SECTION 75(2) - WHAT IS IT?

This is the section in the Family Law Act that sets out what a Court has to take into account in deciding how to distribute property and whether to make an Order for spousal maintenance (called “maintenance” for the rest of this article) at the end of a marriage. There is a similar Section, 90SF, that deals with de-facto relationships.

FUTURE NEEDS

One of the important things that Judges look at in deciding property and maintenance cases are the future needs of the parties – that is, how they are going to cope into the future, having regard to their financial situations, their health, care of children and other factors that the section sets out.

THE RELEVANT SUB-SECTIONS OF SECTION 75(2)

So, lets have a wander through Section 75(2) and see what the Judges look at when deciding property and maintenance cases, noting that the section is also used by lawyers in negotiating settlements for clients.

SECTION 75(2)

(a) This sub-section deals with the age and health of each party. These factors are important as they can affect a person’s ability to work into the future. For example, if a husband is aged, say, 50, and in poor health, his future ability to work may be limited. If his wife is, say, 45, working and in good health, she may have fewer “future needs” and the husband might be given a “loading” by the Court – that is, a larger property settlement to compensate him for not being likely to work for as long as the wife.

(b) This is about the parties’ income, assets and their physical and mental ability to work. If there is a significant “income earning disparity” between the parties – for example, the husband earns $150,000 a year and the wife makes $50,000, that is a factor in the wife’s favour. If the wife, on the other hand, recently received a significant inheritance, that may swing the pendulum back in the husband’s favour. Again, the ability to work into the future is taken into account.

(c) This sub-section refers to whether either party is caring for a child of the marriage who has not turned 18. A parent who has the primary care of children will receive an adjustment to them in a property settlement – because they have to house, feed, clothe and care for themselves as well as one or more children, whereas the other party only has to look after themself.

(d) This is about commitments that are necessary to enable a party to support themselves and any children. That includes the need to pay a mortgage, health costs, educational expenses and the like.

(e) “The responsibility of either party to support any other person” – for example, a de-facto partner or a child of another relationship. That can influence a party’s ability to pay maintenance to their former partner and can have an effect on a property settlement.

(f) “The eligibility of a party for a government or a superannuation pension or entitlement to a superannuation fund”. A pension would increase the party’s income (see (b)). A superannuation fund is treated as “property” by the Courts and is taken into account in an overall financial settlement. Typically, the parties’ super funds are adjusted so that they each end up with the same amount.

(g) “A standard of living in all the circumstances is reasonable”. For example, if the husband earned a high income, the parties lived in a luxurious house, they took expensive overseas holidays and they went out to dinner at upmarket restaurants, at the end of the relationship, the Court would take these factors into account in, say, giving the wife a larger property settlement to compensate her for the loss of that standard of living into the future. However, the Court will not reinstate the previous standard of living.

(h) This sub-section of Section 75(2) is about one party paying maintenance to the other so they could undertake a course of education or training or to set up a business to help them, in the words of the Act, “to obtain an adequate income”.

(ha) This deals with Orders that may affect a creditor’s ability to recover a debt from a party to a marriage. The Courts will not make Orders that would prevent a person who is owed money by a party from recovering that money.

(i) Again, on maintenance, the extent to which a party whose maintenance application is being considered by the Court, has contributed to the income, earning capacity and assets of the other party – if they have, that improves their chances of getting a Maintenance Order.

(k) This is about how long the marriage lasted and its effect on the earning capacity of the parties. For example, if a party gave up a career in order to stay home, raise children and be the main homemaker, they can to some extent be compensated for that in a Maintenance or Property Order.

(l) “The need to protect a party who wishes to continue that party’s role as a parent”. The Courts will look at the ages of any children and how long they will be dependent on the party who is looking after them – its another “future need”, and that party will probably get an adjustment to them in a property settlement. That is especially so if a child has special needs – which would put a greater burden on the parent caring for that child.

(m) If a party to the marriage is living with another person, the financial circumstances relating to that cohabitation. So, if Dad is living with his new partner and that new partner is earning an income, then Dad’s future needs are reduced and Mum may receive a better settlement.

(n) As to maintenance, the terms of any proposed property settlement are taken into account – if Mum is going to get the house and $300,000, her need for maintenance is reduced, or eliminated. It is often the case that a larger property settlement is agreed to, on the basis that there will be no Maintenance Order.

(na) This covers child support. If a parent has been an unreliable payer, or does not pay at all, or if the Child Support Agency has done a “nil” assessment, so that the parent is not required to pay child support, then the Court can take that into account and give the other parent a larger settlement.

(o) This says that the Court can look at anything else it wants to, in a property settlement or a Maintenance Application. This can include “wastage”, where a party “wastes” assets by, for instance, gambling to excess. The Court can take into account the effect of domestic violence, especially on a party’s ability to earn an income, hiding assets from the other party and, as the sub-section says, “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.

(p) The terms of any Binding Financial Agreement. These “BFAs” are often prepared by lawyers to settle property and maintenance issues between the parties. If properly prepared, they are, as the name says, binding on the parties and will prevent a later property or maintenance application being brought to Court.

CONCLUSION

That’s a “birds eye” view of Section 75(2). We hope it helps you to understand how the Courts work out maintenance and property cases. The views expressed in this article are general in nature. Everyone’s story is different. You should make an appointment to see one of our Family Lawyers, St John Heath, Shane Williams, Cassandra Selvaggio, Marlee Viero, Ruby Heath or Charlie Robinson to discuss your individual circumstances.