Section 81 of the Family Law Act contains a principle commonly referred to as the principle of finality or clean break principle, and is a provision introduced to ensure that any final order of the Court separates parties financially on a final basis. That is, the intention of the section is to stop any further claims arising in future due to financial ties subsisting after the Orders are made.

Section 81 of the Family Law Act 1975 (Cth) States:

“In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.”

There are a few exceptions to this rule which have come to light in recent case law. The first is the decision in Laice & Longki [2012]FamCA 526 where Cronin J dealt with an appeal against a registrars refusal to make consent orders where the orders did not adhere to section 81 of the FLA. On that occasion, the original order that was filed and rejected by the registrar contained an order transferring the interest in a property held as joint tenants to a tenancy in common shares. In that case, Cronin J issued a finding that while section 81 was a directive to the court to, wherever possible, make an order that is a clean break, the overriding provision was Section 79 of theFLA. Cronin J was satisfied on that occasion that the severance of the joint tenancy of the property was enough to provide each party with their own distinct interest in the property and the initially rejected consent orders were made by his honour.

There is no doubt that the making of an order such as the orders made by Cronin J in this decision is risky to parties, as if there is a disagreement in future about the sale of a share of the property or the property as a whole, the parties may have to escalate the matter to the courts to force a sale or transfer. The key takeaway here is that ordinarily, whether in a relationship or not, two or more parties may own a property as tenants in common shares and parties should obtain legal advice and carefully consider their position in this regard before entering into Orders to divide a property into a tenancy in common shares.

In another case before the court, a husband and wife sought to divide their property however each retain their interest in a jointly owned business. The parties in this case were joint directors and shareholders of a corporate entity which owned the business and had received financial projections that the business would profit significantly and experience growth in the near future,thus neither wanted to sell or transfer their interest.

Initially, the registrar refused to make the order due to non-adherence to section 81. On review of the matter by the judge, the Orders were made as it was possible for the parties to own a business, whether in a relationship or not, jointly. The parties in this case both had the benefit of independent legal advice and were aware that any dispute in relation to ownership of the business in future would need to be escalated to a different court.

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