Property Settlement

Parties may reach a property settlement agreement without court proceedings, through negotiation, mediation or other alternative dispute resolution which may be formalised by way of an application for consent orders or a binding financial agreement. However, if such alternative dispute resolutions are unsuccessful then a party may have to commence proceedings seeking property settlement orders provided that such an application is brought within the limitations period.

Under the Family Law Act, in order to determine the nature of the relationship for the purpose of a financial or property settlement, the Family Court must be satisfied as to a number of factors including:

– That the parties were in a genuine de facto relationship which has broken down;

– That the relationship lasted at least two years or that there is a child of the relationship.

The first step is to identify the assets, liabilities and financial resources of the parties to the relationship and whether same are held in the sole name of a party or jointly with each other or in fact with another person or on trust. It is important to note that superannuation is treated as an asset for the purposes of property settlement proceedings and may be the subject of a superannuation splitting order. It is also important to assess if there is a pre-existing binding financial agreement between the parties.

STEP 2

There is an assessment of the financial, non-financial and welfare contributions made by the parties to the relationship as well as an assessment of the future needs of both parties.

STEP 3

The final step is an assessment of the proposed division of assets and liabilities to ensure a just and equitable alteration of the property interests of both parties.

Final property orders will be drafted which may necessarily include a mechanism for self-executing enforcement remedies such as a default sale clause, an order for interest payable after the due date for payment or an order for security for payment or an order enabling a registrar of the Court to sign a document on behalf of any party, in the event that a party to the agreement fails to comply with their obligations.

Parties may also commence proceedings seeking enforcement orders by way of an application in the Federal Circuit Court or an enforcement hearing in the Family Court.

A party to a marriage may bring a property or maintenance application at any time following separation unless a divorce order has been granted and in those circumstances, the parties have only 12 months from the date of the divorce becoming final in which to apply for any final or interim property or spousal maintenance order. Proceedings however may be commenced out of time with the leave of the Court.

DE FACTO COUPLE

A party to a de facto relationship has only two years from the date their relationship ends in which to bring a property and/or maintenance application. A party to a de facto relationship cannot apply under the Family Law Act if the relationship has broken down before 1 March 2009 unless both parties consent to their application being heard. If no consent is obtained then the application will need to be made under the respective State or Territory Law.

Ordinarily, parties must be living in a de facto relationship for approximately two years unless there is a child of the relationship or substantial contributions have been made during the relationship to satisfy the Court that it is just and equitable in all of the circumstances to alter the property interests of the parties. Unless a de facto couple registers their relationship there is no written document as to the existence of the relationship or its commencement date. A party to a de facto relationship may seek a declaration as to the existence or non-existence of the relationship under the Family Law Act.

If the parties are entering into a financial agreement following separation then same may operate as a release of the obligation on the part of one party for future spousal maintenance or it may be intended to document the agreed property settlement. As financial agreements are not required to be fair, nor are they approved by the Court, there is no affirmation as to the just and equity of the agreement based on the party’s means and needs at the time. In those circumstances the parties should consider consent orders or Court intervention.

Financial agreements can be set aside in certain circumstances including any agreement obtained by fraud. A financial agreement could be held void or unenforceable if there has been a material change in circumstances since making the agreement (circumstances relating to the care, welfare and development of a child of the marriage), unconscionable conduct or it is impracticable to carry out the agreement. Any application to set aside a financial agreement requires evidence and in most cases, may be difficult to establish because of the requirement for there to be a certificate of independent advice attached to the agreement itself.

Whilst a financial agreement is not required to be fair, should an application to set aside the agreement be filed in the Family Court of Australia or the Federal Circuit Court of Australia and the Court is satisfied that the grounds to set aside the agreement have been established, then the onus shifts to the other party to establish to the Court’s satisfaction that the agreement was in fact fair, just and reasonable.