Litigation, there are several courts that are enlivened with jurisdiction, however by and large most people will deal with:
Parties can come to an agreement themselves or with lawyers or mediation being part of that process. An agreement can be formalised in the following manners:
- Application for Consent Orders submitted to either Family Court of Australia or Magistrates Court of Victoria
- Magistrates Court of Victoria has jurisdiction to determine Applications for Consent Orders, however the Federal Circuit Court of Australia does not
- Binding Financial Agreements made under the Family Law Act 1976
- Part VIIIA – marriages
- Part VIIIB – de facto relationships
- Negotiation has been attempted but has not resolved the dispute
- There is a need to protect assets
- There is a need to seek spousal maintenance
- There are concerns about disclosure by another party
- There is an obligation of full and frank disclosure in the family law jurisdiction – thus if it is requested and it is relevant then it must be disclosed
- Limitation period is coming up
- 1 year following a divorce becoming final for married parties
- 2 years from the date of separation for de facto parties
- There is a significant dispute about children:
- Where one party seeks to relocate with the children, and the other party does not agree
- There is an issue of risk, child abuse or similar
- Mediation has been attempted and has not resolved a dispute
- There is an urgent matter requiring protection of children, where there are no proceedings on foot initiated by a child protection authority (e.g. the Department of Human Services)
What is classified as property?
Many things are assets for the purposes of Family Law matters including companies, trust entities, superannuation and employment entitlements.
- Including self-managed super funds
- Real property, i.e. land and houses
- Intellectual property
- Motor vehicles
- Personal loans
- Business interests
- Bank accounts
- Family debts
- Leave entitlements accrued (depending on whether ‘cashed out’ or not)
- Compensation and damages
- Household chattels
- Licenses and permits (e.g. taxi licenses)
- Realization (e.g. capital gains tax) and tax debts
- Debts owed
- Lottery wins (and other windfalls)
Family Trusts are common and generally they are the alter ego of parties to a marriage/relationship.
Court will consider:
- Who has control of the trust
- Who are the beneficiaries of the trust
- Key case is Kennon v Spry  HCA 56 where the High Court of Australia considered that the assets of the trust to be assets of the marriage, despite neither the husband or wife being beneficiaries of the trust at the time the matter came before the court
- Real property jointly registered, owed with third parties or in the sole name of one of the parties
- The party not on title should register a caveat particularly if the property is not encumbered by a mortgage
- People sometimes (incorrectly) consider that because the business is a separate legal entity (e.g. a Pty Ltd) that it is a matrimonial asset.
- Often difficulties arise where the business is owned with a third-party, or whether the business can be sold, or has any value that can be realized. Some business have no value unless one of the parties’ works in the business (e.g. a psychologist’s practice), whereas others can be easily realized (e.g. a takeaway business).
Inheritances, gifts, windfalls, lottery wins:
- Depends on the timing of the property coming to a party to the marriage
- In respect of gifts, the court may consider what were the intentions of the gift giver, did they intend it as a gift to one party, or both parties jointly
- If one of these windfalls comes to a party or the parties during the marriage then generally it is considered matrimonial property, if post-separation then not, but each case will turn on its own facts
- If not matrimonial property, then that windfall in the possession of one of the parties can be considered by the court to be a financial resource available to that party, which may place them in a better position that the other party, which is a relevant consideration when the court is considering ‘future needs’ and the like
- Registration is not evidence of ownership
Bank accounts/share trading accounts/mortgages/credit cards:
- A party separating from another should make enquiries about freezing or restricting accounts
- Some mortgages can be restricted so that any redraw available cannot be withdrawn
- Amendments to the Family Law Act in 2002 allowing superannuation splitting orders elevated superannuation to becoming property, rather than simply a resource
- Often one party who was employed during a long relationship will have a significantly greater amount of superannuation than the other non-employed party
- The party who was less engaged in employment during the relationship, particularly where the parties took on defined roles of homemaker/parent and breadwinner, should not be disadvantaged because of it
- Generally one party will provide a portion of their entitlements to the party with lesser or no entitlements by way of a superannuation splitting order, of course that party receiving the superannuation split cannot access those entitlements until they reach retirement (or such other criteria as provided by the fund)
- Not commonly accounted for but should be given more than a passing glance
- Can be an asset if:
- A party has ‘cashed in’ their entitlements
- A party is close to retirement and will have their entitlements paid out
- At other times such entitlements will not be relevant, because a person with such entitlements should be able to use those to simply enjoy a period of leave from employment
Family Debts, often prove difficult because:
- Often never recorded in writing
- Often never secured in any fashion
- May not meet the common law/legislative requirements of a debt
Often parties allege that another has engaged in waste of the matrimonial assets.
Common examples include:
- Making poor investments (rarely considered waste)
- Drug use
Waste is a “high bar” to reach and is generally a matter of evidence to be considered by a court, a key decision is that of Kowaliw v Kowaliw (1981) 7 Fam LN 13.
Often in litigation parties will assert that the other party has had the sole benefit of a matrimonial asset (often savings) and that should be ‘added-back’ notionally into the asset pool.
The courts consider add-backs to be the exception and not the rule.
Following the decision of Stanford & Stanford (2012) FLC 93-495, the issue of whether add-backs are permissible, which have the effect of notionally increasing the asset pool with assets or property that does not actually exist is not settled.
Commonly the following, will be considered an add-back:
- Matrimonial savings or property expended on legal costs
- Using savings to purchase unnecessary items, taking holidays and the like
What is not an add-back:
- Matrimonial savings or property used for necessary living expenses
What does the Court consider?
Often property settlements provide for an unequal division of the assets in favour of one party, this is generally because of additional considerations in the legislation that act to give consideration to the parties’ respective needs and financial position. Lawyers refer to these as ‘future needs’ or ‘Section 75(2) considerations’.
The considerations that the courts may consider is not a closed group, however a number are specifically discussed in the Family Law Act, which in brief are:
- the age and state of health of each of the parties
- the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
- whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
- commitments of each of the parties that are necessary to enable the party to support:
- himself or herself
- a child or another person that the party has a duty to maintain
- the responsibilities of either party to support any other person
- the eligibility of either party for a pension, allowance or benefit under:
- any law of the Commonwealth, of a State or Territory or of another country
- any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia
- and the rate of any such pension, allowance or benefit being paid to either party
- where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
- the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income
- the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant
- the extent to which the party whose maintenance is under consideration 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 party whose maintenance is under consideration
- the need to protect a party who wishes to continue that party’s role as a parent
if either party is cohabiting with another person–the financial circumstances relating to the cohabitation
A bit too much to take in?
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