The court is unable to make an order in relation to the division of property unless it is satisfied that the order is just and equitable: section 79(2) Family Law Act 1975 and section 90SM(3) Family Law Act 1975.
In Mallett & Mallett (1984) 156 CLR 605 and various future cases ending in Hickey & Hickey [2003] FamCA 395, the Court has discussed that the just and equitable requirement is generally considered to be the identifiable fourth step.
What does just and equitable mean?
The words ‘just and equitable’ have been described by Justice Dawson in Mallet & Mallet as being the “overriding requirement” to determine whether it is just and equitable to make AN order at all and what THE order should be, if one is made. In determining whether the order is just and equitable, the court must consider the justice and equity of the outcome, i.e. the actual order itself, not just the underlying percentage (%) distribution of the assets: Russell & Russell [1999] FamCA 1875 and JEL v DDF [2000] FamCA 1353.
The main purpose of section 79(2) is to ensure that the Court does not alter the property rights of parties unless justice requires it to do so and if the court decides it is just and equitable to make any order, the court is satisfied that the alteration of property goes no further than t he justice of the matter demands.
What are the four steps? 
Until the case of Stanford, the four steps considered by the Court in determining what orders it makes, were:
- identify the value of the property, liabilities and financial resources of the parties at the date of the hearing;
- identify and assess the contributions of the parties and determine the contribution based entitlements of the parties as a percentage of the net value of the property pool;
- identify and assess the ‘future needs’ factors under section 79(4) and 75(2) of the Family Law Act so far as they are relevant and determine any adjustment necessary (if any).
- consider the effect of those findings and determination as to what order is just and equitable in all the circumstances of the case.
In property disputes, the court’s decision making process involves a broad and independent exercise of discretion, having regard to these four steps, which turns on the facts of each individual matter: Russell & Russell [1999] FamCA 1875.
The effect of Stanford
The case of Stanford v Stanford [2012[ HCA 52 provided an opportunity for the High Court to provide its views on the proper approach to an application for property adjustment under section 79 of the Family Law Act.
In Stanford, the High Court stated that in any application, the Court must first consider whether it is just and equitable to make an order, rather than considering whether the order is just and equitable as a ‘fourth step’. The case did not approve/disprove the four step process but served to refocus attention on the obligation of the Court not to make an order adjusting property interests unless it was just and equitable to do so and in this regard, there must be a “principled reason for interfering with the existing legal and equitable interests of the parties to the Marriage”: [41].
In Watson & Ling (2013) Justice Murphy confirmed that “As Stanford makes plain (especially at [39]) the breakdown of a marriage (or de facto relationship as defined in the Act) does not bring as an automatic consequence an alteration of existing legal and equitable interests. Just as, if an order is to be made, equality is neither to be assumed nor is a starting point (Mallett v Mallet), so too, the making of an order at all is not to be assumed.”
Accordingly, the requirement to consider whether an order is just and equitable is now more accurately considered as the first step, making the previous four step process, now five steps.
How is the just and equitable requirement (as a first step) satisfied?
It is clear from Stanford that in many cases the just and equitable requirement, as a first step, is satisfied because once the parties are no longer living together, there will no longer be common use of the property and the express or implied assumptions previously underpinning the parties’ property arrangements will have been brought to an end. This is the situation in the vast majority of cases. The question of whether it is just and equitable to alter the existing property interests in that particular case will be readily answered where both parties are seeking orders which alter their respective property interests. Whether it is just and equitable to make an order is more difficult to answer where one party seeks that no order be made.
Case Studies dealing with the just and equitable requirement
In Bevan & Bevan [2013] FamCAFC 116 the primary issue in the appeal was whether the trial judge erred in determining that it was just and equitable to alter the existing property interests of the parties when the parties largely lived apart for 18 years and the husband had told the wife she could retain the assets. The appeal was allowed.
In Redman & Redman [2013] FamCAFC 183 the Full Court looked at the just and equitable requirement as a first step. The husband and the wife made an application for consent orders to be made. The sole purpose of the orders sought was to transfer the family home in an intact marriage from the name of the husband to the names of both himself and his wife and to employ the Family Law Act 1975 to achieve this so that stamp duty (very minute in the circumstances) could be avoided. The Registrar declined to make the order. When the decision was appealed, the Court indicated that it does have power under section 79 to make orders in circumstances where the parties marriage is ‘intact’ and had not broken down (Stanford 117 – 118). However, as Stanford says, the court must have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage. The Court held that there was no reason apparent on the facts and the appeal was dismissed.
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