At the end of March 1999 the Federal Government released a Discussion Paper (DP), Property and Family Law - Options for Change, outlining proposals for changes to the law. This document is a summary of the Women’s Legal Services Network’s final submission in response to that paper.

The Women’s Legal Services Network (WLSN) is a national network of the following community-based legal services: Women’s Legal Services (Adelaide, Alice Springs, Brisbane, Canberra, Cairns, Darwin, Hobart, Katherine, Melbourne, Perth, Sydney and Townsville); Indigenous Women’s Legal Services (Adelaide, Brisbane, Cairns, Hobart, Melbourne, Perth, Sydney and Townsville); Domestic Violence Legal Services (Alice Springs, Darwin, Melbourne and Sydney); and Rural Women’s Outreach Workers (Dubbo, Lismore, Mildura, South Hedland, Toowoomba and Warrnambool). Some Network members have been operating for over 15 years, others since the 1996 increase in Commonwealth funding for women’s legal services. All share the objective of improving women’s access to justice. These services have vast experience nationwide in advising and assisting women in relation to the law and the legal system.

The WLSN prepared an Issues Paper in response to the DP which was widely circulated and comments were requested. In particular the views of rural women, women from non English speaking backgrounds, indigenous women, women’s services workers and legal practitioners were sought. Our submission was based on input from these groups and WLSN member organisations, as well as relevant literature and research including the WLSN research report "Fair Shares? Barriers to equitable property settlements for women".

There are some questionable assumptions in the DP:

Women and men are increasing equal in the workforce, so property should be divided equally on marriage breakdown. Although women’s participation in the workforce has increased, women are still mainly employed in low paid, part-time or casual jobs. The kind of work that women do is still undervalued, and is not paid on the same level as men’s work. Women’s earning capacity is also limited by the fact they still do most of the housework and childcare.

Parties to a marriage are in an equal bargaining position to negotiate over property. In most cases equal bargaining power does not exist. The marriage relationship reflects the inequalities between men and women in society. The gender power imbalance may be exacerbated by other factors, for example, violence, superior economic resources and unequal access to legal advice.

A typical family law property dispute involves large amounts of property. The DP often refers to typical family property as being the farm or a business. In fact an average property pool might include a mortgaged home, a car, a small amount of savings and some superannuation. Situations where there is only debt or a very small amount of property are also common. The DP assumes that the whole community is middle-class professionals.

The Child Support Scheme means the day-to-day support of children does not need to be considered in property and spouse maintenance proceedings. The fact is that child support does not cover the full cost of caring for a child; many liable parents do not pay what they are supposed to; others (especially some self-employed people) try to avoid paying; and unemployed parents pay minimal amounts.

Changing the law will solve the problem of unfair property division. It is not the law that is the problem. Many people cannot get what they are entitled to because of process and access issues. Examples of process issues are limited powers of discovery under the Family Law Act and the long delays in the Family Court. Examples of access issues include the effective lack of legal aid for property settlements and limited access to low cost legal advice.

Spouse Maintenance is ‘double dipping’. Women are said to be overcompensated in property orders because their future needs are taken into account and they are also able to claim spouse maintenance. No empirical evidence is offered to support this proposition. In fact spouse maintenance is ‘rare, minimal and brief^’’ and can help to redress the economic disadvantage experienced by women arising from the sexual division of labour within the family.

Option One proposes a starting point of 50:50 for dividing the property based on the assumption that each person has contributed equally to the property.

All of the property belonging to either the husband or the wife is included in the property pool for distribution. This is the same as the current law. What is new is that the Government is also proposing to introduce binding financial agreements, including pre-nuptial agreements (see below). Superannuation will be treated as property (see below). At the moment superannuation is not treated as property but as one person’s financial resource.

As a starting point the contributions each person makes to the property are assumed to be equal. Unless one person says 50/50 is not fair, the property will then be divided on this basis. The current law does not assume equal contributions but in practice contributions are usually considered equal.

If the community believes that there is a 50/50 rule, people will have to go to court to try to get a settlement that is not 50/50. Most people negotiate their own property settlement, often without legal advice, and they may settle on a 50/50 basis when it is not fair in their situation. WLSN believes that women will be under pressure to settle for 50% of the property when at the moment, if they have the children in their care, they are likely to receive 60% or more. Even in cases where women with children receive 60% of the property, their standard of living after separation is much lower than men.

The Australian Law Reform Commission (ALRC) Report, Matrimonial Property, found "that equal sharing of property at the end of a marriage is not necessarily fair sharing. A just sharing of property should be based upon practical rather than formal view of the equal status of husbands and wives within marriage.....Thus, a just sharing of property should take into account any disparity arising from the marriage in the standards of living reasonably attainable by the parties after separation". The ALRC recognised that changes to legislation which result in formal equality will not address the social and economic inequities experienced by women as a result of the sexual division of labour within marriage.

If asked by either the husband or the wife, the Family Court would be able to consider whether their contributions were equal or not. The Option allows the Family Court to first consider the actual contributions made by each person to the property and to the welfare of the family. Secondly it would look at the future needs of each person.

Definition of Contributions Financial contributions may include income, property owned before the relationship and lottery wins. Non-financial contributions may include home improvements or the work of homemaker/parent. The financial and non-financial contributions would usually be considered equal. If one person said that contributions were not equal, he or she would have to prove it. The impact of violence on a person’s ability to contribute would be considered. The current law distinguishes between financial and non-financial contributions to property and contributions as homemaker or parent to the welfare of the family. The DP proposes treating contributions as homemaker or parent as a non-financial contribution to the property and not as a contribution to the welfare of the family.

The proposal will disadvantage women if it fails to distinguish between non-financial contributions to the build up of family property, and contributions to the welfare of the family. Unless the law makes clear the importance of contributions to the welfare of the family, they may be undervalued.

The argument that someone has contributed more than 50% is most likely to succeed when it is about financial contributions. This is most likely to be argued by men. It is more difficult to argue about non-financial contributions because they are often undervalued . Women are more likely to argue this. The discussion in the DP about when a person can have their contributions assessed as greater than 50% is about financial rather than non-financial contributions.

There is also a risk that when the Family Court is assessing actual contributions, the new law will encourage a more mathematical approach. This will disadvantage women whose main contribution is non-financial because it is harder to quantify.

Recognising the impact of domestic violence on contributions The WLSN supports the proposal in the DP to make domestic violence a relevant factor in assessing contributions. A history of violence in the marriage is a barrier to fair property settlements for the following reasons:

• a genuine fear for the safety of their children and themselves
• lowered self confidence which results in a desire to reach settlement as soon as possible
• the inappropriateness of mediation services
• violence has an impact upon contributions and upon future needs which is not adequately recognised in the law

Unpublished research of the Australian Institute of Family Studies (AIFS) as part of its Divorce Transitions project shows that women who have been subjected to violence by their husbands suffer severe financial disadvantage both during the relationship and post separation, the disadvantage increasing proportionately to the severity of violence. The research found that 66% of separated women who had suffered severe violence are living below the poverty line. It also found that 49% of women who suffered severe violence receive less than 40% of the total assets after separation. As the severity of violence increases, the proportion of the property pool allocated to women decreases.

Unfortunately the DP does not expand on the definition of violence or when and how violence will be taken into account. It is imperative that the definition of violence reflects the many different forms of domestic violence, including emotional, economic, psychological and physical. There must be a clear statement in the law of how domestic violence should be treated in property settlements. Otherwise an abused woman will find it hard to successfully argue that making her contributions to the marriage was more difficult because of the violence.

Future needs When someone wants more than 50% of the property, there will be scope as at present to consider the future needs of each person. Option One would keep most of the factors listed in the current law about future needs such as the age and health of the husband and wife, responsibilities for children, length of the marriage. The factors to be removed are: the needs of a person who wishes to continue as a full-time parent; whether child support is paid or is likely to be paid; and the impact of the length of the marriage upon one person’s income, earning capacity, property and financial resources. The Family Court would also be able to consider ‘any other fact or circumstance’ to achieve justice between the husband and wife.

The factors to be cut out from the list of future needs would have a negative impact on women. Women are more likely to look after children full-time, more likely to have reduced earning capacity as the result of a long marriage and more likely to need child support. We believe that factors relevant to the needs of women as homemakers and parents should be kept to make sure they are properly considered. They help to ensure that the whole experience of the marriage relationship and the economic and social consequences of its breakdown are considered, including the question of future financial responsibilities.

Recognising the impact of domestic violence on future needs For the reasons discussed above, we believe that unless there is a specific reference in the ‘future needs’ factors to the impact of violence experienced during the marriage - for example on the future earning capacity of a party - then this will continue to be overlooked to women’s detriment.

The DP proposes that spouse maintenance be considered at the same time as property division. If spouse maintenance is only considered at the time of property division and cannot be reconsidered at a later date, this will disadvantage women. The WLSN does not believe the clean break principle should be applied to prevent women seeking financial support. We agree with the Family Court’s comment in the decision of Best, where it ‘recognised that the clean break principle may have been taken to extremes in the past and requires careful reconsideration in the light of changing economic and social circumstances’.

The DP also proposes that the factors to be considered in deciding whether spouse maintenance should be paid should be separated in the legislation from the factors to be considered in deciding the future needs of each person The WLSN agrees with the proposition.

Another proposal of the DP is that spouse maintenance stop automatically when a person enters a stable de facto relationship or remarries. Under current law spouse maintenance stops on remarriage, although if a person is living with a new partner the financial circumstances of that relationship can be taken into account. The WLSN does not support spouse maintenance payments automatically ceasing upon a party commencing a defacto relationship. There is no consistent legal definition of a de facto relationship across states and territories. Generally a relationship would not be accepted as de facto unless it is of at least 2 years duration. Rather than introducing an automatic cut-off, the current legal position should continue to apply whereby the resources of the new relationship are considered.

Option Two would create a very different family property regime from the present one. Option Two is described as a ‘community of property’ system, although what is ‘communally owned’ is strictly limited. On marriage breakdown, each person would get 50% of the communal property. A person would be able to seek more than 50% of the communal property on the basis of future needs or the ‘economic consequences of the marriage and its breakdown’.

Communal property is defined as property obtained during the relationship, and any increase in the value of property which was owned by either person before the relationship. All property owned by one person before the marriage would not form part of the communal property, but any increase in the value of that property would. It is not clear how this increase in value would be calculated. It is also not clear whether property bought during the relationship with money from the sale of property owned before the relationship is included in the ‘community of property’. Some property obtained during the marriage by either person may be excluded from the communal property and kept by the person who received it (eg, personal injury compensation award). Binding financial agreements (see below) may also be used to exclude assets from the property pool. This is different from the current law where everything owned by the husband and wife is in the property pool and then divided according to contributions and needs. The proposal appears to give primacy to financial rather than non-financial contributions which will particularly disadvantage women.

The term ‘community of property’ is misleading because not all of the property of the husband and wife is divided. The WLSN believes that automatically excluding property owned by either person before the marriage from the communal property to be divided on separation will often produce unfair results. The following example illustrates the problem. The only property of the marriage is a farm brought into the relationship by the husband. Both the husband and wife work hard in the farm for 10-15 years. Despite this, the value of the farm increases only slightly in value. If they separate, the husband would keep the farm and the wife would receive little or nothing of the value of the farm. Under the current law, the husband’s contribution bringing the farm into the relationship would be recognised. So would the contribution the wife made through her work. Both would be entitled to a share of its full value.

We believe the complexity of the system under Option Two will encourage more litigation, as has been the experience in New Zealand where a similar system operates. Questions such as what is separate property, what is communal property or what percentage of the value of an asset should be considered communal or separate, will all have to be tested in a range of scenarios. In our view, this proposal will promote neither certainty of outcomes nor just outcomes.

One person may be given more than 50% of the communal property only if their future needs require it. However, this will not fix the inequities arising from the narrow definition of communal property. Once property is excluded from the available pool for distribution, it cannot be taken into account when looking at the future needs of each person.

The DP suggests two ways of working out the future needs of a person.:

This approach is similar to the proposal in Option One (see above) except that that the Family Court would not be able to consider ‘any other fact or circumstance’. This reduces the Family Court’s discretion and is intended to make it easier for people to work out their entitlements. The risk is that this will reduce flexibility and relevant future needs will not be considered. We believe that the Family Court should be able to consider "any other fact or circumstance".

The second approach is based on Canadian law. Its objectives are to promote economic self-sufficiency, relieve economic hardship and take into account economic advantages and disadvantages. The factors considered include future earning capacity, future employment prospects, opportunities lost because of marriage, childcare responsibilities and qualifications and skills of either person. Spouse maintenance and child support would be considered. These factors are broader than the above approach, but are more limited than the list of factors under the current law. The DP makes it clear that if both persons are in paid work but have different earning capacities (which is typically the case), the property would probably still be split 50/50 unless it can be proved that the inequality is a result of the marriage rather than one person’s greater skills. We believe this approach will disadvantage women, especially because the economically weaker person has to show that their lower earning capacity is caused by the marriage. The advantage of this approach is that it tries to address women’s economic disadvantage as a result of marriage. However, the exclusion of assets from the communal property means that it will often be impossible to compensate a woman for the economic consequences of marriage breakdown.

The Government’s proposals under Option Two regarding spouse maintenance are unclear, apart from a suggestion that the spouse maintenance component will be taken into account at the time of the global assessment of the parties financial circumstances.

Both Options One and Two in the DP are being proposed as part of a larger package of reforms to family property law. These include the proposals in relation to binding financial agreements and superannuation.

The Attorney General has announced that the Government will introduce legislation to enable a husband and wife to enter into binding financial agreements before or during marriage or on separation. These agreements will enable a husband and wife to exclude property from the matrimonial property pool that would be divided if they separated.

The WLSN is concerned that the introduction of binding financial agreements will have a negative impact on women for the following reasons:

• women already suffer economic vulnerability after separation and excluding property from the pool of assets to be divided on separation will make this worse
• women are generally in a weaker bargaining position than men which is a result of factors such as economic inequality and domestic violence.

Although the WLSN opposes the introduction of binding financial agreements, if they are introduced there must be adequate safeguards. The Attorney General’s proposal is that an agreement:

• will be binding if each party has received either independent financial or legal advice
• will only be set aside if the narrow contractual principles of unconscionable conduct, undue influence and duress can be proved.

The WLSN believes these safeguards are wholly inadequate and makes the following proposals:

• both parties to receive adequate independent legal advice and the agreement must be accompanied by certificates of independent legal advice for each person
• both parties to receive adequate independent financial advice
• the agreement to be registered in court
• the agreement to be in writing, signed by both parties and witnessed
• the agreement to contain full disclosure of financial assets and resources by both parties

• the Family Court to have the power to set aside or vary the terms of the agreement if:
• there is a failure to fully disclose financial assets and resources
• the financial agreement is unfair
• circumstances have arisen since the agreement was entered into which make the agreement inequitable eg the birth of a child or illness of a spouse or child
• there was violence in the relationship
• the procedural requirements are not complied with.

The ALRC has observed superannuation has been a source of difficulty, inconsistency and injustice for women in family law. The AIFS has found that superannuation is growing in significance as an asset of the marriage, with the superannuation often being of similar value to the family home, and has observed that "an equal split of superannuation fails to recognise that men and women are not equally able to provide for their own retirements, a fact that may justify giving women more than a half share of superannuation assets."

In the Government’s Position Paper, ‘Superannuation and Family Law: A Position Paper,’ it is proposed that superannuation be treated as property, rather than a financial resource as at present. This would make it easier to work out how it should be divided or taken into account on separation. Couples would be encouraged to agree privately about how they wish to divide the superannuation. However, if they cannot agree and go to the Family Court, the Court will only have the power to divide the superannuation 50/50. There are situations where the court can divide the superannuation other than 50/50. These are where:

• the fund is less than $2000 when it will not be divided at all
• there are a number of superannuation funds and it is possible to offset them against each other
• if the superannuation is divided 50/50 it would be necessary to sell a business which would have a serious impact on either person’s income
• if the superannuation is divided 50/50 it would be necessary to sell the family home which would cause serious disruption to care arrangements for children or other dependents of the couple.

Under Option Two superannuation will be treated as set out in the Government’s Superannuation Position Paper. Under Option One the superannuation proposals in the Position Paper will be modified and superannuation will be divided on the same basis as other property, that is, on the basis of past contributions and future needs, with a 50:50 starting point.

The WLSN supports the Government’s proposals to reform the law to enable superannuation to be treated as property. However we have the following serious concerns about the way in which superannuation will be divided under both Option One and Option Two:

• The proposed changes to the treatment of superannuation under either option will mean that the family home will often be sold. Even Option One’s flexibility in the percentage allocation of superannuation will not necessarily prevent the sale of the family home as many women will not be able to raise enough money to buy out their husband’s interest. Under the current law, 46% of women have managed to keep the family home by offsetting their interest in their husband’s superannuation against his interest in the property. This has meant less disruption to children on family breakdown because in most cases the children are living with their mothers after separation. The WLSN believes that the legislation should state that couples can trade off their superannuation entitlement for a greater share of the present assets of which the family home would be one.
• The WLSN believes that the treatment of superannuation under Option Two punishes couples who are unable to reach a private agreement by imposing a 50/50 split unless the Family Court is satisfied that one of the exceptions applies. This proposal ignores issues of power imbalance which preclude fair negotiation. Indeed it may well have the effect of encouraging one person not to negotiate a property settlement because under the default to a 50/50 split that person could be better off.
• The WLSN believes there will be circumstances when just outcomes will not be achieved by variation of the superannuation percentages. In these cases the Family Court should have the power to allow someone immediate access to their share of the superannuation entitlement (or a proportion of their share) at the time of separation. This proposal does not pose a threat to Government policy promoting self funded retirement. In cases where the superannuation is relatively substantial, there are generally other assets of considerable value. Essentially it will only be where the superannuation funds are relatively small, and therefore unlikely to support someone in retirement, that early access will be allowed.

The objective of law reform in this area should be to provide a fair distribution of property on marriage breakdown. We make the following suggestions for improvements to the law, legal procedures and access to legal assistance.

Broader definition of property: At the moment degrees and qualifications acquired during marriage are not classed as matrimonial property, although the question has been sympathetically considered by the Family Court. The WLSN believes that the definition of matrimonial property should be broadened to include educational and professional qualifications acquired during the marriage.

The importance of a family home: We believe where it is in the best interests of the children, there should be a presumption that the parent with primary care of the children retain the family home.

Compensating women for domestic violence: The WLSN believes there should a statutory right of action under the Family Law Act to claim damages for the infliction of domestic violence. A person making such a claim for damages should have to prove a course of violent conduct, rather than specific elements of each incident (Kennon) in recognition of the unique nature of violence in the home. This reform is vital given the recent decision of the High Court, Wakim; Ex parte Mc Nally which declares cross-vesting legislation invalid. This means victims of violence cannot commence civil damages claims in the Family Court.

Expanding the grounds for setting aside consent orders: Women often consent to property orders without a full appreciation of their options and entitlements and without adequate independent legal advice. Women’s legal services frequently see clients who have agreed to inequitable orders which they will be unable to change. At the moment the grounds on which orders can be set aside or varied are narrow. The WLSN believes that the Family Law Act should be amended to include the following grounds for setting aside or varying property orders:

• where one party has failed to provide full and frank disclosure of their financial position
• where either or both the parties did not have independent legal and financial advice as to their entitlements and the consequences of agreeing to the order proposed
• where the imbalance of power between the parties was such as to negate consent.

Dealing fairly with debts: The WLSN believes that the Family Court should have the power to divide debts as part of the property adjustment in a fair and equitable way. It is essential that the Family Court identify debt that is ‘sexually transmitted’ and then assign the debt to the correct person. The Family Court should also have the power to assign the debt for particular property to the person who keeps the property after separation. At present the Family Court only has the power to provide that one party indemnify the other in relation to joint debts. This means credit providers can still seek payment from the indemnified person. The WLSN proposes that the Family Court have the power to make orders binding on creditors.

Disclosure: Without full disclosure of the assets and liabilities of each person, it is not possible to have a fair property settlement. Changes which would assist disclosure are:

• the Family Court be given the power to appoint an auditor in cases where a person refuses to provide information about their financial affairs, the cost to be recoverable from the recalcitrant party’s share of the property pool
• where the value of an asset is unknown, the Family Court should have the power to deem a value to the asset early in the proceedings, before the conciliation conference, which will facilitate settlement.
• the filing of subpoena without leave of the Family Court should be allowed prior to the conciliation conference
• there should be a requirement for exchange of properly prepared and sworn financial statements before mediation can proceed.

Mediation: Mediation has become increasingly common as a way of settling property disputes. For mediation to result in fair property settlements, it is essential that:

• in no circumstances should mediation be compulsory
• written independent legal advice be compulsory before and after a mediation and before the signing of a property agreement
• guidelines be developed to determine when mediation is appropriate, taking into account relevant research of the impact of power imbalances in this area.

Small claims court: There are cost barriers in accessing the Family Court, particularly when there is a small property pool or debt. The WLSN supports the Government’s plans to establish a small claims court that is low-cost and user-friendly. However, we believe it should be located in the Family Court, rather than in the new proposed Federal Magistrates Court. If a new court is established, the family law system will become more complex as there will then be three courts with jurisdiction the family law area. There would be greater cost in setting up a new court than in expanding services offered by the Family Court. The money saved could be used to set up a regular circuit for rural and remote areas.

Access to legal assistance: A major concern of the WLSN is women’s lack of access to legal assistance in property settlements. To rectify this situation we believe that:

• the Commonwealth Guidelines on legal aid should be broadened to enable women to obtain legal aid for property settlements - at the moment this is almost impossible.
• the Commonwealth Guidelines on legal aid should be amended so that the presence of violence during a marriage is a priority factor when determining grants of aid in the area of property settlement.
• there has to be a commitment to the provision of free legal advice and assistance to women through an accessible mechanism such as a community legal centre
• there should be a sustained program of community education to improve understanding of and access to family law
• legal services must be sensitive to the diverse needs of women, for example, women from non-English speaking backgrounds and Aboriginal women.