The Full Court of the Family Court some years ago identified the steps that the Court must follow to decide property matters between former spouses pursuant to section 79 and 75(2) of the Family Law Act. The Full Court’s approach has become a guide to parties’ entitlements. This approach became known as “the four-steps approach” and it has been applied to family law matters for some years since. The Court applies the four-steps approach in circumstances where parties are (or were) married or in a de facto relationship.
A more recent, very significant, decision of the High Court of Australia  raised questions about whether the four-steps approach continues to be the appropriate approach in all cases. In spite of the this decision, the four-steps approach remains an important guide to assess what should be an appropriate family law property adjustment in a particular case even if it “merely illuminates the path to the ultimate result”.
The four-steps approach should be used to analyse the likely outcome of a property matter whether or not parties wish to negotiate a settlement or to take the matter to Court.
Step One Identifying and valuing the assets and the liabilities of the parties.
Step Two Assessing the contributions that each party made to the marriage
Step Three A comparison of the financial circumstances of each party
Step Four The just and equitable requirement
Below are a couple of examples about how the four-steps approach is applied by courts in different cases:
Example One – A couple cohabited for fifteen years. They married ten years after they commenced cohabitation.
Example Two – The parties commenced to cohabit in a de facto relationship three years ago in the woman's house which she owns in her name.
The four steps mentioned above provide a general overview of the court’s approach to property settlement and a useful guidance to a solicitor to assess what is his/her client’s entitlement in a particular case. For a more detailed advice on your specific circumstances we invite you to contact our team.
 Hickey v Hickey  FamCA 395.
 Stanford v Stanford  HCA 52 (15 November 2012). In that case, the Court emphasised the importance of section 75(2) of the Family Law Act which reads: The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. The Family Court has wide discretion to adjust the proprietary rights of parties under the Family Law Act using the four-steps approach. There are some cases, however, when the Court should not disturb the parties’ proprietary rights and should not make any adjustments at all. A good example may be a short marriage or a short relationship.
 Bevan and Bevan  FAM CAFC116
 The Court has a wide discretion about how to divide the parties’ superannuation entitlements. Normally, although not in all cases, the adjustment described in the example relates to the non-superannuation pool of assets. In that example, the Court is likely to divide the combined superannuation entitlements of the parties equally between them.