Discretion of the Court

Under the Family Law Act 1975 (Cth), courts determining a property settlement must assess a range of factors to decide how the parties’ property should be divided. Amendments that commenced in June 2024 clarified the framework courts apply when determining property matters, although the overall approach remains broadly consistent with the principles developed in case law over many years.

In determining a property settlement, the court generally considers the following matters.

Property Pool

The court first identifies and values the property pool, which includes all assets, liabilities, and superannuation interests in which either party has a legal or equitable interest.

This may include:

• Real estate
• Bank accounts and investments
• Businesses and trusts
• Motor vehicles and personal property
• Superannuation entitlements
• Cryptocurrencies and other digital assets
• Debts and liabilities

Importantly, the property pool can include assets held individually, jointly, or through structures such as companies or trusts, where a party effectively controls or benefits from them.

Contributions

The court then considers the contributions made by each party to the acquisition, conservation, or improvement of the property pool.

These contributions may include:

• Financial contributions, such as income, savings, or inheritances
• Non-financial contributions, such as renovating property or working in a family business without pay
• Homemaker and parenting contributions, including caring for children and managing the household

Contributions are assessed from the commencement of the relationship, during the relationship, and after separation.

The court recognises that homemaking and parenting roles are equally important contributions to the accumulation and preservation of family wealth.

Future Needs

The court also considers the future circumstances of each party, sometimes referred to as “future needs” factors.

These may include:

• Age and health
• Income and earning capacity
• Responsibility for the care of children
• The financial resources available to each party
• The effect of the relationship on a party’s ability to earn income

Where there is a disparity between the parties’ future circumstances, the court may adjust the property division to account for this.

Just and Equitable Outcome

Finally, the court must determine whether the proposed property division is “just and equitable in all the circumstances.”

The 2024 amendments place greater emphasis on ensuring that the court explicitly considers whether the final orders are just and equitable after assessing property, contributions, and future circumstances.

Not a Strict Accounting Exercise

The courts have emphasised that settlement proceedings are not a strict accounting exercise. For example, the court does not require parties to calculate and provide precise evidence of every mortgage repayment or household bill paid during the relationship in order to determine contributions to the former matrimonial home. Similarly, a party is not expected to provide a detailed financial projection of the costs of raising a child until adulthood in order for the court to assess future needs. However, these types of factors may still be relevant context when the court assesses contributions and future circumstances.

How Does the Court Determine the Outcome?

The court has significant discretion when deciding a property settlement division. Parties will differ on their accounts about what they contributed and their needs. Even if their respective accounts are supported by evidence, the court must determine how much weight to apply to that factor when determining the overall outcome. 

There are guiding principles in family law that help parties in understanding the outcome the Court will come to and our role as family lawyers is to apply those principles to the circumstances of a particular case when providing clients advice. However, ultimately, we cannot guarantee how the judge hearing your matter will decide the case on that day, as different judges on different days will give different results.

Clients are usually advised about:

• A strong outcome (the higher end of the likely range)
• A reasonable outcome (the lower end of the likely range)

Providing advice in this way helps clients understand both the legal framework and the uncertainty inherent in litigation. It also allows parties to compare the potential outcome of a court decision with the result that may be achieved through negotiation or settlement discussions. In many cases, a negotiated settlement may produce an outcome that is within or even at the higher end of the likely court range, while avoiding the cost, delay, and uncertainty associated with a trial.

If you require advice on the range of outcomes in your property settlement matter, please contact Armstrong Legal.