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Communtity Law Manual | Relationships & break-ups | Exceptions to equal sharing of relationship property

Dividing your property when you split up (“Relationship property”)

Exceptions to equal sharing of relationship property

In certain situations, the Family Court can depart from the equal-sharing rules for relationship property – for instance:

  • if equal sharing is very unfair (“repugnant to justice”)
  • if there is economic disparity at the end of a relationship
  • if each party owned a home at the date the relationship began
  • if the value of one spouse’s or partner’s separate property has been increased, sustained or reduced by the other spouse or partner
  • if the relationship is of short duration.

(These exceptions are discussed further below.)

If equal sharing would be very unfair (“repugnant to justice”)

Property (Relationships) Act 1976, s 13

The court can order an uneven division of relationship property where there are extraordinary circumstances that make equal sharing “repugnant to justice”. This means that equal division would be totally unfair to one of the spouses or partners. In this case, each person’s share is decided according to their contributions to the relationship (including non-financial contributions). The test is very stringent, and is only rarely met. The circumstances need to be exceptional to meet this test.

If one partner is economically disadvantaged at the end of the relationship

Property (Relationships) Act 1976, ss 15, 15A

An uneven property division may be ordered when there is economic “disparity” between the spouses or partners at the end of a relationship, but only if the disparity is due to the “division of functions” within the relationship while the parties were living together.

Note: Economic disparity means that the income and living standards of one spouse or partner are likely to be significantly higher than those of the other spouse or partner.

“Division of functions” within the relationship refers to the way in which people organise their lives. For example:

  • one partner stays at home and looks after the children while the other works, or
  • one partner supports the other while they are studying and gaining a qualification.

If one partner has been economically disadvantaged by the “division of functions” within the relationship, the court can decide to make an uneven division of the relationship property by awarding a lump sum to one spouse or partner out of the other spouse’s or partner’s relationship property.

If the spouse or partner who is in the better economic position has also been able to increase the value of their separate property during the relationship (due to the division of functions within the relationship), the court can provide compensation to the other spouse or partner out of either relationship property or separate property.

In deciding about whether to order an uneven division of relationship property in the above situations, the court can consider:

  • the likely earning capacity of each person, and
  • the responsibilities of each person for the ongoing daily care of any minor or dependent children of the relationship, and
  • any other relevant circumstances.

If each partner owned a home when the relationship began

Property (Relationships) Act 1976, s 16

Sometimes, at the time when a relationship begins, both spouses or partners might own a home capable of becoming the family home. But, at the time when the relationship property is to be divided, the home (or the proceeds of the sale of the home) of only one spouse or partner is included in the relationship property. In these cases, the court may adjust the division of relationship property to compensate for this. The court may also make an adjustment if one home was sold before the relationship began because the two parties were then planning to set up house together.

If the value of separate property was affected by the other partner

Property (Relationships) Act 1976, ss 9A, 17, 17A

Where the value of one spouse’s or partner’s separate property is increased by:

  • the direct or indirect actions of the other spouse or partner, or
  • the use of relationship property,

then the increase in the value of the separate property is considered to be relationship property and is divided according to the contributions of each spouse or partner to the increase.

Where the separate property of one spouse or partner has been sustained by:

  • the direct or indirect actions of the other spouse or partner, or
  • the use of relationship property,

the court may increase the share of the other spouse or partner in the relationship property or order that they be paid compensation.

Where the separate property of one spouse or partner has been materially reduced in value by the deliberate action or inaction of the other spouse or partner, the court may reduce the share of the other spouse or partner in the relationship property.

Marriages and civil unions of short duration

Property (Relationships) Act 1976, ss 2E, 14, 14AA

For marriages and civil unions that last less than three years, the general principle is that equal sharing won’t apply to the family home and chattels if:

  • they were owned wholly or substantially by one party at the date of the marriage or civil union, or
  • they were acquired after the date of the marriage by succession, survivorship, trust or gift by a third person, or
  • one party’s contribution to the marriage or civil union (including non-financial contributions) was disproportionately greater than the other.

In these cases, the family home and chattels will be divided according to each spouse or partner’s contribution to the marriage or civil union.

For other relationship property, equal sharing applies unless one spouse or partner has made a clearly greater contribution to the marriage or civil union. In these cases, the relationship property will be divided according to each spouse or partner’s contribution to the marriage or civil union.

De facto relationships of short duration

Property (Relationships) Act 1976, ss 2E, 14A

If a de facto relationship lasts for less than three years, the Property (Relationships) Act will usually not apply. Instead, the general rule is that the parties each take out what they brought into the relationship and retain the property that is in their own name. If one partner wishes to claim a share of the other’s property, this can only be done by applying to the High Court and arguing that there is a “constructive trust” in place.

However, the Property (Relationships) Act may still be used for a de facto relationship of short duration if:

  • there is a child of the relationship, or
  • the applicant has made a substantial contribution to the de facto relationship (including non-financial contributions),

and if

  • the court is satisfied that failure to make the order for the division of relationship property would result in serious injustice.

If this is the case, the relationship property will be divided according to the contribution of each partner to the de facto relationship.

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