Is property always divided after separation or relationship breakdown?

The Family Law Act allows the court to adjust property interests between separating spouses after a de facto relationship or marriage ends; however, such adjustments do not occur in all cases. This principle was made clear in the landmark High Court case, Stanford v Stanford [2012] HCA 52, which cautioned against conflating statutory requirements. The court emphasized that each case must be considered separately to determine whether it is just and equitable to make an order for property adjustment.

Despite the passage of 12 years since the Stanford decision, a common misconception persists that the asset pool is automatically divided 50/50 following a relationship breakdown. There is no default position of equal division, and in some cases, the court finds that no adjustment is required at all. This concept of 'just and equitable' was central to the recent case, Min & Orton (No 3) [2024] FedCFamC1F 387, where it was determined that no adjustment to property interests was necessary. The husband’s significant financial contributions throughout the relationship heavily influenced the court's decision to respect his existing property interests. For those interested, the husband in the Min & Orton case spent a staggering $529,630 on legal fees.

Another relevant example is Chancellor & McCoy, in which the Family Court dismissed a property settlement application from a same-sex couple who had been together for 27 years. The court ruled that it was not just and equitable to alter their existing property interests due to the separate financial affairs both parties maintained throughout the relationship. Ms. McCoy had purchased properties solely in her name, while Ms. Chancellor bought a property using an inheritance, also in her own name. Although Ms. Chancellor contributed financially and assisted with renovations on Ms. McCoy’s properties, these contributions were viewed as financial assistance rather than joint investment.

The court emphasized that both parties were financially independent, had no joint accounts, retained individual property, and were not involved in each other's financial decisions. Ms. Chancellor had significant assets at the end of the relationship, while Ms. McCoy had retired and was financially stable. Ultimately, the court concluded that each party should keep their respective assets without adjustment.

So how does the court determine property settlement?

Financial Contributions

Financial contributions refer to direct monetary inputs towards the acquisition, maintenance, or improvement of family assets. In Min & Orton, the husband contributed almost entirely financially, which was a significant factor in the court's ruling.

Non-Financial Contributions

Non-financial contributions encompass those that aren't directly monetary but still play a crucial role in supporting the family's assets. This includes contributions such as homemaking, parenting, and emotional support. These contributions can significantly impact the overall assessment of property interests during a settlement.

Future Needs and Earning Capacity

Future needs are also considered in property settlements, particularly when one party claims a share based on anticipated needs. In Min & Orton, the wife sought 10% of the property pool to account for her future needs. However, the court ultimately awarded her only 2%, highlighting that although her financial position was significantly less than the husband’s, she was still self-sufficient and able to support herself moving forward.

In summary, navigating property settlements under the Family Law Act involves a complex interplay of financial and non-financial contributions, future needs, and the principle of orders needing to be just and equitable. The court takes a nuanced and highly discretionary approach to each case, ensuring that decisions reflect the unique circumstances of each relationship.

This serves as a reminder that seeking tailored legal advice is crucial for individuals involved in property disputes, as no two cases are alike.