Property and spousal maintenance

Contributed by HenryMoser and current to 27 July 2018

In Western Australia this section applies to:

• married parties; and
• also to parties to a de facto relationship which ended on or after 1 December 2002, as long as there is a significant connection to WA and the de facto relationship lasted for 2 years or longer.

If the de facto relationship did not last the 2 years, this part only applies if the party seeking an order can make out hardship if an order is not made, for instance because the parties had a child.

Principles - Just and Equitable, and the Four Step Process

When the Court decides on property matters, it must first determine whether it is just and equitable to make any orders at all. To make that decision, it will consider what assets, liabilities and resources each party will have if no orders are made, how the parties conducted themselves and whether there are other reasons (such as whether the parties had children) which would warrant the making of orders.

If the Court is satisfied that it would be just and equitable to make orders it then has to go through a four step process and take into account:

1. what property is available;
2. how each party contributed to acquiring it;
3. whether, in the circumstances the parties find themselves at the time of determination, further adjustments are necessary to take into account future events; and lastly
4. whether the result arrived at is “just and equitable.” If necessary, the Judge can make further discretionary adjustment before making final orders, depending on what he or she thinks is necessary in the particular case.

When looking at what the assets, liabilities and resources the parties have to determine the asset pool of the parties, the Court usally does that at the time of the hearing, but in some cases different dates, such as the date of separation, may be used.

This step involves not only finding out what the asset pool is but also what the value is of the individual components of the asset pool. This may require the parties to obtain valuation evidence from real estate and other valuers.

The Court then assesses the parties’ contributions by considering:

• what property was owned by each party at the time of marriage;
• what direct or indirect financial contributions were made by or on behalf of each party to the acquisition, conservation or improvement of the property;
• what other direct or indirect contributions (such as redecorating or other improvements) were made by either party; and
• any contribution as a homemaker or parent.

The efforts of a party who worked at home looking after the children and doing the housework are also considered contributions since, by doing this, he or she enabled the other person to work outside the home and earn money. In many marriages, this contribution is seen as equal to the direct financial contributions of the income-earner, especially where the marriage has been of a reasonably long duration.

The assessment of contributions is made at the date of the hearing looking backwards. The Court at this point makes an assessment of contributions, usually by attributing contributions to the parties in percentage terms.

The third step involves looking at the future requirements of the parties using the percentage division on the basis of contributions as a starting point and taking into account the following:

• the age and health of both parties;
• the asset, liabilities and resources of the parties (being the tentative division of the asset pool on the basis of contributions);
• the ability of each party to support him or herself in the future;
• whether either party is supporting another person such as a child;
• whether either party is being supported by another person such as parents or a new partner;
• the effect of any proposed order on the income-earning capacity of either party;
• the effect of other Family Court orders such as who is responsible for the daily care and welfare of any children;
• the obligations of a party to pay Child Support or Child Maintenance for any children of the parties; and
• any other relevant matter, such as any financial agreement between the parties.

When considering the third step, the Court usually makes a further percentage adjustment to the percentage division arrived at on the basis of contributions. However, especially in cases where the asset pool is not large, the Court has to look at the division of the asset pool in real dollar terms and may make a proportionally larger adjustment in this step than it would in a case with a larger asset pool.

Lastly, before making the orders, the Court has to look at the overall division and be satisfied that the proposed division after steps one to three is “just and equitable”. If not, it has to makes further adjustments to arrive at proper orders.

Contrary to a common perception, there is no firm formula for making property settlements. Each set of circumstances must be individually considered and decided on. Steps two to four are determined by a Judge individually and allow for quite a large element of discretion.

There is usually no “right” or “wrong” answer to the division of property and it is important to approach these questions by considering a range of possible outcomes. It is strongly recommended legal advice be sought to obtain a proper assessment.

What is property?

“Property” includes the family home, other real estate, furniture, vehicles, businesses, shares and investments etc. It is extremely inclusive and each individual matter should be discussed with a lawyer, particularly if one party has an interest in a business.

All the property owned by the parties, whether individually or together, is included. Such property may have been acquired in many ways, including:

• jointly or separately during the marriage;
• jointly or separately before the marriage;
• from gifts or inheritances received by either party; or
• from goodwill or assets built up from a business etc.

Although entitlements to superannuation are not really “property”, in cases involving married couples superannuation entitlements are treated as if they were property.

The Family Home

The family home is the main item of property for most people. It could be a house or a home unit or a block of land.

The home or land could be owned in one of the three following ways:

• single ownership , where the property is owned by either the husband or the wife. During the marriage, the property belongs to that person who can mortgage or sell the property without the other spouse’s consent;
• joint tenancy, where the property is in the names of both parties and one person cannot sell it without the other’s permission. On the death of one party, the property automatically passes to the other party in full; or
• tenants in common, where each party owns a specified share of the property. The property does not automatically pass to the other spouse on the death of one party. The share owned by each individual may be left in their will to whomever they choose.

However, despite the above, if the Family Court is asked to decide on ownership, it may give all or part of it to the other spouse.

Right of occupancy

Both parties to a marriage are entitled to live in the property regardless of whose name it is in, unless the Court makes an order otherwise. This applies equally to the husband and the wife.

If parties seek a property settlement or ask for a declaration of ownership, the Court can order one party to hand over possession to the other, regardless of in whose name the house is registered. In deciding who should live in the property, the Court will consider the needs of each party, including who has the daily responsibility for the care and welfare of any children.

Exclusive occupancy orders (allowing one party to live in the property and requiring the other party to move out) are rare; however, the Court has the power to grant an injunction “relating to the use or occupancy of the matrimonial home”. While the Court is reluctant to order one person to leave the home, if it considers the needs of the person making the application and the children outweigh the other person’s needs, it may make a temporary order pending finalisation of the matter, or until such time as a certain event comes to pass, such as the youngest child turning 18.

Threats to dispose of property

If one party threatens to sell, give away or mortgage any property after separation but before final orders are made, the other party can ask the Court for an injunction to prevent it happening. This only applies if the property is in the name of the person threatening to dispose of it.

Injunctions can also be sought to freeze bank accounts, or to prevent furniture or other possessions being sold.

In some circumstances, the Court can “undo” transactions already entered into if the Court believes one party is trying to defeat possible claims by the other. For example, if one party transfers a property into the name of a de facto spouse to prevent their partner claiming a share of it, the Court may set the transfer aside.

Superannuation

Under the Family Law Act 1975 (Cth) (that is, cases involving married couples), the Court now has the power to split superannuation interests between the parties and transfer all or part of an entitlement from one party to the other.

Because there is a great variety of superannuation structures and policies, issues of valuation and the manner of splitting an entitlement are quite complicated.

Where superannuation forms a considerable part of the overall pool of assets and liabilities, it is advisable to obtain legal and also financial advice on the best option to divide the entitlement.

Under the Family Court Act 1997 (WA) (that is, for de facto relationships), the Court does not have the same powers although recently it has been proposed that the legislation should be changed to make superannuation splitting possible also for former de facto partners.

The Court still takes the superannuation entitlement into account but cannot transfer any part of it. In these cases, the Court treats the superannuation entitlement as a resource, that is, a fund which a party will receive at some stage in the future. Therefore the Court looks at the size of the entitlement compared with the asset pool and the time to elapse until the party receives the entitlement.

The Court then may provide the non-member spouse with a greater division of the current property in recognition of the indirect contributions made to the superannuation fund by way of forgone income.

If the superannuation payout is due in the reasonably near future, the Court may divide the existing property and adjourn the application until the payout is determined. At that time, it may divide the payout between the spouses. In any event it is advisable to obtain independent legal advice on this matter.

Agreements after separation

The cost of Court proceedings can be very high, so it is in the interests of both parties to come to an agreement over property arrangements where possible. It is important, however, for each party to receive independent legal advice about their rights and responsibilities, ideally before commencing negotiations and certainly prior to signing any agreement.

It is advisable to put agreements into a form which can be lodged with the Family Court for certainty, and so they can be enforced if necessary.

Consent Orders obtained by the making of an Application for Consent Orders are the most common, uncomplicated and inexpensive manner to register an arrangement made between the parties. However, even though parties may come to their own agreement, the Court will consider the terms of the Consent Orders sought and may refuse to make the orders unless it can be convinced that the orders are just and equitable.

Alternatively, the parties may enter into a Financial Agreement which has to be in a certain form and has to contain a statement confirming that each party received their own legal advice as to the terms of the agreement.

Both Consent Orders and Financial Agreements entered after the break-down of a relationship can be stamped with the State Revenue Office at a nominal rate; any transfer effected in accordance with the orders or the agreement then attracts no further stamp duty.

Applications for property settlement

If the parties cannot agree, one may have to make an application to the Court for a decision. An application may be commenced at any time before a divorce and up until 12 months following a decree absolute. Former de facto partners have 2 years starting at separation to make an application.

After that, an application can only be made with permission from the Court. The only grounds on which the time can be extended past 12 months after a divorce or 2 years after the date of separation for de facto relationships is where:

• in the opinion of the Court, there is a valid case;
• the other party will not be unreasonably disadvantaged by the delay; or
• the person applying for the order has adequate reason for the delay.

Setting aside or Variation of orders

Property orders made by the Court may only be set aside or varied if:

• they were obtained by fraud, duress, false evidence or suppression of evidence at the time the orders were made;
• circumstances make it impractical for the orders to be carried out;
• circumstances concerning the child’s welfare have changed and this is causing hardship to the child or to the person who is responsible for its daily care and welfare;
• a person has defaulted and the effects of the default mean that it would be just and equitable for the order to be varied;
• the applicant would suffer hardship if the order was not varied; or
• both parties agree to the variation.

Apart from the cases where both parties agree, it is very rare for the Court to vary or set aside an order for property settlement.

Death of a party to proceedings

After an application has been made to the Court, the proceedings continue even if one or both parties die before the Court has made a final order.

The legal personal representative of the deceased party takes over the conduct of the proceedings on behalf of the estate of the deceased.

The Court deals with the case in accordance with the normal principles above, but the Court will not need to consider the third step inasmuch as it relates to the deceased.

Third parties

The Court can also make orders binding third parties. This is helpful in cases where parties owe funds to or are owed funds by third parties. The third parties can now be involved in the proceedings and can be ordered to pay funds to one party only, or to have to seek payment from only one party.

“Pre-nuptial” agreements and agreement during a relationship

Parties can also enter into Financial Agreements before and during their relationship, that is, before they separate.

They can therefore decide how their property should be divided between them before they separate and can avoid disputes in the event of a separation.

Again, the agreement has to be quite detailed and each party has to obtain their own legal advice on the advantages and disadvantages of the agreement.

Persons considering such an agreement are advised to see a lawyer. Not all lawyers prepare financial agreements but the Family Law Practitioners’ Association of WA keeps a list of family lawyers who give advice on and prepare financial agreements (see contact details for the Association at the end of this chapter).

Spousal Maintenance

A party to a marriage or a de facto relationship does not have automatic right to receive ongoing financial support by way of spousal maintenance from the other party.

In deciding whether spousal maintenance should be awarded, a Court must consider whether the party making the application has a need for maintenance because he or she is unable to support himself or herself as a result of:

• having to care for children; or
• being unable to work because of age, illness, disability etc.

In addition, the applicant must show the other party is reasonably able to afford the maintenance.

The Court must also take into account:

• the applicant’s income and financial resources and their ability to obtain work;
• their financial needs and obligations;
• what standard of living is reasonable in all the circumstances;
• what contribution the party making the application has made to the earning capacity of the other party;
• the length of the relationship and the extent to which this has affected the party making the application;
• the need to protect the role of a party who wishes to continue his or her role as caregiver to children;
• if the party making the application is cohabiting with another person, the capacity of that person to contribute financially to the upkeep of the party making the application;
• any other relevant factor.

Applications must be made within 12 months of a divorce or 2 years from the date of separation in de facto relationships. Applications after that time would only be made with the leave of the Court, which must be satisfied that hardship to the person or a child would occur if leave to apply was not granted.

Orders for maintenance cease on the death of either party, or marriage of the spouse receiving maintenance, unless the Court orders otherwise.