Going through a separation can be tough, both emotionally and financially. Understanding your legal rights early helps you plan for a fair and peaceful outcome. In Melbourne, as in the rest of Australia, property settlement after a separation is covered under the Family Law Act 1975. This national law enacted by the Commonwealth Parliament applies uniformly in all Australian states and territories except Western Australia, which has its own system for de facto couples. The purpose of the Act is to ensure that any financial settlement is fair and reasonable for everyone involved.
Four-Step Property Settlement Framework.
Australian family law courts apply a structured four-step approach, established in the leading case of Hickey v Hickey (2003) FLC 93-143, under section 79 of the Family Law Act 1975 (Cth) for married couples and section 90SM for de facto couples. This approach ensures that everything remains orderly and well-structured in the legal scenario.
1. Identify and Value the Asset Pool
All assets, liabilities and financial resources—whether in one party’s name, both parties’ names, or held jointly—form the property pool. This comprehensive inventory includes real estate, bank accounts, investments, superannuation, vehicles, business interests, and all debts such as mortgages, loans and credit card balances.
2. Assess Contributions
The Court carefully considers the contributions made by each party to the acquisition, conservation and improvement of the property under sections 79(4)(a)–(c) and 90SM (4) of the Family Law Act 1975 (Cth). This assessment encompasses:
- Financial contributions: wages, savings, initial capital, inheritances, and gifts
- Non-financial contributions: renovations, direct physical labour, or supporting a business
- Contributions to the welfare of the family: homemaking, parenting, and care for the family’s welfare
In Australian family law, all these contributions are recognised as equally important to the best interests of the family as a whole.
3. Consider Future Needs
After contributions are assessed, the Court considers the future needs of each party. This forward-looking assessment allows for adjustments to ensure a fair outcome, particularly where one party is at a financial disadvantage. These future needs adjustments are specifically provided for under section 75(2) of the Family Law Act 1975 (Cth) for married couples and section 90SF(3) for de facto couples.
Factors reviewed include:
- The care and control of children under 18
- The age and health of each party
- Income disparity and earning capacity
- Access to financial resources or government benefits
This step ensures attaining the final decisions that work long-term for both parties.
4. Determine a Just and Equitable Final Outcome
The final stage synthesises the first three steps. The Court, or the parties through their lawyers, determines whether the proposed division is truly “just and equitable” in all the circumstances. The goal is to reach a resolution that provides finality and clarity, allowing both parties to move forward with financial independence and certainty.
Property Settlement Overview. Comparison of Married vs De Facto Relationships.
The four-step process applies to both married and de facto couples. However, certain procedural and evidentiary differences can make property settlements for de facto relationships more complex than those following a marriage breakdown.
Establishing the Legal Relationship.
For married couples, the marriage is evidence-proven, validated by a Marriage Certificate.
For de facto couples
Under the Family Law Act 1975 (Cth), three legal thresholds must be met to enable the commencement of a de facto financial proceeding. Meeting these thresholds forms an essential part of the legal procedure.
Threshold 1: Proving the De Facto Relationship Exists (Section 4AA)
The applicant must first establish to the satisfaction of the Court that a genuine de facto relationship existed. Under section 4AA of the Family Law Act 1975 (Cth), a de facto relationship is defined as one in which the parties have lived together as a couple on a genuine domestic basis.
The Court will consider multiple factors including:
- The duration of the relationship
- The nature and extent of common residence
- Whether a sexual relationship exists
- The degree of financial interdependence and arrangements for financial support
- The ownership, use and acquisition of property
- The degree of mutual commitment to a shared life
- The care and support of children
- The reputation and public aspects of the relationship
The seminal case of Jonah v White (2011) 258 FLR 236 highlighted that the core of a de facto relationship lies in the parties having combined their lives and lived together as a couple on a genuine domestic basis.
Threshold 2: Establishing Jurisdiction (Section 90SD)
Even after proving a de facto relationship exists, the Court must have jurisdiction to hear the matter. Section 90SD requires that one or both parties lived ordinarily in a participating jurisdiction like Victoria at the time of application, and one of the following geographical requirements is met:
- Both parties were ordinarily resident in a participating jurisdiction during at least one-third of the de facto relationship; OR
- The applicant has made significant contributions of the types outlined in section 90SM(4) including financial, non-financial, or homemaker and parenting contributions, within a participating jurisdiction: OR
- The parties were ordinarily residing in a participating jurisdiction at the time the relationship broke down.
Threshold 3: Power to Make Property Orders (Section 90SB)
Finally, the Court must have the power to make property orders. Under section 90SBof the family Law Act 1975 (Cth), at least one of the following threshold requirements must be satisfied:
- The de facto relationship lasted for at least two years; OR
- There is a child of the de facto relationship; OR
- The relationship is or was registered under a prescribed law of a State or Territory (in Victoria, under the Relationships Act 2008 (Vic)); OR
- One party has made substantial contributions of the kind referred to in section 90SM(4) whether financial, non-financial, or as a homemaker or parent, and a failure to make an order would result in serious injustice to that party.
The case of Creese v Lapthorne [2017] FamCA 655 offers some guidance here. It explains how section 90SB and these thresholds work in practice.
Registration of De Facto Relationships in Victoria
Victoria provides for the registration of de facto relationships under the Relationships Act 2008 (Vic). While registration is entirely optional, it serves two important purposes:
1. It provides valuable evidence that a de facto relationship existed
2. It satisfies the threshold requirements under section 90SB, even if the relationship lasted less than two years
Our experienced family lawyers in Melbourne, to the best of their competencies, aim at compiling the comprehensive evidence necessary to establish these legal thresholds for de facto property settlements.
The Critical Difference in Time Limits
One of the most crucial legal differences is the statutory time limit for commencing proceedings. Missing these deadlines can severely prejudice a claim and require special court permission (leave) to proceed.
Under the Family Law Act 1975 (Cth):
- For married couples: Property settlement applications must be filed within 12 months of the Divorce Order becoming final (section 44(3))
- For de facto couples: Applications must be filed within 2 years of the date of separation (section 44(5))
The Court may allow an application to be made outside the prescribed time limits, if satisfied with the situational crisis that a party or a child would suffer hardship should leave not be granted, or where the applicant would be unable to support themselves without reliance on an income-tested pension, allowance, or benefit at the expiry of that period.
Seeking the advice of a property settlement lawyer at the earliest opportunity following separation is a prudent and proactive step to ensure that all relevant time limits are duly complied with.
Proactive Planning: Utilising Binding Financial Agreements (BFAs)
A truly peaceful separation is often one that has been proactively planned. Both married and de facto couples have the power under the Family Law Act 1975 (Cth) to define the terms of any future property division through a Binding Financial Agreement (BFA).
A BFA can protect assets and establish a clear, pre-agreed outcome for the division of property, potentially avoiding the stress and cost of a contested court application. BFAs are particularly useful for protecting assets brought into the relationship, such as inheritances or business interests.
Formal Requirements for a Valid BFA
For a BFA to be legally valid and enforceable under sections 90G (for married couples) and 90UJ (for de facto couples) of the Family Law Act 1975 (Cth), the following requirements must be met:
- The agreement must be signed by all parties involved.
- Each party needs independent legal advice from a practitioner. This advice covers the effect of the agreement on their rights. It also explains the advantages and disadvantages at play.
- The legal practitioner must provide a signed statement.
- This confirms the advice was given to each party.
- A copy of that signed statement goes to the other party or their lawyer. The agreement cannot have been terminated or set aside by a court.
Setting Aside a BFA
The Court may set aside a BFA under sections 90K (for married couples) or 90UM (for de facto couples) for reasons including:
- Fraud, including non-disclosure of material matters
- The agreement being void, voidable or unenforceable
- Circumstances arising since the agreement was made that make it impracticable to carry out
- Unconscionable conduct in the making of the agreement
- A material change in circumstances relating to a child, making it necessary to set aside the agreement to protect the child’s interests
The case of Birdwood and Gravino (2023) 67 Fam LR 194 covers grounds for setting aside financial agreements, including fraud and voidability. It also touches on unconscionable conduct under sections 90K and 90KA of the Family Law Act 1975 (Cth).
Our firm handles BFA preparation with full professional integrity. We make sure both parties get the right independent legal advice.
Professional Guidance is Key
Whether you are separating from a spouse or a de facto partner, expert legal advice is essential. Timely advice helps you:
- Meet critical time limits for commencing proceedings
- Compile necessary evidence for de facto relationships
- Protect your assets and secure your financial future
- Achieve a resolution that allows you to move forward with confidence.
Our firm is committed to providing professional, proactive and clear legal guidance in all aspects of family law property settlement in Melbourne and across Victoria. We offer a path towards a just and equitable resolution with minimal conflict.
Legal References
Legislation:
- Family Law Act 1975 (Cth) sections 4AA, 44, 75(2), 79, 90SB, 90SD, 90SF(3), 90SM, 90G, 90UJ, 90K, 90UM
- Relationships Act 2008 (Vic)
Cases:
- Hickey v Hickey (2003) FLC 93-143
- Jonah v White (2011) 258 FLR 236
- Creese v Lapthorne [2017] FamCA 655
- Birdwood and Gravino (2023) 67 Fam LR 194
Disclaimer
This information is general in nature and does not constitute legal advice. You should obtain advice specific to your circumstances before acting. The law is current as at the date of publication.
