FAIR SHARES?

barriers to equitable property settlements for women

 Author: Nicola Seaman
Research sponsored by:
Womens Legal Services Network
C/o- GPO Box 1726 Canberra ACT 2601
Tel: 02 6257 4377 Fax: 02 6247 0848

 National Association of Community Legal Centres
Suite 602, 383 Pitt Street, Sydney 2000
Tel: 02 9264 9595 Fax: 02 9264 9594
E-mail: naclc@fcl.fl.asn.au
 

The research described in this report was done in late 1997 and early 1998 and the results published in April 1999.

This report was launched by Senator Helen Coonan at Parliament House Canberra on 12 May 1999

Copies of the report are available from Women’s Legal Centre (ACT & Region) GPO Box 1726, Canberra City, ACT 260; Tel 02 6257 4377; fax 02 6247 0848; e-mail wlcact@ozemail.com.au

The report can be downloaded from this site and the preface, summary and summary of recommendations are on this site.

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Download the report (42 pages)

cover
report

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FAIR SHARES?

contents

preface - recent developments
summary
summary of recommendations
introduction
methodology
barriers to equitable property settlements

Substantive Law
1.  Assessment of Contributions and Needs
2.  Superannuation
3.  Violence

Process Problems
4.  Disclosure
5. Power Imbalance
6. Mediation

Access to Justice Issues
7.  Cost Barriers
8.  Access to Legal Assistance

bibliography
references
appendix - women’s legal services network

preface - recent developments

Since this research was completed, there have been a number of developments which impinge on the matters discussed in this Report. In particular, the Attorney General has made several important announcements about proposed changes to the family law property regime. These include:

• a proposal to allow parties to enter into binding financial agreements before, during and after marriage. An agreement would be binding providing the parties have received legal and financial advice on it. The Government announced on 19 February 1999 that it would implement this reform soon.
• reforms to the treatment of superannuation for separating couples. Proposed amendments to the legislation announced on 30 March 1999 would allow for the division of superannuation interests either by agreement between the parties or by the Family Court. This follows the Government’s position paper on Superannuation and Family Law released in May 1998.
• release of a Discussion Paper on Property and Family Law -- Options for Change on 30 March 1999 which presents two options for reform. Option 1 is called a ‘separate property’ regime. It would provide for a starting point of 'equal sharing' of the property based on an assumption that the parties have contributed equally during the marriage. Option 2 is called a ‘community of property’ regime and would introduce a community of property regime where on marriage breakdown each party would get 50% of the assets acquired during the marriage, and 50% of any net increase in assets brought into the marriage.
• proposals to establish a Federal Magistracy which would deal with less complex family law matters, including property matters up to a specified financial limit.

Whilst the research does not specifically address these proposals, because the survey on which it is based pre-dates them, some of the recommendations in the report have a direct bearing on the Government’s announcements. For example, recommendation 7.1 (page 29) urges the establishment of a small claims jurisdiction to assist in the resolution of disputes over small amounts of matrimonial property. This accords with the Attorney General’s announcement of a Federal Magistracy. In relation to the other Government proposals too we believe that the research findings and recommendations in this Report will make a valuable contribution to debate and development of the proposed reforms.

It should also be noted that the Commonwealth Legal Aid Guidelines were amended in August 1998 and provide more flexibility in relation to caps (page 31), although this is subject to the availability of funds and problems continue in this area.

The Family Law Council published a Discussion Paper on Violence and the Family Law Act: Financial Remedies (August 1998) after this research was concluded. We also note that the Australian Institute of Family Studies research on the Australian Divorce Transitions Project should be completed soon and will be relevant in considering the Government proposals.

Women’s Legal Services Network

Canberra 28 April 1999

summary

The Commonwealth Government has indicated its intention to reform the Family Law Act (Cth) 1975 in order "to tackle some difficult property issues in family law" (National Press Club Address by Federal Attorney General, Daryl Williams, 15.10.96). In order to assist and inform the reform process the Women’s Legal Services Network and the National Association of Community Legal Centres commissioned this research in 1997 to highlight the barriers which women face in achieving equitable property settlements under the present system of family law. The findings in this Final Report on "Barriers faced by women in achieving equitable property settlements" were derived from a survey of community legal centres nationally plus more detailed interviews with services most often dealing with women’s property settlements.

The Report considers eight key barriers to women’s ability to achieve fair property settlements under the present system of family law. These fall into three broad categories as follows:

Substantive Law

• the value and weighting given to the past contributions of the parties and their future needs
• failure to consider superannuation as an asset of the marriage
• failure to fully consider the impact of family violence upon a woman’s contributions to property and her future needs

Process Problems

• difficulties in obtaining full disclosure of matrimonial assets
• the impact of power imbalance in the relationship upon ability to participate in dispute resolution processes, particularly when family violence is involved
• increasing reliance upon mediation as a method of dispute resolution

Access to Justice

• cost barriers where there is a small pool of property or considerable debt
• limited access to free legal assistance (such as legal aid)

The impact of each of these barriers is illustrated by real case studies drawn from various community legal centres across Australia.

This Report demonstrates that any reform of the substantive provisions of the Act would be fruitless without due consideration of how the whole legal system operates to impede women’s access to justice. Thus, the 26 recommendations contained in the Report address not only substantive provisions of the Family Law Act (such as the Act’s failure to treat superannuation as matrimonial property) but also broader issues of systemic reform for our legal system (such as access to legal assistance).

summary of recommendations

Recommendation 1.1

That any reform of the principles for the division of property must be based on the concept that "contributions are equal and needs make a difference."

Recommendation 2.1

That superannuation be redefined as matrimonial property in the Family Law Act.

Recommendation 2.2

That the Court should have the power to order that a superannuation fund be split in accordance with the respective contributions and future needs of the parties.

Recommendation 2.3

That where a party can demonstrate financial hardship the Court should have the power to allow immediate access to their share of the superannuation funds.

Recommendation 2.4

That the Federal Government should actively involve superannuation bodies in the policy development process around reforms which would provide the Family Court with the power:

• to order that a superannuation fund be split between parties in accordance with their respective contributions and future needs
• to allow a party access to their share of superannuation funds where they can demonstrate it is necessary to address immediate living expenses.

Recommendation 3.1

That the impact of family violence be explicitly recognised in the Family Law Act as a factor to be considered in property adjustment proceedings.

Recommendation 3.2

That the Family Court thoroughly assess in every case the full implications of any history of family violence upon the past contributions and future needs of the respective parties.

Recommendation 3.3

That the Government fully consider the Australian Law Reform Commission’s recommendation to create a direct cause of action under the Family Law Act for torts which arise out of family relationships and that the interrelationship between such compensation claims and the criteria for property division under the Family Law Act be clarified.

Recommendation 4.1

That the Family Court should deal more firmly with non-disclosure of matrimonial property and financial resources by providing:

• Enforceable penalties such as forfeiture of non-disclosed assets and/or fines
• Court appointed auditors where disclosure is not complied with
• Costs orders against parties who fail to disclose
• Access to discovery and the use of subpoenas from the first directions hearing
• A pre-application procedure for disclosure before a Registrar

Recommendation 5.1

That the Family Law Act be amended to provide that "financial and non-financial contributions are regarded as being equally significant."

Recommendation 5.2

That tools of discovery be reinstated from first directions hearing to assist both parties to have access to relevant financial information.

Recommendation 5.3

That a system of pre-trial disclosure be introduced

Recommendation 5.4

That a fact finding project be established to determine the extent of systemic gender bias in the processes and procedures of the Family Court.

Recommendation 5.5

That thorough consideration be given to moving family law proceedings from an adversarial model to an inquisitorial model.

Recommendation 6.1

That independent legal advice be made a compulsory pre-requisite to attendance at mediation for family law matters.

Recommendation 6.2

That follow up advice from a solicitor after the mediation session be strongly recommended in all cases and that it be made a compulsory pre-requisite to the filing of any consent orders which result from that mediation process.

Recommendation 6.3

That there be a compulsory tabling and exchange of sworn financial statements prior to mediation proceeding.

Recommendation 6.4

That in no circumstances should mediation be made a compulsory pre-requisite to a grant of assistance from legal aid.

Recommendation 6.5

That sufficient funding be provided to community legal centres and legal aid commissions to provide women with access to independent advice (referred to in recommendations 6.1 & 6.2) when required.

Recommendation 7.1

A small claims jurisdiction should be established to provide an independent forum for determining small property settlements for parties in dispute and for whom mediation or consent will not provide an equitable result. Ideally the features of such a small claims jurisdiction would be:

• small filing fee
• jurisdiction up to $60,000 (able to make orders with respect to chattels and debt)
• self representation

• a less formal and more directed, inquisitorial style of proceedings
• a regular "circuit" for rural and remote areas
• no costs
• enforceable rules of disclosure (with penalties)
• sanctions for non-compliance with orders
• right of appeal to a single Judge of the Family Court.

Recommendation 7.2

That test case funding should be provided to Women’s Legal Services to allow presentation of suitable cases to the Family Court which will enable the development of jurisprudence in relation to the division of debt in various circumstances (e.g where debt has arisen through one party’s gambling or speculation as opposed to where it has arisen through purchase of

household necessities).

Recommendation 7.3

That the Family Court should have the power to assign debt to a particular party.

Recommendation 7.4

That banks should develop fair and responsible policies with respect to the pursuit of debt following marriage breakdown. For instance:

• they should recognise indemnities provided by the Family Court and therefore only pursue the party which the Court has held to be responsible for the debt
• provided that they have been notified that the relationship has ended, they should sever an innocent party from any responsibility for debt which is accrued by the other party in their "joint names" after receiving that notification.

Recommendation 8.1

That a complete review of the Commonwealth legal aid guidelines be undertaken with the view to assessing their impact on women’s access to legal assistance for all family law matters and the extent to which this constitutes systemic discrimination against women.

Recommendation 8.2

That the National Association of Community Legal Centres devise a means of monitoring community legal centres nationally in order to assess the extent to which the true legal needs of women seeking property settlements are being masked by the low rate of applications for legal aid (due to the assumption that the client would not meet the stringent eligibility criteria).

Recommendation 8.3

That community legal centres receive specific funding which will enable them to provide independent and thorough advice to those who seek such assistance:

• prior to participation in primary dispute resolution processes (such as mediation or negotiation) and
• again before the signing of any consent orders which arise from those negotiations.

introduction

Community legal centres have long witnessed that the process for the division of family property after marriage breakdown operates to disadvantage women because of differences in economic power, violence and other factors. Cuts to legal aid and the imposition of caps for grants of aid in family law have exacerbated this situation further. Research continues to show that sole parents - 95% of whom are women - are considerably worse off financially than their spouses after divorce. ¹ It is not surprising then that two and a half times more women seek free legal assistance for property settlements from generalist community legal centres than men. ²

The present Federal Government indicated in 1996 its intention "to reform the way property is allocated between spouses and to tackle some difficult property issues in family law such as superannuation, pre-nuptial agreements, and the preservation of income-producing property including farms and businesses when matrimonial property is divided." ³

The former Labor Government had also intended reform of such issues and in 1994 released an exposure draft of a Bill on property for community consultation. That Bill was the subject of serious criticism from a wide range of commentators including senior family law practitioners, academics, legal aid lawyers, community legal centres and women’s groups. Those with expertise in family law were of the view that the Bill would have seriously disadvantaged women. Furthermore, it made no progress on long standing and well documented problems such as the treatment of superannuation ⁴. The previous Government attempted to meet these criticisms by making minor amendments to the Bill instead of acknowledging that the whole approach to division of property had to be rethought. The Bill was introduced but fortunately lapsed after failing to pass prior to the election in March 1996. However, the present Attorney General, Daryl Williams, has stated that "the earlier Bill could form the basis of new legislation" ⁵.

It is the view of the National Association of Community Legal Centres, and Women’s Legal Services Network in particular, that significant reform is required not only of substantive provisions in the Family Law Act but also of the procedural approaches to the division of property if the economic hardship, arising from the breakdown of marriage, is not to continue to be unfairly borne by women.

Clearly there are limits on the ability of family law to redress women’s economic disadvantage. Therefore any discussion of the impact of the present law on the economic circumstances of men, women and children after divorce must distinguish between general social economic influences on women’s income (e.g that an average salary for women working full time is still only 75% of an average salary for men working full time) and those factors which are confined to marriage and the law relating to its dissolution.

 

methodology

A review of relevant literature ⁶ reveals that there are eight key barriers which affect women’s ability to obtain equitable property settlements under the Family Law Act. These fall into three broad categories as follows:

Substantive law

• the value and weighting given to the past contributions of the parties and their future needs
• failure to consider superannuation as an asset of the marriage
• failure to fully consider the impact of family violence upon a woman’s contributions to property and her future needs.

Process problems

• difficulties in obtaining full disclosure of matrimonial assets
• the impact of power imbalance in the relationship upon an ability to participate in dispute resolution processes, particularly when family violence is involved
• increasing reliance upon mediation as a method of dispute resolution.

Access to justice

• cost barriers where there is a small pool of matrimonial property or considerable debt
• restricted access to free legal assistance (such as legal aid)

These barriers are the focus points for this study. This report describes these barriers as they are experienced by CLC workers when giving women advice about property settlements. It is hoped that the recommendations which arise from this study will be heeded by the Government in the drafting of any reform Bill.

Community legal centres exist in every State and Territory - there are over 150 centres Australia wide. The results described and discussed in this report were derived from:

• responses to a written questionnaire (a copy is available on request) which was sent to 136 generalist community legal centres across Australia in November 1997 and
• 11 in-depth phone interviews (a copy of the questionnaire is available on request) conducted with lawyers who specialise in family law from community legal centres across Australia in November/December 1997 and
• statistics drawn from the national data base of community legal centres known as the National Information System (NIS) for the 1996/97 financial year and the first quarter of the 1997/98 financial year

NIS statistics show that during the 1996/97 financial year, women sought assistance for property settlements from community legal centres on 8,566 occasions. This assistance was provided by 80 different CLCs across Australia.

The following table indicates the amount of assistance provided by the 11 centres who were invited to participate in the phone interviews for this research. It can be seen that these 11 centres alone provided close to half of the total assistance to women for property settlements by CLCs nationally.

 

Name of centre Location Occasions of assistance to

women for property settlement

1996/97

Women’s Legal Service Darwin, N.T	91
Women’s Legal Centre Canberra, ACT	181
Women’s Legal Resource Centre Sydney, NSW	1664
Dubbo Community Legal Service Dubbo, NSW	57
Women’s Legal Resource Group Melbourne, Victoria	369
Brimbank Community Legal CentreDeer Park, Victoria	22
Women’s Legal Service Brisbane, Queensland	1122
Women’s Legal Service Townsville, Queensland	95
Women’s Legal Service Adelaide, South Australia	202
Women’s Legal Service Perth, Western Australia	247
Women’s Legal Service Hobart, Tasmania	121
Total	4171

Nicola Seaman conducted this research. She worked to a steering committee of representatives of both the National Association of Community Legal Centres and the Women’s Legal Services Network

The findings from the community legal centres survey and the interviews with family law practitioners from community legal centres are presented below in relation to each of the barriers identified in the literature review. Not all questions were asked of both groups.

barriers to equitable property settlements

substantive law issues

1.  Assessment of Contributions and Needs

Survey results

Over half of the family law practitioners who were interviewed for this study felt that the present formulation for property division provides a sufficient balance between the consideration of past contributions and future needs on the face of the Act. However, all agreed that this balance is rarely struck in practise: be it in a court room or out.

Under the present law in s.79 of the Family Law Act the Family Court is required to make a just and equitable division of the assets. In order to do this it must first take account of the parties’ financial and non-financial contributions to the marriage. The Act identifies two categories of non-financial contributions:

• a party’s labour on property which increases or preserves its value (e.g home renovations); and,
• a party’s contributions to welfare of the family, including any contribution made in the capacity of homemaker or parent.

Having assessed the contributions, the court must then consider certain matters which are set out in s.75(2) of the Act which are commonly described as the "future needs" factors and include:

•         the age and health of the parties
• their employment prospects
• their financial resources
• their child care and child support responsibilities
• the financial circumstances of any new partner they may be living with.

The Court has the power to give these factors as much weight as it deems appropriate and so to increase or decrease the division which would have been made on the basis of the assessment of the contributions alone. It is under this second stage that a woman, who has a lesser earning capacity than her husband and often the continuing daily care of the children, is compensated and her share of the assets is commonly raised by the Court to 60% or more.

However, it is the experience of community legal centres that this consideration of contributions and needs does not happen systematically in negotiated settlements and that many women with children walk away from mediation or consent based agreements with a straight 50:50 split. While this may be perceived to be equal sharing it is not fair sharing for it does not produce equality in financial results. Hence, the Australian Institute of Family Studies findings that there are large numbers of women with dependent children who have a much lower standard of living than their former husbands and that in most cases even a 60:40 split of the property does not achieve an equal end result for women ⁷. Thus, the comprehensive assessment of future needs is absolutely crucial to achieving equitable property settlements for women.

For this reason, the Australian Law Reform Commission dismissed any consideration of reform which involved a presumption of a fixed, equal entitlement in its 1987 Report on Matrimonial Property and opted instead for reform which would deliver "result equality’:

"All the evidence leads to the conclusion that an equal sharing of property at the end of a marriage is not necessarily fair sharing ... 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." ⁸

Chief Justice Nicholson of the Family Court has observed:

"The current law requiring an assessment to be made of past contributions and the present and future circumstances of the parties is hardly a "scientific" process. It is a framework which favours broad discretion over presumptions and thereby, puts the decision maker in a ‘hot seat’... however ... a rigid formula would risk more people perceiving injustice." ⁹

Like Chief Justice Nicholson, none of the practitioners who were interviewed favoured the move to the less discretionary framework which was contained in the 1994 Bill.

"While some judges might undervalue the contribution of homemaker and/or fail to give sufficient weight to the "future needs" factors to compensate for the disadvantage which a woman generally has to bear into the future this would not be addressed by a move to a 50% starting point presumption. All such a presumption would achieve is to relegate the issue of "future needs" to a subsidiary place and make it even harder to convince men that 50% is not all she deserves." - Brimbank Community Legal Centre - Victoria

The two main concerns of the practitioners about the current practise of dividing property under the Family Law Act are discussed below.

• That the non financial contributions to a marriage, generally made by women, are not accorded equal value to the financial contributions, which are substantially made by men.

"So many women play the multiple roles of homemaker, child rearer and financial

provider but they never receive a double loading for this in terms of the assessment of

contributions." - Women’s Legal Service - Canberra

"The Courts seem happy to consider the case of the "exceptional provider" and give that extra weight but the "exceptional homekeeper" is never accorded special recognition." - Women’s Legal Service - Sydney

This trend is reinforced by the fact that women will even tend to undervalue their non-financial contributions, as was supported by the findings of the Australian Institute of Family Studies that "Women generally acknowledged their husband’s financial contributions while men were more likely to overlook the financial contributions made by their wives. Both men and women regarded financial contributions as more significant than non-financial ones." ¹⁰

One legal academic believes that all of these problems could be addressed by simply relinquishing the assessment of contributions altogether.

"Why are we locked into this notion that we have to assess and quantify people’s contributions to the marriage in order to divide their property ? The approach which is adopted in a great many other countries is to treat marriage as a partnership ... there is no attempt to compare homemaker contributions with financial contributions or to judge how well someone has performed as a marriage partner. It avoids all the complexities which dog our attempts to compare the contributions of parties as if this is either possible or meaningful." ¹¹

He argues that the assessment of contributions is an idea which gained popularity in England around the time that our Family Law Act was being drafted but has since been abandoned. Rather than attempting to reform the approach of comparing contributions, which is enshrined in our Act, he suggests that the law should not attempt to compare contributions.

• That "future needs" factors receive less weighting in determining the division of the matrimonial assets than the assessment of contributions

"Clearly the future needs component is not being taken far enough when in most cases

the property settlement forces women and children to leave the former matrimonial home."

Women’s Legal Service - Canberra

"In negotiated settlements, men discount any loading for "future needs". Their attitude is ‘that’s not relevant’." - Women’s Legal Service - Victoria

The reason that the 1994 Reform Bill caused so much concern to a wide range of commentators, including Women’s Legal Services, was that it had the effect of further reducing the relevance or applicability of the needs factors and this clearly would have had a serious and disproportionate impact upon women. The Bill introduced a presumption of equality of contribution - future needs were only to be considered if that presumption did not produce a just and equitable overall result.

Under the current law, justice and equity require the consideration of future needs regardless of the assessment of contributions. And while in practice there is variation as to the extent to which needs are taken into account routinely and fairly there is, at least, no doubt that the legislation requires that this take place.

What the former Government were apparently attempting to do was to ensure equal recognition of the contributions of both parties to the marriage but the way the Bill was drafted would have resulted in something quite unintended: the presumption of a 50:50 split, otherwise known as "rule equality". The impact of violence on contributions and future needs is considered later in this report.

Recommendation 1.1

That any reform of the principles for the division of property must be based on the concept that "contributions are equal and needs make a difference"

2.  Superannuation

survey results

All family law practitioners who participated in the phone interviews stated that the current treatment of superannuation in family law is an issue which often arises and significantly impedes women’s ability to obtain a fair property settlement.

The Australian Law Reform Commission has noted:

"Superannuation has been a source of difficulty, inconsistency and injustice for women in family law. As it has been held not to be property within the meaning of the Family Law Act 1975, the Family Court cannot direct that it be divided between the parties." ¹²

Women’s opportunities to accrue their own superannuation entitlements are frequently diminished by role distribution within the marriage which results in their interrupted or reduced capacity to participate in the workforce.

In addition there is still the significant disparity between the earning power of men and women which is thereby translated into superannuation entitlements. Thus, studies conducted by the Australian Institute of Family Studies have revealed that men are far more likely than women to hold policies and their policies are invariably of far greater value ¹³. Notwithstanding the fact that the husband’s potential superannuation payout is one of the most valuable assets accrued in many marriages it is often not factored into the property division at all or when it is, it is not precisely valued but simply used as a balancing factor when other assets are being traded off.

Non disclosure can also be a significant issue in relation to superannuation - often women have no information about their husband’s entitlements. If they do not know how long he has been in the fund and how much is invested, their negotiations are significantly hampered.

Despite the fact that contributions to superannuation result in a lower level of disposable income being available to the family during the period of cohabitation - and are really a form of deferred earnings to which the wife has contributed either directly or indirectly - there is a belief system in the community that it is only right and fair that the husband’s entitlement to superannuation should be preserved.

"In negotiations, the bottom line of many men is "I don’t want my super touched" and a large proportion of women will agree and say "it’s his super, he worked for it , I’m not entitled to it." - Women’s Legal Service - Cairns

Unfortunately, this perception is in no way alleviated by the current provisions of the Family Law Act. Until a superannuation fund has vested it is deemed not to be "property" but a "financial resource" which cannot be divided between the parties until the entitlement has vested.

If there are sufficient other assets in the marriage the Court can offset the value of the superannuation against these to provide a final settlement of the property between the spouses. However, the Family Court has had great difficulty in establishing a way of determining and apportioning the notional value of this financial resource. Indeed up to five different methods of treating superannuation have been identified and there is still no certainty as to the correct approach. ¹⁴ With such lack of certainty, the non-earning spouse does not have a clear basis on which to conduct her negotiations and as a result may receive less than her pro rata share of the property. ¹⁵

"The lack of clarity over how to take superannuation into account means that negotiations with the other party are protracted ... you have to beg for it to be taken into account rather than being able to say ‘this is my right, and this is how it will be done." - Brimbank Community Legal Centre

"Whatever argument you put forth with regard to super entitlements you are in murky waters - no one can really argue their case with true confidence. The problem is that the other party always has the legitimate option to resist negotiations and go and fight it out in Court because in law super is not matrimonial property." - Women’s Legal Service - Perth

However, the reality in many cases is that superannuation is the only asset of the marriage and women actually end up with no property settlement. Without recourse to legal aid, or the assistance of a private solicitor (as lawyers will not "speculate" their fees on a claim for future superannuation entitlements) they really have no means of obtaining redress.

case study 1 A woman’s marriage of over 20 years had just broken down and she was looking after the two teenage children of the marriage. She had endured a long history of mental and verbal abuse from her husband which had resulted in her loss of employment due to a nervous breakdown some years earlier. She had attempted to obtain employment since the separation but had no success and so was subsisting on the sole parent’s pension. Her husband was employed in a well paying managerial position and the only asset of the marriage was his superannuation policy. Legal aid was not available for the property settlement and she was unable to afford a private solicitor. We advised her that if she were able to initiate proceedings she would have a good chance of obtaining an order apportioning some of his superannuation. However, the order would not come into effect until he chose to retire. She decided not to pursue proceedings in court herself as she thought her husband might retaliate by refusing to make child support payments. He had threatened in the past that he would quit his job if she tried to pursue payment of child support through the Agency.

Even if the wife can find some means of initiating court proceedings, orders may be made but the money will still not be payable until the husband receives his superannuation upon retirement. This means, in some cases, that women have to wait twenty to thirty years for their property settlement to be concluded - which is by no means consistent with the "clean break" principle which is supposed to underpin all property settlements in family law.

In such cases enforcement is more likely to be an issue, due to the significant gap between the date the Order is made and the date the superannuation becomes payable. The superannuation funds are not bound by Family Court orders and so it is up to the husband to "do the right thing" at the time he finally receives the money.

case study 2 The client, now aged 62 years, separated from her first husband in 1990. As there were no substantial matrimonial assets, the Court ordered that the client receive 75% of her husband’s superannuation entitlement upon his retirement in June 1997. A copy of that Family Court order was lodged with the husband’s superannuation fund, National Mutual. In the intervening years the client had no contact with her ex-husband and so in July 1997 contacted National Mutual to enquire about payment of her entitlement. She was then informed that the husband had received his benefits in full six years ago after falling ill and being unable to return to work. The client applied for legal aid to enforce the Court order but was ineligible under the guidelines even though her only income was the aged pension. In order to obtain her share of the money she was forced to instruct a private solicitor who conducted negotiations with the husband’s solicitor on her behalf. The result of these negotiations was that she was paid an amount which represented 75% of the payment he received from the fund six years prior. However, no adjustment was made for the loss of interest on that money over the last six years or for the legal costs which she incurred in having to instruct the private solicitor to pursue her entitlement. The interest and costs claim was somewhere in the vicinity of $2000 but the husband said that he had no other money and that it would be pointless for her to pursue these in the Family Court. She therefore had no choice but to accept that not only had she received far less than the Court originally intended but that she had to wear the legal costs of securing this lesser entitlement.

Since the mid 1980s there have been a plethora of government reports which have argued for reform of family law with respect to superannuation ¹⁶.

While early reports of the Law Reform Commission concluded that the splitting of an interest in a super fund was not warranted ¹⁷, it would seem that since 1992 it has been the collective agreement of various government bodies that the Family Court should be given power to split interests in superannuation funds. The Joint Select Commitee recommended that this be a discretionary power based on the length of the marriage or cohabitation and the time over which contributions were made to the fund ¹⁸, whilst the Law Reform Commission recommended that interests in superannuation funds be equally shared between parties to the marriage on the presumption that both parties have contributed directly or indirectly to that interest ¹⁹. Echoing these recommendations, the Attorney General’s Department issued a discussion paper in 1992 which said:

"Superannuation is seen as a direct form of savings for retirement. The more people who use superannuation for adequate retirement income the less will be the drain on the public purse in the form of social welfare and aged pension payments. For these reasons it is considered that a new approach to the treatment of superannuation ought to be developed. The basic objective should be to provide each spouse after separation with a prospective right to retirement income which reflects the benefits the married couple had anticipated sharing in their retirement. Changes in family law need to be developed ... to provide a clear and precise method for the Courts to apply in the treatment of prospective superannuation entitlements following divorce." ²⁰

Notwithstanding this consensus, the former Labor Government concluded that the splitting of funds was not practical and despite considerable criticism from a wide cross section of the community made absolutely no provisions for reform of superannuation in its 1994 Bill.

It is to be hoped then that the current Attorney-General, Daryl Williams will stand by his own words ²¹ and the collective wisdom of those Reports which preceded his Government and ensure that a thorough revision of the law with respect to the division of superannuation entitlements under the Family Law Act is proceeded with as a matter of priority.

Recommendation 2.1

That superannuation be redefined as matrimonial property in the Family Law Act

Recommendation 2.2

That the Court should have the power to order that a superannuation fund be split in accordance with the respective contributions and future needs of the parties.

Recommendation 2.3

Where a party can demonstrate financial hardship the Court should have the power to allow immediate access to their share of the superannuation funds

Recommendation 2.4

That the Federal Government actively involve superannuation bodies in the policy development process around reforms which would provide the Family Court with the power:

• to order that a superannuation fund be split between parties in accordance with their respective contributions and future needs
• to allow a party access to their share of superannuation funds where they can demonstrate it is necessary to address immediate living expenses

3.  Violence

survey results

80 % of centres surveyed said that a history of physical violence in the marriage relationship is an issue which significantly impedes women’s ability to obtain a fair property settlement.

71% of centres said that violence was an issue which often arises when advising women with respect to property settlements.

All family law practitioners surveyed said that a history of physical violence in the marriage relationship is a barrier to a fair property settlement.

The Australian Law Reform Commission has said:

"Violence directly impedes women in enforcing their legal rights through its destructive impact on their personal confidence and because they may fear retaliation ... the need to escape from extreme forms of domestic violence often [leads] a woman to decide not to pursue her right to a share of the matrimonial property." ²²

The survey of family law practitioners revealed five ways in which a history of violence often affects the survivor’s ability to obtain a fair property settlement:

• genuine fear for the safety of children and themselves overrides any "need" to pursue their claim for property
• lowered self confidence results in a desire to reach a settlement as soon as possible (even walk away) rather than go through the stress of ongoing legal battles
• there are fewer options for formal assistance (e.g mediation is not appropriate) to reach a settlement
• violence may have affected her past contributions
• violence may have affected her future needs

case study 3 A woman from a non-English speaking background emigrated to Australia on a fiance’s visa to marry an Australian man that she had met, and begun a relationship with, overseas. She had three children from a previous relationship and it was not an easy decision to sell all her belongings and move half way across the world to a country where she could not even speak the language. However, the woman believed that her husband could offer her and the children a secure and happy future. After the wedding in Australia the husband became increasingly controlling of the woman. He bought a mobile phone and would constantly ring and check on what she was doing. Nothing she could do was right in the eyes of the husband and she became increasingly scared that he might physically assault her and the children. He threatened that if she ever left him he would get her deported. They eventually fled to a refuge. However, she did not pursue a domestic violence order or applications for property settlement and spousal maintenance due to genuine fear of her husband’s reaction.

"It is far more difficult to conclude a property settlement satisfactorily where there has been a history of family violence. Negotiations face to face are not desirable, mediation is not an option and even if the client has the finances to pursue the matter in court she often doesn’t have the emotional strength to do so." - Women’s Legal Service - Canberra

Violence, Contributions and Future Needs

The Australian Law Reform Commission has observed that

"Violence against a woman by her spouse is directly relevant to her ability to contribute to the marriage and to her future needs" ²³

While the Family Court has recognised negative contributions (such as violence) to a marriage where they are financial in nature, until very recently it has completely resisted recognising negative non-financial contributions on the basis that this introduces a notion of fault. The "no fault" philosophy which governed the reform of divorce law in Australia in 1975 has tainted the Family Court’s broader decision-making under the Act.

Violence should be regarded as a form of conduct quite distinct from fault given that it maybe directly relevant to existing statutory factors in property cases, such as the health of the parties and their capacity to obtain work. The problem is not that the relevant provisions of the Act have precluded the court’s consideration of violence but that until the decision of Doherty (1996) FLC 92-652 "the courts ha[d] retreated behind no fault discourse to strike out any allegations of violence". ²⁴

In Doherty the trial judge found that the wife’s contribution as homemaker and parent had increased as a result of the husband’s drinking habits, violence and aggression. However the overall weighting based on contribution was increased "only slightly". This was clearly intended as a warning to practitioners not to undertake such arguments lightly, for the toll which it could take on the parties in both financial and emotional terms may easily be disproportionate to its impact on the end result.

More recently, in Kennon (1997) FLC 92-757 the Family Court has further elucidated, though arguably restricted, the extent to which arguments about violence may be relevant:

"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."

While Kennon has firmly established the principle that violence may be relevant in circumstances where it has no direct financial consequence it was found on the facts of the case that the domestic violence had not had a significant impact upon the wife’s contributions during the marriage.

This recent movement in the jurisprudence of the Family Court with respect to violence is welcome but it is, as the judges in Kennon noted, limited to "a narrow band of cases". For not only does it strictly define the circumstances in which domestic violence might be said to have had an impact upon the contributions of the woman, it fails to consider the greatest impact of violence upon the property adjustment needs of women - which is undoubtedly their future needs.

"Unfortunately, such movement in the case law of the Family Court has minimal impact upon settlements that are negotiated outside the formal court process.

95% or so of disputes do not proceed to a final trial. Thus, when law is created by Parliament ... it is not just guidance for Judges but sets the framework within which most people bargain, negotiate and settle their disputes." ²⁵

Chief Justice Nicholson - Family Court.

"Violence does not get taken into consideration in settlements that are negotiated outside the court - this won’t happen until it appears on the face of the Act." - Women’s Legal Service - Perth

And while the substantial limitations of the current case law can be countered to some extent by cross vesting damages claims for assault in the Family Court, unfortunately the Court’s willingness to entertain such claims is not predictable. Indeed, in Western Australia the Family Court is a State Court (not Federal) and therefore has no jurisdiction to hear cross vested claims for damages.

In South Australia, the Women’s Legal Service has noted reluctance by the Family Court to entertain cross vested claims for assault and has found that the small increase which might be achieved in the property settlement is often countered by the cost of making the claim. While another Women’s legal service reported the details of a case where the judge found that violence had occurred in the relationship and then ordered that a sum of $100 be paid as damages !

It would seem clear then that the capacity to hear cross vested damages claims in the Family Court is not a solution in itself - indeed it is of little assistance to the bulk of litigants who are forced to reach their own settlement out of court - although clearly the relationship between compensation claims arising from family violence under torts law and the criteria for property division under the Family Law Act needs to be clarified. The Australian Law Reform Commission has suggested that a way around some of these problems would be to create a cause of action directly under the Family Law Act for torts which arise out of family relationships.

Recommendation 3.1

That the impact of family violence be explicitly recognised in the Family Law Act as a factor to be considered in property adjustment proceedings.

Recommendation 3.2

That the Family Court thoroughly assess in every case the full implications of any history of family violence upon the past contributions and future needs of the respective parties.

Recommendation 3.3

That the Government fully consider the Australian Law Reform Commission’s recommendation to create a direct cause of action under the Family Law Act for torts which arise out of family relationships and that the interrelationship between such compensation claims and the criteria for property division under the Family Law Act be clarified.

Process Issues

4.   Disclosure

survey results

69 % of centres surveyed said that difficulty in obtaining full disclosure of the assets and liabilities of the husband was an issue which significantly impedes women’s ability to obtain a fair property settlement, as did all the family law practitioners interviewed.

52 % of centres said that it was an issue which often arises when advising women with respect to property settlements.

The traditional division of roles in many marriages results in:

• men being responsible for the family’s money management
• matrimonial assets often being in the sole name of the husband
• men generally having access to more substantial superannuation benefits than women.

This makes disclosure of the full extent of matrimonial assets particularly important for women - even in cases where wives are partners in a family trust or company it is often for taxation purposes only and is not an indication of a "hands on" role in the management of the family finances.

"When a woman doesn’t know the extent of the matrimonial assets, it is impossible to advise her confidently as to her entitlements." - Women’s Legal Service - Perth

Almost all the family law practitioners who were interviewed reported that non-disclosure has become a much greater issue since the so-called "simplification of procedures" in the Family Court resulted in the deferral of discovery until after the conciliation conference. Prior to this, discovery was available immediately after the completion of the first directions hearing.

"Settlements used to happen a lot earlier than they do now because people felt that they had access to all the information they needed to negotiate an informed settlement.

While there was cost in the formal pleadings/discovery process, ultimately it saved money because agreement could be reached at a much earlier stage in the proceedings." - Women’s Legal Service - Perth

"Most women can’t comprehend why the Family Court doesn’t enforce disclosure from the outset of proceedings - they are frustrated by the fact that they know their husband is hiding money but there is no way to prove it. The emotional impact of their lack of confidence in the foundations of the agreement which they’ve reached can have a bigger impact on them than the financial loss itself." - Women’s Legal Resource Group - Melbourne

Yet even with a return to the discovery rules of the "pre-simplification" era, the majority of women would still be negotiating blindfolded because they cannot even afford legal assistance to initiate proceedings. Thus, some practitioners argue that there is a need for a formal, yet simple, process of pre-trial disclosure which would permit parties to have access to information which they require in order to negotiate a fair agreement. Applications could be made on a standard form and determined by a Registrar.

However this would only work if the weight of the Court was behind it and we were seeing clear judicial statements about the unacceptability of non disclosure with costs orders and penalties to back these up. Until a clear message is sent to the community that non-disclosure is not acceptable and penalties will follow, compliance with minor procedural applications before Registrars is unlikely.

"There is a lot of assistance in the community for men who are wanting to avoid their financial obligations. I have known of wage earners who have been given assistance to move their salaries into "share options" which have no realisable value to reduce their child support obligations. In another case the accounts clerk of the company wrote a letter to the effect that "due to an oversight Mr X was overpaid last year". The ultimate was an Accounts Department who agreed to take the husband off the books for a year so that it would appear he was unemployed while his property settlement was being negotiated." - Women’s Legal Resource Centre - Sydney

case study 4 A woman had worked in her husband’s office and was aware of the worth of the business and that certain transactions had been made. After separation she was denied access to the office and the records. By the time of the property settlement he had dissipated all of the business assets and declared himself bankrupt. This was achieved by selling the business to his brother for $25,000; by giving a further gift to his brother of $200,000; and, by purchasing $900,000 of Macquarie Bank shares (now in the family trust). The wife believed these transactions were the tip of the iceberg. The wife had several young children and no income and as a result of him declaring himself bankrupt was left with joint business and tax debts. To formally trace the funds and find the appropriate evidence to present to the Family Court would have been very time consuming and expensive. She did not have the funds to pay a solicitor to assist her.

This account is not isolated - every one of the practitioners who were interviewed had their own personal experience with the injustices of non-disclosure. These accounts came from across the board - whether it was about the farmer from western NSW, the truckie from Deer Park, the Chinese herbalist from Cabramatta or the Aussie contract workers who are based in Cairns and do project work in PNG: the wives of every one of these men had to settle knowing that there was a lot more stashed away than they could ever prove.

Recommendation 4.1

That the Family Court should deal more firmly with non-disclosure of matrimonial property and financial resources by providing:

• Enforceable penalties such as forfeiture of non-disclosed assets and/or fines
• Court appointed auditors where disclosure is not complied with
• Costs orders against parties who fail to disclose
• Access to discovery and the use of subpoenas from the first directions hearing
• A pre-application procedure for disclosure before a Registrar

5.  Power imbalance

survey results

80% of the centres surveyed said that a power imbalance in the marital relationship was an issue which significantly impedes women’s ability to obtain a fair property settlement.

80% of centres said that it was an issue which often arises when advising women with respect to property settlements.

In the interviews with practitioners all acknowledged this power imbalance, which is usually evidenced by threats or violence, limited knowledge about the marital finances and a reluctance to pursue a property settlement due to fear that the other party will react badly.

Several practitioners mentioned that female clients who have been the primary homemakers and caregivers to children and have not been earning often believe they have limited entitlements to property. These practitioners feel that this situation is exacerbated by the fact that there is not explicit recognition of the weight attached to non-financial contributions on the face of the Family Law Act.

"Women often have the idea that they are not entitled to a share of the property or that they only have a basic entitlement. Many of these women will say ‘but my husband said ... ‘ and it can be very difficult to persuade them that their husband’s advice is wrong." - Community Legal Service for Western NSW - Dubbo

Financial strength and weakness reflect and are determined by role distribution in the marriage which most often falls along gendered lines. This financial strength often results not only in control of the finances, but also control of the information about the finances.

It is not within the power of the Family Law Act or the Court to stop such power dynamics from arising - they are a product of general social /economic influences which go far beyond the boundaries of family law. However, it is essential that neither the Act or the Court allow processes and procedures which are within their control to effectively play into the hands of the party who is in the more powerful position. Community legal centres therefore welcome the proposal by Chief Justice Nicholson that the Family Court establish a fact finding project to determine the extent of systemic gender bias in family law. ²⁶

The family law practitioners who were interviewed identified three procedural aspects of family law which are often manipulated by the "stronger" party to strengthen their bargaining power:

• the staging of proceedings and the opportunities which this provides for unnecessary delay.

"The complex staging of proceedings is quite unwarranted where the parties are only arguing about the equity in the car or the home. It simply provides the party who is in the stronger financial position with too many opportunities to deliberately string matters out." - Top End Women’s Legal Service - Darwin

• conciliation conferences

"The whole point of conciliation conferences is to bulldoze the parties into a settlement. When the husband is powerful and articulate he will do better in front of the Registrar. Even if he is unrepresented he will often have a natural advantage - he is used to dealing with business like situations, she is used to dealing with the kids. The fact is you can’t relate to Registrars as you would to children." - Community Legal Centre for Western NSW - Dubbo

• the limited powers of discovery and subpoena under the Act

"Putting aside issues of physical or emotional violence, men are invariably in the stronger bargaining position financially: they have the super, the job or business and the access to the information about the marital finances. Whoever holds this information in family law holds the power." - Brimbank Community Legal Centre - Victoria

Despite the introduction of modifications such as information sessions, counselling, mediation, the ordering of family reports and the appointment of child representatives the Family Court still operates substantially on the basis of an adversarial system which is based on the assumption that "the fairest and most effective method of determining the truth of a matter and the most appropriate decision is to allow the parties to put their respective cases in their own way. This assumption depends upon the parties being able to identify their own interests and fight their own battles. In many cases the extent to which a party can do that will depend upon their own qualities and resources and those of their legal representatives and experts." ²⁷ Given that the adversarial system is also assumed to have a neutral judge and this necessarily limits the extent to which a judge can intervene to assist an unrepresented litigant.

Putting aside any questions of systemic bias, there can be little argument that women are generally in a weaker financial position than their husband post-separation. This in and of itself leads to a power imbalance in family law proceedings which are adversarial and premised on having two equally matched sides able to present fully their respective cases with skill. This is rarely the case.

Thus many of the family law practitioners who were interviewed felt that a move to a more inquisitorial system might dilute much of the power imbalance inherent in our current system of family law. Issues such as these have given rise to the Australian Law Reform Commission Inquiry into the adversarial system of litigation and in particular to the issues paper titled "Rethinking family law proceedings".

Recommendation 5.1

That the Family Law Act be amended to provide that "financial and non-financial contributions are regarded as being equally significant".

Recommendation 5.2

That tools of discovery be reinstated from first directions hearing to assist both parties to have access to relevant financial information

Recommendation 5.3

That a system of pre-trial disclosure be introduced

Recommendation 5.4

That a fact finding project be established to determine the extent of systemic gender bias in the processes and procedures of the Family Court.

Recommendation 5.5

That thorough consideration be given to moving family law proceedings from an adversarial model to an inquisitorial model.

6.  Mediation

survey results

85% of the centres surveyed refer women to mediation for property settlements

48 % of those centres which refer women to mediation and all the practitioners interviewed said that they had seen evidence that mediation resulted in less equitable property settlements for women

These community legal centres were able to identify a range of factors and outcomes which indicated less equitable property settlements result from the mediation process:

• a history of domestic violence or power imbalance in the relationship
• non-English speaking background
• lack of independent legal advice prior to the mediation
• parties and mediators operated under the assumption that a 50:50 split is fair
• lack of full financial disclosure
• custody/residence of the children had been traded for property
• women feared pursuing the matter in Court
• women settled at any cost to end the ongoing conflict
• failure to get advice about the agreement reached at the mediation prior to the
• signing of consent orders

"I have been annoyed, frustrated and angered by the approach of some PDR services. Often women, and it is usually women, turn up to mediation and simply agree to a settlement because they feel pressured. The legal ramifications of the mediation are not thought through beforehand and the mediators do not think it is appropriate or necessary to advise the women accordingly." - Parks Legal Service - South Australia

Mediators cannot provide independent advice to the participants and the following extract from the report on the Evaluation of the Family Court Mediation Service in Melbourne (1994) addresses this issue:

"Division of property and financial resources ... requires the mediator to exercise caution in providing legal information in order to avoid the appearance of giving specific legal advice to one party which could be seen as siding with that party or creating a conflict of interest if such advice is given to both parties. Either situation would seriously compromise the mediator’s neutrality." ²⁸

However, there is an equally important issue: do mediators have sufficient knowledge of family property law to even make a realistic assessment about whether a settlement is "fair" ?

In a study carried out by LaTrobe University at four federally funded mediation services in Sydney in 1996, mediators were asked to make judgments about the perceived fairness of agreements reached. In 20% of cases they were unable to assess whether the agreement was fair or not. ²⁹

"It is of great concern that evaluations of mediation services have not to date contained any assessment of the objective fairness of the agreements reached. The only way the true appropriateness of mediation in property settlements could be assessed would be to compare the actual outcomes of agreements reached through mediation with judicial decisions in similar cases and then apply some objective criteria. For instance, it would be useful to compare the extent to which the party who had the ongoing day to day responsibility for the children was able to remain in the former matrimonial home or the ways in which superannuation was handled." - Brisbane Women’s Legal Service

"It is far more common for women to make concessions in the process of property settlements - and in mediation those concessions are less likely to be checked ." - Brimbank Community Legal Centre - Victoria

case study 5 The client, attended our legal centre for advice about child support. She brought along the minutes of consent orders which had been prepared by her husband’s solicitor to reflect the terms of the agreement they had reached at mediation. Those terms allowed him to keep all of the superannuation without any compensatory adjustment in her favour and child support payments were to be made at approximately a quarter of the rate indicated by the Child Support formula. Her husband had obtained advice prior to the mediation but she had not. She was surprised we advised her not to sign the consent orders as she had put much weight on the fact her husband’s solicitor had said it was ‘a good deal".

It would seem then that whilst there is a significant risk for women who fail to get independent legal advice before attending mediation of ending up with an inequitable settlement, that preliminary legal advice in and of itself is not prophylactic. Advice after the mediation is equally, if not more, important.

"About a third of the agreements we see women reaching through mediation are unfair and require adjustment before they are formalised through consent orders. It is our experience that even when a woman has independent advice before attending mediation she will often return with an agreement that falls considerably short of the range that we had advised her she was entitled to." - Women’s Legal Service - Adelaide

All of the family law practitioners who were interviewed made reference to the fact that women are far more likely to make concessions in the mediation process than men. This "giving in" as many described it was motivated by a range of factors including wanting to bring an end to the conflict; knowing that they can’t afford to fight the matter in court anyway; and, in particular wanting to reduce the threat that he might pursue custody/residence of the children. It is this "giving in", which if unchecked, gives rise to unfair agreements.

Mediation should be a totally voluntary undertaking . Arguably, women are being forced to participate in mediation because there are no affordable dispute resolution mechanisms being offered by the legal system. The establishment of a small claims jurisdiction for property settlements might go a long way to redressing the heavy and unsatisfactory reliance which has come to be placed on mediation.

Recommendation 6.1

That independent legal advice be made a compulsory pre-requisite to attendance at mediation for family law matters

Recommendation 6.2

That follow up advice from a solicitor after the mediation session be strongly recommended in all cases and that it be made a compulsory pre-requisite to the filing of any consent orders which result from that mediation process.

Recommendation 6.3

That there be a compulsory tabling and exchange of sworn financial statements prior to mediation proceeding

Recommendation 6.4

That in no circumstances should mediation be made a compulsory pre-requisite

to a grant of assistance from legal aid.

Recommendation 6.5

That sufficient funding be provided to community legal centres and legal aid commissions to provide women with access to independent advice (referred to in recommendations 6.1 & 6.2) when required.

Access to Justice Issues

7.  Cost barriers

Small Pool of Matrimonial Property

survey results

63% of the centres surveyed said that a small pool of matrimonial property was an issue which significantly impedes women’s ability to obtain a fair property settlement.

Furthermore, 80% of the centres said that it was an issue which often arises when advising women with respect to property settlements.

Costs act as a barrier to justice when they are disproportionate to the amount of property at stake. The size of the pool of matrimonial property essentially determines a woman’s ability to access private solicitors and proceedings in the Family Court.

It is common for solicitors to run cases in family law on the understanding that they will be paid once the property settlement has been finalised. However, they will only "spec" a case if there is a significant enough pool of property to guarantee their fees after the settlement.

Quite simply, when there is less than $20,000 in the pool it is not viable to consider initiating proceedings in the Family Court as the available property will barely cover the legal costs.

"The litigation process in the Family Court is geared for major property settlements where there is plenty of money and people can afford lawyers. The system is simply not set up to solve small disputes." - Top End Women’s Legal Service - Darwin

"I have been before Family Court judges for cases with pools of $50-$60,000 and have been told that such a case should not be in Court, that the parties should settle themselves and stop wasting their money and the Court’s time. And that’s all very well in theory but what other option is there than to proceed when one party is intractable ?" - Women’s Legal Resource Centre - Sydney

Is it really fair that the system only affords the opportunity of a final, independent determination of an issue to those who can afford to pay for it ? Shouldn’t there be some alternative for people who are arguing about who gets the fridge, the car, the washing machine and the small savings account? Mediation is supposed to offer that alternative, but in reality cannot. It is based on an assumption that parties are able to sit in a room together and reach an agreement. It does not provide an option for a woman who has suffered a history of domestic violence in the relationship or even for the woman who, having been out of the workforce for several years, simply doesn’t have the skills or the confidence to argue the matter through.

case study 6 A woman contacted the Service seeking advice about property issues after separation. The marriage was only of a short duration, approximately 4 years. There were two young pre-school children who both suffered from chronic asthma. The eldest child suffered from other bronchial problems and was undergoing tests for another serious health issue. There was domestic violence in the relationship. The woman had left the matrimonial home with the children and was living with a relative. She had obtained a domestic violence order. The only significant asset the parties owned was a car worth approximately $5,000. The husband worked and earned a good income, the woman was receiving the supporting parents’ pension. The car was in the husband’s name and he refused to give it to the wife, even though he did not use it for two to three weeks at a time while he was away from Brisbane working. The wife needed the car for the transport of the children and it was particularly important in light of the children’s health problems. The woman was unable to obtain legal aid for a property settlement as she did not meet the guidelines. She was also unable to obtain aid for spousal maintenance. Mediation was not an option because of the violence. Her only option was to negotiate with her husband herself and this could clearly put her safety at risk.

A low cost and accessible forum is needed for the resolution of disputed small property matters. No doubt it was anticipated that this role would be played by State and Territory courts of summary jurisdiction, however this has not eventuated. Most magistrates have little or no background in family law and are very reticent to deal with disputed property matters. Furthermore, a client can request for the matter to be transferred to the Family Court at any time.

Many of the family law practitioners who were interviewed spoke highly of Registrars in the Family Court and felt that they would be more than competent to run a small claims jurisdiction within the Family Court. Under the current structure of the Family Court registrars are delegated the exercise of certain powers relating to interlocutory proceedings, discovery and the inspection and production of documents. They can also make final orders in undefended proceedings or wherever the parties consent. They preside in conciliation conferences for property matters and are therefore used to dealing with unrepresented litigants.

Indeed, the current Australian Law Reform Commission Inquiry raises the possibility of the establishment of a federal magistracy to "provide a lower cost option for determinative dispute resolution, deliver these services in a user-friendly way ...., provide processes appropriate to the needs of less complex cases, better cater for litigants in person and allow for more intervention directly by the judicial officer in reaching decisions." ³⁰ Given that Registrars already perform the sorts of functions we would wish to see in a small claims jurisdiction of the Family Court, and by all accounts perform them well, it may be unnecessary to establish a Federal Magistracy.

The Attorney General’s Department is currently considering the policy issues involved in such a proposal and the Attorney General has altered the Commission’s terms of reference for the Inquiry to specifically exclude consideration of "the possible establishment, structure and jurisdiction of a federal magistracy". ³¹ An options paper issued by the Department in January 1997 advocates for the creation of a federal magistracy rather than simply expanding the role of judicial registrars in the Family Court. The justification being that Magistrates could exercise judicial powers in their own right whereas Registrars have constitutional restrictions on the exercise of their powers, which are delegated by Judges - for instance, appeals of Registrar’s decisions must be by way of complete rehearing rather than a simple appeal which is restricted to questions of law.

There seems little doubt then that a small claims jurisdiction is needed and however it is to be achieved the sooner it happens, the better.

Substantial Sum of Matrimonial Debt

survey results

71% of the centres surveyed said that a substantial sum of matrimonial debt was an issue which can operate to significantly impede women’s ability to obtain a fair property settlement.

74% of the centres said that it was an issue which often arises when advising women with respect to property settlements.

It is the experience of most community legal centres that substantial debt often goes hand in hand with small property pools. Indeed, in many cases the debt outweighs the available assets and creates a "negative pool of property". All of the costs barrier issues discussed in relation to small property pools apply also to cases where there is significant debt and for this reason would be better addressed in a small claims jurisdiction of the Family Court. Just as small property pools can be dissipated quickly without swift intervention, debt can be further accumulated. A small claims jurisdiction would have a capacity for swifter intervention. As cost barriers prevent such cases being brought before Judges, the Family Court has not had the opportunity to develop any case law about the division of matrimonial debt. The lack of jurisprudence on the subject also affects the negotiation of settlements around these issues outside the court process.

Debt arises in a myriad of circumstances - gambling, business speculation, to buy every day necessities - and the Court needs to develop principles for the division of debt which are appropriate to these different circumstances. Case law is also needed which enables debt to be legally assigned, thereby removing the right of creditors to pursue the party which the Court has determined is not responsible for the debt.

At present the Family Court only has the power to provide that one party indemnify the other in relation to joint debts. Ultimately this affords limited protection because credit providers take the view that the indemnity only provides the party with a cause of action against their spouse - it does not mean the indemnified party’s obligation to the credit provider has been extinguished.

case study 7 In September 1995 the wife left the matrimonial home in Queensland and travelled to Dubbo with the only child of the marriage, aged 6 years. Initially there was no entrenched animosity and it seemed likely that the parties would be able to resolve all matters by consent. The wife informed the bank (who was the provider of the loan for the matrimonial home) of her change of address and requested that copies of all correspondence be forwarded to her. It later became apparent that the bank failed to do this. Meanwhile negotiations for a property settlement continued. On at least three occasions the parties had reached agreement, only for the husband to withdraw at the last moment - and on one occasion after he had actually signed and returned the terms of settlement! In the meantime there had been disputes relating to the child, most significantly in respect to child support. The husband argued that as he had to bear the significant cost of repaying the mortgage he should be excused from making child support payments. Early on in the settlement negotiations, the husband disposed of the family business and claimed to have used the proceeds to repay debts but instead had dissipated those funds. Part of the mortgage debt on the house related to the business. By mid 1996 it was clear that the matter could not be resolved without litigation and proceedings were initiated. In late 1996 the husband forwarded by courier a notice from the Bank indicating their intention to start action for repossession. The husband had ceased making mortgage payments in mid 1996 but this notice was the wife’s first knowledge of the situation. After receiving the notice the wife liaised closely with the bank and the real estate agent to find an urgent purchaser for the property. Had the mortgage payments been made and had there been time to sell the property in a normal market there would have been about $20,000 equity in the home (which given the husband’s dissipation of the business proceeds would have in all likelihood been awarded to the wife). Instead there was a deficit of approximately $2,500. The Bank refused to sever the wife from the debt despite lengthy representations which were made on her behalf. They sympathised but said that bank policy precluded such action.

Recommendation 7.1

That a small claims jurisdiction should be established to provide an independent forum for determining small property settlements for parties in dispute and for whom mediation or consent will not provide an equitable result. Ideally the features of such a small claims jurisdiction would be:

• small filing fee
• jurisdiction up to $60,000 (able to make orders with respect to chattels and debt)
• self representation
• a less formal and more directed, inquisitorial style of proceedings
• a regular "circuit" for rural and remote areas
• no costs
• enforceable rules of disclosure (with penalties)
• sanctions for non-compliance with orders
• right of appeal to a single Judge of the Family Court

Recommendation 7.2

That test case funding should be provided to Women’s Legal Services to allow presentation of suitable cases to the Family Court which will enable the development of jurisprudence in relation to the division of debt in various circumstances (e.g where debt has arisen through one party’s gambling or speculation as opposed to where it has arisen through purchase of household necessities)

Recommendation 7.3

That the Family Court should have the power to assign debt to a particular party

Recommendation 7.4

That banks should develop fair and responsible policies with respect to the pursuit of debt following marriage breakdown. For instance:

they should recognise indemnities provided by the Family Court and therefore only pursue the party which the Court has held to be responsible for the debt

provided that they have been notified that the relationship has ended,they should sever an innocent party from any responsibility for debt which is accrued by the other party in their "joint names" after receiving that notification.

8.   Access to Legal Assistance

Legal Aid

• The Commonwealth’s eligibility criteria for legal aid

Although access to legal aid for property settlements has been limited for many years the advent of the new Commonwealth guidelines during 1997 has virtually put an end to eligibility for aid for property settlement proceedings across Australia.

survey results

Almost half of the community legal centres surveyed estimated that more than 90% of their female clients would not be eligible for a grant of legal aid for a property settlement

All of the 11 family law practitioners interviewed were aware that under the terms of the new Commonwealth Guidelines well over 90% of their female clients would not be eligible for a grant of legal aid for a property settlement.

The criteria which determine eligibility for legal aid for "Commonwealth matters" are contained in individual Agreements signed by each of the Legal Aid Commissions which became effective on 1 July 1997. The Commonwealth Guidelines in these Agreements establish priorities for the use of Commonwealth legal aid funds.

Schedule 2 of the Commonwealth Agreement in relation to the provision of legal assistance states that property orders are only considered to be a priority where assistance is also to be granted in relation to proceedings for children’s matters under the Family Law Act or Child Support (Assessment) Act. Hence, even if a client is eligible for legal aid on the application of the standard means and merit tests she will not be eligible for aid for a property settlement if they are not in dispute in relation to a children’s matter also.

case study 8 A woman from Asia arrived in Australia five years ago and married an Australian man. He owns a small rural property near Darwin. Together they make significant improvements to the property so that it increases in value. They have one child and she is responsible for its daily care. She wishes to separate but it appears there will be no significant conflict about the child. Her claim on the property is small, but significant, due to her non-financial contributions. She requires legal assistance to even negotiate a property settlement with her husband because of the language and cultural differences. However, she will not be eligible for legal aid as there is no dispute about the child.

Even once an application has fallen into one of the Commonwealth’s "priority areas" it will only be granted if it also satisfies the individual Commission’s means test, the specific matter-type Guidelines and the merits test. In Schedule 3 of the Agreement specific guidelines are set out for each type of matter for which legal assistance might be sought. Guideline 8 sets out the eligibility criteria for property proceedings.

The Commission may (but not must) grant assistance for property proceedings if:

• the parties have been separated for 6 months or more and
• the applicant is likely to retain the family home but is unable to borrow sufficient funds to buy out the other party’s share of the home as well as paying the anticipated legal costs of the proceedings and
• the equity in the matrimonial property is valued at less than $20,000 or more than $10,000 (note: where the value of the equity in the property is less than $10,000 assistance will not usually be granted for proceedings but may be granted for negotiations only)
• aid will only be granted for proceedings for personal property when it relates to funds from which the applicant can only receive a deferred benefit (e.g superannuation).

The very notion of having between $10,000 and $20,000 equity and being "likely to retain the family home" is so fanciful that a family lawyer working in one Commission has been heard to say "if and when someone manages to meet these criteria for property settlements I’ll expect lights and bells and buzzers to go off."

"Since opening in 1996 this Centre has provided 339 instances of advice and/or information in relation to property settlement upon breakdown of marriage. To our knowledge only one of these women has received a grant of legal aid, although in our view many of them should have done so." - Women’s Legal Service - Canberra

In the extraordinarily unlikely event that someone should meet these criteria they still have to satisfy the merits test which has three components:

• the "reasonable prospects of success" test (which means there must be more than a 50:50 chance of success)
• the "ordinary prudent self-funding litigant" test (if it is considered that an ordinary, prudent litigant would not risk his/her own funds for the proceedings then legal aid will not be granted)
• the "appropriateness of spending limited public legal aid funds" test (if it is considered that the proceedings are vexatious or are of minor significance in relationship to the legal costs then legal aid will not be granted).

Having satisfied all these "tests" the legal aid which is granted is not "free" - contributions will be sought by the Commission. In order to secure these a caveat or charge is put over the legal title of the family home.

"Five years ago I would have made a legal aid application for all clients seeking a property settlement. Now I rarely make an application. Normally our clients have so little equity that they don’t want a caveat over their property. The legal aid conditions which are imposed are simply too onerous for our clients to undertake." - Brimbank Community Legal Centre - Victoria

"I’ve only heard of one case where a woman has got legal aid for a property settlement - in that case she had to borrow money from the Bank in order to pay out her husband’s share of the house. Legal aid then put a charge over what must have been close to the remaining equity in the property to cover her legal costs. The question is has she really kept the house, and at what cost ? Has anything really been achieved for her ?" - Community Legal Service for Western NSW (Dubbo)

• Costs ceilings on grants of aid (caps)

survey results

Although community legal centres have reported that caps are having a significant impact upon the extent of legal aid available for children’s matters (e.g contact, residence), this study has revealed that they have made virtually no impact upon access to legal aid for property settlements because applicants are simply not able to fulfil the Herculean eligibility criteria for property settlements anyway.

All grants of legal aid for family law matters commenced after 1 July 1997 have been limited to $10,000. This may seem like a substantial sum of money, however, the Australian Law Reform Commission has estimated that a "standard" property matter can cost between $8000 - $10,000 to settle: and this allows for just a one day hearing in Court. ³²

There has been considerable criticism of the imposition of caps in family law matters for they are only serving to further entrench the already well documented gender bias in the allocation of legal aid. ³³ The Chief Justice of the Family Court made his disapproval of caps apparent in a recent address to a community forum about property and Family Law:

"The current policy of setting an arbitrary limit on aid can play into the hands of parties in a stronger financial position who would seek to erode the resources of those who are dependent on legal aid." ³⁴

• Other restrictions on grants of aid

In Tasmania and Western Australia, limited grants of aid are given for property settlements.

In Western Australia this type of grant is known as the "pilot conferencing project". The grant of aid is limited to $500 and is only available if there are children’s matters also in issue. It allows attendance for advice with a private solicitor. The solicitor then accompanies the applicant to a "conference" which is run by a mediator at the offices of Legal Aid. If an agreement is reached, then the private solicitor draws up consent orders and has them filed at the Family Court. However, where there is no agreement no further grant of aid will be made.

In Tasmania, where the value of the property is less than $10,000 the grant of aid is limited to legal fees for up to three hours of negotiation. If the parties reach an agreement they can apply for a further two hours of assistance to allow for the drafting of Consent Orders.

In Queensland grants for in-house mediation (known as conferences) were available for property settlements prior to the introduction of the Commonwealth Guidelines but the understanding of the Women’s Legal Service in Brisbane is that they are no longer available. However, there was a great deal of concern amongst community legal centres in Queensland about the circumstances in which compulsory mediation conferences were being conducted by Legal Aid.

"Historically, Legal Aid Queensland has put huge emphasis on conferences, to the extent that even if a woman had a protection order against her husband for domestic violence they would encourage her to have the order varied so that she could attend the conference with her husband." - Women’s Legal Service - Cairns

"Conferencing in legal aid terms has always meant settle now or end up with nothing. It is one thing having a condition that parties try mediation first but it is quite another to say this is it, this is your one and only chance with us." - Women’s Legal Service - Brisbane

Women’s Legal Services in Tasmania, Western Australia and Queensland have all seen clients who have compromised in order to conclude a property settlement within the terms of a restricted grant of aid:

"Women often come to us as a last resort after they have failed to reach an agreement through the pilot conferencing project. But we also see the pilot conferencing project resulting in compromises. The clients know the grant of aid is available for the conference only and that if they don’t settle through this process they will have no other avenue of redress. Even with their own solicitor present they can feel pressured to reach an agreement, however unsatisfactory that may be." - Women’s Legal Service - Perth

"Whilst we have seen some women who have been unable to conclude a settlement, it is more common for them to just "give in", to settle on their husband’s terms because it is too hard to pursue the matter any further." - Women’s Legal Service - Hobart

The Role of Community Legal Centres

Community legal centres are the first and last resort for a substantial proportion of women due to the inaccessibility of legal aid and the high costs of securing a private solicitor. From 1 July to 30 September 1997, women sought assistance for property settlements from community legal centres on 2,188 occasions ³⁵. This assistance was provided by 73 different CLCs across Australia.

44.2 % of these women were either on government benefits or had no income
12.5 % worked part time
15.0 % worked full time
1.6 % were self employed
26.7 % did not provide information about their income source

It is not surprising then that the survey revealed that a large proportion of these women are completely reliant upon the free assistance which they can obtain from community legal centres. However, community legal centres simply do not have the resources required to provide these women with all the assistance they would need in order to conclude a fair property settlement.

survey results

Two thirds of community legal centres surveyed estimated that more than half of their female clients were completely reliant upon the assistance they could give.

Only 1% of the community legal centres surveyed provide all forms of legal assistance, including court representation, to clients seeking help with family law property settlements.

82% of the legal centres surveyed acknowledge that they are unable to provide women with all the legal assistance which they would need in order to conclude a fair property settlement.

Most community legal centres are operating with very limited budgets. They have only a skeleton of paid staff (usually 1 or 2 solicitors per centre who do nearly all their own administrative support work). In most centres the bulk of appointments for advice are handled by volunteer solicitors who generally do no ongoing casework.

 Lawyers in community legal centres are highly frustrated by the fact that the bulk of their female clients are really only given basic advice about their entitlements and then because of their ineligibility for legal aid and their inability to afford a private lawyer must be turned into the wilderness to negotiate their own settlements.

"Our centre has only two solicitors which means we simply cannot commit to trials unless we drastically limit the number of clients that we see. A lot of women are left hanging with the limited assistance which we provide in most cases. They are given basic advice about their entitlements but it’s too daunting for them to try and negotiate a settlement alone so they don’t even try or, in other cases, will try but settle for far too little." - Women’s Legal Service - Perth

"Women are disadvantaged by the limited assistance we can provide even in cases where their husbands do not have legal representation. The problem is men still have an entrenched view that they have earned the money and that 50:50 is a generous split - they have no understanding of the concept of "future needs". So even if the woman is aware of her rights it can be very difficult to reach a fair settlement without a go-between to assist with the negotiations." - Brimbank Community Legal Centre - Victoria

"Our assistance is restricted to situations where there is consent. To get consent though you are more often than not going to have to settle for a 50:50 split. And while it is possible to negotiate settlements of up to 60:40 by consent, if there are the circumstances that warrant a claim for 70% or more you really have to be prepared to go to Court to argue it out." - Women’s Legal Service - Cairns

"The basic legal assistance which we can provide means that women are settling every day on the basis of limited information and complex issues like super are just not being taken into account." - Top End Women’s Legal Service - Darwin

"At least 50 % of our family law clients come here for assistance with property settlements. They are given a 30 minute appointment and advised about their entitlements and options but that is all we can really do. The court forms for property settlements are complicated and it is a high liability area which needs time and expertise. In a low funded centre with high client turnover, property settlements have to be low priority issues." - Gosnells Community Legal Service - Western Australia

Community legal centres see the truly unfair end results of the inaccessibility of legal assistance for women reflected in the terms of the consent orders which are presented for what is often last minute "independent" advice, or worse still - for whatever reason - after they have actually been signed.

case study 9 A couple with two pre-school age children had $50,000 equity in a house worth $150,000 at Penrith. The husband owns a large transport truck and runs a business. Consent orders are prepared by private solicitors giving a 50/50 split on the equity in the house. Neither the value of the truck or business are taken into account. The wife sought advice about the consent orders from our legal service. We called the solicitors to ask them why the other assets had not been taken into account. They explained that a buyer had been found for the house, which can be hard in outer areas of Sydney, and that the husband had simply refused to sign the conveyancing contract unless the wife signed the consent orders in that form.

"There is an assumption that when a woman obtains independent advice it will be truly independent - but we’ve had cases where the family solicitor sells the house, negotiates the whole property settlement, draws up the consent orders and then sends the woman to us for token independent legal advice. In these circumstances we simply refuse to sign for she has not had the benefit of genuine and thorough independent advice." - Central Coast