Introductory Info
Date introduced: 27 November 2019
House: House of Representatives
Portfolio: Attorney-General
Commencement: A single day to be fixed by proclamation; but that day cannot precede the day that section 4 of the Commonwealth Powers (De Facto Relationships) Act 2006 (WA) commences.Purpose of
the Bill
The purpose of the Family
Law Amendment (Western Australia De Facto Superannuation Splitting and
Bankruptcy Bill 2019 (the Bill) is:
- to
give effect to a limited referral of power from the Western Australia (WA) Parliament
to the Commonwealth in respect of superannuation matters in family law
proceedings for separating de facto couples in WA, thus resolving the current
anomaly whereby WA is the only state not permitting the use of superannuation
splitting[1]
when de facto couples go through a property settlement[2]
and
- to
extend federal bankruptcy jurisdiction to the Family Court of Western Australia
so that the Court may hear bankruptcy proceedings concurrently with family law
proceedings for de facto couples, when appropriate.[3]
Structure of
the Bill
The Bill is divided into five parts. The first part
briefly provides technical details regarding the name of the Bill, the starting
date of the subsequent Act and the legal status of the following schedules.
The substantive parts of the Bill are included in four
Schedules:
- Schedule
1 proposes amendments to the Family Law Act 1975
(the FLA) with the principal proposed amendment being the insertion of a
new Part VIIIC into the Act, dealing exclusively with superannuation splitting
for separating de facto couples in WA
- Schedule
2 proposes amendments to the Bankruptcy Act 1966,
with the effect of conferring jurisdiction in bankruptcy on the Family Court of
Western Australia in defined circumstances
- Schedule
3 proposes consequential amendments to a variety of Acts, largely to
include in those Acts references to the new provisions put in place by Schedules
1 and 2
- Schedule
4 contains application and transitional provisions.
Background
Family Law - a brief summary
Forms of family law were present in Australia prior to Federation
based on an English model. South Australia passed the Divorce
Act 1858 and over the next 15 years the other states passed similar
legislation. From its inception the Australian
Constitution gave the Federal Parliament the power to make laws with
respect to: ‘marriage’;[4]
and ‘divorce and matrimonial causes; and in relation thereto, parental
rights, and the custody and guardianship of infants’.[5]
It also included the power to legislate with respect to ‘matters
incidental to the execution of any power vested by this Constitution in
the Parliament’.[6]
The Constitution gave the Australian Parliament the
power to make laws, rather than compelling it to make laws about the
subjects set out in the Constitution. Until the Australian Parliament
exercised its constitutional power state laws continued to prevail in these
areas of law, consistent with section 108 of the Constitution.[7]
In fact the Commonwealth did not exercise the marriage and
divorce powers for a considerable period after Federation. It made its first
legislation under these powers with the passage of the Matrimonial Causes
Act 1945. However, this Act was of limited scope dealing only with
jurisdiction and not with grounds for relief; the principal aim of it was to
ensure that Australian women who had married overseas persons (usually during
the course of the Second World War) could institute divorce proceedings in
Australia.[8]
The Commonwealth moved more firmly into the field with the
passage of the Matrimonial
Causes Act 1959 and the Marriage Act 1961,
and then further entrenched its position with the passage of the Family Law Act 1975
(FLA). The effect of the passage of Commonwealth legislation, combined
with the effect of section 109 of the Constitution,[9]
meant that the Commonwealth had effectively taken control of the law on many
aspects of family law, but only to the extent that such control was consistent
with the explicit wording of the Constitution. This meant, for example,
that the Commonwealth’s power to make laws with effect to ‘divorce …
and in relation thereto, parental rights’, was taken to mean that the
Commonwealth could only make laws regarding the children of the marriage.[10]
An issue that did not automatically fall under the ‘parental
rights’ power in the Constitution concerned separating
partners’ children who were not themselves children of the marriage.
While powers such as this remained at that stage with the
states, there is a mechanism under the Constitution for the states to
refer powers to the Commonwealth. Section 51(xxxvii) of the Constitution
specifically allows the Commonwealth to make laws about matters referred to it
by the states. When a state refers a matter, the Commonwealth has the same
power to make laws on that matter as it does on the other matters spelt out in
section 51.
However, any law made by the Commonwealth following the
referral of a power by a state or states only has effect in the referring
states. In other parts of Australia state law continues to apply. Thus, if five
states refer their powers on a subject pertaining to family law to the
Commonwealth and a single state such as WA does not, then any subsequent
amendment to the FLA that depends on the referral of state powers will
apply to those five states and not to the non-referring state(s).
Why is this Bill specifically about
Western Australia?
When the FLA first took effect in 1976, leading to
the establishment of the Family Court of Australia (FCA), the FCA could only
hear matters that were within the Commonwealth’s constitutional powers. No
relevant state referrals had at that stage occurred. From the beginning, the FLA
had provision for states to establish their own Family Courts.[11]
The FLA provision gave a state family court, when established, the
ability to hear matters of federal jurisdiction.[12]
This is consistent with the Commonwealth’s power in section 71 of the Constitution
which says that ‘the judicial power of the Commonwealth shall be
vested in … such other courts as it invests with federal
jurisdiction’. In fact, WA was the only state to create its own Family
Court with the passage of the Family
Court Act 1975 (WA).[13]
The Family Court of Western Australia had such federal jurisdiction as was bestowed
on it by the FLA,[14]
and jurisdiction over other WA Acts, where those Acts gave it that
jurisdiction.[15]
None of the other states established their own Family
Courts, rather relying on the Commonwealth system to hear those family law
matters that fall within the powers of the Commonwealth. However, WA has always
maintained its original decision to retain the Family Court of Western
Australia. The effect of this decision by WA is that WA and the Commonwealth
have had legislatively separate but, in the main, parallel family law systems.
Judges of the Family Court of Western Australia may have a
dual appointment to the FCA. There are currently five Judges of the Family
Court of Western Australia – a Chief Judge and four other Justices.[16]
The names of these judicial officers also appear in the list
of Judges of the FCA. WA Magistrates also have a family law role, similar
to the role taken by Judges of the Federal Circuit Court in the Commonwealth
sphere.[17]
Extent of jurisdiction of the
family courts
All of the Australian jurisdictions have long been of the
view that, in the family law context, the ideal approach is for matters based
on similar facts that may arise under both state law and Commonwealth law to be
decided together. It is both a waste of the litigants’ resources, and of
the resources of the justice system, for matters covering much of the same
ground to be heard in two different venues.
However, where WA and the other states have differed is
that WA has continued to maintain its single venue as the Family Court of WA,
while the other states have accepted that the single venue should (generally)
be in the federal system, either in the FCA or the Federal Circuit Court.
For all matters to be heard in one system or the other, it
has been necessary, under Australia’s federal system, for one level of
government to allow another level of government to exercise what would normally
be its powers. For this to occur in a federal court, the relevant state has to
give the Commonwealth permission to hear matters that are originally state
matters. The converse is also true. For a WA Court to hear matters that fall
within Commonwealth powers under the Constitution, the Commonwealth has
to pass laws, consistent with section 71 of the Constitution, to invest
in the relevant state court the power to hear matters that ordinarily fall
under the mantle of federal law. This is the principal reason that the current
Bill is necessary.
Transfer of powers
As noted above, the FCA originally only had the power to
make decisions regarding the children of a marriage. The FCA finally gained the
power to make orders about ex-nuptial children with the passage of the Family Law
Amendment Act 1987, which applied to the various states as they
referred the necessary powers to the Commonwealth. WA did not refer these
powers to the Commonwealth. The relevant legislation in other states
transferring the powers to the Commonwealth was:
The actual referral in each Act was in respect of:
(a) the maintenance of children and the payment of expenses
in relation to children or child bearing;
(b) the custody and guardianship of, and access to, children.[18]
As can be seen from the date of the state Acts, the 1987 Commonwealth
amending Act could only reference the referred powers from SA, NSW, Victoria
and Tasmania. The Explanatory Memorandum to the Bill which, when passed, became
the 1987 amending Act, said:
Insofar as the Act will extend to the four referring States
and will apply in the Australian Capital Territory, the Northern Territory and
Norfolk Island, the provisions relating to children will apply generally to all
children, whether children of a marriage or not, and their parents, whether
married or not. In relation to the non-referring States, those provisions will
be confined, as at present, to children of a marriage and to parties to a
marriage. [19]
Around 10 years after the passage of the legislation in
each jurisdiction the states amended these referrals. The relevant legislation
in NSW was the Commonwealth
Powers (Family Law—Children) Amendment Act 1996, the need for
which was explained in the second reading speech of the NSW Minister Paul
Whelan who said:
The intention of the bill is to close a gap that currently
exists whereby neither the Family Court nor State courts have jurisdiction to
effectively make orders relating to the custody, access, guardianship or
maintenance of children who are the subject of orders under State child welfare
laws. The need to resolve these issues, as well as certain matters concerning
the ability of the Family Court to make declarations concerning a child's
parentage, have been the subject of discussions by the Standing Committee of
Attorneys General, or SCAG, since 1990. This bill will give effect to a number
of decisions made by the standing committee which will enable these matters to
be resolved.[20]
Each of the states that had made the original referrals
made the same amendments.
More recently the five states other than WA referred
powers to the Commonwealth in relation to de facto relationships in the:
The referral in the NSW legislation was in respect of:
(a) financial matters
relating to de facto partners arising out of the breakdown (other than by
reason of death) of de facto relationships between persons of different sexes,
(b) financial matters
relating to de facto partners arising out of the breakdown (other than by
reason of death) of de facto relationships between persons of the same sex.[21]
The powers referred by the other states were the same.
Superannuation
as a distinct family law subject
Since the introduction of compulsory superannuation,
superannuation has become a major component of people’s
property—commonly either the most important interest or second only to
real property. Therefore, in a division of property after a relationship breakdown,
superannuation has become an increasingly important subject and possibly a
major point of contention. It is also an issue of some complexity as it is not
necessarily a convertible asset, in that because of laws regarding
‘preservation age’ it can frequently not be accessed by either
party for a considerable period of time.
The FLA first included provisions specifically
covering superannuation in the Family Law
Legislation Amendment (Superannuation) Act 2001 (Cth), which applied to
parties to a marriage. This amendment to the FLA also applied to WA, as
the ability to make the amendments fell within Commonwealth constitutional
power and thus was also within the WA Family Court’s power in exercising
its federal jurisdiction.
In 2008 the FLA’s financial settlement regime
was extended to de facto couples through the Family Law
Amendment (De Facto Financial Matters and Other Measures) Act 2008
(Cth), which relied on the state referrals of power between 2003 and 2009
mentioned above.
In the same period WA made a limited referral of power to
the Commonwealth in the Commonwealth
Powers (De Facto Relationships) Act 2006 (WA) (the WA Act). As
noted above, the referrals of the other states was in respect of
‘financial matters’ in general, whereas the WA Act’s
intention was specified as ‘to refer legislative power to the
Commonwealth Parliament … in relation to the superannuation interests of
de facto partners whose relationship has broken down’.[22]
This specific and limited referral of powers in relation
to superannuation in the WA Act has not previously been accepted by the
Commonwealth. The Commonwealth’s stated grounds have been that such a
limited referral ‘would not provide for a nationally consistent family
law property regime for separating de facto couples’.[23]
In October 2018 the Australian Government’s position
on this matter changed, and it decided to ‘accept and implement a narrow
referral of power from WA’.[24]
Schedule 1 (and the majority of Schedule 3) of the Bill is the
result of that acceptance and implementation.
Why are
bankruptcy provisions included in a family law Bill?
It is common enough for persons to have family law and
bankruptcy issues at the same time. As these can both involve a court assessing
complicated financial arrangements, it would make little sense for the parties,
their legal advisors, or the justice system generally, to have essentially
duplicate matters running concurrently. Therefore, for the majority of
Australians, these matters can be heard together in a single venue through the
vesting of the relevant courts with the necessary powers.
However, at this stage, this is not the case in WA for
parties to a de facto relationship. Currently, the WA person with concurrent de
facto separation and bankruptcy issues would need to have matters heard in two
venues—the Family Court of Western Australia for the family law matter,
and the Federal Court or Federal Circuit Court for the bankruptcy matter.[25]
While bankruptcy is within the constitutional power of the Commonwealth, the Constitution
also allows the Australian Parliament to make laws that invest any court of a
state with federal jurisdiction.[26]
That is to say, a WA, or other state, court can hear
bankruptcy proceedings provided that a Commonwealth law allows it to do so.
Indeed, the Family Court of Western Australia does have bankruptcy jurisdiction
in relation to parties to a marriage. The FCA obtained bankruptcy jurisdiction
as a result of the Bankruptcy
and Family Law Legislation Amendment Act 2005 (Cth), and the Family
Court of Western Australia was given bankruptcy jurisdiction only in relation
to married people by the Family Law
Amendment Act 2005 (Cth). In many jurisdictions, the passage of the Family
Law Amendment (De Facto Financial Matters and Other Measures) Act, which
extended the FLA’s financial settlement regime to de facto couples
(see above), also amended the Bankruptcy Act to extend the Family Court
of Australia’s bankruptcy jurisdiction to parties to a de facto
relationship.
However the 2008 amending Act did not apply to WA.
Consequently the Family Court of Western Australia does not currently have
jurisdiction to hear bankruptcy matters in the context of a de facto family law
matter.[27]
This is proposed to be remedied by the Bill.
What is a de
facto relationship?
De facto relationship is defined at section 4AA of the FLA.
A definition of the term is also contained in sections 2D to 2F (inclusive) of
the Acts
Interpretation Act 1901 (Cth) (AIA), and that definition applies
to all Commonwealth legislation which defines the term by reference to the AIA.
For example, subsection 5(1) of the Bankruptcy Act defines ‘de
facto partner’ by reference to the AIA. While there are some minor
drafting differences, the definitions in the FLA and the AIA are
essentially the same. For the sake of completeness, the AIA definition
is reproduced here:
2D
References to de facto partners
For the purposes of a provision
of an Act that is a provision in which de facto partner has the
meaning given by this Act, a person is the de facto partner of
another person (whether of the same sex or a different sex) if:
(a) the person is in a registered relationship with the other person
under section 2E; or
(b) the person is in a de facto relationship with the
other person under section 2F.
2E
Registered relationships
For the purposes of
paragraph 2D(a), a person is in a registered relationship with
another person if the relationship between the persons is registered under a
prescribed law of a State or Territory as a prescribed kind of relationship.
2F De facto relationships
(1)
For the purposes of paragraph 2D(b), a person is in a de facto relationship with
another person if the persons:
(a) are not legally married to each other; and
(b) are not related by family (see subsection (6)); and
(c) have a relationship as a couple living together on a genuine
domestic basis.
(2) In determining for the purposes of paragraph (1)(c)
whether 2 persons have a relationship as a couple, all the circumstances of
their relationship are to be taken into account, including any or all of the
following circumstances:
(a) the duration of the relationship;
(b) the nature and extent of their common residence;
(c) whether a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any
arrangements for financial support, between them;
(e) the ownership, use and acquisition of their property;
(f) the degree of mutual commitment to a shared life;
(g) the care and support of children;
(h) the reputation and public aspects of the relationship.
(3) No particular finding in relation to any circumstance mentioned in
subsection (2) is necessary in determining whether 2 persons have a
relationship as a couple for the purposes of paragraph (1)(c).
(4) For the purposes of paragraph (1)(c), the persons are
taken to be living together on a genuine domestic basis if the persons are not
living together on a genuine domestic basis only because of:
(a) a temporary absence from each other; or
(b) illness or infirmity of either or both of them.
(5)
For the purposes of subsection (1),
a de facto relationship can exist even if one of the persons is
legally married to someone else or is in a registered relationship (within the
meaning of section 2E) with someone else or is in
another de facto relationship.
(6) For the purposes of paragraph (1)(b), 2
persons are related by family if:
(a) one is the
child (including an adopted child) of the other; or
(b) one is another descendant of the other (even if the relationship
between them is traced through an adoptive parent); or
(c) they have a parent in common (who may be an adoptive parent of
either or both of them).
For this purpose, disregard
whether an adoption is declared void or has ceased to have effect.
Committee
consideration
Senate Legal and Constitutional
Affairs Legislation Committee
The Bill was referred to the Senate Legal and Constitutional
Affairs Legislation Committee (the Senate Committee) for inquiry and report.
The Senate Committee reported on 13 March 2020. Details of the inquiry are at its
home
page. Ten submissions were made to the inquiry.[28]
The Committee’s Report had three recommendations,
namely:
- the Committee recommends that the Bill be amended so that it is not the
date upon which an application is filed which determines if superannuation of
de facto couples can be split, but instead the date upon which the relevant
final order from the Family Court is made
- the Committee recommends that the Bill be amended to expressly provide
that the provisions do not apply to separating de facto couples who have
already made a binding financial agreement pursuant to Division 3 of Part 5A of
the Family Court Act 1997 (WA), and where that agreement has not
otherwise been set aside[29]
- the Committee recommends that, subject to the preceding
recommendations, the Senate pass the Bill.[30]
Senate Standing Committee for the
Scrutiny of Bills
In its Scrutiny Digest 10 of 2019, the Scrutiny of
Bills Committee stated that it had no comment on the Bill.[31]
Policy
position of non-government parties/independents
Non-government parties and independents have not provided
comment about the Bill at the time of writing.
Position of
major interest groups
As noted above, 10 submissions were made to the Senate
Committee, ranging from groups with a day to day professional interest in the
matter, such as the Family Court of Western Australia and the Family Law
Practitioners’ Association of Western Australia, to a fathers’
group and private individuals. The relevant Australian Government agency, the
Attorney-General’s Department also made a submission.[32]
The Department also provided a further reply to a question from the Committee.[33]
The submissions made to the Senate Committee were considered
by the Committee and were summarised in the Committee’s report. However,
a major point made in a number of submissions, and followed up in the
Committee’s recommendations, is that the transitional provisions in the
Bill, in relation to matters already before the courts at the time that the
Bill becomes law, should perhaps be amended to broaden the range of people who
can take advantage of the amended provisions. This is discussed further in the Key
issues and provisions section of this Digest.
Financial
implications
The Explanatory Memorandum states that the Bill is not
expected to have any financial implications. It is not expected to lead to an
increase in the number of cases heard in Western Australian courts, but may
broaden the range of issues at dispute in matters already heard by those
courts.[34]
Statement of Compatibility with
Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[35]
Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights stated
that it had no comment on the Bill.[36]
Key issues
and provisions
Family Law Provisions (Schedule 1)
Part VIIIAB of the FLA deals with financial matters
relating to de facto relationships. Under this part, section 90RA provides that
the relevant provisions only apply to ‘participating
jurisdictions’, which means each ‘referring state’, and each
territory.[37]
However, a state is not regarded as a referring state if its Parliament has
referred only a limited class of the relevant matters.[38]
This has been the situation with WA, so that it has not been regarded as a
‘participating jurisdiction’ up to this point in time.
The approach taken by the drafters of the Bill has been
not to amend Part VIIIAB, but rather to insert a new Part in the FLA, proposed
Part VIIIC, which will apply to WA specifically, and only to WA.[39]
Nevertheless, the provisions in Part VIIIC will be similar to those that
already apply to other Australian jurisdictions.
Proposed Part VIIIC sets out the provisions
relating to superannuation interests held by the separating partners in WA de
facto relationships in full. Proposed section 90YA sets out the object
of the Part as:
… to allow certain payments (splittable payments) in
respect of a superannuation interest to be allocated between de facto partners
in a de facto relationship in Western Australia, either by agreement or by
court order.
Proposed section 90YC notes that the provisions in
the Bill will override any other law, state or Commonwealth, and anything in a
trust deed or other document.
Proposed sections 90YD to 90YI provide definitions
for the purposes of Part VIIIC, in a number of cases by reference to
other proposed clauses.[40]
Some notable definitions are:
- a
‘child of the de facto relationship’ only refers, for the purposes
of the part, to a child of both parties to the relationship[41]
- splittable
payment refers to a payment in respect to a superannuation interest either to a
party, or to another person for the benefit of that party, to a legal
representative of the party following the death of the party or to a
reversionary beneficiary or their legal representative after the death of the
party; unless a regulation is made which specifies that a particular payment or
payments generally are not splittable payments.[42]
The latter provision means that most superannuation
payments in respect of an individual’s superannuation are splittable
payments regardless of how they are to be otherwise distributed.
Proposed sections 90YK and 90YL set out what
superannuation agreements the Bill is intended to cover. Section 90YK
replicates the effect of existing section 90XHA, so as to apply to WA. This
means, in effect, that a superannuation agreement between WA de facto partners
will form part of a general financial agreement relating to the distribution of
property on the breakdown of the relationship. This already applies to parties
to a marriage Australia wide, and parties to a de facto relationship in other
Australian jurisdictions.
One significant difference in WA is that for WA de facto
couples a financial agreement is made under the WA Family Court Act,
rather than under the FLA as is the case otherwise. Proposed section
90YK thus specifies that if a financial agreement made under the WA Act
includes a superannuation agreement, that superannuation agreement will, with
the passage of proposed section 90YK, only be enforceable under the FLA
and not the WA Act.
Payment splitting
Proposed sections 90YM and 90YN set out provisions
in respect of payment splitting. This sets the conditions for how, and when,
superannuation is distributed following the breakdown of a WA de facto
relationship. Superannuation splitting is a process by which the value embedded
in a superannuation fund is divided between the relevant parties. It does not
convert superannuation into a cash asset. The ‘split’ is only on
paper until the superannuation asset is realised in line with general
superannuation law—for example, when the person whose superannuation
policy it is retires from the workforce.
The proposed provisions on superannuation splitting for de
facto relationships in WA replicate those already in the FLA in respect
of other Australians. Superannuation can be split by consent between the
parties, or by court order in line with proposed section 90YX. Where a
court itself decides the interests of the parties in the value of the superannuation
asset it does so by applying the Family Law (Superannuation)
Regulations 2001, or by determining the value of the interest by such
method as the court considers appropriate.[43]
Payment flags
Proposed sections 90YO to 90YS (inclusive) contain
provisions about payment flags and the lifting of payment flags. Essentially, a
payment flag is an injunction to stop the relevant superannuation fund from
paying out certain sums to the policy holder while the flag is in place. This
approach might be taken, for example, where the parties are about to reach the
age at which they can access their superannuation, and no superannuation
agreement or orders are in place. Penalties apply for the trustee of a
superannuation fund who acts contrary to a payment flag.[44]
The parties can make an agreement to lift a payment flag.
Certain conditions apply to this, including that both parties must have
obtained independent legal advice and must provide a certificate from the relevant
legal practitioner attesting to that.[45]
The WA courts exercising family law jurisdiction can set aside a flag lifting
agreement under certain specified circumstances. These include where the flag
lifting agreement is unconscionable or fraudulent; was entered into for the
purpose of defrauding someone such as a creditor; or where circumstances have
arisen or changed since the agreement was made.[46]
Who does proposed Part VIIIC apply
to
Proposed sections 90YZB and 90YZC limit the
jurisdiction of proposed Part VIIIC. For that Part to apply, at least
one of the parties must be resident in WA on the day the application was made;
they must have resided in WA for at least one third of their de facto
relationship (or have made substantial contributions as set out in the WA Family
Court Act in WA); and they must have been in a de facto relationship for at
least two years, unless there is a child of the relationship and the two year
rule would cause serious injustice to the carer of the child.
What does a court take into account
in making an order?
Proposed section 90YZD sets out what a court should
take into account before making an order under proposed section 90YX.
This section is lengthy but not novel. It largely replicates provisions already
in the FLA in subsections 90SM(2) to 90SM(20).[47]
The court must take into account issues such as:
- age
and health of the parties
- their
financial resources
- their
earning capacity
- their
contributions while in the relationship and
- their
necessity to support other people, including persons who they may now be
cohabiting with.
(This list is not comprehensive).
Other provisions
The court is not compelled to make an immediate decision
under proposed section 90YX. It can adjourn a matter where, for example,
there is likely to be a significant change in the financial circumstances of
the parties and where it considers that the adjournment would be more likely to
do justice between them.[48]
Persons other than the separated parties, whose own
interests might be affected by a section 90YX order, can become parties to a
proceeding for such an order. These might include
- creditors
or
- persons
who have a financial agreement with one of the parties, such as other de facto
partners or spouses.[49]
Decisions of the court under proposed Part VIIIC
must ultimately be final decisions. The court has a duty to end the financial
relations between the parties.[50]
A party to a payment split can waive their right to a split (for example, this
might occur when the former partner makes a cash payment equivalent to the
value of the superannuation interest). A waiver notice must be accompanied by a
statement, and evidence in the form of a certificate, that the non-member
spouse has received independent financial advice from a prescribed financial
adviser.[51]
The death of the non-member spouse does not negate a payment split—the
person’s legal representative has all the rights of the non-member
spouse, including being able to waive the payment split.[52]
Transitional Provisions (Schedule
4)
The courts which consider family law matters have a heavy
and ongoing workload. Consequently an important question when there are
substantial legislative amendments, such as in this Bill, is to which cases
should the new provisions apply? The transitional provisions in the Bill
provide an answer to this question—however, those transitional provisions
are probably the most contentious in the Bill.
Item 2 of Schedule 4 says that proposed
section 90YK (inclusion of superannuation interest in general financial
agreement) applies in relation to any WA financial agreement made after the commencement
(of section 90YK). Item 3 provides that the new provisions do not
apply to a de facto relationship where the parties are parties to proceedings
under the WA Act which have commenced and are not yet determined, unless
the parties choose for proposed section 90YX (the court may make orders)
to apply. It is not possible, under the transitional provisions, for a single
litigant to ‘opt in’ to the new provisions. Proposed sub-item
3(2) of Schedule 4 says ‘the parties … may choose
for section 90YX … to apply’ (emphasis added).
For such a choice to be made both parties have to provide
informed consent, following the receipt of legal advice. A choice, once made,
is irrevocable by the parties themselves;[53]
but can be set aside by a court if the court decides that it would be unjust
and inequitable not to set the choice aside.[54]
Comment on the transitional
provisions
The contentious nature of the transitional provisions was
summed up by the Senate Committee in its report. It said:
… a number of key stakeholders expressed
concerns regarding the transition arrangements contained in Schedule 4. These
stakeholders were concerned that the transitional arrangements may disadvantage
the financially-weaker party because they require parties in matters that are
already before the courts to agree if they wish the provisions to apply to
their settlement (‘opt-in’ to the new regime).[55]
It appears to be implied in the Senate Committee report’s
summary of the submissions that it received that the new legislative regime
will provide more protection to the weaker party in a superannuation split.
This would further imply that it may be in the interests of the party in a
stronger position to ensure actions commence under the existing provisions.
This would appear to be contrary to the spirit of the
amending legislation. The Family Law Practitioners Association of WA considers
that the opt-in mechanism fails to meet the intent of the legislation, which is
to overcome inequity in cases where the inability to super split leaves one
party without access to the appropriate property settlement.[56]
On the other hand, the Attorney-General’s Department
has submitted,[57]
and indeed resubmitted in its answer to the question on notice,[58]
that the transitional provisions as drafted were consistent with the provisions
in place when superannuation splitting amendments were applied to other
Australian jurisdictions by the inclusion of Part VIIIAB in the FLA.
One point, which could not perhaps be envisaged when the
Senate Committee released its report, is the time taken for this legislation to
pass Parliament, mostly because of the public health situation in Australia in
2020. This may strengthen the case for more flexible transitional provisions.
It may be the case that a party who wished to rely on the new provisions has
not been able to do so because of time limits after separation for the
commencement of proceedings.
Bankruptcy Provisions (Schedule 2)
Schedule 2 contains provisions amending the Bankruptcy
Act 1966. As noted earlier, the purpose of these provisions is to extend
the capacity of the WA courts to hear bankruptcy matters, which are
constitutionally federal issues, where appropriate.
Section 35 of the Bankruptcy Act, which will not be
amended, gives the FCA jurisdiction in bankruptcy where the trustee is a party
to property settlement proceedings. Subsection 35(1) contains clauses about a
marriage break-up. WA is already covered by provisions relating to marriage, as
previously explained. Subsection 35(1A) relates to the break-up of a de facto
relationship.
Current subsection 35B(1) specifically notes that subsection
35(1A) does not apply to the Family Court of WA. Neither does section
35A of the current Act in relation to de facto relationships. (Section 35A
allows the transfer of bankruptcy matters from the Federal Court to the FCA.)
In summary, section 35B as it stands gives the WA Family
Court bankruptcy jurisdiction in the same way as the FCA has that jurisdiction,
but specifically excludes matters relating to the breakdown of a de facto
relationship.
Rather than making amendments to the current provisions such
as section 35 and section 35A, the Bill replaces current section 35B in its
entirety with a proposed new section 35B.
Proposed section 35B gives the WA Family Court full
jurisdiction to hear bankruptcy matters in similar fashion to the FCA. Proposed
subsection 35B(4) specifically refers to matters where the trustee to a
bankrupt person is also a party to proceedings under proposed Part VIIIC
of the FLA. This will mean that, unlike before, the Family Court of WA will
have the capacity to hear the bankruptcy and de facto separation matters
together.
Appeals against decisions of the Family Court of WA made
under proposed subsection 35B(4) will lie to the Court of Appeal of the
WA Supreme Court and not elsewhere (for example, not to the Federal Court).[59]
This means that once the matter goes into the WA court system it remains there.
A bankruptcy matter can be transferred to the WA court
either on the application of a party or on the initiative of the Federal Court
or Federal Circuit Court.[60]
There is no appeal against such a transfer (or indeed a decision not to
transfer).[61]
Where a matter is transferred to the WA Family Court, that Court has full
capacity to make and enforce decisions in the proceeding.[62]
Schedule 2 contains a number of other consequential
changes to the Bankruptcy Act, necessitated by the effect of proposed
section 35B. These largely involve cross referencing the new Part VIIIC of
the FLA.
Other provisions
Consequential Provisions (Schedule
3)
The substantive changes made by the Act necessitate that
certain consequential changes to other Acts must be made. The Acts that are
amended by this schedule are typically Acts relating to superannuation or
pensions, as well as the Income Tax
Assessment Act 1997, the Social Security Act
1991 and the Proceeds
of Crime Act 2002. In each case, the purpose of these consequential
amendments is to cross reference the new sections in the FLA.
Concluding comments
The substantive provisions of this Bill appear unexceptional
and largely replicate for Western Australians the system which has operated
elsewhere in Australia for a number of years.
As noted earlier, the principal, or perhaps only, point of
contention has been concerning to whom the new provisions should apply when the
Bill becomes law. There is no objectively right answer to this. Some
submitters, and the Senate Committee, have suggested one course of action while
the Attorney-General’s Department has stated and restated its opposition.
It might be noted, though, that the Bill, though it is basically
uncontroversial, has taken, like most legislation this year, a considerable
time to pass through the Parliament for reasons other than the Bill’s
contents. In these circumstances a reconsideration of the transitional
provisions may be warranted.