The court, when considering a property settlement for parties who are married/divorce or couples who have been in a de facto relationship of two or more years duration or who have made significant financial contributions to each other if their relationship was of shorter duration, provided the de facto couple separated on or after 1 March 2009, adopts a four step process: –
- It identifies and values the property of the parties;
- It considers the past contributions of the parties both financial and non-financial which caused the property pool which exists to have come into being;
- Relevant Section 75(2) factors;
- How to divide the property pool in a manner which is fair to both parties.
Recording of agreements
If the parties reach agreement and thus do not need to go to trial, there are two ways of recording such agreement: –
- Consent Orders;
- Financial Agreement/Part VIIIAB Financial Agreement.
If the agreement is to be recorded by way of Consent Orders then: –
- A document called Terms of Settlement is prepared and signed by the parties;
- An Application for Consent Orders is completed and signed by the parties;
- The marriage certificate, Terms of Settlement and Application for Consent Orders are lodged in the Family Court of Australia;
- The Terms of Settlement are considered by a Registrar and are usually sealed (or requisitioned) within a few weeks of being filed.
The Orders made by consent have the same weight and effect as Orders which are made by a Judge.The Consent Orders can deal with all matters in dispute: –
- Property settlement;
- Spousal maintenance;
- Parenting Orders;
- Child support departure Order;
Financial Agreements/Part VIIAB Financial Agreements
These are also discussed on the website under the heading “Pre-Nuptial and Cohabitation Agreements”. Binding Financial Agreements may also record property settlement and spousal maintenance. They are not commonly used to record agreements in relation to children or child support. Sometimes agreements are recorded both in Consent Orders and in a Binding Financial Agreement. If that is the case, often the Binding Financial Agreement records an agreement in relation to spousal maintenance. A Financial Agreement is a complex document which ideally should be prepared by a solicitor. Independent advice must be given to each of the parties separately. There is a complex procedure to be followed to ensure that such an agreement is binding on the parties.
Property settlement with the court’s assistance
If the parties cannot agree on property settlement, spousal maintenance or a child support departure order then these matters would need to go to court and be decided by the court. A contested property settlement generally follows these steps: –
- First the parties will attempt to negotiate a settlement either face to face or via correspondence or phone calls;
- If that does not work then parties may consult solicitors to negotiate on their behalf or they may go to a mediation;
- If the parties are unable to settle matters after negotiation/mediation, then they need to commence proceedings. Proceedings are commenced in the Federal Magistrates Court by filing an Application, Financial Statement and Affidavit in support. The great bulk of Applications (about 80%) are filed in the Federal Magistrates Court. Only complex property applications proceed in the Family Court. In the Family Court the documents lodged are an Application and Financial Statement;
- The first court event in the Federal Magistrates Court is a directions hearing where the court will want to know what has stopped the parties from settling. Examples might be: –
- They cannot agree on what assets are in the asset pool or how much they are worth. The assets may need to be identified. Valuations may need to be obtained;
- They cannot agree on past contributions;
- They cannot agree on relevant Section 75(2) matters;
- They cannot agree on how to divide the pool up.
- The court will order a Conciliation Conference or a private mediation. In the Federal Magistrates Court, the court is now reluctant to order a Conciliation Conference unless the property pool is very small. Therefore, parties bringing court proceedings should anticipate that they will need to pay for a private mediation during the court process;
- In the Family Court, the first court event is a Case Assessment Conference where a Registrar of the court will sit down with the parties and their solicitors and ask the parties about the matters and what is stopping them from settling. The court will commonly make Orders designed to resolve any differences between the parties which will include obtaining valuations and attending either a Conciliation Conference or a private mediation;
- At the Conciliation Conference which is attended by a Registrar, the parties will put their cases to each other and negotiate;
- The Registrar may reality test what the parties are saying and speak to the parties about the range of outcomes that might be made if the parties go to court.
- Most Applications (our estimate is 80%) will be settled by the end of the Conciliation Conference.
- If the parties have reached agreement at the Conciliation Conference, then Terms of Settlement can be drawn up and signed and the Order made on the spot by the Registrar who conducts the Conciliation Conference.
- If the matter is not settled at the Conciliation Conference, then the matter will need to be mentioned in the court and directions made for trial.
- The directions for trial commonly cover things such as the filing of Affidavits of Evidence-in-Chief, filing of a Case Outline and Chronology.
- At the trial, the Judge will hear / read the Affidavits of each of the parties, hear the parties under cross examination, hear submissions made on behalf of the parties and make an Order which will be binding on the parties. The Order is not necessarily made on the day of the trial (reserved judgement).