Family Law Property Settlement

At Frigo James Legal Group we focus on trying to help our clients achieve a property settlement through alternative dispute resolution processes, rather than litigating their property dispute in the Courts. By reaching an agreement on the division of property from their relationship, parties save not only time and legal costs, but can also avoid the stress that fighting over property in the Courts will usually bring.

There are several alternative dispute resolution methods that parties can use to try and reach agreement on the division of property from their relationship. These include Family Law Mediation, Arbitration, Collaborative Law, and Early Neutral Evaluation.

Family Law Mediation is one of the most common forms of alternative dispute resolution methods used by parties to try and finalise property matters between them. It is a co-operative problem-solving process that is facilitated by a jointly appointed neutral mediator who is usually a very experienced family law barrister or family law solicitor. The mediator helps the parties to clearly define what each of them considers to be the issues that need to be resolved and guides the communication process. This enables personal feelings to be put aside whilst still allowing everyone to have a chance to be heard. A good mediator can help parties find solutions to the issues in dispute, but the mediator cannot make decisions about those issues where parties cannot agree.

Arbitration enables parties to jointly appoint an appropriately qualified arbitrator, who is also usually a very experienced family law barrister or family law solicitor, to resolve their property dispute. Unlike a mediator, however, an arbitrator is able to make a decision in relation to matters that are in dispute. However, arbitration can only be used for disputes about property, spousal maintenance or other financial issues. It cannot be used in relation to disputes over parenting arrangements or in relation to disputes that involve third parties (e.g. a family relative who is claiming a share of the parties’ matrimonial property).

Arbitration is very similar to going to court, with the arbitrator considering the evidence gathered by each of the parties and making a decision as to how the property from a relationship is to be divided. Once the arbitrator makes a decision, that decision is final and an Arbitral Award is registered in the Family Court. This has the same effect as an Order of the Family Court, and there are only a few circumstances where an arbitrator’s decision can be reviewed by the Family Court or the Federal Circuit Court of Ausrtalia.

The main advantage of using arbitration instead of going to Court is that the parties can choose their arbitrator and a resolution can usually be reached much sooner and less expensively.

In a Collaborative Law approach, parties and their lawyers work in a co-operative way to reach a fair settlement. To utilise this process both parties consent in a written agreement to be part of a collaborative process, to not go to Court, and to be respectful of each other throughout the process. To try and reach an agreement on how to divide the property from their relationship, parties may take part in a series of face-to-face sessions to enable the parties to have an honest exchange of information and allow them to inform each other of their expectations. Parties can be assisted in this process by financial and family law experts.

One of the advantages of utilising a Collaborative Law process is that the parties retain the control of the final decision rather than handing that decision over to a judge or an arbitrator.

Early Neutral Evaluation is a process whereby the parties can jointly appoint an independent evaluator to assess their case. The independent evaluator is usually a retired family law judge, an experienced family law barrister, or experienced family law solicitor. After reviewing the case, the independent evaluator will provide the parties with their opinion as to the likely result of the matter if they parties were to proceed to court. This independent evaluator’s opinion is not binding and the parties can decide whether they want to adopt that opinion as the basis for their separation agreement.

If parties do not adopt the independent evaluator’s opinion as the basis of their property settlement, they can still choose to use other forms of alternative dispute resolution to reach an agreement rather than proceeding straight to court.

But just reaching an agreement with your partner as to how you want to deal with your property, even if both parties sign that agreement, will not result in a binding arrangement. If you do not formalise your agreement by recording it in a Binding Financial Agreement or by having the Court make Consent Orders that reflect your agreement, you risk your former not complying with their obligations in that agreement or seeking a further distribution of property from you.

Where parties have been able to reach agreement on the distribution of property from their marriage or de facto relationship, they have the option of formalising that agreement by recording it in a Binding Financial Agreement or BFA.

A BFA is, in essence, a contract between the parties which sets out the terms of their agreement. As it has the effect of excluding the jurisdiction of the Family Court to deal with the parties’ financial matters, the Family Law Act 1975 stipulates that for a BFA to actually be binding on the parties, it must comply with a number of requirements.

Those requirements include that all parties to the agreement must sign the BFA. However, before signing the BFA, each of the parties to it have to have received independent legal advice about the effect of the agreement on their rights and about the advantages and disadvantages to that party of entering into the agreement. After a party has received their independent legal advice, their lawyer will provide a certificate confirming this advice was given. A copy of that certificate must be provided to the other party.

A BFA may deal with a wide variety of financial matters, including:

• The division of the parties’ joint and individual assets, liabilities, and financial resources (including superannuation)
• The payment of spousal maintenance.

There is no requirement for a Court to review and approve the BFA. Accordingly, where parties comply with the formal requirements under the Family Law Act 1975 , they can agree to enter into an agreement that a Court may not consider to be ‘just and equitable’ or ‘fair’ in all of the circumstances, which is a prerequisite before a Court will make an order in relation to the division of property from a relationship. This enables the parties to have a lot more flexibility and control over how their property is distributed between them.

Entering into a BFA can provide parties with certainty as to how their property is to be divided, or how they will be provided for financially into the future, without having to incur the significant legal costs associated with a Court hearing or having to endure the delays that often arise when seeking a Court hearing date.

Where a BFA has been properly prepared and executed in accordance with the requirements under the Family Law Act 1975, it can be very difficult to have it set aside. Circumstances where a Court will set aside a BFA include:

1. Where the agreement set out in the BFA was obtained by fraud, where the term fraud can include the non-disclosure of relevant financial information.
2. A party to the BFA entered into the agreement:

• For the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party; or
• With reckless disregard of the interests of a creditor or creditors of the party; or

1. A party to the BFA entered into the agreement:
2. For the purpose, or for purposes that included the purpose, of defrauding another person who is a party to a de-facto relationship with a spouse party; or
3. For the purpose or for purposes that included the purpose of defeating the interest of that other person in relation to any possible or pending application for an Order to alter the persons property interests; or
4. With reckless disregard of those interests of that other person; or
5. The agreement is void, voidable or unenforceable due to, for example, non compliance with the requirements of the Family Law Act 1975 , or a party being subjected to duress and force to sign the BFA;or
6. Where circumstances have arisen since the agreement was made, whereby it is impracticable for the agreement or a part of the agreement to be carried out; or
7. Since making the agreement there has been a material change in circumstances relating to the care, welfare and development of a child of the relationship and, as a result of the change, the child, or a person who entered the agreement with the care of that chid, will suffer hardship if the Court does not set the agreement aside; or
8. One of the parties entering into the agreement engaged in unconscionable conduct.

As an alternative to entering into a BFA, where parties have reached an agreement on how to divide the property from their relationship they can formalise that agreement by asking the Court to make orders by consent that sets out the obligations each party has under the agreement.

Unlike a BFA, parties do not have to seek independent legal advice about the effect of the orders on their rights or about the advantages and disadvantages to them of the agreement contained in the Consent Orders. However, a Court will not make Consent Orders unless the parties have satisfied it that in all of the circumstances the division of property is ‘just and equitable’ or fair.

Where parties want a Court to make Consent Orders, it is necessary to file an Application which includes a minute of consent which sets out the orders that are being sought. Where a Court is satisfied that the proposed orders contained in the minute of consent are just and equitable, the Court will make those orders without requiring the parties to attend Court. The individual circumstances of some relationships may mean that supporting materials need to be filed with an Application for Consent Orders so as to be able to demonstrate to the Court that the proposed agreement contained in the Consent Orders is just and equitable.

At Frigo James Legal Group our experienced family lawyers Gold Coast can help you draft clear orders which accurately record the agreement that you have reached as well as any supporting material that may be required to demonstrate that the agreement is just and equitable.

Once the Consent Orders have been made, they are binding on each party and a failure to comply with them may result in enforcement action being brought against you.

Where parties are unable to reach an agreement on a property settlement they may have to apply to the Court for property orders. The types of orders that can be sought for the court include:

• An interim distribution of property, including cash, as a partial property settlement whilst you wait for the final hearing;
• An interim distribution of funds to help you pay your legal fees to prepare for a final hearing;
• Interim spousal maintenance to enable you to financially support yourself whilst you wait for the final hearing;
• How the assets and liabilities from your relationship should be distributed;
• Splitting one party’s superannuation and rolling a portion of it into the other party’s superannuation fund;
• The payment of spousal maintenance after you receive your property settlement.

Once a Court determines that it is just and equitable to make an order to divide property between the parties from a relationship, it must follow a four-step process.

The First Step – Determining the Property Pool

The first of those steps is to determine what constitutes the ‘Property Pool’ that is available for distribution between the parties. To do this, the Court will look to see what assets and liabilities each of the parties have, and make findings in relation to their values. In addition, the Court will also value each parties’ superannuation interests. This assessment is usually undertaken as at the date of the Court hearing.

A common misconception is that unless an asset or liability is in joint names, or was purchased or incurred during the relationship, it cannot form part of the Property Pool. This is incorrect. The Court has the power to take into consideration assets and liabilities that are not only in the parties’ individual or joint names, but also property that is held in another person’s name or the name of a trust or corporation that one or both of the parties have an interest in, irrespective of when that asset or liability came into the Property Pool. Accordingly, where one party enters a relationship with an asset such as a home, that home can still form part of the Property Pool that is available for distribution between the parties.

The Second Step – Determining the parties’ contributions to the Property Pool

After determining what assets and liabilities the parties have, and the values of those assets and liabilities, the second step a Court is required to undertake is to determine what contributions the parties made to the Property Pool.

In making this determination, the Court will take into account the initial financial contributions made by the parties at the commencement of their relationship. Generally, the shorter the relationship, the more significance this contribution will have. Where the parties have been in a long term relationship, the Court may exercise its discretion and not give as much weight to that initial financial contribution.

The court will also have regard to the financial contributions and the non-financial contributions made by the parties during the relationship towards the acquisition, conservation of any of the property of the parties and/or to the welfare of the family. This does not involve a strict mathematical assessment and comparison of the income earned by the parties during their relationship. Rather, a Court will often recognise the importance of a home-maker’s non-financial contribution, and in particular the role this plays in enabling the other party to earn an income.

At the completion of these first two steps, the Court will have been able to make an assessment in percentage terms of what role each party had in bringing about the Property Pool that now has to be distributed.

The Third Step – Comparing the parties’ future needs

However, before distributing the Property Pool based solely on financial and non-financial contributions, the third step of determining a property settlement is for the Court to compare the parties’ competing future needs. Matters such as the parties’ age and health, earning capacity and any disparity in future income, the availability of financial resources, and the ongoing care of children under the age are all factors taken to into account when considering the parties’ future needs. Where one party’s future needs are greater than the other, the Court has the discretion to make an adjustment in favour of that party. That adjustment is made by deducting part (or a percentage) of one party’s contribution based assessment and adding it to the party with the greater future needs. For example, where a court may have initially assessed the contributions of the parties to the property pool as being equal, which would give rise to a 50/50 distribution of the property pool, where the court then considers the future needs of one party to be greater that the other, it may adjust the distribution so as to provide an extra 10% of the property pool to the party with the greater future needs. The effect of this would be to determine that prior to any further adjustment arising as a consequence of the fourth step, discussed below, the Property Pool would be distributed on a 60/40 basis in favour of the party with the greater future needs.

The Fourth Step – Is the distribution ‘Just and Equitable’

After determining the parties’ contributions to the Property Pool and making any necessary adjustments for the parties’ competing future needs, the Court will give consideration to whether the distribution of the property pool on the adjusted basis is ‘just and equitable’ or fair. This requires the Court to look at, amongst other things, the practical effect of an order distributing the Property Pool based on contributions and future needs, and to “stand back” and look at the reality of the percentage division at which it has arrived. Matter such as whether one party should receive more of the current available assets instead of, for example, superannuation, can be taken into consideration during this step and changes made to any proposed order to make sure it is ‘fair’.

If you are considering applying, or have applied, for a protection order, then obtaining early legal advice may help ensure that you are successful in that application. At Frigo James Legal Group our experienced domestic violence lawyers are able to advise you in relation to all aspects of applications for protection orders. Contact today our experienced family lawyer Mr Andrew James on 07 5621 3799 or email us at info@fjlegal.com.au for experienced legal advice in relation to your matter.