment made by a spouse directly towards the purchase, conservation and/or improvement of an asset.
Examples:
An indirect financial contribution is a payment made towards expenses so that the other party’s income can be instead applied to a direct financial contribution.
Examples:
A direct non-financial contribution is work done by one (1) of the parties to maintain or improve an asset without making a payment towards it.
Examples:
An indirect non-financial contribution is work done by one (1) of the parties that is not done directly to an asset and is not of a financial nature, but that still contributes to the acquisition, conservation or improvement of an asset.
Examples:
Contributions to the welfare of the family are not required to be towards the “acquisition, conservation or improvement” of the property pool, as are the previous categories of contributions. Contributions to the welfare of the family are considered valuable on their own merits and are given weight accordingly. Therefore, the work that one (1) party does as homemaker and parent may have the effect of offsetting significant direct financial contributions of the other party. Therefore, a breadwinner on a high income and a stay-at-home parent of three (3) children may be considered to have made equal contributions to the property pool despite the differences in their roles.
Contributions to the property pool are relevant during three (3) specific periods:
Contributions at the commencement of the relationship are likely to be direct financial contributions that are readily quantifiable. The contributions of each party at the start of the relationship (at the commencement of cohabitation) are weighed against each other, so if both parties have brought assets of a similar value to the relationship, they are assessed as having made equal contributions at this stage.
Where one (1) party brings a greater share of assets, this party is likely to be entitled to a greater share of the assets on a contributions-basis, unless these initial contributions are entirely offset by the contributions of the other party throughout the relationship and before the Property Division.
Generally, in a short relationship, where one (1) party has made greater initial contributions, there has been less time for the other party to make enough contributions throughout the relationship to offset the initial contribution. Therefore, the contributions are likely to be weighed in favour of the party with the greater initial contributions.
Generally, in a long relationship (ten (10) years+), as there has been more time during the relationship for the party who has not brought assets to the relationship to make other types of contributions (particularly as homemaker and parent), the party with the greater initial contributions is likely to have less weight given to their initial contributions.
Throughout a relationship there is usually a myriad of contributions made by each party to the property pool and welfare of the family as part of the fabric of family life. These might involve accumulating property, paying the costs of living, keeping a home and raising children. The longer the relationship, the more likely that each party will be assessed to have made more-or-less equal contributions.
As living arrangements change at the time of separation, so do the types of contributions made by each party. One (1) party may make all home loan repayments and have the primary care of the children, but they are no longer supported by the other party as they were during the relationship. Therefore, where one (1) party takes on the majority of contributions after separation, this can shift the assessment of contributions in their favour. Where the period between separation and Property Division is short, this discrepancy does not have a large, if any, impact. Where the period between separation and Property Division is long (several years or more), an imbalance in post-separation contributions can have a significant impact on the ultimate contributions-based division of assets.
Over many years of the Courts considering, weighing and assessing the contributions of parties to a former relationship, several principles have developed in relation to particular circumstances:
The next step is to consider the circumstances of each of the parties to ascertain whether they have greater responsibilities, disabilities or disadvantages than the other party that mean that they should get the division of property adjusted in their favour.
The factors that the Court will take into consideration in determining whether there should be an adjustment of the contributions-based division of the property pool include:
The circumstances must be considered for each party and then weighed against each other so that, where one (1) party has future needs that outweigh the other party’s, there is likely to be an adjustment of the contributions-based Property Division in their favour.
In practice, assessing future needs can be quite straightforward where both parties are of a similar age and state of health and one (1) party has the care of young children and cannot earn an income. It is quite clear in such a case that the future needs of the party with the care of the children outweigh that of the other party and that there should therefore be an adjustment of the assets in their favour.
However, in cases where each party has considerable future needs, it may be difficult to determine which person, if any, has the greater future needs. Each person may have poor health and be unable to earn and income but, where neither party has future needs factors that outweigh the other person’s, there will not be an adjustment.
At this final step, it must be just and equitable to make an Order to alter the property interests of the parties and, if so, that the Order itself be just and equitable.
Just and equitable means that the outcome is not only right, but that it is fair between the parties.
This step is to ensure that the Court does not alter the property rights of parties unless justice requires it to do so. If the Court decides it is just and equitable to make any Order, the Court must be satisfied that the alteration of property goes no further than is needed to do justice. The primary concern of the Court at this step is the existing and future needs of the parties.
This step recognises that the calculation of percentages or an equal distribution is not necessarily the fairest outcome if it results in one (1) person receiving property such as real estate and savings, and the other receiving only superannuation, where the superannuation cannot be accessed for several years. In this situation, a just and equitable outcome may still involve an equal division of property but where the parties each end up with real estate, savings and superannuation.
The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.
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