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Changes to the Family Law Act – codifying property division    

A Consultation Paper and Exposure Draft Bill have been released by the Federal Government covering proposed changes to the Family Law Act including in relation to how property settlement matters are determined – with the intention that existing case law is codified and the Family Law Act is simplified, increasing its usability and accessibility to parties negotiating out of court settlements.

The Exposure Bill sets out a “decision-making framework” which has four principles to determine a property division. They largely mirror the existing process but, rather confusingly, the Exposure Bill provides that they can be adopted in any order – seemingly creating scope for potential dispute between parties.

Otherwise the Exposure Bill attempts (with questionable degrees of success) to codify various aspects of existing case law, including:

  • How and when “the just & equitable principle” is to be applied – albeit that the Exposure Bill states that the Court has flexibility to apply it at the outset, during or at the end of the process, perhaps not providing any clarification for parties;
  • That the effect of family violence perpetrated by one party on the other will be an express factor for the Court to consider (both in assessing contributions but also future needs). Of note, the “effect” of the family violence is without condition – unlike in the existing case law which provides that the family violence must have made the contributions ‘significantly more arduous than they ought to have been’ and that there must be a ‘discernible impact’. It is speculated though that while these changes reflect the prevalence of family violence in matters they will increase the cost and time involved in preparing matters for hearing given the evidentiary issues involved. The Exposure Bill also expressly adds ‘economic abuse’ as a factor to be considered in determining the parties’ contributions – it is currently unclear as to what, if any, overlap there is between ‘family violence’ and ‘economic abuse’; and
  • That the effect of any wastage of property or financial resource by a party will be an express factor for the Court to consider. There is no definition of ‘wastage’ in the Exposure Bill and therefore it can be anticipated that disputes will arise between parties as to what constitutes wastage for this purpose.

It is worth noting that the 2019 Law Reform Commission Report, the source for these proposed reforms, also included a recommendation for curtailing the broad discretion of the Court in relation to property division (such as introducing presumptions of equality) – a position which has not been adopted in the Exposure Bill.

The consultation process will end on 10 November 2023 – with the Federal Government proposing that the final version of the Bill being passed into law in early 2024.

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