Relationship breakdown is well recognised as a contributing cause of poverty in Australia, and a lack of equitable access to financial assets can be ‘a major barrier’ to the recovery of families affected by violence. Family violence is the most common factor contributing to homelessness among women and their children. Indeed, a property settlement can bring ‘huge material relief’ to families in financial hardship and is crucial to preventing entrenched poverty following family violence.
Yet seven in ten women who have left a violent relationship also leave property or assets behind. Men and women who leave the family home face financial difficulties. Property settlements can be exceptionally difficult to achieve following family violence, with as many as 90 per cent of women experiencing difficulty in obtaining a property settlement after family violence. When assets are divided, those who have experienced family violence are more likely to accept unfair property settlements: victims of violence are three times more likely to receive less than 40 per cent of the property.
Although just, equitable, prompt and accessible property settlement is critical to preventing poverty, the process for obtaining a property settlement in the family law system is ‘difficult, long and expensive’. Evidence to the inquiry suggests that the complexity and inaccessibility of the family law system can contribute to families’ decisions not to pursue equitable property division matters. Women’s Legal Services Australia (WLSA) advised that, particularly when asset pools are under $100,000, families often walk away instead of pursuing a drawn out property settlement which might also provoke violence from their former partner. Similarly, Supriya Singh, Marg Liddell and Jasvinder Sidhu commented:
The financial/economic abuse and emotional costs of the legal system are so great that some of our participants chose to give up their property and child support entitlements. They are impoverished twice, first by the partner exercising coercive control over finances, and secondly the court failing to take this reality into account.
This chapter first examines the existing options and challenges for achieving a property settlement following separation after family violence. The chapter will then consider law reform proposals for family violence to be considered in all property settlements where family violence is present. Acknowledging the importance of a quick settlement, particularly where the asset pool is small, the chapter will review proposals for a new small property claims process. The chapter will then examine existing challenges in obtaining a superannuation splitting order and proposals for reform before considering how the Family Law Act 1975 (Cth) (Family Law Act) might better approach joint debts between separating parties. Lastly, the chapter will examine procedural changes to ensure property settlements progress more expeditiously through the family law system.
Existing options and challenges for property settlement
As noted in Chapter 2, property settlement can be reached by informal agreement, written agreement (including a Binding Financial Agreement) or Court Order (either by consent or as determined by a Judge). All three will be discussed in this chapter. Research by the Australian Institute of Family Studies found that only seven per cent of separated parties resolved their property settlement by a judicial determination, with the remainder of settlements being achieved through formal or informal negotiation between the parties.
Significantly however, family violence creates a substantial power imbalance between the parties that disadvantages the victim of violence when negotiating property settlements. Although consent orders are often viewed as an attractive option to settle property matters without the need for litigation, in matters where one party has experienced family violence by the other, consent orders can be used as ‘a tool to further perpetrate and entrench family violence’. This can lead to the party affected by family violence to consent to unfair property settlements. Consent orders for both property division and parenting matters are discussed in depth in Chapter 4.
In addition, evidence to the inquiry suggests that property settlement negotiations are often used as another opportunity for continued control and coercion. The Queensland Domestic Violence Services Network explained:
The perpetrator can draw out property settlement for years, or will hide or dispose of assets in this time. During this time a victim cannot sell, occupy or even rent out a property that is jointly owned. Lack of access to financial assets often for extended periods of time needs to be considered by the family law system when making property division orders, including prioritising the finalisation of property settlements in order to do this.
Similarly, Good Shepherd Australia New Zealand stated that property settlement negotiations can be used as a continuing form of abuse:
Our research identified a variety of ways property settlements were used as a form of abuse. Examples included abusers intentionally delaying settlement in order to ‘negotiate’ inequitable settlement amounts; abusers drawing out property settlement to financially exhaust their partners; and abusers hiding information in order to effect inequitable property settlements for victim/survivors.
The failure of an abusive partner to provide appropriate or complete financial disclosure prevents the matter from reaching a timely resolution. The Women’s Legal Service Victoria comments that during these periods of delay, it is ‘common for an abuser to remain in the home, fail to meet outgoings and continue to increase debt either by non-payment or continued spending’. The Service explains that there is little incentive for the perpetrator to provide financial disclosure in property settlement negotiations:
There is currently little disincentive for an abusive ex-partner who continues to refuse to provide relevant financial information or otherwise delay the process. This failure to provide the information needed to finalise a property settlement is more upsetting for women when they are asked themselves to comply with onerous requests for information from the other party. In some cases, the length of proceedings was exacerbated by an abusive ex-partner failing to attend Court dates, or attending and requesting adjournments.
Evidence to the inquiry advocates for the role of legal representation in addressing abuse of process and coercion into consent orders during property settlement negotiations. However, Victoria Legal Aid acknowledged that this is not widely available:
Currently without a lawyer’s assistance, it is extremely rare to obtain a property settlement in the family law system. Legal aid is very limited for matters involving property, and private representation is prohibitively expensive for most.
When matters do proceed to court, delays in finalising property settlements, either through long Court lists or through legal tactics employed by the perpetrator, can have ‘serious implications’ for families living in financial hardship, and can result in those families getting more deeply into debt while they are waiting for a settlement.
Box 5.1: Property Settlement
The following is a selection of responses to the Committee’s questionnaire:
‘Family violence was never considered as part of divorce or property settlement. If the option was there to at least have it recorded, even if it was not a factor of consideration, I would have done so’.
—Respondent from South Australia
‘Family violence is not taken into account at all in the family court proceedings for property settlement. I have two kids, and apparently need to consider myself ‘lucky’ to get [a] 50/50 split’.
—Respondent from Western Australia
‘I wasn’t satisfied that the domestic violence was considered at all. I struggled severely financially and couldn’t understand why the property settlement was not prioritised when I was telling the Court, I was homeless (living with my parents), because of him [and the] domestic violence. I was very upset that cash was awarded to him, but I got funds put in my super’.
—Respondent from Queensland
‘I have been advised that it [family violence] is unlikely to be taken into account for our property settlement. It is likely to hold more weight if we go to court regarding custody of the children. In my opinion it should be taken into account for both. The reason we are in court is because he is still perpetuating financial abuse over me and my children, this is not the only abuse that continues despite our divorce. Being told that the abuse you suffered will not count in the eyes of the law is devastating’.
—Respondent from South Australia
Women’s Legal Service Victoria advocates that victims who are unable to reach an agreement with an abusive ex-partner ‘should not be precluded from receiving the benefits a property settlement can bring’. For that reason, the Service advocates easy access to court-based property settlements. The remainder of this chapter will consider options for effective and equitable court-based property settlements.
Considering family violence in property division
The Family Law Act sets out the contributions the Court must consider in determining the division of property, including financial, property and family welfare contributions. The Court may also take into account additional factors when deciding property division (commonly referred to as ‘future needs factors’), including the age and health of the parties, their income and assets, and whether they have care for children.
However, the Family Law Act does not currently contain an explicit reference to the relevance of family violence in deciding property settlements. Currently, this rests in common law, as established in Kennon v Kennon (1997). In that case, the Full Court of the Family Court held:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions ... We prefer this approach to the concept of ‘negative contributions’.
Known as the ‘Kennon adjustment’, a Court may consider therefore:
whether family violence impacted on the victim’s contributions to the relationship; and
the extent to which family violence has created future needs as defined under the relevant section of the Family Law Act.
The requirements of a course of violent conduct and significant adverse impact have had ‘a significantly restrictive consequence on recognising the role of family violence in property proceedings’. Former Justice of the Family Court, Professor the Hon. Nahum Mushin AM, commented:
While our understanding of family violence and its significance have increased exponentially since Kennon, the law has not kept pace with those developments ... It discounts the actuality that one incident can, and often does, change a victim for the rest of their life. I submit that those restrictions should be removed and it be open to the Courts to assess its significance on a case by case basis without restriction in accordance with the discretionary requirement.
WLSA also discussed the restrictions of the Kennon adjustment, explaining:
When considering a Kennon adjustment, family violence is only relevant insofar as it can be proved that it has had a financial impact on the parties. Therefore, victims of violence may be able to show that violence has occurred but fail to show how it affected their contributions … While physical violence and its effects may be relatively easy to prove, proving intangible violence such as emotional violence or controlling behaviour, and its financial consequences, is more difficult.
Since the Kennon decision, where the Court has accepted that violence had occurred in the relationship, an adjustment has only been made in 42 per cent of property settlements, with the average adjustment being 7.2 per cent. The Law Council of Australia advised that many Kennon adjustments fail:
… not because clients and lawyers are not cognisant of the relevance of family violence but rather, for reason of lack of admissible evidence and the inability to adduce evidence that establishes there is a causal link between the acts of family violence and the nature and extent of, and circumstances in which, a party has made their contributions.
Recognising the impact of family violence on a relationship, the Australian Law Reform Commission first recommended legislative reform in a 1994 report. The recommended reform would have directed the Family Court to take into account family violence in property, future needs assessments, and spousal maintenance proceedings.
Subsequent to the ALRC 1994 recommendation, the Family Law Council provided written advice to the Commonwealth Attorney-General in 2001 commenting that the Kennon adjustment created uncertainties in the law. The Council recommended legislative amendment to clarify the relevance of violence in resolving property divisions, arguing that the Court should consider:
the impact of the violence on the victim; and
the ‘negative contribution’ made by the perpetrator through being violent.
The ALRC again considered the issue in 2010, recommending that the provisions of the Family Law Act relating to property adjustment be amended to refer expressly to the impact of family violence on past contributions and on future needs with respect to spousal maintenance assessments.
A large number of submissions supported these successive recommendations that:
the Kennon adjustment be codified in the Family Law Act;
the Court consider the ‘negative contribution’ made by the perpetrator through family violence (including the destruction of property); and
family violence be a consideration in the future needs assessment.
However, For Kids Sake cautioned against linking family violence and property settlement, commenting that the Kennon adjustment should not be extended to all cases as it ‘risks returning the system to a fault-based divorce court—a system we abandoned for good reason’. The organisation instead advocated the use of other mechanisms including victims of crimes compensation.
Whilst the Law Council of Australia did not wish to support an amendment to the Family Law Act before viewing the specific proposal, it stated that such an amendment ‘would convey a powerful social and community message’.
A new small property claims process
The procedure to obtain a court-ordered property settlement is the same regardless of the size of the asset pool. That is, the same procedure must be followed for a $12,000 superannuation settlement as for a $1.2 million property settlement. The complex requirements to commence proceedings appear to deter families from using the family law system to resolve small property claims in particular.
According to the Productivity Commission, parties with asset pools under $40,000 (low asset pool range) and between $40,000 and $139,000 (low‑medium range) were less likely to use lawyers to help them to resolve their family law financial dispute than those with more assets, because of the high cost of legal representation. Further, parties in the low and low to medium asset pool range are much less likely to use Family Dispute Resolution (FDR) or court services to resolve their dispute than those with more assets.
Reflecting upon these statistics, the Castan Centre for Human Rights Law commented that ‘it is much less likely that an agreement will be made to divide property’, and particularly in family violence matters, it ‘raises questions about the appropriateness of agreements or outcomes arrived at in these cases’.
To encourage use of the family law system, participants in the inquiry were in broad agreement that a separate process should be developed for small claim property matters, which would both relieve pressure on the Court as well as providing families affected by family violence with much needed financial relief and independence.
WLSA recommended an early resolution of small property disputes under $100,000 through a case management process upon application to the court, rather than a pre-filing requirement. Women’s Legal Service Victoria commented that a case management process, as opposed to a pre‑filing requirement, is preferable in order to encourage property settlements ‘rather than creating another barrier’.
The Magistrates’ Court of Victoria similarly advocated for a small claims environment:
… less complex matters [might] be dealt with by adopting the processes involved in other speedy, low-cost, small claims environments but which are embedded with protocols which properly recognise the dynamics of family violence and the safety risks inherent in any negotiation so as not to aggravate the risks to the family.
Drawing upon the 2015 Stepping Stones Report, Victoria Legal Aid (VLA) proposed a new simplified case management process within the Federal Circuit Court for small claim property divisions, with eligibility determined by the potential share of the total property pool and not the total pool itself. VLA explained:
Parties could … apply using a single, tick-a-box style form which is written in plain English and designed to make it as easy as possible for the parties to provide the judicial officer with the information needed to make a property settlement decision without affidavits or other complex legal documents or legal assistance. Decisions in this list could be delegated to a judicial registrar, could be made in accordance with the current legislative framework and could be appealable in the usual way.
Where families are also litigating parenting matters, VLA was of the view that these could be dealt with concurrently but separately. It noted however that in some cases, it would be appropriate to adjourn the property decision until after the determination of parenting matters, or the Court hear matters concurrently as is existing practice.
This proposal was supported by a number of participants including Legal Aid NSW and National Legal Aid.
Some organisations discussed the use of FDR and legally-assisted mediation in property settlements. The requirement to attend FDR applies only in parenting matters, and is not a requirement to accessing the courts for property division.
Family Relationship Centres are not funded to provide FDR in property division matters, although some Centres do offer mediation services on a fee-for-service basis. According to Family and Relationship Services Australia, centres providing mediation services in property matters have seen an increase in the number of families wanting to access mediation for these types of disputes.
National Legal Aid advised that Legal Aid Queensland (LAQ) has been providing arbitration services in family property law matters since 2001:
LAQ’s arbitration program deals with property applications where the ‘net pool’ falls within the range of the assets test for obtaining a grant of aid. Both parties must be legally represented throughout the process and matters are only arbitrated by legal practitioners who meet the requirements as set out in the Family Law Act 1975. It is a process run ‘on the papers’ which assists to ameliorate power imbalance but which enables full discovery to occur through sworn material identifying assets and liabilities and quantifying value. It is a relatively quick and inexpensive process and which assists parties who cannot resolve their property division through mediation due to a lack of disclosure or agreement about value of assets. It is a consensual process and there is some diminution of numbers due to this often as a result of financial abuse and other forms of family violence.
National Legal Aid agreed that, as a matter of principle, ‘there should be compulsory dispute resolution for property matters’, though noted that the ‘present lack of ability to ensure full and proper disclosure about proprietary matters’ is a ‘significant consideration in developing any requirement’.
Division of superannuation
Superannuation is one of the most significant assets for Australian families, and is recognised by the Family Law Act as a relationship asset. However, many families affected by violence face delays caused by the failure of a former partner to make full financial disclosure about these assets. Parties to family law proceedings are required to make full and frank disclosure of their financial assets. If a party engaged with the court process fails to make full and frank disclosure, the Court can exercise its discretion in a way that is adverse to that person, including by imposing penalties.
Despite this obligation, WLSA identified difficulties in obtaining a superannuation splitting order as part of a family law property settlement. It noted problems discovering the name of the superannuation fund of former spouses as well as the cost and complexity of the process. WLSA advised that the current process for obtaining a superannuation splitting order as part of a property settlement involves the following steps:
the name of the superannuation fund of a former partner is obtained, usually through financial disclosure;
an application is made to the fund requesting information about the balance of the fund account, which may involve some cost to the applying party;
orders are drafted and sent to the super fund to provide ‘procedural fairness’ to the fund; and
if the fund approves the orders to be provided to the Court to make final orders.
Where a party fails to provide details of their superannuation fund in financial disclosure, the other party faces a number of challenges obtaining that information. WLSA commented that there are limited options currently available to find a former partner’s superannuation fund and there is ‘no guarantee of having the complete picture of all superannuation interests held by the former spouse’. WLSA also stated that there are costs associated with searching such information which can include lengthy administrative and court processes.
WLSA recommended a new administrative mechanism to obtain superannuation information as it would improve the operation of the Family Law Act and close a ‘loophole which lets people hide their assets’. It identified that the Australian Taxation Office—which holds the most complete records of superannuation accounts—as an existing single point from which to seek such information.
WLSA further identified legal complexities, procedural complexities and issues with multiple funds as barriers to equitable division of assets. For example, it noted that a party seeking an order to split a superannuation interest must provide procedural fairness to the superannuation fund. That is, the party must provide the fund with the draft orders so that they can indicate any objections or foreshadow any problems they might have within complying with the orders. In practice however, funds ‘rarely object’ to the quantum of the split being sought and ‘have very limited practical interest in the substantive impact of orders’.
Further barriers may arise when a former partner has multiple funds with small balances. The Family Law (Superannuation) Regulations set out that superannuation interests of less than $5,000 cannot be divided. WLSA advised that to obtain a super split these funds need to be rolled into one account, and that a court order may be sought requiring a former partner to do so, however identifying this option is difficult without legal assistance.
Treatment of joint debt and liabilities
Property settlement is not only critical for the division of financial assets but also the division of joint debt and liabilities. As many as 43 per cent of women are seeking to resolve joint debts following separation from a violent partner, of which 25 per cent had a debt that was accrued by an abuse partner against their wishes, without their knowledge, without understanding or under duress. Joint liabilities can also arise directly as a result of physical family violence, with long-term impacts:
I think for a lot of our clients it is more getting out of joint debt that is the priority rather than accessing property … A lot of our clients are in public housing. They may have fines or debts related to property damage caused by the perpetrator. There may have been property damage as a part of family violence or as a part of threats. She is fined for them and then unable to get into another house or is evicted because of that debt.
While secured debts are usually deducted from the total asset pool and the remaining net assets divided between the parties, in the case of joint unsecured debt, typically both parties will remain jointly and severally liable. This means that the creditor can choose which party to pursue for the entirety of the debt.
WLSA commented that this can be ‘an untenable situation’ for families attempting to cut ties with a perpetrator:
Abuse is thus perpetuated through the medium of this lingering debt and the real threat to women’s credit ratings, which impedes on their economic recovery.
The Family Law Act permits the Court to make an order directing a creditor to substitute one party for both parties in relation to the debt owed, or sever the debt and apportion it in different amounts between the parties. However, the Court may only make such orders if it is not foreseeable that the order would result in the debt not being paid in full, and it is just and equitable to do so.
The Stepping Stones Report found that although the family law system is routinely employed to divide the remaining property of the parties,
… it is not routinely used to divide the remaining debt between the parties (where there is a net negative asset pool). A property settlement apportioning debt between the parties is, in many cases, unavailable because of the position taken by banks, refusing to split joint unsecured debts.
The Report recommended that the Court promote the use of remedies such as orders that split or transfer unsecured joint debts, commenting that ‘access to this remedy is likely to provide huge relief to women in financial hardship who are unable to service joint debts’.
Procedural changes to support reform
Greater use of state courts’ powers to determine property settlements
As discussed in Chapter 4, a large number of submissions recommended the greater use of family law jurisdiction by state and territory magistrates courts. With respect to property division, family violence proceedings in state and territory magistrates courts ‘provide an accessible and safe forum for financially disadvantaged victims of family violence to resolve personal property disputes quickly’.
However, in respect of property division, the jurisdiction of state and territory magistrates’ courts is limited by the Family Law Act to determining contested family law property disputes where the total value of property is under $20,000. This amount has been increased only once, from $1,000 to $20,000 in 1988.
In 2016, both the Victorian Royal Commission into Family Violence and the Family Law Council recommended that the jurisdictional limit on state and territory magistrates courts hearing family law property disputes be increased. This was supported by the Castan Centre for Human Rights Law, Gippsland Community Legal Service, National Legal Aid, and Legal Aid NSW.
In December 2016, the Attorney-General’s Department released an exposure draft of the Family Law Amendment (Family Violence and Other Measures) Bill 2017. The Bill would remove the $20,000 limit from the Family Law Act, instead providing for a new limit to be set in regulations. At the time of writing, the bill is yet to be introduced into Parliament.
The Public Consultation Paper advises that the amendment would, ‘allow the monetary limit to be increased to a more appropriate amount, and to be updated in the future as necessary’. It was intended that a new limit would be settled in consultation with the states and territories and other stakeholders.
The Castan Centre for Human Rights Law supported the bill, commenting that that the amount set in the regulations would need to mirror the upper financial jurisdictional limit on civil dispute able to be heard by state and territory magistrates courts. In Victoria, this is currently $100,000.
The Magistrates’ Court of Victoria advised however that family law property matters ‘may well be too complex and highly contentious to hear … unless consideration is given to simplifying the current decision-making environment’. The Court stated it will require further resources to exercise any expanded jurisdiction.
Extension of safeguard procedures to property matters
The Family Law Act provides that in parenting matters, the Court is to conduct proceedings in a way that will safeguard the parties against family violence. These protections are not applicable in financial proceedings.
Legal Aid NSW recommended the extension of sections 69ZN and 69ZX to apply to financial proceedings where allegations (or findings) of family violence have been made. Legal Aid NSW commented:
… victims of family violence who are party to financial proceedings require equal protection from the potentially re-traumatising experience of being cross‑examined by a perpetrator of violence.
Families affected by family violence often need the family law system to re‑gain their share of assets in their ongoing recovery from deeply traumatic events. Families are at increased risk of violence if they cannot achieve financial independence from their perpetrator.
As reflected throughout this report, the Committee is of the strong view that the family law system must be accessible, equitable, responsive and prioritise the safety of families. At present, the family law system is failing to deliver against these principles with respect to property division, thereby impairing the financial recovery of families following violence.
Obtaining a just and equitable property settlement is complex, costly and uncertain, discouraging many families from using the family law system to seek legitimate resolutions. The jurisdictional fragmentation discussed in earlier chapters prevents seamless and integrated resolutions. Without legal assistance, the system is inaccessible to most to resolve property matters.
Evidence received by the Committee indicates that property division following family violence is rarely fair: victims of violence are more likely to receive a smaller share of the property settlement, and seven out of 10 women who have left a violent relationship also leave property or assets behind.
The proportion of parties seeking to resolve disputes outside the family law system demonstrates that the family law system is neither effective nor responsive to the dynamics of family violence, particularly when determining property disputes. Collectively, these factors are crippling the financial independence of families leaving violent relationships, and thereby reducing the safety of these families. The Committee’s recommendations seek to address these current deficiencies.
Family violence in property division
The Committee is of the view that the impact of family violence, as defined in the Family Law Act, should be considered by the Court in property division. Evidence to the inquiry identified difficulties in discerning useful precedential authority with respect to property division.
As noted at the beginning of this chapter, relationship breakdown is well recognised as a contributing cause of poverty in Australia, and a lack of equitable access to financial assets can be a significant barrier to the recovery of families affected by violence. The Committee was particularly concerned by evidence that the majority of women leaving violent relationships leave assets or property behind that would otherwise assist them in the recovery after violence.
Amending the Family Law Act to enable the impact of family violence to be taken into account in the Court’s consideration of both parties’ contributions and their future needs, would not only address the difficulties of discerning useful precedential authority but also the significant evidentiary limitations identified in evidence to the inquiry.
The Committee recommends that the Australian Government introduces to the Parliament amendments to the Family Law Act 1975 (Cth) to enable:
the impact of family violence to be taken into account in the Court’s consideration of both parties’ contributions; and
the impact of family violence to be specifically taken into account in the Court’s consideration of a party’s future needs.
Small claim property matters
A family law system that applies the same processes and evidentiary burdens on litigants regardless of whether a property pool is $10,000 or $10 million, is not an accessible system. An equitable and timely division of a small property pool can provide significant financial relief to a family following separation.
The accessibility of the family law system should never present families with any additional barriers in its design or delivery. To achieve an accessible and equitable family law system, the Committee recommends that the Family Law Act be amended to include a requirement for an early resolution process in small claim property matters, including a case management process upon application to the Court for a property settlement, rather than a pre-filing requirement.
The Committee is of the view that such a process would provide families in crisis with greater certainty and more expeditious resolution.
The Committee recommends that the Australian Government introduces to the Parliament amendments to the Family Law Act 1975 (Cth) to include a requirement for an early resolution process for small claim property matters. This process should involve a case management process upon application to the Court for a property settlement, rather than a pre-filing requirement, which will provide greater certainty and more expeditious resolution.
Division of superannuation
The Committee is concerned about evidence to the inquiry which highlighted significant hurdles that families may face when seeking equitable division of assets. For families recovering from family violence, equitable division of relationship assets is critical to their recovery and stability following relationship breakdown, avoiding homelessness and greater independence.
The Committee agrees with WLSA that change is required to provide parties with the ability to independently access the superannuation details of their former partner when that information is not properly disclosed.
The Committee recommends that the Attorney General:
develops an administrative mechanism to enable swift identification of superannuation assets by parties to family law proceedings, leveraging information held by the Australian Taxation Office; and
amends the Family Law Act 1975 (Cth) and relevant regulations to reduce the procedural and substantive complexity associated with superannuation splitting orders, including by simplifying forms required to be submitted to superannuation funds.
Treatment of unsecured joint debt and shared liability
Although not discussed widely in evidence to the inquiry, the Committee is of the view that the treatment of unsecured joint debt needs to be further considered by the Australian Government.
The Committee is concerned that a family affected by family violence may be in an untenable situation where they cannot be financial independent of a perpetrator. This situation can be exacerbated when the perpetrator either coerced their former partner into an unsecured joint liability, or did so without their former partner’s knowledge.
The treatment of joint debt broadly can also arise in insurance claims where only one party to a joint policy is at fault. For example, the Committee was privately advised of one instance where a violent ex‑partner was convicted of arson following a fire at the family’s home. As one of the policy holders committed arson, the family’s home and contents insurance policy was initially voided by the insurance company.
The Committee notes that the Family Law Act permits the Court to make an order directing a creditor to substitute one party for both parties in relation to the debt owed, or sever the debt and apportion it in different amounts between the parties. However, the Court is currently limited in making such orders and may only do so if it is not foreseeable that the order would result in the debt not being paid in full, and it is just and equitable to do so.
The Committee is particularly concerned that in cases where the Court cannot make such orders, due to the limitations imposed by the Act, that families who are seeking to both emotionally and financially recover from family violence are facing significant additional impediments. The Committee did not receive sufficient evidence that would allow it to make a recommendation for a specific amendment to the Family Law Act. Rather, the Committee recommends that this issue is given further consideration by the Australian Government.
The Committee recommends that the Attorney-General’s Department considers options for legislative amendment to the Family Law Act 1975 (Cth) to enable the federal family courts to make greater use of court orders for the split or transfer of unsecured joint debt and shared liabilities following the separation of families, particularly those affected by family violence.
Procedural changes to support reform
To support these broader reforms, procedural changes are also required. As recommended in Chapter 4, the Committee reiterates the opportunity provided by state and territory magistrates exercising jurisdiction under the Family Law Act to provide prompt and effective resolutions to family law matters. As recognised in this chapter and previously, the state and territory magistrates courts face a monetary limit on the property disputes they can determine.
The Committee notes the release of the exposure draft of the Family Law Amendment (Family Violence and Other Measures) Bill 2017, which includes proposals to remove the $20,000 limit from the Family Law Act, and providing for a new limit to be set in regulations. Along with its previous recommendations with regards to resourcing and training, the Committee is of the view that the passage of this legislative amendment will provide greater certainty and a more expeditious resolution of property disputes.
The Committee recommends that the jurisdictional limit on state and territory magistrates’ courts hearing family law property disputes be increased and that the Attorney-General introduces to the Parliament the Family Law Amendment (Family Violence and Other Measures Bill 2017) to give effect to the increase.
Families who have experienced violence and are parties to property division matters, also require protection from the potentially re-traumatising experience of being cross-examined by a perpetrator of violence, such as those afforded during parenting matters.
The Committee therefore recommends extending the safeguards established in section 69ZN and section 69ZX of the Family Law Act that apply during parenting matters to property division matters that require the Court to conduct proceedings in a way that will safeguard the parties against family violence.
The Committee recommends that the Family Law Act 1975 (Cth) be amended to extend sections 69ZN and 69ZX, which requires the Court to conduct proceedings in a way which safeguards the parties against family violence in parenting matters, to apply in property division matters.