Changes to the Family Law Act – Property Proceedings [Family Law Amendment Bill (No. 2) 2023]

Proposed Changes to the Family Law Act – Property Proceedings 

Following from the amendments made to the parenting framework in the Family Law Act 1975 (Cth) which came into effect in May 2024, attention is now shifting to the proposed amendments to the framework for property matters.

The Family Law Amendment Bill (No. 2) 2023 is currently being reviewed by the Attorney General’s Department, following a public consultation which concluded in November 2023. This article briefly discusses the proposed changes to the property legislation, however it is likely that further changes will be made before the Bill is tabled in Parliament.

The amendments will apply equally to marriages and de facto relationships.

Clarification of the four ‘step’ process

It has long been the practice of the Court to employ a four ‘step’ process in the property settlement process, being to:

1. Identify and value, the parties’ property, liabilities and financial resources at the date of the hearing;

2. Identify and assess the contributions of the parties as referred to in s.79 of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;

3. Identify and assess the other factors relevant including, the matters referred to in s.75 of the Act and determine the adjustment (if any) to be made to the contribution entitlements at step two; and

4. Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.[1]

The Bill codifies these ‘steps’ but makes it clear that they do not need to be taken in any particular order. As such, they are more appropriately described as ‘principles.’ This reflects the approach of the Full Court in Bevan, which emphasised that the requirements of section 79 do not need to be followed in any particular order.

Contributions

The second principle set out in the Bill is the consideration of contributions made by the parties. No changes are proposed with respect to financial and non-financial contributions, nor regarding contributions to the welfare of the family.

Currently, family violence makes a very limited impact on property matters. However, four new factors have been introduced which highlight and acknowledge the prevalence and impact of family violence in today’s society.

The effect of any family violence, to which one party to the marriage has subjected the other party, on the ability of a party to the marriage to make the kind of contributions referred to in paragraphs (a), (b), and (c)

In Kennon & Kennon (1997) FLC 92-257, the Court indicated that family violence could be taken into account in the assessment of contributions if the conduct made the victim’s contributions “significantly more arduous” such that there was a “discernible impact”.

The Consultation Paper to the Bill provides an example of this factor in practice, for instance, where a victim was less able to engage in paid employment and therefore contribute financially to the relationship.

Although these changes reflect the prevalence of family violence and societal expectations for reform, they may increase the costs in preparing matters for hearing, given the substantial volume of evidence that will be required to demonstrate such allegations.

The effect of any economic or financial abuse to which a party to the marriage has been subjected by the other party

The existence of this provision implies that economic or financial abuse is separate to family violence and may not qualify as a form of “family violence.” The Consultation Paper indicates this is intended to capture a broad range of conduct and would include behaviour such as “controlling or denying access to money, finances or information about money and finances, and also undermining a party’s earning potential, for example, by limiting access to employment, education or training.”

The effect of any wastage, by a party to the marriage, of property or financial resources of either of the parties to the marriage or both of them

Wastage is now identified as a distinct factor in assessing contributions, rather than being taken into account under section 75(2)(o) as a future needs issue.

Historically, the Court has been reluctant to add-back wasted property into the property pool. But where wastage is now identified as a specific contributions factor, it will likely be much easier to succeed in a claim of wastage. The converse of this, however, is that claiming an add-back with a dollar value, rather than having it be taken into account in the determination of contributions, will be more difficult.

Further, no definition is provided as to what actions may constitute ‘wastage,’ however the Consultation Paper included examples such as excessive gambling, allowing a person to live in the parties’ property rent-free for a year, or undermining the profitability of a business or investment.

Any debts incurred by either of the parties to the marriage or both of them

Debts are now recognised as a negative financial contribution. The Consultation Paper explains that this is intended to bring the legislation into line with current case law. In taking debts into account, the Court will consider factors such as “how and when a debt was incurred (that is, before, during or after the relationship), who incurred the debt and who it is owed to, and whether it was incurred with the awareness and/or consent of the other party to the relationship.”

Current and future considerations

In considering current and future needs, the current Act directs us to section 75(2), which are matters to be considered for spousal maintenance matters. The Bill removes this cross referencing by creating section 79(5), which sets out a list of factors to be taken into account, independent of spousal maintenance.

The factors remain largely the same, although it does introduce “the effect of any family violence, to which one party to the marriage has subjected the other party, on the current and future circumstances of the other party, including on any of the matters mentioned elsewhere in this subsection.” Given that family violence is now relevant to both contributions and future considerations, there is a likelihood of double-up – something which the Consultation Paper recognises:

“It is possible that the same conduct could be relevant to the assessment of contributions and current and future considerations. The proposed amendments do not curtail the court’s discretion in making these assessments and to respond to the wide variety of factual circumstances that come before it.”

As such, if family violence can be considered twice under the proposed scheme, its’ impact on the property settlement process has the capacity to be substantial.

Duty of Disclosure

Currently, the only reference to the duty of disclosure is contained in the Rules. The proposed section 71B makes clear that each party has a duty of full and frank disclosure to provide all information and/or documents relevant to the issues in the proceedings. This duty applies from the time that parties start preparing for proceedings and ends when the proceedings are concluded. For de facto couples, the duty arises once proceedings commence.

Less Adversarial Trials

The proposed amendments also introduce the “Less Adversarial Trial” process for non-child-related matters by replicating what currently exists for parenting matters. The principles require the Court to actively control proceedings, safeguard the parties against family violence, and to conduct proceedings with as little formality and legal technicality as possible.

[1] Bevan & Bevan (2013) FLC 93-545 at [72]–[73], set forth in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143