The principles for alteration of property interests are laid out in subsection 79 (4) for married couples and subsection 90SM (4) for de facto couples of the Act. A precursor to adopting those principles is that the Court must not make an order under section 79 or section 90SM unless it is satisfied that, in all the circumstances, it is just and equitable to make the order (Section 79 (2) and Section 90 SM (3)). The application of this pre-cursive section is discussed in the case of Stanford. Usually in “long” relationships or in relationships where there are children, the Courts will say that it will be just and equitable to make an order altering property interests (although in the recent case of Bevan the Court refused to make an order notwithstanding a marriage of more than 20 years. The circumstances of that case were however somewhat unusual).
The wording in Section 79 (2) and Section 90 SM (2) is identical and by the application of subsection 1 of both sections confers a wide discretion on the court to make “such order as it considers appropriate”. Provided that the decision of the Court is not outside the range of discretion, (i.e. not beyond that which the community generally would consider reasonable) the exercise of such a wide discretion will not be overturned on appeal. Subsection 4 of both sections is mandatory in that it sets out what the court must consider. In broad terms, those mandatory matters fall under 4 main heads. They are:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the relationship, or a child of the relationship to the acquisition, conservation or improvement of any of the property of the parties to the relationship or either of them;
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the relationship, or a child of the relationship to the acquisition, conservation or improvement of any of the property of the parties to the relationship or either of them;
(c) the contribution made by a party to the relationship to the welfare of the family constituted by the parties to the relationship and any children of the relationship, including any contribution made in the capacity of homemaker or parent;
(d) the matters referred to in subsection 75(2) and subsection 90SF(3) so far as they are relevant.
The approach taken by the Courts is to adopt what is known as “the four-step process which is laid out in the case of Hickey.
Step 1
Identify the assets which comprise the “matrimonial” assets being the whole of the property owned by the parties or either of them and ascertain the values of those assets either by agreement or valuation.
Step 2
Assess the contributions ( as defined in Sections 75(4) and 90SH(4)) of each of the parties in percentage terms.
Step 3
Identify the subsection 75(2) or 90SF(3) factors which are applicable and assess whether the contribution-based entitlements need to be adjusted on account of any or all of those factors (e.g. one party has a much greater income earning capacity than the other. By how much should the contribution-based entitlements be adjusted to account for that? 5%? 10%?)
Step 4
Having assessed the value of the pool, the percentages of the contribution-based entitlements and the extent, if any, by which such contribution-based entitlements need to be adjusted to account for any subsection 75(2) and 90SF(3) factors, to assess whether the result so obtained is “just and equitable” – i.e. is that result fair to each party having regard to all the circumstances of the relationship?
To the disappointment of most people, there is no “matrix” to which one can refer to accurately forecast the outcome of any decision. The best any legal practitioner can do is to assess the likely range of outcomes that a Court might decide upon. This is primarily because of the wide discretion with which the Court is entrusted which may be affected by the way in which the Court considers the evidence and the reliability of each of the parties as witnesses. This of course may vary from Judge to Judge as one Judge may well view the parties’ reliability differently from another. An example of the uncertainty with which litigants are faced is evidenced by the simple fact that when a matter goes on appeal to the full Court, the 3 Judges of the Court of Appeal often do not agree with each other!
It should be obvious from this that going to Court on property matters is somewhat akin to taking a ticket in a lottery. Judges do the best they can with what they have before them but they are also constrained to act within a somewhat limited framework. The essence of a judicial determination is that the outcome is beyond the parties’ control, an aspect which is usually lost on at least one of the parties to the dispute.