Finalising a Property Settlement Agreement
Separating from your partner can be a painful and disruptive time. While many separated couples may want to distance themselves from each other, it is important to organise arrangements for your children (if you have them) and the division of your property.
Hopefully your separation is amicable and you and your former spouse or de facto partner can agree on how your property should be divided. Once an agreement is reached, it must be formalised by a Consent Order or finalised into a Financial Agreement to be binding.
No matter how well intentioned, a hand shake agreement is not sufficient to bind parties to the “in principle” agreement they may have reached together. This kind of agreement will not stop either party from changing their mind at a later date and seeking a further division of property.
A binding agreement ensures that the parties sever their financial connection with each other and from the date of the Consent Order or Financial Agreement neither party can make a property settlement claim against the other in the future.
The simplest method to formalise the agreement is to apply to the Family Court of Australia for a Consent Order. Such an application must be signed by each party and usually drafted by a lawyer.
For the Court to make a Consent Order, the agreement must, on the relevant facts of the separating couple in question, be “just and equitable” taking into account the following:
the property pool that is available for distribution (eg real estate equity, savings, investments and superannuation less any debts),
the financial and non-financial contributions each party has made to the property pool (eg gifts or inheritances received, renovations and improvements to real property and home-maker contributions); and
the future financial needs of each party (such as the parties ages, health, income and the care arrangements of dependent children).
The Court must assess these factors, including the length of the relationship, to determine a percentage division and adjustment of property which is considered to be just and equitable in all of the relevant circumstances.
To ensure that a proposed division is just and equitable there is an obligation of both parties to make full and frank financial disclosure of their current financial position including assets, liabilities, superannuation and financial resources (such as beneficiary interests in family trusts or a deceased estate). The obligation to make financial disclosure is to each other and to the Court.
A substantial proportion of a family lawyers’ work is advising clients on the range of entitlements based on the couple’s unique family circumstances and ensuring that proper financial disclosure is made to the other party and to the Court.
Once a Consent Order is made by the Court it is binding and can only be overturned in limited circumstances.
One of the limited circumstances is where there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information) or the giving of false evidence or any other circumstance.
In a recent decision of the Full Court of the Family Court of Australia (Pearce & Pearce 2016) the Court found that a Consent Order could be set aside when the husband failed to make proper financial disclosure about the value of real estate he was to retain. This lack of financial disclosure caused a miscarriage of justice because if the wife had known the alternative value of the real estate she may not have entered into the agreement with the husband or made her own further enquiries. The fact that the real estate valuation was incorrect was not the overriding reason for the decision of the Court but rather that the wife was not in a position to provide informed consent.
This case highlights the essential requirements in family law property settlements of:
Obtaining appropriate legal advice about a proposed agreement;
Each party making full and frank financial disclosure to each other and the Court; and
Obtaining proper valuations for assets of significant value.
If you have any questions contact:
Lisa Hunt
Principal
Harwood Andrews
T: 03 5226 8584
E: lhunt@harwoodandrews.com.au
*this article was first published in the Geelong + Surfcoast Living Magazine http://www.gscl.com.au/
