Family Law Act 1975: Understanding Divorce and De Facto Property Settlements

At a Glance

The Family Law Act 1975 governs both divorce and property settlements for married and de facto couples
Australia operates under a "no-fault" divorce system
Property settlements are not a 50:50 split by default: they follow a specific four-step process
De facto couples generally have the same rights as married couples if they meet specific criteria
Strict time limits apply for filing property applications after separation or divorce

The Framework of Divorce in Australia

Under the Family Law Act 1975, divorce is the formal legal end of a marriage. Australia utilizes a "no-fault" jurisdiction, which means the court does not consider why the marriage ended or who was responsible for the breakdown. The only ground for divorce is the "irretrievable breakdown" of the marriage, evidenced by the parties having lived separately and apart for a continuous period of at least 12 months.

It is a common misconception that getting a divorce automatically settles financial matters. In reality, divorce and property settlements are two distinct legal processes. You can settle your property affairs any time after separation without being divorced.

De Facto Relationships: Are You Covered?

The Act also extends significant protections to de facto couples. To apply for a property settlement under the Act, a de facto relationship must usually have lasted at least two years. However, exceptions apply if there is a child of the relationship, or if one party made substantial contributions and a failure to make an order would result in serious injustice.

Australian courts, including the High Court of Australia and the Federal Circuit and Family Court of Australia, have emphasised in multiple decisions that the existence of a de facto relationship turns on whether the parties have demonstrated a mutual commitment to a shared life, rather than merely on whether they have continuously lived together.

Accordingly, even where parties reside in separate households due to work, health, or other practical reasons, they may still be found to be in a de facto relationship if, viewed as a whole, the characteristics of their relationship satisfy the legal criteria for such a relationship.

The Four-Step Process for Property Settlements

The Federal Circuit and Family Court of Australia does not start with a presumption of an equal split. Instead, it follows a structured approach:

Identify and Value the Assets: This includes everything owned by either party: houses, cars, shares, businesses, and superannuation. Debts like mortgages and credit cards are also subtracted to find the "net pool."
Assess Contributions: The court looks at financial contributions (wages, inheritances) and non-financial contributions (homemaking, parenting, DIY renovations).
Future Needs: The court considers the "Section 75(2) factors," such as age, health, earning capacity, and who will have primary care of children.
The "Just and Equitable" Requirement: Finally, the court must ensure the overall result is fair to both parties in the specific circumstances.

Practical Case Example

Consider the case of Stanford v Stanford. This High Court case reminded us that the court must first decide if it is "just and equitable" to make any order at all before dividing property. In this case, an elderly couple was separated because the wife had to move into high-level nursing care. The wife’s daughter (from a previous marriage) sought a property settlement on her behalf. The Court ultimately found that since the husband was still providing for the wife and the marriage had not "broken down" in the traditional sense, it was not just and equitable to force a sale of the matrimonial home.

This case serves as a vital reminder that every family law matter is unique: there is no "one size fits all" formula.

Time Limits: The "Hidden" Trap

One of the most critical aspects of the Family Law Act 1975 is the limitation period:

Married couples: You must commence property proceedings within 12 months of your divorce order becoming final.
De facto couples: You must commence property proceedings within two years of the date of separation.

If you miss these deadlines, you must seek "leave of the court" to apply out of time, which is difficult, expensive, and not guaranteed.

Key Takeaways

Divorce and property settlements are separate legal actions
Non-financial contributions, such as raising children, are given significant weight
De facto partners have similar rights to married couples under the Act
Strict time limits apply for financial claims following separation

Frequently Asked Questions

Does it matter whose name the house is in?

No. Under the Act, the court looks at the total pool of assets regardless of whether they are held in joint names or in the sole name of one partner.

Do I have to go to court to settle my property?

No. Most matters are settled via Consent Orders or a Binding Financial Agreement (BFA) without ever needing a judge to make a decision.

Is superannuation included in the property pool?

Yes. Superannuation is treated as a different type of "property" and can be split between parties to ensure both have adequate retirement funds.

Can I keep my inheritance?

Not necessarily. Inheritances are generally included in the asset pool, though the court may treat the person who received it as having made a significant financial contribution.

What if we separated but still live in the same house?

This is known as "separation under the one roof." You can still apply for divorce or property settlement, but you may need to provide evidence (like affidavits) to prove you were leading separate lives.