On 28 June 2019 the Law Commission completed its review of the Property (Relationships) Act 1976 and submitted its Report to the Minister responsible for the Law Commission. The Report was tabled in Parliament on 23 July 2019.
The Commission has concluded that while fundamental aspects of the law remain sound, such as the general rule of equal sharing and its application to marriages, civil unions and de facto relationships that last for three years or more, other aspects of the law are no longer fit for purpose. Some significant changes are required to make the law fairer for partners dividing property on separation.
The Report makes 140 recommendations for reform that cover a wide range of topics. The Commission’s key recommendations include:
- Introducing a new statute, the Relationship Property Act. This should be the principal source of law applying to the division of property when relationships end on separation.
- Changing how the family home is classified. Currently the family home is always treated as relationship property and usually divided equally, regardless of when or how it was acquired. Under our recommendations, if the family home was owned by one partner before the relationship began or was received as a third party gift or inheritance, only the increase in the value of the home during the relationship should be shared.
- Simplifying the eligibility criteria. The law should apply in the same way to all marriages and civil unions, and de facto relationships that meet certain requirements. Most de facto relationships would still need to satisfy a three year duration requirement before the law applies to them. We recommend changes that will it make easier for de facto partners to know when their relationship is subject to the Relationship Property Act.
- Introducing Family Income Sharing Arrangements (FISAs). FISAs would replace both the court's compensatory powers under section 15 of the PRA and maintenance under the Family Proceedings Act 1980. Under a FISA, partners would share income for a limited period following separation in order to ensure the economic advantages and disadvantages arising from the relationship or its end are shared more fairly. The amount and duration of a FISA should usually be calculated by a formula that takes into account the partners' incomes before separation and the length of the partners' relationship.
- Giving a court greater powers to divide trust property. These powers should apply when a trust holds property that was produced, preserved or enhanced by the relationship.
- Giving children's best interests greater priority in relationship property matters. This should include greater rights to occupy the family home in the period immediately following separation.
- Improving the way relationship property matters are resolved in practice. Our recommendations are designed to promote the just and efficient resolution of relationship property matters and address behaviour that causes delay and increases costs.
The Commission also recommends that the rules that apply to relationships ending on death should be subject of further consideration within a broader review of succession law. The Commission recommends that the Minister Responsible for the Law Commission ask the Law Commission to undertake that review as a matter of priority.
The Minister’s media release: Justice Minister tables Law Commission Report of Property (Relationships) Act 1976
