You may have received information about property settlements from television shows, back yard BBQ’s, people you know, and good old Google searches. There’s a problem with this, though. Only your divorce lawyer (also called a family lawyer) can properly advise and guide you through the settlement process.

When you don’t have a family lawyer, what you find, hear or read
might not apply to you, like these five (debunked) myths below.

 

Myth #1: We can only start dividing property once we divorce

Not true. You can begin settlement proceedings when you separate. Calling your family/divorce lawyer is an important first step to take if you know there’s no chance of reconciliation.

Getting the right information early assists in minimising conflict, obtaining faster resolution and reducing legal costs.

Your divorce lawyer at Hooper Family Lawyers will answer any questions you have during an initial consultation, which can take up to two hours. Bring any documents you believe are important and make a list of you and your partner’s assets, superannuation and liabilities.

 

Myth #2: Everything is a 50/50 split

Just because you’re married or in a de facto relationship doesn’t mean assets are split 50/50 on separation.

The law requires that the contributions and future economic circumstances of the parties are examined. The amount of time the parties are together and number and age of children is often examined in assessing how much one side will receive.

The contributions of the parties are not just financial, but also non-financial and as homemaker and parent. Financial contributions do not rank more highly than others. That saying ‘money isn’t everything’ certainly applies here.

 

Myth #3: The only way to end this is going to court

Your divorce lawyer, divorce lawyer or family lawyer assists you to avoid going to court. Most will regard it as the last option. Instead of going to court, most divorce cases can get settled through mediation.

Even if court proceedings begin, the process is very much geared towards settlement. There’ll be directions for a conciliation conference or mediation ordered early on. Statistically, of the matters that begin in court only about 2% to 5% go all the way through to a final hearing.

 

Myth #4: The breadwinner will get more

The Court looks at the contributions that are direct and indirect, financial and nonfinancial. They also regard the acquisition, conservation and improvement of the properties for settlement; and as parent and homemaker, when it comes to adjusting property and superannuation. Even if one parent was a homemaker and didn’t work, they still contributed significantly to raising the children and maintaining the home. This is regarded the same as the breadwinner’s contribution.

When deciding how to divide property, the Court looks at the following:

  • The net value of the property, assets and superannuation
  • Contributions both parties have made over the years
  • The future needs of each side

 

Myth #5: My partner cheated, so the odds are in my favour

The Family Law Act 1975 introduced the concept of “no fault” divorce. Therefore the majority of judges aren’t concerned with any alleged misconduct from one side. Not even when the misconduct could be regarded as “immoral” or similar.

This changes if the misconduct has an economic impact. Where there has been a negligent, reckless or wanton destruction of property, the conduct of whoever’s responsible is considered. Gambling or even the effect of domestic violence on property are examples of this.

In child custody cases, behaviour/conduct is closely examined. The conduct, though, must be relevant to best interests of the child, especially when protecting them from unnecessary risks. Will the settlement affect a parent’s ability to keep their kids safe from emotional, physical or sexual harm?

The above are some of the “myths” commonly encountered, but there’s plenty more out there. You best way forward is to trust a family law expert, your divorce lawyer. We set you on the correct path from the moment you walk into your consultation.

Separation almost never places anyone in a more favourable economic position.

The effect of separation is usually results in assets needing to be divided or sold, the family is living in and maintaining two households, incomes are now kept separate and so on.

On top of this most people understand that they will need a family lawyer; and that family law services are by their nature expensive.

So what is the answer?

The good news is if you can control your emotions and manage to keep the brakes on your amygdala (the stress and anxiety emotions part of your brain), a lot can be done to reduce the cost of separating.

Here are five tips:

  1. Reconciliation Counselling – To use some clichés, perhaps you don’t need to throw the baby out with the bath water. And prevention is better than cure. There are plenty of good counsellors out there who can assist. If the relationship can be saved that is arguably the best outcome for everyone;
  2. Stay calm – Easier said than done. Separation is an emotional process and people handle things differently. If you are struggling get help from your GP and/or a counsellor ASAP. A lot of people who don’t handle separation well can engage in destructive and self-destructive behaviours which cause breakdowns in communication and can cause the settlement process, or resolution process, to be drawn out and much more expensive;
  3. Get Good Advice – I’ve spent a lot of years working as a family lawyer in Brisbane, doing my law degree, specialist accreditation in family law and my Masters degree in family law. Family Law is not something you can Google and figure out in an afternoon. Before you and your spouse/partner start to negotiate with each other, find out from an expert in family law what the range of outcomes are. That way you have some idea what the parameters of your negotiation should be;
  4. Negotiate with each other in a business-like manner, in writing – You’ve both had advice now you can get down to brass tacks. If you’ve followed point 2 above, communication should be possible and you’ll save a fortune in not needing family lawyers bounce letters back and forth. Here I find email is best because it is in writing (which encourages people to behave) and date stamped. Please note generally settlement discussions are “without prejudice” and section 131 of the Commonwealth Evidence Act 1995 applies. This means generally settlement negotiations cannot be used in evidence in the family law property proceeding. The key here is to limit your “without prejudice” settlement communications to negotiations; and don’t mention other wider issues in the same correspondence. Please note however if the matter doesn’t settle, and reasonable offers have been rejected, after the trial the judge can consider the offers in deciding whether to make a costs order against a party.
  5. Go back to your family law lawyer – After you’ve reached an agreement, the agreement needs to be formally recorded in order to achieve a final resolution. You’ll already know this however because you will have gotten the advice first at step 3 above. The party’s family lawyers will be able to advise you what method of recording the agreement is best for you.

Sometimes when communications break down some help is required. Using your Brisbane family lawyer places a degree of separation between you and your spouse/partner if relations are strained. Mediation is also a very useful process to help people reach an agreement.

Remember, the cost of separation is not always financial. The emotional cost must also be considered and in my experience most people can only really start to heal their emotional side after their family law issues have been resolved.

Peter HooperHooper family Lawyers in Brisbane

Separating from a spouse or partner can be a traumatic event and very emotional time.

Legal Practitioners working in this area of law often work in a high pressure environment, having to take immediate steps relating to care of children, home occupancy and assets, whilst taking instructions from clients who are often in a fair bit of emotional pain.

Quite often the pain is extended with the other side continuing to supply untruths relating to their situation.

Combining legal skills with our investigative strength often provides practitioners and their clients with a significant advantage over adversaries.

Generally, investigation will often ensure that you have a wealth of evidence to support your clients application.

Discovering information or evidence through investigation will often induce the other party to settle on your client’s terms, not their terms.

How often do Practitioners suspect that statements made by the other side are untruthful, but do not have the ability to disprove them. In some cases, their own clients can assist with this process, as well as general discovery. A key feature of Investigation however, is that it allows you as Practitioners to test the veracity of the other side’s contentions throughout the proceedings, undermining the other sides confidence and credibility at every opportunity.

Over the last 17 years we have assisted many practitioners with;

  • The enforcement & execution of orders, service of documents with supporting Affidavits, removal of or collection and or protection of property and your client’s security and safety;
  • Preparation of evidence of criminal offences, including stalking, violent and threatening conduct and engaging law enforcement;
  • Confirmation of the occurrence of separation, reconciliation or other significant events;
  • Identifying, locating and/or verifying property interests;
  • Substantiating negative contributions, including wasted expenditure; (i.e. Mistresses & gambling)
  • Identifying and verifying undisclosed income levels or potential for earning capacity;
  • Exposing fraud, shams, misrepresentations or non-disclosure, relevant to the outcome of proceedings; (e.g. non-payment of child support)
  • Discovering extramarital relationships and linking negative consequences;
  • Substantiating inappropriate behaviour by a parent or other caregivers;
  • Investigating child at risk issues;
  • Supervising contact or handovers.
  • Obtaining evidence substantiating a breach of orders or undertakings.
  • Conducting interviews, drafting statements or affidavits;
  • Proving or disproving de facto relationships;
  • Assisting in the execution of orders, including:
    • Anton Pillar Orders;
    • Recovery Orders.

Clients usually have a wealth of information about the other side, and any investigation should commence with an analysis of this information.
It can often be dangerous however to allow clients to carry out investigations on their own behalf, such investigations often exposing them to breaches of various legislation and courts later adopting an adverse opinion of them.

The benefit of using a competent investigator is that it will allow you to present the truth, whilst protecting your clients,

Michael Featherstone www.phoenixglobal.com.au

The issue often arises during relationship breakdown as to who will remain living at the former matrimonial home; and who will move out. Some people can manage to resolve the impasse amicably while others can agree to remain separated under one roof.

For those who can’t agree the court has power pursuant to the Family Law Act 1975 (“FLA”) to order that one party has sole use and occupation of the former matrimonial home.

The court’s power

The power to make a “sole use and occupancy” order is by way of injunction.

For married couples the relevant section is 114(1) FLA which provides the court may make:

  • “An injunction restraining a party to the marriage from entering or remaining in the matrimonial home or the premises in which the other party to the marriage resides, or restraining a party to the marriage from entering or remaining in a specified area, being an area in which the matrimonial home is, or the premises in which the other party to the marriage resides are, situated”[i];
  • “An injunction relating to the use or occupancy of the matrimonial home”[ii].

For de facto couples there is similar power in section 114(2A) FLA. In a de facto financial cause the court may:

  • “Make such order or grant such injunction as it considers proper with respect to the use or occupancy of a specified residence of the parties to the de facto relationship or either of them; and[iii]
  • “If it makes an order or grants an injunction under paragraph (a)–make such order or grant such injunction as it considers proper with respect to restraining a party to the de facto relationship from entering or remaining in:
    • that residence; or
    • a specified area in which that residence is situated; and[iv]
    • Make such order or grant such injunction as it considers proper with respect to the property of the parties to the de facto relationship or either of them.[v]

Again the test is what the court “considers proper”.

There appears to be a separate power with respect to de facto couples in section 90SS (5) FLA. This section provides:

  • The court may grant an interlocutory injunction; or an injunction in aid of the enforcement of a decree in any case in which it appears to the court to be just or convenient to do so; and grant an injunction either unconditionally or upon such terms and conditions as the court considers appropriate.[vi]

The criterion here is where it appears to the court “just or convenient” as opposed to what the court “considers proper”.[vii]

Another situation which has arisen in the context of de facto matters is jurisdiction to make the injunction on an interim basis when the existence of the de facto relationship is in dispute.

In Locke & Norton [2013] FCCA 1154 the applicant de facto wife sought injunctions, that, inter alia, the respondent be prevented from evicting her from the home pending the final hearing of her de facto property claim.

The respondent denied that there was a de facto relationship and, therefore, disputed the Court’s jurisdiction to make such an order.

The facts were the applicant wife was impecunious while the respondent was a man of means with several properties. The respondent described the applicant as a “kept woman” i.e. boys friend and girlfriend relationship at best.

The court found there was jurisdiction to make the order. The court said at paragraph 29 it was open to the applicant to rely upon the provisions of s 114(2A). At para 30 Judge Scarlett said:

True it is that the very existence of the claimed de facto relationship is in issue, but it would lead in my view to an unjust situation for an applicant in the nature of the applicant in this case if there was no jurisdiction to seek an injunctive order to preserve the status quo until the de facto relationship can be established.

The Test – grant an injunction the court considers “proper”

Leave aside what section 90SS (5) FLA might mean for de facto couples, the test has been examined in a number of cases.

The often cited passage from Davis & Davis was recently referred to again in Saveree & Elenton [2014] FamCA 38 at 16 as the correct approach:

The criteria for the exercise of the power under sec. 114(1) are simply that the court may make such order as it thinks proper. The matters which should be considered include the means and needs of the parties, the needs of the children, hardship to either party or to the children and, where relevant, conduct of one party which may justify the other party in leaving the home or in asking for the expulsion from the home of the first party[viii].

The court in Saveree & Elenton also referred to authority that the criteria listed in Davis & Davis are not exhaustive and each case must ultimately be determined on its facts.[ix]

Practical considerations

Generally these type of injunctions are sought on an interim basis so the usual limitations of an abridged hearing apply. Saveree & Elenton is a good example of the sort of evidence that satisfied Justice Stevenson with respect to the injunction being “proper”. In this case:

  • Allegations of non-physical family violence and abuse were made. The husband was very verbally aggressive, abusive and damaged furniture etc over a 5 year period escalating. The husband admitted to quite a bit of the-behaviour i.e. the family violence was largely not a contested fact;
  • There was strong evidence of the negative effect of the conflict on the children who were sitting exams. Reports were made to school counsellors who provided evidence of their significant concerns and negative impact on the children. Again, this evidence was not largely in dispute;
  • There was hardship to the wife in terms of finding alternate accommodation; and that she operated a business from home seeing 8 clients per week, and she worked at schools in the area – This was another non contentious fact;
  • The husband’s financial circumstances indicated he would be able to find alternate accommodation. The court acknowledged he would experience hardship but he had secure employment and liquid funds (savings of $45,000). In his financial statement the husband claimed weekly credit card expenses of $700 but only about $1,600 was owing on 2 cards;
  • There was no realistic prospect of the children living with the husband at the matrimonial home i.e. 3 moves or 1 move.

The court placed significant weight on the ill effects the children were experiencing from the violence/conflict in weighing up all the factor including the seriousness of an order excluding a person form their property.[x]

The decision can be contrasted with several recent decisions where the injunction was not granted.

In Kanelos & Kanelos [2014] FamCA 36 (4 February 2014) the parties each gave conflicting accounts of family violence, each alleging the other was the aggressor with no independent corroboration. This matter was also before Justice Stevenson.

In declining to make the order Her Honour said at 43:

have no reason at all to prefer one parties’ version of these events to that of the other. I would observe that, if the wife has genuine fears for her safety or security, nothing whatsoever prevents her from seeking an apprehended violence order against the husband pursuant to State legislation.

Another situation where the order was not made is Kimberley [2011] FamCA 406 (7 June 2011) were both parties sought sole occupancy of the matrimonial home.

Watts J said at paragraphs 39 to 43:

An order for exclusive occupation is made pursuant to s 114(1) (f) FLA. In doing so, I may make an order which I consider ‘proper’. Orders giving exclusive use or occupation of a matrimonial home are only made with caution. It is a serious matter to turn a spouse out of their home. The onus is on the mother to establish a case for exclusion of the father.



The decision in respect of exclusive occupation is not merely something that is decided on a balance of convenience. The consideration of convenience is only one element of getting to a decision as to what order might be proper in the circumstances of an individual case.



Matters which I need to consider include the means and needs of the parties; the needs of the children; the hardship to either party or to the children; and if relevant, conduct of the parties (see Davis & Davis (1976) FLC 90-062). These considerations are not meant to be exhaustive. Part of the considerations in relation to needs is the question as to whether or not the mother in this case can be adequately housed elsewhere and whether there are financial resources to allow her to be housed independently. Balance of convenience is a matter that I would need to take into account.

As Wood J observed in Dean & Dean (1977) FLC 90-213, in cases of intense matrimonial disharmony, frequently coupled with assaults by one party to the other, and often occasioning distress to the children, the court needs very little persuasion to take the view that the balance of convenience requires that the mother have sole occupancy of the matrimonial home with the children. As that case showed however, each case needs to be looked at on its own facts.

At paragraph 61 His Honour said:

I do not find it is proper to remove the father from the matrimonial home, although it might be more convenient for the mother for that to happen.




Care needs to be taken in bringing these applications to ensure that sufficient evidence is available in the context of the interim hearing for the order to be made.

In relation to an injunction pursuant to section 90SS(5) FLA in a de facto matter, based on the comments made by Justice Watts in Kimberley, my view is a decision with respect to what is “convenient” may be easier to obtain than one with respect to what is “proper”; although the seriousness of any order placing a significant restriction of a proprietary right can’t be ignored.



[i] Family Law Act 1975 section 114(1)(b);

[ii] Family Law Act 1975 section 114(1)(f);

[iii] Family Law Act 1975 section 114(2A)(a);

[iv] Family Law Act 1975 section 114(2A)(b);

[v] Family Law Act 1975 section 114(2A)(c);

[vi] Family Law Act 1975 section 90SS(5)(a) and (b);

[vii] With respect to the “considers proper” test the court in Kimberley [2011] FamCA 406 said “the decision in respect of exclusive use and occupation is not merely something that is decided on the balance of convenience. The consideration of convenience is only one element of getting to a decision as to what order might be proper in the circumstances of an individual case.” Section 90SS(5) seems to say “convenience” need be the only criteria required for an injunction to be made;

[viii] Davis & Davis (1976) FLC 90-062 the Full Court (Evatt CJ, Pawley & Ellis JJ) said (at page 75,309);

[ix] Fedele & Fedele (1986) FLC 91-744  (Fogarty, Murray and Nygh JJ);

[x] The court referred to comments by Murray in O’Dea & O’Dea (1980) FLC 90-896.

Lovett & Xavier and Anor [2014] FamCA 49

Facts:

The wife commenced an application in a case seeking the sum of $100,000 for, inter alia, her ongoing legal fees.

The relationship was about 16 year’s duration with the parties having been married in 1998, separating briefly in 2009; with final separation occurring in 2012.

The parties had an 11 year old daughter with whom they shared time equally between households.

In the substantive proceedings the wife joined the husband’s brother (who was also the husband’s business partner) as the second respondent alleging the husband had engaged in transactions designed to divest the matrimonial pool of property in 2009, in the context of the first separation. The wife applied for final orders to reverse the dispositions pursuant to section 106B Family Law Act 1975 (“FLA”).

At the interim hearing it was not controversial that the property available for distribution was at least $1,180,081.37 on the husband’s case; and the husband made a concession in affidavit material that the wife would receive an overall adjustment in a range between 50% and 55%.

Issues:

The wife’s application was that the $100,000 be paid either by way of an interim costs order pursuant to section 117 FLA; or as an interim property settlement pursuant to section 79 FLA and section 80(1) (h) FLA.

The wife’s counsel also referred to spousal maintenance as being a potential source of power but this was not pursued.[i]

In any event, the wife’s position was regardless of the source of power, having regard to Zschokke (1996) FLC 92-693 and Strahan (Interim Property Orders) 2011 FLC 93-466 the relevant considerations in ordering a payment with respect to legal costs were the same. That is:

  1. The respondent being in a relative position of strength;
  2. Respondent’s capacity to meet their own costs; and
  3. Applicant’s inability to meet their own costs.

A further submission was made with respect to complexity of the litigation being a factor, but not a precondition, for making an order under any of the possible heads of power (Zschokke).

The husband did not take issue with the legal principles raised by the wife but argued that any payment ordered ought to be characterised as a part property settlement under section 79 and section 80(1)(h) FLA. The husband also referred to Gabel v Yardley (2008) FLC 93-386 as authority for the proposition that any interim property order must be capable of reversal without report to section 79A FLA or appeal.

Held:

With respect to the power being exercised pursuant to section 117 FLA the court made a number of points at 49 to 55:

  • The general (and primary) proposition in section 117 FLA is that each party bears their own costs;
  • However, section 117(2A) FLA allows the court to make an order for costs (including an interim order) if the circumstances justify to do so, as the court considers just;
  • Section 117(2A) mandates the factors which the court must consider which justify an order with the weight attached to each factor wholly discretionary;
  • If the litigation funding is ordered pursuant to section 117 then some form of assessment of the amount required should be made.

In relation to the last point the court referred to Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 where it was said funds for litigation expenses ought to be applied for that purpose only, and the court might require records to be maintained to permit review.

Justice Thornton determined that having regard to the submissions by both parties, it was appropriate and in the interests of justice to exercise the power under section 79 FLA.

At 77 Her Honour said:

“I accept the submissions on behalf of the husband in respect of the issues he raised surrounding s 117 of the Act. This is largely because one of the issues in the substantive proceedings will be whether the husband has divested himself of property in favour of his brother and if so, whether any transactions should be reversed under s 106B of the Act by way of a final order. It will not be possible until the conclusion of the substantive hearing to make any findings about the conduct of the parties which might have implications as to costs under s 117. I cannot identify matters in isolation or cumulatively which would justify an order for costs against the husband. It would be inappropriate for this reason to characterise any payment to the wife at this stage of the proceedings as a payment for costs under s 117.

With respect to interim property order pursuant to section 79 the court referred to the 2 steps from Strahan, that is, the procedural or “adjectival” step; and then the substantive step.

The first step requires the court to identify the circumstances that make it appropriate to consider using the power. Here it was satisfied because of the complexity of the litigation, the wife’s expectation that she would receive at least $100,000 at the final hearing was conceded, the funds being sought for costs were not at an unreasonable level, and the purpose for which the wife required the funds was well set out.

The court considered the substantive step taking into account post Stanford and Bevan considerations.

In finding that the proposed interim settlement was just and equitable within the meaning of section 79(2) the court had regard to the relatively long marriage, it was common ground the pool was at least $1,180,081.37 on the husband’s case, the husband conceded the wife will ultimately be entitled to 50% to 55% of the net pool, and the court was satisfied the interim property settlement of $100,000 sought by the wife was capable of being adjusted and taken into account at the final alternation of property interests without resort to section 79A.

 



[i] Another potential source of power is injunction section 114  – Poletti and Poletti (Unreported, Family Court of Australia, Nygh J, 2 March 1990); Zschokke and Zschokke (1996) FLC 92-693; Strahan & Strahan (Interim Property Orders) [2009] FamCA 116 at 84. 

Article – PDF – Succession planning

Blended families and second marriages can be challenging; and statistically second marriages are more likely to end in divorce than first marriages.[i]  For many people in this situation, often middle aged or later in life[ii], one concern is how can assets be best protected moving towards retirement and/or preserved for the children of the first marriage in the event of separation or death?

The potential claims

The potential claims that might arise from a second spouse/partner are typically those pursuant to the Family Law Act 1975 (“FLA”) with respect to property adjustment/spousal maintenance in the event of relationship breakdown[iii]; or a family provision claim.

A family provision claim is made pursuant to the Succession Act 1981 (“Succession Act”) in the event of death. This might be an issue where there are children from a first marriage who benefit under the will. A family provision claim is against the estate and arises if the deceased spouse does not make adequate provision in the will for the surviving spouse.

The difficulty for clients with respect to the above is:

  • High costs of family law litigation in the event of dispute; or high legal costs for the estate in family provision litigation;
  • These types of claims involve discretionary remedies which creates a degree of uncertainty as to the outcome;
  • Acrimonious dispute between spouses/partners; or between the children of the first marriage and spouse/partner.

What protection can the law offer?

Methods of asset protection such as via corporate or trust structures are of little assistance in the family law arena.-It is well settled that the real issue for the court in determining whether the matrimonial property pool ought to be expanded by trust or corporate assets is control.[iv]

Thus the court can look behind the veil and determine whether the facts and circumstances support a conclusion that assets ought to be included as “matrimonial property”.

Since 2000 (and 2009 for defacto couples) changes to the FLA make it possible for persons contemplating a relationship/marriage; or in a relationship/marriage; to contract out of the property adjustment/spousal maintenance provisions by entering into a Binding Financial Agreement.

What is a Binding Financial Agreement?

A Binding Financial Agreement is a Financial Agreement that is binding because it has met the formal requirements of the FLA necessary to make it binding.[v]-Where a Financial Agreement is binding, it removes the jurisdiction of a court to make a property adjustment or spousal maintenance order.[vi]

Thus the Binding Financial Agreement can specify matters such as how property is to be distributed, whether property brought to a relationship is to be retained or quarantined out of the property pool available for distribution, whether spousal maintenance is payable and the extinguishment of future spousal maintenance claims.

Third parties can be parties to Binding Financial Agreements and thus inter entity transfer of property is possible as well as making allowances for loans from family members etc.

What happens to a Binding Financial Agreement when a party to the agreement passes away?

A Binding Financial Agreement operates despite the death of a party and is binding on the personal representative of a party.[vii]

Opinions are divided however as to whether a Binding Financial Agreement for married couples becomes operative upon the death of a party. The significance of this would be to allow the Binding Financial Agreement to be used as a succession planning tool i.e. the Binding Financial Agreement would specify what joint property (or even property in the name of the surviving spouse) would fall into the deceased estate upon the death of a party pursuant to the Binding Financial Agreement.

The arguments for and against concern the wording of a number of sections[viii] (see endnote for explanation and why I think Binding Financial Agreements have force and effect on death) however there may be other provisions included in a Binding Financial Agreement that make a Binding Financial Agreement useful as a succession planning tool and protect against a family maintenance provision claim.

Binding Financial Agreements and family provision claims

Apart from the Binding Financial Agreement potentially being used to include or exclude assets from an estate, there is also potential to use the Binding Financial Agreement to “contract out of” the family maintenance provisions of the Succession Act.

In this respect the Binding Financial Agreement cannot remove the jurisdiction of the court to make an order because the Succession Act is Queensland legislation while the FLA is Federal legislation. Nevertheless a provision in the Binding Financial Agreement to the effect that neither party shall make a claim on the estate of the other, while not binding on a State Court, may represent important evidence of the intention of the parties and with respect to what “family provision” was considered adequate by the parties. This was the case in Queensland in Hills v Chalk & Ors (as executors of the estate of Chalk (deceased)) [2008] QCA 159where the court said at 46:

“In this case, the voluntary statement of the parties of their mutual intentions and expectations in a form intended to be binding affords a reliable conspectus of the totality of the relationship of the parties and of their respective relationships with others who have a claim on their bounty. In my opinion, the court should have regard to such a voluntary statement by the parties of their intentions and expectations…”

Further, in other jurisdictions the succession laws have been amended to permit parties to contract out of family maintenance provisions. For example, section 95  of the NSW Succession Act 2006  provides a person may contract out of/release their rights to a family provision order[ix]. A clause can be inserted into the Binding Financial Agreement in contemplation of the succession law in Queensland being amended to allow for a similar provision.

Getting a Binding Financial Agreement?

Some people may argue that a Binding Financial Agreement in contemplation of marriage or “pre nuptial agreement” is unromantic or demonstrates a lack of commitment. Maybe…but having this discussion at a time when both parties are in love and looking to the future could also be said to be a preferable time to negotiate what is fair as opposed to during the period of emotional turmoil at the end of a relationship.

For people with children to another relationship and assets hard earned it makes sense to obtain the best protection the law can offer.

For people wanting to leave behind a legacy to children and others, rather than leaving behind court battles and an estate ravaged by legal costs, a Binding Financial Agreement can offer more certainty and protection for loved ones. Many lawyers will understand that often claims such as family provision claims may be settled and paid out even if they are without merit simply to avoid the legal costs of defending them.

The Binding Financial Agreement doesn’t have to be entered into at the start of the relationship; it can be made during and even after the relationship has broken down.

Binding Financial Agreements are very helpful provided they are created by a skilled lawyer. Strict legislative requirements are necessary to make them binding and in some circumstances they can be set aside.

Two idioms best capture the essence of Binding Financial Agreements, they are: a stitch in time save nine but a chain is only as strong as its weakest link.



[i] Australian Institute of Family Studies

[ii] 2011 Census data show that in 2011 the median age in Australia for males to become separated was 40.8 with divorce occurring at 44.4 while for females the median age for separation was 38.1 and 41.5 for divorce.

[iii] Since 1 March 2009 most de facto couples in Queensland separating after that date are able to seek remedies pursuant the Family Law Act 1975 which are in most respect the same as those available to married couples.

[iv] Deputy Commissioner of Taxation v Austin (1998) 16 ACLC 1,555; and Coventry, Coventry and Smith (2004) FLC 93-184.

[v] See sections 90G and 90UJ FLA.

[vi] See sections 71A and 90SA FLA.

[vii] See sections 90H and 90UK FLA.

[viii] Section 90H and 90UK are mirror provisions for married and defacto Binding Financial Agreements (“BFA”) except that the s.90UK provision contains a note which reads, “If the parties are still in the defacto relationship when one of them dies the de facto relationship is not taken to have broken down for the purposes of enforcing the matters mentioned in the financial agreement. Because section 90H doesn’t have a similar note it could be argued it is intended to mean death constitutes relationship breakdown for the purposes of the BFA. The difficulty with this is sections 90B(2) and 90C(2) refer to marriage “breakdown” which the definition in section 4 provides “in relation to a marriage, does not include a breakdown of the marriage by reason of death”.

The above would seem to put the matter beyond issue except for sections 90DA(1) and 90DA(1A). Section 90DA(1) requires that upon marriage breakdown, a BFA has no force or effect until a party signs a separation declaration. Section 90DA(1A) provides that section 90DA(1) does not need to be complied with if either or both spouses die. The note to section 90DA(1A) goes on to say:-“This means the financial agreement will be of force and effect in relation to the matters mentioned in subsection (1) from the time of the divorce or death(s)” (my emphasis). Thus the section clearly indicates a BFA has force and effect from the time of death.

In further support of this idea is section 90B(3)(b) and 90C(3)(b). This section provides that the BFA may contain “other matters” i.e. other matters in addition to how in the event of breakdown the property, financial resources and spousal maintenance is dealt with. It is submitted “other matters” might refer to how in the event of death the property, financial resources and spousal maintenance is dealt with.

A BFA is not terminated by death. Section 90J provides a BFA can “only” be terminated by including a terminating clause in a subsequent BFA (as referred to in sections 90B, 90C and 90D) or by making a “terminating agreement”. Therefore if the BFA is still operative, the surviving spouse could choose whether to sign the separation declaration in section 90DA(1) and give the BFA “force and effect”. Presumably this is why section 90DA(1A) was inserted and in my view gives further weight to the argument that BFA’s have force and effect on death of a party.

[ix] The release of rights to a family provision order in NSW requires the courts approval and other findings with respect to advantage to the releasing party; that it was prudent, fair and reasonable; and the releasing party had independent advice.

 

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PDF – The Full Court of the Family Court sheds more light on Stanford and the 4 step process

Some recent developments in the law with respect to matrimonial property adjustment orders have the potential to cause a significant rethink as to how lawyers have approached advising clients with respect to entitlement pursuant to section 79 Family Law Act 1975.

The High Court decision in Stanford[i] makes it clear the requirement for the court to determine whether it is “just and equitable”[ii] to make a matrimonial property adjustment order is a “precondition” to exercising the power conferred by section 79(4).[iii]

Arguably this should be obvious from a perusal of the section. Section 79(2) 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” (my emphasis)

As was pointed out by Professor Parkinson in his article “Family Property Law and the Three Fundamental Propositions in Stanford and Stanford”, the notion of Section 79(2) being a positive requirement rather than a restraint on the power is not new, and similar comments had been made in high profile decisions over the years including in Mallet v Mallet.[iv]

The difficulty for lawyers with the idea of the “justice and equity” requirement being considered first is that a long line of decisions notably set out in Hickey and Hickey[v] made it clear the preferred approach to exercise of the discretion in section 79 followed 4 steps, the last step of which was the “justice and equity” step:

“The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties … Secondly, the Court should identify and assess the contributions of the parties …Thirdly, the Court should identify and assess the relevant matters referred to in… s.75(2)…Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.”[vi] (My emphasis)

To add to the confusion, Stanford sets out how the justice and equity statutory precondition ought to be satisfied by having regard to “3 fundamental propositions” which in some respects resemble the 4 step process. The three fundamental propositions are:

  1. Begin by considering whether it is just and equitable by identifying according to common law and equitable principles the existing interests of the parties;
  2. The exercise of discretionary power pursuant to section 79 must be exercised according to legal principles and not in an unguided manner. The judge exercising the power is not entitled to do “palm tree justice”;
  3. The court can not begin from the starting point of assuming any adjustment of proprietary interests is necessary. A determination that a party has a right to a property adjustment only fixed by reference to the matters in section 79(4) and without separate consideration of section 79(2) would erroneously conflate what are distinct statutory requirements.[vii]

So what of Hickey and the 4 step process?

Fortunately for those of us in the trenches wondering whether we still ought to be explaining the four step process to our clients, the Full Court of the Family Court has come to the rescue with Bevan & Bevan [2013] FamCAFC 116 delivered 8 August 2013.

This decision examines Stanford and provides guidance as to how treating section 79(2) as a precondition may be reconciled with the 4 step process.

In Bevan the Full Court noted the High Court in Stanford had not disavowed (nor approved) the 4 step process[viii].

In examining the post Stanford approach to the preliminary justice and equity question, Bevan makes a number of important points. The Full Court said:

  • It would be a “fundamental misunderstanding to read Stanford as suggesting the matters referred to in section 79(4) should be ignored” in determining the preliminary justice and equity question. While the Court recognised the warning in Stanford not to conflate the section 79(2) and section 79(4) issues, it was recognised in the majority of cases the justice and equity preliminary issue will be readily satisfied.[ix]

The second and third fundamental principles seem to invite an examination of section 79(4) with respect to the preliminary question, and add further resemblance to steps 2 and 3 of the 4 step process. It is submitted the reference to “legal principles” and not doing “palm tree justice” as well as not “beginning from the starting point of assuming any adjustment of proprietary interests is necessary” seem to be most appropriately grounded in section 79(4) i.e. an examination of contribution and section 75(2) matters.

The Full Court referred at 88 to a paper by Martin Bartfeld QC where he opined there was scope for considering section 79(4) matters in section 79(2).

Mr Bartfield QC says the contribution and section 75(2) factors must be treated as having 2 characteristics. Firstly, a discretionary characteristic used to identify those matters relevant to enliven the exercise of the discretion i.e. contributions over a long period may provide a basis for a finding it is just and equitable to make an order in accordance with the statutory precondition in Stanford. Secondly, an evaluative characteristic to measure, weigh or quantify the effect of the contribution or future factor (i.e. steps 2 and 3 of the 4 step process – assessment of contributions and future factors).

  • At 87 the Court referred to the decision of Strauss J in Ferguson and Ferguson where His Honour said that section 79(2) “is directed to both the questions of whether an order should be made at all, and what order should be made, if one is made at all.”[x] Thus the Stanford precondition to determine whether an order should be made is not inconsistent with the fourth step in Hickey.

The Full Court said:

“We do not consider it helpful, and indeed it is misleading, to describe this separate enquiry as a threshold issue…the justice and equity requirement is therefore not a threshold issue, but rather one permeating the entire process.”[xi]

So what is the process?

It is submitted two separate exercises are required:

  • Firstly to determine the justice and equity preliminary question in accordance with the 3 fundamental principles from Stanford (which requires an examination of section 79(4) from the perspective of whether it is just and equitable to make an order);
  • Secondly, if the first question is answered in the affirmative, to follow the 4 steps referred to in Hickey culminating in again considering whether the orders proposed to be made are just and equitable. This is because the requirement to do justice and equity is not a threshold issue but rather one permeating the entire process.

In practice the first exercise will often rarely need to be conducted on other than a cursory level. The Court in Bevan[xii] referred to paragraph 42 of Stanford where it was acknowledged:

In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife…Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

Thus in practice it is submitted unless the preliminary justice and equity question can be flagged by unusual factual circumstance (such as those in Stanford and Bevan) the preliminary question can be swiftly resolved in the mind of the lawyer; before moving on to provide the client with advice, usually following the 4 steps in Hickey as to a range of outcomes that would be just and equitable.

Most importantly it is submitted these decisions highlight the practice of not overlooking the importance of section 79(2) in favour of moving directly towards assessing a client’s case under section 79(4). Of this the Court said in Bevan:

“It appears to have been routinely assumed by litigants, certainly in recent times, that justice and equity requires the court to assess their claims by reference to section 79(4)…”[xiii]

It is also submitted this practice may have come about by only regarding justice and equity as the final step in the four step process, after a “result” had been determined.

In practice for the future the consequences of Stanford may be more far reaching than simply being alert to justice and equity issues in some matters. One consequence may be greater scrutiny of circumstances such as short marriages with no children, or where finances are kept separate, where previously some entitlement may have been assumed.



[i] [2012] HCA 52 (15 November 2012)

[ii] Section 79(2) Family Law Act 1975

[iii] Stanford[2012] HCA 52 (15 November 2012) at 24

[iv] Parkinson “Family Property Law and the Three Fundamental Propositions in Stanford and Stanford” in Aust Family Lawyer Autumn 2013, Vol 23 No2 at page 6

[v] (2003) FLC 93-143

[vi] Hickey and Hickey (2003) FLC 93-143 at 39

[vii] Stanford[2012] HCA 52 (15 November 2012) at 37 to 40

[viii] Bevan & Bevan [2013] FamCAFC 116 at 65

[ix] Bevan & Bevan [2013] FamCAFC 116 at 84 and 85

[x] Bevan & Bevan [2013] FamCAFC 116 at 87

[xi] Bevan & Bevan [2013] FamCAFC 116 at 86

[xii] Bevan & Bevan [2013] FamCAFC 116 at 69

[xiii] Bevan & Bevan [2013] FamCAFC 116 at 68

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