Separation is difficult enough without discovering that, while you’ve been focused on children, housing, or just getting through the day, someone is selling, transferring, or quietly shifting into their name the assets you expected to divide.
It happens more often than you’d think. Someone transfers a house to a parent or sibling for a token amount.Bank accounts drain. A business interest vanishes into a family trust. An inheritance is disclaimed by deed so the money flows to other relatives instead. By the time any of this surfaces, it can look like it’s already too late.
It isn’t. The Family Law Act 1975 (Cth) gives the court specific powers to stop these transactions before they occur and, in some cases, to unwind them after the fact.
The problem the law is designed to solve
When a court makes a property adjustment order, it can only divide what’s actually there. Deliberately shrink the pool, and the court’s power shrinks with it, while the other party bears the shortfall.
That’s precisely what the law is designed to prevent. Sections 114 and 106B of the Act both address the problem, though in different ways and at different stages.
Worth noting: both provisions apply equally to de facto couples, not only married parties. If you were in a genuine de facto relationship that has ended, these protective powers are available to you. Timing differs. De facto couples generally have two years from the breakdown of the relationship to start property proceedings, compared with 12 months after a divorce order for married couples. As that window narrows, the urgency of acting only grows.
Section 114: stopping a transaction before it happens
Broadly speaking, section 114 is the court’s general injunctive power. Used in financial proceedings, it can stop a party from dealing with property while the parties resolve the settlement, from selling the family home or transferring funds, to encumbering a business or moving assets offshore. An injunction under this provision doesn’t determine who gets what. It holds the position while the court answers that question.
A party can apply at short notice. Where the parties have already exchanged a contract, or settlement is only days away, the court can list an urgent hearing and make a holding order quickly, sometimes before anyone even serves the other party.
In more pressing cases, a party can apply without telling the other side at all. That’s an exceptional step, and courts don’t take it lightly. The applicant must give full and frank disclosure, including anything that might weigh against the application. Courts almost always make without-notice orders on a temporary basis: the court relists the matter promptly so it can hear the responding party. But when timing is critical, a Friday afternoon order can prevent a settlement from completing the following Monday.
What does the court look for? Essentially three things: a genuine dispute in the underlying property proceedings, a real rather than speculative risk that someone will deal with the asset before the court makes orders, and a balance of convenience that favours preserving the status quo. Suspicion alone won’t do. The evidence needs to point to an actual, identifiable risk.
Nor is the response always a flat prohibition. Sometimes a court will allow a sale to proceed, but only on condition that a solicitor holds the net proceeds in trust until the parties resolve the property dispute. Someone can still manage a transfer that looks unstoppable, provided they can secure the money.
Section 106B: undoing a transaction that has already occurred
Section 106B operates differently. Rather than simply preserving assets, it reaches back to a completed transaction and can undo it, provided the statutory test is met.
A court can set aside a dealing where someone made it to defeat an existing or anticipated family law order, or where it’s likely to have that effect regardless of what anyone intended. Motive matters, but it isn’t everything. The real question is whether the transaction, whatever the stated reason behind it, leaves a proper property order unable to be satisfied.
A wide range of dealings falls within the provision’s reach. A house transferred to a sibling for little or nothing. Shares gifted to a relative. A family debt quietly forgiven. In Ivanovic & Ivanovic & Ivanovic [1999] FamCA 2087, the court set aside an assignment by the husband of his interest in a property to his brother, made for a cash payment while the husband was aware of enforcement proceedings on foot against him and intended to defeat any order made in them. A deed disclaiming an inheritance so the money passes to other family members rather than into the property pool can fall within the same net. What unites these dealings is a single outcome: value that should have been available to divide no longer is.
The distinction that matters
Put simply: section 114 holds the line. Section 106B can move it back.
You can invoke both at the same time. If a transaction is under way but not yet complete, both provisions allow restraint simultaneously. Once a transfer is done, section 106B becomes the primary mechanism, though courts will often freeze further dealings first and resolve the full setting-aside application later, once all the relevant parties have had a chance to respond.
How far back can the court reach?
Further than most people expect.
In Ferguson & Ferguson [2022] FedCFamC2F 1194, the court set aside a transfer that had occurred approximately 19 years before the wife’s application. At the time of the transfer, the parties were still married and living together. Their home was worth $400,000. By the time of the proceedings, it had grown to $1,000,000.
Evidence showed the husband had been concerned about losing the property in a future settlement and structured the transfer to put it beyond the wife’s reach. His daughter paid nothing. She knew of her father’s concern. No real consideration changed hands, and the dealing wasn’t at arm’s length. That was enough.
The transfer was set aside. The home reverted to the parties.
Not every historical transfer is vulnerable to challenge. But this outcome makes clear that section 106B isn’t confined to transactions made after separation or once proceedings have started. Where the evidence is strong enough, the reach is considerable.
When relief is refused
Courts draw a careful distinction between a transaction that genuinely defeats a property claim and one that simply changes the form of assets without causing real prejudice.
Badenoch & Faldyn & Anor [2020] FCCA 1530 illustrates that line. After separation, the wife sold a property the parties had owned together without telling the husband, who applied to set the sale aside. The court accepted that a future property order was objectively foreseeable. The application still failed. What defeated it was straightforward: the net proceeds of $200,000 were still held in trust by the conveyancer. The sale had not placed the asset beyond the husband’s reach at all. The valuation evidence he relied on was two years old and the valuer had never entered the property. The buyers had purchased through a real estate agent with no knowledge of any property claim and were bona fide purchasers for value.
That’s the key point. An asset changing hands or the pool shifting in form doesn’t simply trigger section 106B. The applicant must demonstrate that the transaction leaves the court unable to make a proper order. Foreseeing a claim isn’t the same as proving that a proper order can’t satisfy it. A well-prepared applicant will build a picture of the property pool with and without the dealing, and explain why what’s left falls short.
What about the family member who received the property?
This is where many people assume the situation is beyond recovery. Property has been transferred. A family member has been living there for years. What now?
The answer isn’t always nothing.
Courts must consider the position of a bona fide purchaser, meaning someone who paid genuine market value, had no knowledge of the family law dispute, and dealt at arm’s length. Where that description fits, the court is unlikely to disturb registered title. Relief might instead take a different form: tracing the sale proceeds, adjusting the final settlement against the disposing party, or other orders that address the shortfall without unwinding the transfer itself.
Where a recipient paid nothing, or far less than the property was worth, the analysis shifts. In Ferguson & Ferguson, the daughter received the home for no consideration, didn’t have to pay stamp duty, and the deed indemnified her for property-related liabilities. She wasn’t a bona fide purchaser. The court set aside the transfer.
How any recipient is treated comes down to the facts: what was paid, what they knew, how they’ve dealt with the asset since. A relative who received property for nothing stands in very different territory from an unrelated buyer who paid market rate with no knowledge of any dispute.
Signs worth acting on
Certain patterns tend to recur in transactions that attract section 106B scrutiny. If more than one of the following applies, it’s worth getting advice.
- Property transferred to a parent, sibling, or close relative since separation, or just before it.
- Consideration described as nominal, “love and affection,” or simply well below what the asset is worth.
- A business interest, shareholding, or trust distribution changing hands within the family group without any obvious commercial rationale.
- A family debt quietly forgiven.
- An inheritance disclaimed or redirected by deed.
- Financial disclosure that doesn’t add up, or assets that have disappeared from the records.
- A transaction you weren’t told about until after it happened.
None of these is automatically decisive. Together, though, they describe exactly the kind of dealing that section 106B exists to examine.
What you need to show
Section 106B isn’t a general fairness remedy. Showing that the other party transferred property and you received less than expected isn’t enough on its own.
What’s required is evidence that the transaction is likely to defeat an order you’d otherwise be entitled to. That means constructing a clear picture: what the pool would have looked like without the dealing, what a proper order would have provided, and how the transaction prevents you from obtaining that outcome from what remains.
Rarely will there be a document saying “I transferred this to defeat your claim.” Courts don’t need one.The court draws inferences from timing, absent or inadequate consideration, the closeness of the parties involved, secrecy, and the commercial irrationality of the arrangement viewed on its own terms. The court will examine carefully a transfer made after separation, for little or nothing, to a close family member, at a time when proceedings were clearly on the horizon, whatever explanation is offered.
Urgency and timing
These situations don’t sit still. A sale can settle. Funds can move again. Each additional step makes reversal harder and more expensive, and creates opportunities for the asset to reach a recipient whose position is harder to challenge.
When you first become aware of a problem, the question isn’t whether your evidence is complete. It’s whether you have enough to seek urgent relief and preserve the position while the matter is properly investigated. A holding order restraining further dealings is often the realistic first step, often more achievable in the short term than the immediate reversal of a transaction that’s already done.
Moving early matters in another way too. Section 106B has no fixed limitation period of its own, but delay can affect the court’s willingness to grant relief, particularly where a third party has altered their position since the transaction occurred. On top of that, the underlying property proceedings carry their own time limits. If that window closes, a section 106B application becomes significantly harder to pursue.
What to do if you are in this situation
Start by documenting what you know. Bank statements, title searches, corporate records, correspondence. All of it can be relevant. Gaps in financial disclosure are themselves a data point worth preserving.
Don’t assume a completed transaction is untouchable. If it can be shown to have the effect of defeating what would otherwise be a proper property order, and there isn’t enough left to satisfy that order, the court has power to act.
Don’t wait. Every day a transaction stays in place, the harder it becomes to reverse and the more time there is for the position to shift in ways that complicate recovery
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
Article Written by Isabelle Knight, Solicitor
