Section 79: The Four-Step Process

The Stanford Threshold: Just and Equitable

Before applying the four-step process, the court must first determine whether it is "just and equitable" to make any property order at all. This threshold question — settled by Stanford v Stanford [2012] HCA 52 — means the court cannot simply assume property should be divided.

In Stanford, the majority held: "The power to make an order under s 79 may be exercised only if the court is satisfied that, in all the circumstances, it is just and equitable to make the order." A mere disparity in assets is not enough. The court must consider whether it would be unjust to leave the existing property arrangements undisturbed — looking at factors such as the intermingling of finances during the relationship and contributions made by each party.

Step 1: Identify and Value the Asset Pool

The first step requires identifying all assets, liabilities, superannuation interests, and financial resources of both parties, then determining their current market values.

Assets included in the pool

• Real property (family home, investment properties)
• Bank accounts and savings
• Shares, investments, and managed funds
• Vehicles, boats, and valuable personal property
• Business interests and partnerships
• Superannuation (all types — accumulation, defined benefit)
• Expected inheritances (in some circumstances)
• Entitlements under trusts

Liabilities and other interests

• Mortgages, personal loans, credit cards
• Tax liabilities (including CGT on property transfers)

Step 2: Assess Contributions (Section 79(4))

The court assesses each party's contributions to the relationship and to the asset pool. Section 79(4) requires consideration of three types of contributions.

Financial contributions — s79(4)(a)

Direct financial contributions to the acquisition, conservation, or improvement of property. These include initial assets brought into the relationship, income earned during the relationship, inheritances and gifts received, compensation or damages received, and post-separation contributions.

Non-financial contributions — s79(4)(b)

Non-financial contributions to property acquisition, conservation, or improvement — for example, renovation and maintenance work, managing investment properties, working in a family business without pay, and project management of building works.

Homemaker and parent contributions — s79(4)(c)

Contributions made in the capacity of homemaker or parent to the welfare of the family. This covers primary care of children, managing the household, supporting a spouse's career, and enabling the other party to earn income.

Step 3: Future Needs Adjustment (Section 75(2))

After assessing contributions, the court considers whether an adjustment should be made based on the future needs of each party under Section 75(2).

Section 75(2) factors

• Personal circumstances — age and health of each party, duration of the marriage
• Financial circumstances — income, property, and financial resources; capacity for gainful employment; eligibility for pensions or benefits
• Caring responsibilities — care of children under 18; impact on earning capacity
• Other matters — living standard during the marriage; existing financial agreements; child support payments

Step 4: Just and Equitable Test

The final step requires the court to stand back and consider whether the proposed order is just and equitable in all the circumstances of the case.

At this stage, the court asks whether the percentage division arrived at through Steps 2 and 3 produces a fair and practical outcome. Considerations include:

• Practical implementation — can the order be implemented in practice? Are there enough liquid assets, or will property need to be sold?
• Proportionality — does the outcome bear a reasonable relationship to the parties' contributions and needs?
• Double-counting — has the court inadvertently counted the same factor twice (e.g., both as a contribution and as a future need)?
• Overall fairness — looking at the big picture, is this outcome fair to both parties?

De Facto Couples: Section 90SM

The same four-step process applies to de facto couples, but under a different legislative provision — Section 90SM of the Family Law Act 1975.

Jurisdictional requirements

The Federal Circuit and Family Court has jurisdiction if: the relationship was at least 2 years; or there is a child of the relationship; or one party made substantial contributions and failure to make an order would cause serious injustice; or the relationship was registered under state/territory law.

Section 90SF factors

The equivalent of Section 75(2) for de facto couples is Section 90SF, which sets out similar future needs factors with some minor differences reflecting the nature of de facto relationships.

Time limits

Applications must generally be made within 2 years of the end of the de facto relationship (compared to 12 months after divorce for married couples). Leave to apply out of time may be granted in certain circumstances.

Common questions