Family Law Articles

The Turnbull Government on 9^th May 2017 announced that the Australian Law Reform Commission (ALRC) would undertake a comprehensive assessment of the family law system. Such an assessment was the first since the commencement of the Family Law Act 1976 (Cth) (‘the Act’) which proposed the reforms necessary to address the Australian family law system’s contemporary landscape. The Review primarily contemplated whether the Act is effective in addressing the changing needs of families from diverse familial structures and whether it adequately protects the needs of children. It also dealt with the need to ensure the expeditious resolution of family disputes in the least costly manner as well as the need to safeguard public confidence in the family law system.

The Family Law Act was established, in some measure, to address the changing societal attitudes regarding the divorce regime which was being increasingly perceived as outdated. Divorce was previously administered under the Matrimonial Causes Act 1959 (Cth) which stipulated 14 fault-based grounds for obtaining a divorce such as adultery and cruelty. This emphasis on ‘fault’ and ‘marriage offences’ created a highly adversarial court environment that severely damaged the image of the family law system. The Family Law Act of 1976 therefore served as a means to redress such grievances and provide a more dignified and amicable legal process for families.

The face of Australia’s family life has transformed significantly since the enactment of the Family Law Act in 1976 in accordance with overall societal developments. For example, family structures have diversified with a growing number of blended, step and same-sex families. Similarly, the use of assisted conception procedures and surrogacy arrangements are being increasingly adopted in preference to traditional methods of adoption. The family law system has had to evolve in line with these shifts to account for the emerging contemporary issues in family law such as ratifying the United Nations Convention on the Rights of the Child and making orders regarding children and property of de facto couples. Similarly, there has been a growing emphasis placed upon the need to pursue alternative dispute resolution processes in lieu of court. As such, the ALRC Review has been instrumental in articulating some of the key issues affecting the family law system today.

One such issue that the Review addressed was the accessibility of the family law system for people from culturally and linguistically diverse backgrounds. The SPLA Committee in 2017 found that the family law system is not “accessible” nor is it “responsive” to culturally and linguistically diverse families and this is problematic considering that more than one quarter of Australians are born overseas and 21 per cent of Australians speak a language other than English at home. The Review attributed the inaccessibility of the family law system to this demographic to several factors. One such factor is that new migrants or refugees may have a limited understanding of the Australian legal system which is further exacerbated by language barriers and the unavailability of translation services and materials. Where translation services are available and are utilized, the review established serious concerns about the accuracy of translations and the ramifications on the clients’ participation.

The Review also identified the issue of domestic and family violence as a major issue affecting those from culturally and linguistically diverse backgrounds. The review found that family law professionals are largely not aware of culturally specific instances of family violence nor are they conversant with the burden and attitudes relating to disclosure of such incidents. One such example is the prevalence of intergenerational conflict in certain communities which involves many layers of complexity and requires a thorough understanding of the role of each member in the family unit and their ‘hierarchy’ based on cultural norms. A lack of attention to these factors further isolate this demographic, deter those individuals from seeking assistance and create a great underrepresentation of such cases in the Australian family law system.

The ALRC Review concluded that areas such as those discussed above are in dire need of analysis and reform and that professional practices and services in the family law sphere must adapt to these emerging demands. In order to maintain the highest degree of confidence in the family law system and ensure accessibility to all in the Australian society, the Review urged significant stakeholder participation from government and advocacy groups to members of the legal profession.

Commonwealth Attorney-General Christian Porter announced the amalgamation of the Federal Circuit Court and the Family Court of Australia on 30^th May 2018. This integration process will result in the creation of a single court referred to as the Federal Circuit and Family Court of Australia (FCFCA).  The FCFCA will be separated into two divisions, each comprised of existing judges from the Family Court of Australia and the Federal Circuit Court. There will also be a Family Law Appeal Division established in the Federal Court of Australia to hear all family law appeals from the FCFCA.

These developments come as a response to the growing sentiment among legal professionals that the Australian court system is in “crisis”. Waiting periods for finalising family law matters extending up to three years in the Family Court have resulted in a gross denial of justice to many Australian families. This drawn-out process has exacerbated the trauma involved in familial breakdowns and has been described by the Attorney-General as “unacceptable”, particularly in cases involving children and family violence allegations.

Mr Porter asserted that approximately 22 000 family law final order cases are filed annually in the Family Court and the Federal Circuit Court. In the last five years, there has been an increase from 17 000 to 21 000 matters that are awaiting finalisation. Similarly, the average period of time taken to even reach the trial stage has been further prolonged from 10.8 months to 15.2 months in the Federal Circuit Court and from 11.5 months to 17 months in the Family Court. The FCFCA has been envisioned to enhance the efficiency of the federal family law system in light of these concerning statistics, and to allow up to an additional 8000 cases to be finalised every year. The FCFCA will address current limitations in the split family law system to improve consistency with a single entry point for all federal family law matters and the adoption of a uniform set of procedures and practices.

These changes will be operational from 1^st January 2019 in what the Federal Government hopes will herald the necessary transformation of the Australian family law system.

The 2-year rule in family law refers to the special procedure that parties of a short marriage wishing to apply for a divorce must undertake. It stipulates that spouses who have been married for a period of less than two years and who are wishing to apply for a divorce must either:

• Attend counselling to discuss any prospect of reconciliation and obtain a certificate confirming that this was discussed;

OR

• If the parties do not attend counselling for any reason, they must seek permission from the Court to apply for a divorce by attaching an affidavit to the divorce application. This should contain an explanation as to why both parties did not attend counselling in addition to any special circumstances of your relationship such as a history of violence or abuse.

As per the ordinary requirements for a divorce, both parties must have been separated for at least 12 months prior to submitting an Application for divorce.

Pursuant to the Family Law Act 1975 (Cth), a party is obligated to provide financial support to a former spouse or de facto partner where that former spouse or partner is unable to independently support their own reasonable expenses. This obligation constitutes spousal maintenance which may continue even after parties have separated. In determining the amount of spousal maintenance to be paid in a matter, the Court will give consideration to both the ‘financial need’ of the lower income earning partner as well as the ‘financial capacity’ of the higher income earning partner to support the other.

The Court will exercise its discretion to ascertain what the ‘reasonable’ expenses of the dependent party are, and determining this is often an area of contention for parties. Importantly, the function of spousal maintenance is not to maintain the dependent partner’s standard of living that they were accustomed to prior to the termination of the relationship; rather its purpose is for supporting a standard of living that is reasonable in the circumstances. Although there is a positive obligation on the dependent party to seek employment to satisfy their financial needs; they are entitled to fully commit to the homemaker role where they are the primary carers of children of the relationship.

The Court also takes into account the parties’ income earning capacity as a determining factor of ‘financial capacity’ as opposed to their income. In doing so, a former partner cannot seek to lower their income in an effort to evade their spousal maintenance responsibilities. They must fully exercise their income earning capacity.

An assessment of spousal maintenance entitlements is conducted by the parties, who provide Financial Statements detailing income and expenditure. If an agreement cannot be reached between the parties, an application for spousal maintenance is brought before the Court. There are time limitations involved in bringing such an application before the Court; if the parties were married, the application must be made within 12 months of their divorce; and if parties were in a de facto relationship, the relevant date is within two years of the termination of the relationship. Failing to bring an application within these time frames will require the Applicant to seek special permission from the Court which is not easily granted.

The factors which are considered in the Court’s assessment include the Applicant’s age and health, their income and assets, whether the marriage or de facto relationship impacted their ability to work, and what is a reasonable standard of living. The Court also considers with whom the children of the relationship live. Spousal maintenance is either paid on a periodic basis or as a lump sum disbursement. It is within the Court’s discretion to determine which mode of payment is suitable given the parties’ circumstances.

It is important to note that entitlements to spousal maintenance cease upon a party marrying another person unless the Court otherwise orders. Similarly, upon entering a new de facto relationship, the Court will examine the financial nature of the relationship to assess whether the low income earning party is still unable to financially support themselves.

It is possible for a couple to be separated despite continuing to live together in certain circumstances. Under the Family Law Act 1975 (Cth), the sole criteria to be satisfied for granting a divorce is that the marriage has broken down irretrievably. This can be demonstrated to the court by both parties having been separated for a period of at least 12 months with no possibility of resuming the relationship at a later date.

The law, however, is flexible in understanding that sometimes separating parties are required to continue sharing accommodation and to perform household tasks for the convenience of those residing there. Such arrangements may satisfy the criteria for a ‘separation under one roof’ which essentially means that you and your spouse have been separated for at least 12 months but have lived together during part or all of that 12 month period or are still living together.

Where you and your spouse have adopted such an arrangement, it is essential that you provide an affidavit to the Court prior to applying for your divorce. This should detail changes in the marriage which are indicative of a separation such as changes in sleeping arrangements, a separation of finances, a division of household tasks and demonstrating to others that you are no longer a couple. You should also include an explanation of why you continue to cohabitate with your spouse post-separation and whether you have an intention of making any changes to the living arrangements. It may also be useful to detail the living arrangements for any children under 18 years during the time you were separated under one roof. If you have notified any government departments such as Centrelink or the Department of Human Services of your separation, it may also be advisable to attach such correspondence to your affidavit.

For more information about ‘separation under one roof’ or assistance in preparing your affidavits, get in touch with us at info@emfl.com.au or on 3211 4920.

Upon separation, one of the primary concerns for parties is the division of their assets and debts. If both parties can reach an agreement independently, they may seek to formalise their arrangement through an application for Consent Orders in the Family Court. Conversely, and as is often the case, parties who are not successful in reaching a mutually agreeable arrangement, may apply to the Court for a property adjustment.

Contrary to popular belief, the division of property follows a distinct trail in each case and there is no formula to calculate or anticipate the adjustment. However, the Family Law Act 1975 (Cth) is useful in providing a general framework of the Court’s approach in determining a property settlement. This framework is applicable both to parties who were in a marriage as well as those in a de facto relationship and it presently follows a five stage approach as established in Stanford v Stanford (2012) FLC 93-495.

At the outset, the Court contemplates whether in the particular circumstances it is just and equitable to make a property adjustment. Determining this is a critical step as it ‘permeates the entire decision making process’[1] of a property settlement. Satisfying this threshold is not difficult; if parties have been in a marriage or de facto relationship and own property jointly, it is generally just and equitable to make a property adjustment as there is no longer the common use of property by the parties.

The second stage in the process involves the identification and valuation of the net property pool. This pool includes any assets, liabilities and financial resources held by the parties independently and together and acquired before or during the relationship or after separation. The value of property is generally determined by agreement between the parties or by an independent valuer at market price and this value is assessed by the Court as at the date of the hearing.

Following the determination of the net asset pool, the Court assesses the contributions made by both parties toward the acquisition, conservation and improvement of the relevant property. The Family Court in the case of Ferraro in 1993 provided that the Court must assess the contributions “against an evolving social and legislative background”. As such, the Court has adapted its approach with respect to this step to recognise not only financial contributions, but also non-financial contributions including a party’s role as a parent and homemaker. These contributions are afforded the same weight as financial contributions and therefore it is not necessary that the earning party would receive more than the homemaker party in a property settlement.

• Financial contributions refer to monetary contributions made to the relationship in the form of wages, lotto winnings, inheritance, and termination payments among others.
• Contributions of a non-financial nature, however, recognise ways in which a party has added value during a relationship, such as renovating the family home or investment property.
• Parental contributions account for active involvement with the children, whether that be helping with homework or dropping them to school or co-curricular activities. It is important to note that the Court’s assessment is limited to considering whether the parties have made the relevant parental contributions, and it does not extend to evaluating the quality of the parenting.
• Homemaker contributions include the performance of domestic duties in the course of the relationship such as vacuuming, cooking and washing. Again, the Court is not evaluating the quality of the homemaker contributions; rather it is considering that the contributions were made and by whom they were made.

In its assessment, the Court takes into account contributions made at the start of the relationship, during the relationship and after the separation of the parties. The length of the relationship is a relevant factor in this step, as in shorter relationships, the Court tends to place more emphasis on financial contributions while in longer-term relationships, more weight may be afforded to non-financial contributions.

After considering the parties’ contributions, the fourth step involves assessing the parties’ current and future needs. This assessment is conducted by reference to factors such as income and earning capacity, the property retained by each party, superannuation entitlements, the existence of any health problems as well as the care of a child and the payment of child support. If the results demonstrate a disparity between a party’s needs and their capacity to financially satisfy such needs, the Court may make further adjustments to arrive at the division of property as expressed as a percentage.

Finally, the Court examines and evaluates the abovementioned adjustment and makes the necessary changes to ensure it is just and equitable in the circumstances. When the Court is satisfied that the result is just and equitable, the process of property settlement is concluded.

It is of paramount importance to note that all parties have an obligation pursuant to the Family Law Rules to provide full and frank disclosures of their finances. This is to ensure that all stakeholders are aware of the true nature of the parties’ financial positions so as to reach a just and equitable adjustment. Where one party seeks to breach these disclosure obligations, the Court may make an adverse finding against that party and make special orders requiring the full disclosure of financial materials. If a party breaches the disclosure obligations and the property adjustment has been finalised, the other party may file a fresh application to the Court to set aside the previous agreement or decision and to have the settlement considered again.

[1] Stanford v Stanford (2012) FLC 93-495

Prior to the enactment of the Family Law Act 1975 (Cth) (“the Act”), spouses wishing to obtain a divorce were required to prove in Court that the other party was ‘at fault’ for the breakdown of the relationship by way of factors such as adultery or cruelty. Evidencing such ‘faults’ created a heightened adversarial system in which achieving amicable divorces became extremely challenging. The Act, however, has established the ‘no-fault’ principle in Australia, whereby the Court’s only consideration is whether the marriage has broken down irretrievably. This is evidenced by 12 months of separation between the spouses which suggests that there is no likelihood of them resuming their relationship. Consequently, obtaining a divorce has become vastly more accessible for Australians.

A party can apply for a divorce if either them or their spouse:

• Regard Australia as their home and intend to live in Australia indefinitely; or
• Are an Australian citizen by birth, descent or by grant of Australian citizenship; or
• Ordinarily live in Australia and have done so for 12 months immediately preceding filing for divorce.

The Federal Circuit Court of Australia is vested with the jurisdiction to determine divorce matters pursuant to Part VI of the Family Law Act 1975 (Cth). As such, either spouse or both spouses may file an Application for Divorce in the Federal Circuit Court. Generally, the issue of granting a divorce is dealt with independently to issues pertaining to arrangements for children, property settlement and spousal maintenance. However, in cases where there are children under the age of 18, the Court will give consideration to ensuring that appropriate measures are being taken for the care, welfare and development of the children.

Section 4AA of the Family Law Act 1975 (Cth) defines a de facto relationship as one between individuals of the same or opposite sex living together on a genuine domestic basis. If you are legally married or if you are related, the relationship does not constitute a de facto relationship. In order to determine whether you are living together on a ‘genuine domestic basis’, the Court may consider factors such as the duration of your relationship, whether a sexual relationship exists, the care of children, the nature of common residence, the ownership and use of the property and whether the relationship is registered under a prescribed law of a State or Territory.

If your relationship satisfies these criteria, the Family Court and the Federal Circuit Court can address matters relating to children of your de facto relationship the same way in which it deals with children of married couples. Similarly, parties of a de facto relationship which has broken down after 1 March 2009 can apply to the abovementioned Courts within two years of the relationship’s termination to have financial matters adjudicated.

Prior to filing an application to the Court for any children’s or financial matters, you should get in touch with our team of qualified family lawyers to ensure you are in an eligible de facto relationship and that your circumstances fulfil the requisite conditions.

Child support is the provision of financial assistance by one or both parents to the other to cover the expenses incurred for the care of their child. In certain circumstances, child support may include the provision of financial support by a parent to another person under whose care the child is in.

The Child Support Agency (CSA) governs the Child Support (Registration and Collection) Act and the Child Support (Assessment) Act which is designed to enforce the right of children to be financially provided for by both parents. The CSA falls under the Department of Human Services and parents may apply to the Department for a child support assessment where they are unable to reach an agreement independently. In determining the amounts of child support payable, the CSA considers the income of both parents, arrangements regarding the care of the child and whether there are dependent children (including from other relationships).

Pursuant to the CSA Act, the subject child must be under the age of 18 years for their parent/s to make a child support assessment application. Where the application is successful, child support is generally paid until the child turns 18, after which it automatically terminates. There are, however, circumstances where child support payments may cease before the child turns 18 and these include:

• if the child becomes self-sufficient;
• if the child marries or enters into a de facto or marriage like relationship;
• if the child is adopted;
• if the child dies.

Similarly, there are also cases in which the provision of financial support by a parent may be required for a child over 18 years. In those circumstances, the relevant party would be required to apply for a child maintenance order under the Family Law Act 1975 (Cth).

Child support payments differ based upon the individual circumstances of each family unit. However, they are generally delivered through one of the following modes:

• Periodic payments – Consistent payments at regular intervals which are typically calculated by reference to the child support formula and paid through the Child Support Agency.
• Non-periodic payments – Payments designed to assist for particular expenses such as education fees. These payments may be made under the formula assessment, however it is more common for them to be determined by independent agreement.
• Lump-sum provision – A single payment of a credit balance of which a percentage covers ongoing costs. Lump-sum or ‘one-off’ payments are typically determined by agreement and rarely by a court order.

Although these are the primary methods through which child support is provided, parties may be entitled to other modes of payment. A non-cash payment such as the exchanging of property to be credited to a child is one such example.

Regardless of the mode of child support payment, the paying parent must adhere to their financial obligations in all circumstances. A failure for the paying parent to do so would entitle the payee parent or carer to request the Department of Human Services to deduct the relevant amount from the paying parent’s salary or tax return. If the payee parent so wishes, they are entitled to personally seek enforcement for the outstanding payment. As such, it is of critical importance for the paying parent to adhere to their financial child support obligations.

Determining issues related to the care arrangements for a child is one of the most emotionally challenging aspects of a separation.

There are two primary avenues for detailing an agreement between parents regarding the care, welfare and development of their children:

1. Parenting Plan; or a
2. Parenting Order

A Parenting Plan is a signed and dated written agreement between parents that details arrangements pertaining to parental responsibility and living arrangements for their children. It addresses matters such as who the child lives with and who they spend time with; who the child spends birthdays, holidays and special days with; it also sets out a process for making significant decisions regarding the child’s welfare and provides methods of altering the Plan or resolving future disputes regarding the Plan’s contents.

A Parenting Plan is a suitable option where the relationship between the parents is amicable and where an oral agreement can be recorded in writing. However, one key ‘limitation’ of Parenting Plans is that they are not legally enforceable and as such, parties are not bound by the terms set out in them. In circumstances where a matter goes before Court, the Court considers the terms of the most recent Parenting Plan when formulating Parenting Orders if it is in the child’s best interests. If parties wish to modify certain arrangements in a Parenting Order, these can be agreed upon in a subsequent Parenting Plan which the parties may rely upon.

On the other end of the spectrum, Parenting Orders are appropriate for parties that wish to create a legally enforceable agreement. A Parenting Order sets out the same procedures regarding parental responsibility and the living arrangements for the parties’ children as discussed above and as decided upon by the Court. It also generally addresses how the child will communicate with the parent they do not live with and how much time the child will spend with that parent and other people such as grandparents. Such orders can be made by the Court on the basis of a pre-existing agreement between the parties, or consent orders, or following a court hearing. Once Orders are made, they are legally binding upon each party.

Where parents are successful in coming to an agreement independently, they are entitled to file an Application for Consent Orders with the Family Court to have the agreement approved. Court orders will be made accordingly if the Registrar is satisfied that the terms of the agreement are in the child’s best interests. Like Parenting Orders, an agreement that is later approved by the Court through Consent Orders is legally binding, and breaching the obligations imposed by the Orders entails a set of consequences of varying degrees.

A Parenting Order application can be brought by a child, their parents, grandparents or any party concerned with the welfare of the child. In determining a Parenting Order, the Court must turn its attention to the best interests of the child as the paramount consideration.

The Family Law Act 1975 (Cth) enunciates that while the child is under 18 years of age, both parents are responsible for the child’s care and welfare. The presumption that shared parental responsibility is in the child’s best interests is therefore also established in the Act.

In this vein, the Court will contemplate the following primary considerations:

• The benefit to the child enjoying a meaningful relationship with both parents;
• The need to protect the child from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence.

From these primary considerations, the Court will place greater weight on the need to protect the child from harm. The additional considerations stipulated in Section 60CC(3) are also instrumental in guiding the Court’s determination of a child’s best interests in a parenting matter.

Clients often ask whether the views expressed by their children will have any bearing on the Court’s determination and while the Court is required to consider any views expressed by a child, the weight given to these views is largely dependent on the individual child. Consideration will be given to the level of the child’s emotional and intellectual maturity, their age, the strength of their views, the circumstances in which the views were expressed, as well as whether they were pressured in any way to form those views.

Ultimately in parenting matters, the Court views the child as possessing the relevant rights and the parents as owing a responsibility and this is reflected in the abovementioned approach.

Upon separation, one of the primary concerns for parties is the division of their assets and debts. If both parties can reach an agreement independently, they may seek to formalise their arrangement through an application for Consent Orders in the Family Court. Conversely, and as is often the case, parties who are not successful in reaching a mutually agreeable arrangement, may apply to the Court for a property adjustment.

Contrary to popular belief, the division of property follows a distinct trail in each case and there is no formula to calculate or anticipate the adjustment. However, the Family Law Act 1975 (Cth) is useful in providing a general framework of the Court’s approach in determining a property settlement. This framework is applicable both to parties who were in a marriage as well as those in a de facto relationship and it presently follows a five stage approach as established in Stanford v Stanford (2012) FLC 93-495.

At the outset, the Court contemplates whether in the particular circumstances it is just and equitable to make a property adjustment. Determining this is a critical step as it ‘permeates the entire decision making process’[1] of a property settlement. Satisfying this threshold is not difficult; if parties have been in a marriage or de facto relationship and own property jointly, it is generally just and equitable to make a property adjustment as there is no longer the common use of property by the parties.

The second stage in the process involves the identification and valuation of the net property pool. This pool includes any assets, liabilities and financial resources held by the parties independently and together and acquired before or during the relationship or after separation. The value of property is generally determined by agreement between the parties or by an independent valuer at market price and this value is assessed by the Court as at the date of the hearing.

Following the determination of the net asset pool, the Court assesses the contributions made by both parties toward the acquisition, conservation and improvement of the relevant property. Over time, the Court has adapted its approach with respect to this step to recognise not only financial contributions, but also non-financial contributions including a party’s role as a parent and homemaker.

• Financial contributions refer to monetary contributions made to the relationship in the form of wages, lotto winnings, inheritance, and termination payments among others.
• Contributions of a non-financial nature, however, recognise ways in which a party has added value during a relationship, such as renovating the family home or investment property.
• Parental contributions account for active involvement with the children, whether that be helping with homework or dropping them to school or co-curricular activities. It is important to note that the Court’s assessment is limited to considering whether the parties have made the relevant parental contributions, and it does not extend to evaluating the quality of the parenting.
• Homemaker contributions include the performance of domestic duties in the course of the relationship such as vacuuming, cooking and washing. Again, the Court is not evaluating the quality of the homemaker contributions; rather it is considering that the contributions were made and by whom they were made.

In its assessment, the Court takes into account contributions made at the start of the relationship, during the relationship and after the separation of the parties. The length of the relationship is a relevant factor in this step, as in shorter relationships, the Court tends to place more emphasis on financial contributions while in longer-term relationships, more weight may be afforded to non-financial contributions.

After considering the parties’ contributions, the fourth step involves assessing the parties’ current and future needs. This assessment is conducted by reference to factors such as income and earning capacity, the property retained by each party, superannuation entitlements, the existence of any health problems as well as the care of a child and the payment of child support. If the results demonstrate a disparity between a party’s needs and their capacity to financially satisfy such needs, the Court may make further adjustments to arrive at the division of property as expressed as a percentage.

Finally, the Court examines and evaluates the abovementioned adjustment and makes the necessary changes to ensure it is just and equitable in the circumstances. When the Court is satisfied that the result is just and equitable, the process of property settlement is concluded.

It is of paramount importance to note that all parties have an obligation pursuant to the Family Law Rules to provide full and frank disclosures of their finances. This is to ensure that all stakeholders are aware of the true nature of the parties’ financial positions so as to reach a just and equitable adjustment. Where one party seeks to breach these disclosure obligations, the Court may make an adverse finding against that party and make special orders requiring the full disclosure of financial materials. If a party breaches the disclosure obligations and the property adjustment has been finalised, the other party may file a fresh application to the Court to set aside the previous agreement or decision and to have the settlement considered again.

[1] Stanford v Stanford (2012) FLC 93-495

The Family Law Act 1975 (Cth) legislates the obligation of a person to provide financial support to a former spouse or de facto partner where that former spouse or partner is unable to independently support their own reasonable expenses. This obligation constitutes spousal maintenance. In determining the amount of spousal maintenance to be paid in a matter, the Court will give consideration to both the ‘financial need’ of the lower income earning partner as well as the ‘financial capacity’ of the higher income earning partner to support the other.

The Court will exercise its discretion to ascertain what the ‘reasonable’ expenses of the dependent party are, and determining this is often an area of contention for parties. Importantly, the function of spousal maintenance is not to maintain the dependent partner’s standard of living that they were accustomed to prior to the termination of the relationship; rather its purpose is for supporting a standard of living that is reasonable in the circumstances. Although there is a positive obligation on the dependent party to seek employment to satisfy their financial needs; they are entitled to fully commit to the homemaker role where they are the primary carers of children of the relationship.

The Court also takes into account the parties’ income earning capacity as a determining factor of ‘financial capacity’ as opposed to their income. In doing so, a former partner cannot seek to lower their income in an effort to evade their spousal maintenance responsibilities. They must fully exercise their income earning capacity.

An assessment of spousal maintenance entitlements is conducted by the parties, who provide Financial Statements detailing income and expenditure. If an agreement cannot be reached between the parties, an application for spousal maintenance is brought before the Court. There are time limitations involved in bringing such an application before the Court; if the parties were married, the application must be made within 12 months of their divorce; and if parties were in a de facto relationship, the relevant date is within two years of the termination of the relationship. Failing to bring an application within these time frames will require the Applicant to seek special permission from the Court which is not easily granted.

The factors which are considered in the Court’s assessment include the Applicant’s age and health, their income and assets, whether the marriage or de facto relationship impacted their ability to work, and what is a reasonable standard of living. The Court also considers with whom the children of the relationship live. Spousal maintenance is either paid on a periodic basis or as a lump sum disbursement. It is within the Court’s discretion to determine which mode of payment is suitable given the parties’ circumstances.

It is important to note that entitlements to spousal maintenance cease upon a party marrying another person unless the Court otherwise orders. Similarly, upon entering a new de facto relationship, the Court will examine the financial nature of the relationship to assess whether the low income earning party is still unable to financially support themselves.

Following the breakdown of a marriage or de facto relationship, it is in the parties’ best interests to formalise their property settlement. This involves transferring the ownership of property and severing any financial ties.

A property settlement can be formalised by way of the following two methods:

1. Consent Order

A Consent Order constitutes a set of guidelines determined by the Court in accordance with the parties’ terms of agreement. In reaching a Consent Order, the Court is required to consider whether the contents of the proposed Order are just and equitable in the circumstances by reference to factors outlined in section 79 of the Family Law Act 1975 (Cth).

1. Binding Financial Agreement.

The alternative method of finalising a property settlement is by way of a Binding Financial Agreement (BFA). A BFA is an agreement detailing the settlement of financial and property matters between the parties which has not been examined by the Court. It can be drawn up either before or during a marriage or after the finalisation of a divorce. In order for a BFA to be legally binding and enforceable, both parties must seek independent legal advice regarding the impact that the BFA will have on their rights as well as the advantages and disadvantages of pursuing a BFA. It is important to note that unlike a Consent Order, there is no requirement that a BFA be just and equitable and there is a possibility that a party is agreeing to a settlement that is less than their true entitlement.

It is critical to formalise a property settlement by one of the abovementioned means, as Consent Orders and BFAs (if all necessary steps have been followed) are binding upon the parties. As such, if one party contravenes the terms, there is recourse to the Court to impose the necessary compliance with the terms. Equally crucial is the fact that Consent Orders and BFAs terminate the parties’ financial relationship and future property settlement claims cannot be made against one another.

If parties do not formalise the property settlement promptly post-separation, they remain exposed to the possibility of a future property settlement claim. This is not desirable as any newly acquired assets or benefits would form part of the new property pool of which the former partner would continue to have an entitlement. On the other hand, if following separation, a former partner sells an asset and applies the income for their own benefit, the property pool would be reduced and so would the other party’s entitlements. Therefore, it is essential for peace of mind and a sense of finality, that a property settlement be formalised by way of a Consent Order or a BFA.

In light of the above, it is in your best interests to finalise the property settlement as soon as practicable not only for your peace of mind, but also because you are faced with a limitation period. Married couples have 12 months from the date of their divorce to finalise the property settlement, while de facto couples have two years from the date of their separation to do so. A failure to formalise the property settlement outside of these limitation periods will require you to seek leave of the court; however this is not always successful and should not be relied upon.