Property Settlements

‍ When a married or de-facto couple separate and there is no hope of a reconciliation, they are entitled to apply to the Federal Circuit and Family Court of Australia (“the Court”) pursuant to the Family Law Act (1975), for the Court to make an order dividing their assets.

For married couples the power is section 79 (de facto: section 90SM). The Court undertakes the process set out in section 79. The process has been known as the “four step” process, but there is no assumption that existing interests should be altered at all.

‍Since 10 June 2025, significant amendments to the Family Law Act were enacted, and caselaw is emerging to clarify these changes.

The process is determined by the facts and the “justice and equity” of the case, and is to be a wholistic process rather than a rigid formula to be applied. Generally speaking, the Court undertakes the following steps:

The Court identifies the existing legal and equitable interests and liabilities (section 79(3)(a)); for example;
a. It will identify and value all real estate, bank accounts, vehicles, jewellery, businesses, shares, investments, mortgages, credit cards, loans and all other assets and liabilities the parties own or have an interest in;‍ ‍
b. It will identify how these liabilities and assets are held and by who;
c. The Full Court in Shinohara held that only the existing property of the parties is to be identified and only that existing property divided or adjusted. Prior to Shinohara the Court would regularly deal with “add-backs,” - notional property that had been spent or wasted, that was added back to the asset pool to be adjusted.
The Court then looks at the the contributions each party made to those assets and liabilities(section 79(4)), for example;
a. Financial contributions such as initial contributions at the start of the relationship of real estate or savings, inheritances received during relationships, ongoing financial contributions by way of a wage or salary, personal injury or redundancy payments and
b. Non-financial contributions such as personal effort and work to maintain real estate or to improve it via renovations and gardening, growth and management of investments and careful refinancing of loans, having family members look after children to save on child care.
c. Homemaker and parenting contributions such as staying home with a baby, picking up children from school, providing care and teaching to growing children undertaking domestic tasks such as grocery shopping, cleaning, washing, cooking.
d. A person who contributed more will often receive more in a property settlement, although this will be weighed against the factors in the next step.
The Court then takes into account the current and future circumstances of the parties (section 9(5)),; for example;
a. The age and health of the parties, whether one party has the care of young children, whether there is a large income disparity, or a person has sacrificed their career to be a primary caregiver, whether a person has adequate assets or resources to meet their needs.
b. Large adjustments of asset pools can occur upon the consideration of future needs. If one party has sacrificed their career and earning capacity for the care of young children that will remain in their care, the asset pool can be significantly adjusted in response. Alternatively, if both parties have retired and have relatively similar future needs , there may be no future needs adjustment.
The Court must also be satisfied that any order is just and equitable (section 79(2)) and this step permeates the entire process. It may not be just and equitable to even make an order.

A property settlement is obtained by agreement or by order. Where the parties agree, the terms of the agreement can be made into consent orders. Where they do not, a party applies to the Court for orders altering the parties’ property interests under section 79 (or section 90SM for a de facto relationship).