Marriage, Divorce, and Separation – De Facto and De Jure
Marriage
Marriage in Australia is defined in section 5 of the Marriage Act 1961. It is described as the
union of two people to the exclusion of all others, voluntarily entered into for life.
Unfortunately, many marriages are not for life. When a marriage ends, there are a range of
things that need to be considered, who will care for the children and when, who will keep the
house, and who will pay for the bills, amongst others. This is further complicated by the
emotional distress that a breakdown of a relationship can have.
Divorce
Divorce is governed by federal law under the Family Law Act 1975, which
emphasizes a no-fault approach, meaning the reasons for the breakdown of a marriage are
generally not considered in granting a divorce. All that is required is that the marriage is
‘void’. In other words, all that needs to be shown is that the marriage is over. To obtain a
divorce, one or both parties must demonstrate that the marriage has irretrievably broken
down, evidenced by a 12-month separation period. This separation can occur while living
under the same roof, provided certain conditions are met. Once the court grants a divorce, it
becomes final one month and one day after the hearing, allowing both parties to remarry if
they wish.
De facto relationship
In Australia, the dissolution of a de facto relationship is governed by the Family Law Act
1975, which recognizes de facto couples similarly to married couples in many legal aspects.
As per section 4AA of the Family Law Act, a person is in a de facto relationship with another
person if the persons are not legally married, the persons are not related by family, and
having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
If you are unclear whether your relationship would be considered de facto, there is further information available in s4AA of the Family Law Act.
However, the requirements are
subjective and everyone’s circumstances are different. If you wish to know whether your
relationship may be considered de facto, contact us for a discussion.
A de facto relationship is considered to have broken down irretrievably when one or both
parties decide to end the relationship, evidenced by a separation period of at least 12 months.
This separation can occur while still living together under the same roof under specific
circumstances. Upon proving the breakdown, either party can apply to the court for property
settlements, financial orders, and parenting arrangements for any children of the relationship.
The Family Court or Federal Circuit Court handles these matters, ensuring equitable
outcomes for both parties involved in the de facto relationship.
Separation’ and ‘Divorce
Whilst often used interchangeably, have distinct legal meanings within Australia’s court system. Divorce is the process of ‘tearing’ up the Marriage certificate. It has a few legal ramifications, such as the ability to remarry. It also sets a timer on when property matters can be resolved. In general, the Divorce process is straightforward.
Separation however is the process of dividing the parties’ assets, and dealing with childcare
arrangements. This can be a highly complicated area of law, and involves many differentaspects, all the way from accounting, to psychology.
Court intervention is not required for the majority of separations. But there are many
circumstances where an independent third party will be required to help parties resolves their
matters. This may be a mediator, or a Judge, depending on how complicated, or differently
the parties view their circumstances.Separation can be complicated, both emotionally, but also legally. In order to ensure that you
get a fair and reasonable result from your separation, and to reduce the stress involved in the
process, contact Bentleys Barristers and Solicitors to help guide you through the process.
Child Custody
In Australia, child custody arrangements, now referred to as parenting arrangements,prioritize the best interests of the child as outlined in the Family Law Act 1975. These arrangements aim to ensure that children maintain meaningful relationships with both parents, unless it is contrary to their welfare. When parents separate or divorce, they areencouraged to reach a parenting agreement through mediation or negotiation outside of court.This agreement covers matters such as where the child will live (residence or primary care),how much time they will spend with each parent (contact or visitation), and decision-making
responsibilities regarding the child's upbringing (responsibility for long-term issues, such as
medical, education, and other).
If parents cannot reach an agreement, they may apply to the Family Court or Federal Circuit
Court for a parenting order. The Court will consider various factors, including the childs
views (if mature enough to express them), the nature of the child is relationship with each
parent, any risk of harm to the child, and the practicality of proposed arrangements. The
courts primary concern remains the childs welfare and safety, aiming to ensure stability and consistency in their lives post-separation. Ultimately, Australian law encourages cooperative
parenting and the involvement of both parents in their childs life, promoting shared responsibility and decision-making where feasible and beneficial for the child. Section 60CC outlines what factors the court will take into consideration when determining the best interests of the child, which cover a wide range of circumstances,understanding that everyfamily’s circumstances are unique.
The court process should be viewed as a last resort for parenting matters. The court process
can be incredibly stressful for parents, and this stress will often impact children.
If you are struggling to come to an agreement with your ex-partner about the care of children,
feel free to contact Bentleys Barristers and Solicitors for real world advice, with a focus on the
practical impacts and solutions that can be reached to resolve your matter in a cost-effective,
friendly and caring manner.
Property Division
In Australia, property division after separation is governed by the Family Law Act 1975,which emphasizes a just and equitable distribution of assets and liabilities accumulated during the relationship. This applies to both married couples and de facto couples who have separated.
The process typically involves identifying and valuing all assets, which can include real estate, vehicles, investments, superannuation (pensions), businesses, and personal belongings.
Liabilities such as mortgages, loans, and credit card debts are also taken into account and can be adjusted if necessary.
The court considers a range of factors when determining how property should be divided,
including the financial contributions made by each party (such as income, property,inheritances), non-financial contributions (such as homemaking and childcare), future needs (such as age, health, income-earning capacity, care of children), and any other relevant factors. The aim is to achieve a fair outcome based on each partys contributions and needs
following the separation.
Couples are encouraged to negotiate a property settlement agreement themselves or through mediation, which can be formalised by a consent order approved by the court. If anagreement cannot be reached, either party can apply to the Family Court or Federal Circuit.
Court for a property order. The court may then make orders specifying how property and debts are to be divided, considering the circumstances of the case and ensuring any arrangements are practical and just for both parties involved.
The preferred approach to property division is enunciated clearly in The Marriage of Hickey
[2003] FamCA 395. The four steps are as follows:
1. Firstly, the parties should identify and value the property, liabilities and financial resources of the parties. This is not necessarily the value of the property at the time of separation, but rather, is the value of the property at the time of the division.
2. Secondly, the parties should identify and assess the contributions of the parties within the meaning of s79(4)(a-c) of the Family Law Act 1975 (Cth) and determine the
contribution based entitlements of the parties, as a percentage of the net value of the property of the parties.
3. Thirdly, the parties should identify and assess the relevant matters referred to as the‘other factors’ in s79(4)(d-g) and s75(2) of the Family Law Act 1975 (Cth), also
known as the ‘future needs’ factors.
4. Finally, the parties should consider the effect of the above and determine what result is just and equitable in all the circumstances.
Property of the Parties
Like most common law countries (that is, countries that follow the traditional English system), Australia has a distinct property regime, where being married has no effect on property acquisition. This can be compared to civil law countries, where married couples will generally have joint ownership of all property acquired after marriage. In Australia, both parties to the marriage can obtain property in their sole name, or jointly. To avoid one party leaving a marriage with an inequitable amount of property, the issue is resolve by s79 of the Family Law Act, which provides courts the ability to adjust the property rights of the parties
when it is just and equitable to do so. Section 79 of the Family Law Act distinguishes between the following:
– Income
– Property, and
– Financial Resources
Only ‘property’ of the parties to the marriage can be adjusted under s79 of the Family Law
Act. Property is defined in section 4 of the Family Law Act,‘Property, in relation to the parties to a marriage [the same definition applies to de facto couples] or either of them – means property to which those parties are, or that party is,
as the case may be, entitled, whether in possession or reversion’This definition should be interpreted broadly, as in The Marriage of Duff (DL and Ej) [1977] 90-217, where the Court held that property is the most comprehensive of all terms which can
be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.
The most common form of ‘property’ of a marriage, is the matrimonial home. Other common types of property owned by parties to a marriage is: a business, shares, vehicles, beneficialinterest in a fixed trust (however not an expectancy interest), and jewellery. Whilst an adjustment under s79 of the Family Law Act can affect any property of the marriage, most of
the time, the focus of the courts is on the ‘bigger ticket’ items. Although, sometimesarguments can occur over property as minor as the TV stereo system. Other times, there aresentimental items which have little value monetary value, but significant personal value to the parties.
Pets are also considered property for the purposes of Family Law. There is no specific mention of pets in the Family Law Act 1975 (Cth). It has been shown that the court has jurisdiction over who pets should live with: Jarvis & Weston [2007] FamCA 1339. Factors relevant that the court would consider in deciding who should get Katsu include, who purchased the pet, who was the primary carer for the pet during the relationship and who thepet is registered to. The Court may take into consideration the positive impacts the pet has on party’s mental wellbeing. The court does not have the jurisdiction to order any ‘sharing’ or
‘co-custody’ of animals, see Davenport & Davenport (No. 2) [2020].
It should also be noted here that liabilities of the parties also need to be considered, including
credit card debt, mortgages, car loans and others. The important factor is the net value of the
property. That is, all of the assets of the parties minus all of the liabilities of the parties = net
property of the parties. The ‘net property of the parties’ is colloquially known as the
‘matrimonial pool’.
Superannuation
The definition of superannuation was historically a difficult task. Traditional definitions of
property would view accumulation funds as being property, but there were greater difficulties
in defining whether defined benefit funds, and periodic pensions were property. This was
resolved by the Famil Law Legislation Amendment (Superannuation) Act 2001 which
inserted s90MC into the Family Law Act, which provides that for the purposes of Family Law
matters, superannuation is to be treated as property.
Financial Resources
Many individuals have sources of wealth that will not fit into the definition of ‘property’
within the meaning of section 4 of the Family Law Act. The court may consider the ‘financial
resource’ but are not able to adjust it.
In Hall v Hall (2016) 257 CLR 490, the Court explained a financial resource as follows,
‘a source of financial support by which a party can reasonably expect will be
available to him or her to supply a financial need or deficiency’
Some common examples of financial resources are:
– Familial wealth
– Being a beneficiary of a discretionary trust Effectively, the court will take into consideration the fact that one party will have access to certain financial resources that the other will not, which will, in some circumstances, effect
the ‘percentage’ division of the assets at separation.
Understanding how a financial resource can affect property division can be one of the most
complicated areas of the Family Law, with interplay between factual circumstances and
complex business and trust structures. At Bentleys, our lawyers have a thorough
understanding of business and trust law and their intersection with family law, that allows
them to provide accurate and useful advice when dealing with financial resources in the
family law jurisdiction.
Valuing the Property
Many items of property that the parties hold will have clear and obvious values. The value of
a mortgage, for example, is the precise amount that is left due and owning. The value of the
matrimonial home however, can be more nebulous. For items of property where there is no
clear value, then there are three options available to parties:
– Sell the property,
– Mutual agreement, or
– Value the property.
For every conceivable type of property, there is someone out there who can professionally
value it. However, most property is not worth the cost of having it professionally valued.
Even if the property’s value is greater than the cost of the valuation, often parties’ estimation
of the property’s value are not that far apart. Therefore, in most cases, it is economical for
parties to simply pick a number somewhere in the middle. For property that is too valuable to
be simply guessed at, such as a home, an independent sworn valuer can be appointed to
provide a precise estimate of value.
If the parties would prefer a cheaper option to an independent sworn valuer, real estate
agents, and sometimes the mortgaging institution itself, can offer what is known as a ‘curb
side’ valuation free of charge. Whilst not as precise as an independent sworn valuation, it is
often accurate enough to provide a starting point for parties to discuss and agree on.
Financial Disclosure
In order for parties to be able to assess the financial position of each other after a breakdown
of a relationship, it is necessary that parties exchange financial documents. This process is
called ‘full and frank financial disclosure’. Financial Disclosure requirements are outlined in
Rule 6.01 and Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law)
Rules 2021.
Financial Disclosure documents include, but are not limited to, the following, whether in
Australia or internationally:
a) Pay slips and employment contract
b) Details of a party’s earnings
c) Any interest in property owned by the party, or owned by a legal entity fully or
partially owned or controlled by a party
d) Financial resources
e) Any Trust that the party is a beneficiary, trustee or administrator of
f) Most recent tax return and notice of assessment
g) Bank records for 12 months immediately prior
h) If a party has an Australian Business Number, a copy of the last four business activity
statements
i) Any document in the party’s possession, custody or control that may assist in
determining the income, needs and financial resources of the party.
There are consequences for not providing full and frank financial disclosure, especially when
done so to conceal assets.
Non-financial contributions
Non-financial contributions are any contributions that do not have any direct financial impact
on the property of the parties. This could include traditional home-making tasks, raising and
caring for children, providing love and support, amongst a range of other tasks that the court
would view as worthy of recognition when assessing contributions to the marriage.
The Court has stated, in In the marriage of Ferrero [1993] FLC 92-335, the following, which
neatly explains the current understanding of the Family Court when viewing homemakers’
contributions, at [79,579],
‘…Parliament had not provided that a wife’s homemaker contribution and the
husband’s financial contribution are deemed to be equal. It is equally true to say that the
Parliament has not provided that they cannot or may not be equal. It is a matter of evaluating
those contributions in the individual case but against an evolving social and legislative
background… There is also, we think, an evolving social background which gives greater
emphasis to the equality and partnership concepts in a marriage and, no doubt, this
evolutionary process will continue.’
There is of course, still an acknowledgement that one party may fill their role to an
exceptional standard that warrants additional attention, in the decision, the Court said,
‘The case law has established however that there may be special factors, such as the
homemaker having performed her responsibilities without the assistance of her frequently
absent husband or the breadwinner having applied outstanding entrepreneurial skill to the
building up of a business, which justify the court considering that contribution to be above
the normal range…’
Weight of Contributions and Length of Relationship
The length of the marriage can be seen to be of considerable importance in the assessment of
contributions. In Waters and Jurek [(1995) FLC 92-635, at 82,379] Fogarty J, in the context
of s 79(4)(e) of the Act, said:
‘When the marriage ends, especially where that marriage has been a long one, one
cannot separate the parties as individuals from the people they became in the context of the
marriage relationship, and the allocation of roles, duties and responsibilities which it
entailed.’
In other words, the longer the marriage, the less ‘weight’ the court will place on
contributions, noting that each party will file a particular role, and that this role may not result
in a direct financial contribution. This is most easily seen in a family where one party will
continue to work, whilst the other party stays at home and fills the home-maker role. The
court has expressed a desire to view the income generating role as just as important as the
home-maker role in most circumstances.
Comparatively, in the opposite context, being that of a relatively short relationship, the Full
Court in Figgins & Figgins [2002] FamCA 688; (2002) FLC 93-122 at 89,301 [129] stated
that:
‘In cases … involving short marriages and a substantial imbalance of financial
contribution, equality of division is again likely to produce substantial injustice. Its value
as a starting point is therefore highly questionable.’
Understanding what the court considers a ‘short’ or ‘long’ relationship can be difficult. As a
general rule of thumb, a ‘short’ relationship is less than five years, and a long relationship is
one longer than ten years.
Wastage, Family Violence, and Property Division
For the most part, conduct of the parties to a marriage is not considered relevant to the
division of property. That is, the marital behaviour is not of itself relevant to applications
under section 79 of the Family Law Act. There are however exceptions to this general rule.
The two main circumstances where conduct of the parties will be relevant to property
division are as follows:
– Wastage
– Family Violence
Wastage is often considered a ‘negative’ contribution and can be defined as a financial loss
caused by the conduct of one of the parties, where the loss should not fairly be borne by them
both equally. Some common examples of wastage are gambling, excessive spending, disposal
of assets for below their market value, and, occasionally, drug addiction resulting in a
significant loss of money.
The ‘rule’ for determining whether wastage will be considered was enunciated by the court in
the case of Kowaliw [1981] FLC 91-092,
‘As a statement of general principle, I am firmly of the view that financial losses
incurred by parties or either of them in the course of the marriage whether such losses result
from a joint or several liability, should be shared by them (although not necessarily equally)
except in the following circumstances:
a) Where one of the parties has embarked upon a course of conduct designed to
reduce or minimise the effective value or worth of matrimonial assets or
b) Where one of the parties has acted recklessly, negligently or wantonly with
matrimonial assets, the overall effect of which has reduced or minimised their
value.’ (emphasis added)
It is important to note that the above was only put forward by the court as a guideline.
However, it has been later followed by the Full Court who stated they had ‘no reason to
depart’ from it, see Browne v Green [1999] FLC 92-873.
Family violence is a scourge on the community but only has a limited impact on property
division. As outlined by the Court in Kennon & Kennon (1997) FLC 92-757, family violence
experienced during a marriage will only affect property distribution where a party’s
contributions were made more arduous, or more onerous, because of the violence suffered.
In Martell & Martell (2023) 66 Fam LR 650 Aldridge J held at [24] “The focus is not on the
conduct per se, but on its effects on contributions.”
In Martell, Aldridge J continued at [25-26] that:
‘The threshold for recognition is therefore met by conduct which has a discernible
effect on the contributions of the other party such that it should be recognised in determining
the respective contributions of the parties …. The effect of the conduct must be such that a
greater weight should be given to the contributions.”
Recently in Gormley Gormley (No. 4) [2023] FedCFamC1G, an application of the relevant
principle, Campton J said of the evidence as to family violence and whether the wife in that
case had established that the contributions were rendered more onerous by any family
violence occasioned by the husband the following at [238]:
‘Even if I were able to make findings as to the incidents of family violence alleged by
the wife, there was a deficiency in the evidence as to how those incidents impacted upon the
wife’s contributions. I am not satisfied that the wife has discharged her evidentiary burden to
establish that her contributions were rendered more onerous by any family violence
occasioned by the husband.’
An adjustment in property matters is such commonly referred to as a ‘Kennon adjustment’
and requires significant evidence, of both family violence, and its impact on contributions
made. This is an area where the lawyers at Bentleys have extensive experience, on both sides
of the argument, which allows us to approach these issues with knowledge, and sensitivity.
Future Needs
The next property adjustment factor that needs to be considered by parties’ is ‘future needs’,
also known as s75(2) factors, which are required to be considered in section 79 by section
79(4)(e).
In Petrellis Petrellis [2023] FedCFamC1A at [69] McClelland DCJ said:
The appropriate approach in considering relevant s 75(2) [s.90SF(3)] factors is to:
– firstly, determine what factors should be taken into account pursuant to s 75(2) [s.
90SF(3)], without any consideration at all at that stage of the amount (if any) that
should be ordered,
– Secondly, when all of these factors have been determined, it is then appropriate to determine what weight should be given to each of them, including the outcome of the Court’s analysis undertaken pursuant to ss 79(4)(a), (b) and (c) [ss. 90SM(4)(a), (b)
and (c)].
Future needs can be broken down into two broad categories, those that relate to children, and
those that relate to income.
For income, there will traditionally be an adjustment in favour of the lower earning spouse.
Disparity in income earning capacities is a common basis for an adjustment in propertydivision. This comes from an understanding that due to the division of roles in a marriage,one party will have had the opportunity to focus more on their career, resulting in a higher income earning capacity. It is important to note, that earning capacity is separate from what a person is currently earning. The court is more interested in how much the individual has the capacity to earn. This may arise where one party is working full time, and the other only working part time at the time of separation, but could work more.
The other factors impacting income are health and age of the parties. An individual close to retirement age has less earning capacity than a 26-year-old. Likewise, an individual with persistent health issues will have greater future needs. S75(2) also considers the impact that raising children has on one’s future needs. It considers
both that the cost of raising children is often greater than the monies paid in child support,and the limitations it places on obtaining full time employment. The adjustment warranted for children will depend on a range of factors, with the main ones being the number of children, their ages, and any special needs.
Just and Equitable
The final consideration a court will make, is whether the adjustment is ‘fair and reasonable’ and ‘just and equitable’. That is, in all the circumstances, is the proposed adjustment fair.
This is a highly subjective area, which allows a judge to exercise discretion. Whilst this can create uncertainty around what decision a judge may make, it ensures that no unique circumstance is not taken into account.