The Federal Circuit and Family Court of Australia (FCFCOA) must be satisfied that an order in relation to the division of property in a Family Law property settlement is just and equitable before making it.
In leading cases (such as Mallett & Mallett and Hickey & Hickey), the Court has stated that the just and equitable requirement is generally the last of the four step process undertaken by the court in family law property settlements.
What does just and equitable mean?
In Mallet & Mallet the words ‘just and equitable’ were described as the “overriding requirement” to determine whether it is just and equitable to make AN order at all and IF one is made, what that order should be. In determining whether the order is just and equitable, the court must consider not just the underlying percentage distribution of the assets but also the justice and equity of the outcome (i.e. the actual order) (see Russell & Russell and JEL v DDF).
The main purpose of section 79(2) is to ensure that the Court:
- alters the parties’ property rights only if justice requires it to do so; and
- If the court decides it is just and equitable to make any order, the court is satisfied that the alteration of property goes no further than the justice of the matter demands.
What are the four steps?
Before the High Court case of Stanford v Stanford, the four steps the Court considered in determining what orders it makes, were:
- identify the value of the parties’ property, liabilities and financial resources at the date of the hearing;
- identify and assess the parties’ contributions and determine their contribution based entitlements as a percentage of the net value of the property pool;
- identify and assess the relevant ‘future needs’ factors under section 79(4) and 75(2) of the Family Law Act and determine any adjustment necessary;
- consider the effect of those findings and determine what order is just and equitable in the circumstances.
The court’s decision making In property disputes involves an exercise of discretion, having regard to these four steps, which turns on the facts of each individual matter (Russell & Russell).
The effect of Stanford
In the case of Stanford the High Court expressed its views on the proper approach to an application for property adjustment under s.79 of the Family Law Act.
In Stanford, the High Court stated that the Court must first consider whether it is just and equitable to make an order, rather than considering whether the order is just and equitable as a ‘fourth step’. Stanford refocussed attention on the Court’s obligation not to make an order adjusting property interests unless it was just and equitable to do so.
Watson & Ling confirmed that the breakdown of a marriage or de facto relationship does not automatically result in the parties’ property being altered and, nor should the making of an order at all be assumed.
Accordingly, the requirement to consider whether an order is just and equitable is now more accurately considered as the first step, adding an extra step to the four step process.
How is the just and equitable requirement (as a first step) satisfied?
The just and equitable requirement as a first step is generally satisfied because, once the parties no longer live together, there will no longer be common use of the property. Consequently , the assumptions underpinning the parties’ property arrangements will have been brought to an end. The question of whether it is just and equitable to alter the existing property interests is readily answered where both parties are seeking orders which alter their respective property interests. Whether it is just and equitable to make an order is more difficult to answer where one party seeks that no order be made.
The just and equitable requirement: Case Studies
Bevan & Bevan found in the appeal that the trial judge erred in determining that altering the existing property interests of parties who had largely lived apart for 18 years and the husband had told the wife she could retain the assets was just and equitable.
In the Full Court appeal of Redman & Redman, the husband and the wife applied for consent orders to be made. The sole purpose of the orders sought was to transfer the family home in an intact marriage from the name of the husband to the names of both himself and his wife and to employ the Family Law Act 1975 to achieve this to avoid paying stamp duty. The Registrar refused to make the order. On appeal, the Court indicated that it has power under s 79 to make orders where the parties’ marriage was intact. However, the court must have a principled reason for interfering with the parties’ existing legal and equitable interests (per Stanford). There was no apparent reason and the appeal was dismissed.
Are you unsure what order is just and equitable in your case?
If you have recently separated, contact us for advice regarding what orders are just and equitable in your case.
