Often during the course of property settlements, it is asserted by one of the parties that they ‘deserve’ a larger portion of the asset pool due to reliance on certain factors. The factors relied upon are found in the Family Law Act 1975 (Cth), in particular Section 75(2) for married couples, and Section 90SF(3) for de-facto couples. Application of these provisions is seen as the third step (out of four) that Australian Courts typically undertake in making Financial Orders.
The four steps undertaken by Courts are generally set out as follows:
- Identify and value the assets, liabilities and resources of the parties;
- Consider the contributions of the parties made throughout the relationship;
- Consider the future needs of each party; and
- Determine whether the proposed settlement is just and equitable.
Essentially, at the third step the Court evaluates the future needs of the parties taking into account their individual circumstances. The aforementioned provisions set out 19 factors that may be taken into account by the Court in evaluating the extent of each parties’ future needs. The relevant subsections relating to adjustments for disability and illness are the following:
- The age and state of health of each of the parties (s 75(2)(a)); and
- The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment (s75(2)(b)).
Unfortunately, many Australians face challenges in their everyday lives associated with ongoing disabilities or illnesses. At Carter Dickens Lawyers we seek to assist those who may be vulnerable in financial settlements, and ensure they are aware of their rights and the impact their disability may have upon the expected distribution percentage they would receive from a Court ordered financial settlement.
Am I likely to receive an adjustment in my favour due to my disability?
The assessment of ‘future needs’ remains a discretionary activity undertaken by the Court. Therefore, it is difficult to say with confidence that an ongoing disability or illness will guarantee a percentage adjustment in your favour by the Courts.
However, there are precedent cases which appear to suggest a 5-15% adjustment may be made where one party suffers from disabilities and this impacts their ability to achieve gainful employment in the future. In particular, the case of Dritsas v Wilson  FMCAfam 44 saw a section 75(2) adjustment in the wife’s favour of 10 per cent where the potential of future employment was essentially non-existent due to the extent of the wife’s disabilities and her age.
Although there appears to be precedent for making these adjustments, and the legislation specifically makes reference to age, health and the ability to gain meaningful work – each case is determined on an individual basis. We therefore recommend you seek legal advice on this matter if you are either going through a financial separation or are planning on seeking financial orders.
What if both myself and my ex suffer from disabilities/illnesses?
Unlike the circumstances aforementioned, in some cases both of the parties to a financial separation suffer from illnesses or disabilities respectively. This situation creates greater difficulties for Courts in evaluating the ‘future needs’ of the parties as both may have their own valid claims.
Again, this situation would see the courts exercise their discretion, and all factors would be evaluated prior to any Order is made. However, Nathan & Nathan  FamCA 589 was an example where the Family Court of Australia deemed it equitable to make no adjustment. In this case, Justice Kay at  stated no adjustment would be made out for the following reasons:
“A global view of this case shows two people with very limited earning capacity, two people with significant medical disabilities. They are both aged 46. Neither of them has a very secure economic future to look forward to. The husband appears able to live on his wits. The wife has secure employment at least with some modest superannuation available to her. It does not seem to me to be a case in which any s 75(2) adjustment is appropriate.”
Essentially, where in the Courts discretion the parties equally suffer from limited earning capacities and significant medical disabilities/illnesses, it may be just and equitable to make no adjustment for future needs, instead opting for an equal split of the asset pool.
From the situations discussed, it is clear that the Court is empathetic to the plight faced by those with illnesses and disabilities; however, the extent to which this will impact Financial Orders depends on scope of the facts at hand. If you believe that the section 75(2) factors discussed in this article may apply to your circumstances, please contact Carter Dickens Lawyers on (08) 9408 5212 for a free 15-minute consultation with one of our lawyers.
Carter Dickens Lawyers specialise in Family Law and Financial Disputes. We pride ourselves on our ability to provide legal assistance and advice, including on niche areas of law, such as the impact of disabilities on expected percentage distributions from Financial Orders. We will ensure that you are fully informed of any rights and risks associated with your divorce or financial matter.
Please note that the above is general information and should not be relied upon as legal advice. All situations are different and legal advice must always be tailored to the specific situation.