The 5 steps the Court takes to determine a property matter in Family Law
In some circumstances, parties are not able to reach an agreement by way of mediation or negotiations as to how they are going to divide their assets following separation. The next step involved in progressing a matter is to file an Application in the Federal Circuit and Family Court of Australia seeking property Orders.
There are 5 factors that the Court is required to consider when making a determination in relation to property proceedings. These steps are set out as follows:
1) Is it appropriate to divide the property at all?
It may not always be appropriate to divide assets following separation. Some circumstances where this may be the case are where the parties do not hold any jointly owned assets, where the parties have only been in married or in a de facto relationship for a short period of time, or where the parties have not contributed to the property held in the other party’s name during the course of the marriage or relationship.
2) Identify and value the net asset pool available for distribution
Provided that the answer to 1 above is yes, the next step is to determine what the asset pool available for division between the parties is comprised of. This includes all assets and liabilities, whether held solely, jointly with the other party or jointly with some other person or entity outside of the proceedings, and can include bank accounts, superannuation interests, business/trust entities, vehicles, real property, and the like.
If the parties are unable to agree on a value to be attributed to specific assets, the parties will be directed by the Court to jointly appoint a single expert with experience in the relevant field to prepare valuations to be used in the proceedings. This commonly occurs in relation to property, businesses/trusts, defined benefit superannuation interests and vehicles.
3) Assess the contributions made by each party to the marriage/de facto relationship
The Court is required to consider an array of contributions each of the parties made during the relationship to the assets available for distribution between the parties. This includes financial contributions, such as the assets and liabilities held by the parties when they commenced cohabitation, as well as lump sum contributions received throughout the relationship such as windfalls, inheritances or redundancies received. Non-financial contributions are also considered, such as renovations to the property.
Finally, the role of the homemaker is also considered in circumstances where one party may have assumed the role of the homemaker and primary carer of any children to the relationship, whilst the other assumed the role of breadwinner and financially supported the family unit. This contribution of homemaker is considered equal to that of financial contributions made by the other party in the eyes of the Court, in relation to any breadwinner role they may have assumed.
4) Consider what future needs each of the parties have
The next step is to look at what future needs the parties may have and how such needs may warrant an adjustment in favour of either of the parties. For example, the Court looks at whether either of the parties will be the primary carer of children moving forward, the age and health of the parties, as well as any earning disparity and earning capacity of the parties.
5) In light of the above considerations, Orders made must be just and equitable
The final consideration of the Court in this process is that in light of all of the above factors and having regard to the circumstances of the party’s relationship, are the proposed Orders to be made ‘just and equitable’ in the circumstances.
Ultimately, the Court may use its discretion in determining a property matter, however the above are the factors that a Court considers when making a property Order.
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Disclaimer: The information contained in this article is provided as general information only. It is not intended to be legal advice and it should not be used or relied on as legal or professional advice.