Family Law Act 1975 Property Settlement: s 79 Four-Step Process Explained

Section 79 and the codified four-step process

Section 79 of the Family Law Act 1975 (Cth) provides the court with the power to make orders regarding the division of property between married parties; a similar provision exists for de facto couples (s 90SM). Recent legislative changes, specifically the Family Law Amendment Act 2024 which received Royal Assent on 10 December 2024 and largely commenced on 10 June 2025, have significantly altered the application of this section. National Employment Standards: 11 entitlements deep dive

The most notable change is the codification of the four-step approach previously used by courts when determining property settlements. This structured process is now outlined in amended s 79(3). The intention of this codification is to improve clarity and accessibility, particularly for individuals representing themselves in legal proceedings.

The four-step process begins with Step 1, which mandates the court to first identify all existing legal and equitable interests in property, as well as any liabilities held by the parties. Subsequent steps will be detailed in later sections.

Step 2 - Contributions under s 79(4)

Step 2 of the four-step process involves assessing considerations relating to contributions, as outlined under s 79(4). This step examines the financial and non-financial contributions each party has made to the relationship. Financial contributions encompass income, capital injected at purchase, and direct payments toward acquiring or improving property. Non-financial contributions include unpaid renovations, work within a family business, and the care of the home and children. Paid family and domestic violence leave: 10 days entitlement

The court considers contributions made at the start, during, and after the relationship. The 2024 amendments to the legislation mandate that the court specifically consider the effect of family violence on a party's ability to make or benefit from contributions. This consideration is a key element in evaluating the overall impact of each party’s contributions.

Ultimately, the assessment of contributions under s 79(4) is a factual inquiry. The court will examine the evidence presented to determine the nature and extent of each party's contributions, taking into account the impact of any family violence.

Step 3 - Current and future circumstances

The third step in the property settlement process, previously referred to as ‘future needs’, is now titled ‘current and future circumstances’. This step requires the court to consider a range of factors relevant to each party’s present situation and prospects. These factors include age and health, income, earning capacity, and the availability of property and financial resources. The court must also consider the care of children under 18, with particular attention given to who has primary care responsibilities. Sex Discrimination Act 1984: overview

A significant addition to Step 3 is the express inclusion of the effect of family violence on a party’s circumstances. This recognises the potential impact of such violence on a party’s ability to earn an income or maintain financial stability. The court must consider this impact when assessing the overall financial position of each party.

Step 3 often leads to an adjustment in the proposed property settlement, typically favouring the party with a lower earning capacity or who has primary care responsibilities for children.

Step 4 - Just and equitable

The final step in the s 79 process requires the court to be satisfied that any proposed order is 'just and equitable' in all the circumstances (s 79(2)). This is an overarching discretion that sits on top of the assessments of contributions and circumstances, allowing the court to consider factors not fully addressed in the previous steps. The court’s consideration of justness and equity is not a re-hearing of the previous steps, but a final check.

The High Court case *Stanford v Stanford* (2012) clarified that the court must not assume that altering property interests is appropriate. This reinforces the need for a strong justification before any adjustments are made. The court retains the power to refuse to make any order at all if the parties’ existing property interests already result in a just and equitable outcome. Australian Human Rights Commission Act 1986: process

Ultimately, if the court is not satisfied that an order altering property interests is just and equitable, it must decline to make that order. This step ensures that the final outcome is fair and appropriate given the totality of the relevant factors.