A divorce does not cover the division of a married couple's property. This must be applied for separately. The law regulating property settlements is contained in the Family Law Act 1975 (Cth) and all references are to this Act unless otherwise stated.
What is property?
Property can include almost anything to which a value can be attributed. Commonly, it includes land, money, vehicles, superannuation and household goods, but it is worth bearing in mind other items, such as insurance policies, intellectual property, debts due to the spouses, rights to sue, such as potential compensation claims, long service leave entitlements, partnership interests, entitlements as beneficiaries of a trust or a will, etc. One thing that is not regarded as property is the ability to borrow, so one spouse will not be entitled to a larger share of the property on the basis that the other has greater borrowing power, but see Future needs. The Court will also apportion liability for any debts and liabilities of the marriage, such as a mortgage, credit card debts, overdrafts, personal loans and the like.
Property in marriage
Property belonging to a husband or wife before marriage is still that person's property after marriage. This includes furniture, bank accounts, vehicles and other household goods. There is no law that it must be transferred into joint (both) names. Property acquired after marriage also belongs to the person in whose name it was bought or who paid for it. The same applies for debts in sole names. It is only on the breakdown of a marriage that the court looks behind the legal title, and may make orders about ownership, notwithstanding whose name the property is in.
Married couples usually buy homes, units or land in their joint names. When this is done, neither of them can dispose of the property without the consent of the other, even if only one of them paid for it. Both owners must consent if a jointly owned property is to be used as security for a mortgage or loan.
Property prior to marriage
Where parties have cohabited before marriage and their financial affairs have become mixed together, the Court will take into account the financial arrangements during the period of cohabitation when deciding on the division of property. If parties contend that their finances and property remained separate, they may need to produce documentary proof.
When is property valued for property settlement?
Matrimonial property includes anything owned by either spouse at the date of their separation, but does not include property acquired after separation. However, the date of valuation of property is the date of trial, even though this may be some months or even years later. This means that it is in the interests of both spouses to maintain the value of matrimonial property after separation, so as to maximise the value available for distribution between them. The Court may look at the conduct of a party who has wilfully damaged or neglected matrimonial property and may take this into account in the division of property.
The Court's object in making property settlement orders is to bring to an end once and for all the economic relationship between the parties to the marriage by dividing the property in such manner as the Court considers just. A property settlement should therefore cover all the property of the marriage and should take into account the whole economic situation of each spouse.
The Court has broad powers to alter the existing rights to property in any way it sees fit so as to do justice between the parties. It can overturn transactions designed to defeat claims for property settlement or spousal maintenance, such as where a spouse has disposed of assets for less than their true value. It can set aside any orders obtained by fraud or duress. Where a party fails or refuses to carry out orders of the Court in relation to property, the Court can take steps to carry out the orders itself, by signing necessary instrument, and can punish the party concerned.
Wherever possible, people should attempt to reach their own agreement about their property arrangements. This saves the expense, delay and worry of a lengthy property case in court which may take two or three years and cost thousands of dollars. People should seek legal advice before entering into negotiations and finalising any agreement to check that the agreement is fair.
In cases where the parties agree about the division of their property and the property is fairly simple, the parties may complete an application for consent orders. This is available from the Court and online. It may be suitable when both spouses have obtained independent legal advice and where the only property of substance is the matrimonial home, vehicles and household goods.
Where the property is more complex, for example where superannuation entitlements of any substance are to be varied in any way, where a company or business is involved, where a guarantee has been given or where capital gains tax liabilities may arise, it is desirable that each party have independent accounting and legal advice before entering into any consent orders.
This article provides basic information only and is not a substitute for legal or other professional advice. If you are likely to be involved in court proceedings or legal action, you should get advice from a lawyer.
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