Senate

Revised Explanatory Memorandum

(Circulated by authority of the Attorney-General, the Honourable Christian Porter MP)

GENERAL OUTLINE

1. This Bill will give effect to a referral of power from Western Australia to the Commonwealth in respect of superannuation matters in family law proceedings for separating de facto couples in Western Australia.

2. The Bill will also extend federal bankruptcy jurisdiction to the Family Court of Western Australia to hear bankruptcy proceedings concurrently with family law proceedings, where appropriate.

Superannuation splitting

3. In 2001, the Family Law Act 1975 (Cth) ('the FLA') was amended by the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth), to enable parties to family law proceedings to split their superannuation interests as part of their family law property division. Part VIIIB was inserted in the FLA, enabling superannuation interests to be split either by agreement or by order of the Court.

4. In 2008, the Family Law Amendment (De facto Financial Matters and Other Measures) Act 2008 (Cth) extended the financial settlement regime under the FLA to de facto couples, relying on referrals by States to the Commonwealth in accordance with subsection 51(xxxvii) of the Constitution. Between 2003 and 2010, all states except Western Australia provided the Commonwealth with full subject matter referrals of power for de facto property, maintenance and superannuation in family law matters. Since these referrals took effect, family courts have been able to make orders in respect of de facto couples' property as they do for married couples in all states and territories except Western Australia.

5. In 2006, Western Australia enacted the Commonwealth Powers (De facto Relationships) Act 2006 (WA) ('the WA Referral Act'), to provide a limited referral of power to the Commonwealth, to enable the splitting of Western Australian de facto couples' superannuation in family law matters. Western Australia has not provided a referral of power for other aspects of de facto property or financial matters. This narrow referral was not previously accepted by the Commonwealth, on the basis that it would not provide for a nationally consistent family law property regime for separating de facto couples.

6. In recent times, superannuation has become an increasingly valuable asset for Australians, and can be the largest single asset in the property pool of a separating family. The inability for de facto couples in Western Australia to split their superannuation has led to increasing inequity, particularly for couples with low-value property pools where superannuation may be the only asset. It also disproportionately affects women who, on average, accumulate less superannuation. To ensure de facto couples in Western Australia are treated consistently with de facto couples across the country in terms of superannuation, the Australian Government decided in October 2018 to accept and implement a narrow referral of power from Western Australia.

7. The amendments in Schedule 1 of this Bill will improve access to justice for separating de facto couples in Western Australia, enabling them to achieve a fair split of their superannuation assets in property settlements. All other aspects of property splitting for separated Western Australian de facto couples will continue to be dealt with under Western Australian law (that is, the federal FLA regime will not apply).

8. Schedule 1 of the Bill will create a new Part VIIIC in the FLA, dealing solely with superannuation splitting for separating de facto couples in Western Australia. The provisions will be contained in a discrete Part of the FLA in order to avoid any confusion about the application of geographical limiters elsewhere in the Act in respect of de facto couples' non-superannuation property interests. A separate Part will reduce the risk of unintended consequences to the operation of the existing property provisions in the FLA for de facto couples in other states. Finally, it will confine the Western Australian provisions in a single place, which should aid usability and comprehension for judicial officers, lawyers, and separating couples in Western Australia, seeking to find the WA-specific provisions.

9. The operative provisions in proposed Part VIIIC, set out in Schedule 1 of this Bill, would replicate provisions in existing Parts VIIIAB and VIIIB of the FLA. Certain procedural provisions, for example the geographical requirements and length of relationship requirements to commence Part VIIIC proceedings, replicate those contained in Part 5A of the Family Court Act 1997 (WA) ('the FCA'). This reflects that superannuation splitting proceedings will typically be heard concurrently with Part 5A property proceedings in either the Family Court of Western Australia or the Magistrates Court of Western Australia.

10. The superannuation splitting arrangements in new Part VIIIC will apply to all Western Australian de facto couples who have not yet received final property orders.

Bankruptcy jurisdiction

11. The objective of amending the Bankruptcy Act is to align proceedings for Western Australian de facto couples with proceedings across Australia for parties to a de facto relationship and parties to a marriage.

12. Currently, Western Australian de facto couples need to resolve matters where either or both parties are also involved in bankruptcy proceedings through separate proceedings in two different courts: family law proceedings in the Family Court of Western Australia, and bankruptcy proceedings in the Federal Court of Australia or the Federal Circuit Court of Australia.

History of the Family Court of Western Australia's jurisdiction in bankruptcy

13. In 2005, the Family Law Amendment Act 2005 amended the Bankruptcy Act to confer on the Family Court of Western Australia the same jurisdiction in bankruptcy (which related to parties to a marriage) that had been conferred on the Family Court of Australia by the Bankruptcy and Family Law Legislation Amendment Act 2005.

14. In 2008, the Bankruptcy Act was amended by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008, to allow de facto couples to access the federal family law courts for property and maintenance matters. As a consequence, the bankruptcy jurisdiction of the Family Court of Australia was extended to apply to concurrent bankruptcy and family law matters involving parties to a de facto relationship. That jurisdiction in relation to parties to a de facto relationship was not extended to the Family Court of Western Australia. The Family Court of Western Australia's jurisdiction therefore remained limited to concurrent bankruptcy and family law proceedings involving parties to a marriage.

Extending the Family Court of Western Australia's jurisdiction in bankruptcy

15. The Bill will extend the jurisdiction in bankruptcy of the Family Court of Western Australia to enable it to determine family law and bankruptcy matters together for parties to a de facto relationship. The jurisdiction of the Family Court of Western Australia will reflect the existing jurisdiction in bankruptcy of the Family Court of Australia, ensuring a nationally consistent approach to the exercise of bankruptcy jurisdiction in family law matters.

16. The amendments in Schedule 2 (principally in proposed section 35B) will confer jurisdiction in bankruptcy on the Family Court of Western Australia in two circumstances:

(i)

when a party to a marriage or de facto relationship is bankrupt and the trustee of the bankrupt's estate is a party or an applicant in relation to property settlement or spousal maintenance proceedings under the FLA or the Family Court Act 1997 (WA), or

(ii)

when proceedings which are before the Federal Court or the Federal Circuit Court are transferred to the Family Court of Western Australia.

17. Schedule 2 of the Bill largely mirrors existing provisions of the Bankruptcy Act that provide the Family Court of Australia with jurisdiction in bankruptcy when a party to a family law proceeding is a bankrupt.

18. The Bill also provides that appeals in relation to concurrent family law and bankruptcy proceedings for Western Australian de facto couples will mirror existing appeals pathways for married and de facto couples in other jurisdictions. To achieve that consistency, appeals will lie to the Full Court of the Federal Court where the bankruptcy matter originates in the Federal Court or Federal Circuit Court and is subsequently transferred to the Family Court of Western Australia. These proceedings generally involve complicated questions of bankruptcy law and are best considered by the specialist bankruptcy court, the Federal Court. Matters that originate in the Family Court of Western Australia will be appealed to the Supreme Court of Western Australia.

19. The ability to have bankruptcy and family law matters heard together will bring de facto couples in line with married couples in Western Australia, and with married and de facto couples in the other states and territories.

FINANCIAL IMPACT

20. The Bill will have nil financial implications. Although measures in the Bill will extend the jurisdiction of the Family Court of Western Australia and the Magistrates Court of Western Australia, they are unlikely to result in an increase in the number of cases heard in those courts. The measures will broaden the range of issues litigated within de facto proceedings, which are already heard by those courts.

REGULATION IMPACT

21. The measures in this Bill are machinery in nature and will have no more than minor regulatory impacts.