Making sure your Property Settlement is Final

27/04/2020

Separating couples when attempting to achieve a property division need to ensure that any settlement they reach and the transactions and transfers that take place in the course of the settlement are full and final and cannot be overturned in the future.  They also want to be sure that there can be no further future claims.  It is inadvisable to divide property and not document that division of property properly as a failure to document or obtain Court Orders can lead to future claims or the possibility of challenges to the transactions being made in the future.

How can I ensure that my property division is full and final?

Section 81 of the Family Law Act 1975 provides that the Family Court of Australia or Federal Circuit Court must ensure that a property division between spouses is a final division.  The Family Court or Federal Circuit Court can make Final Orders after the Court has heard the case. The Court can make Final Orders by consent if the parties make an Application to the Court for Approval of Consent Orders

Can Final Court Orders be set Aside or can there be an Appeal?

Final Orders can only be set aside pursuant to Section 79A of the Act and those circumstances are limited and include:

• Miscarriage of justice by reason of fraud, duress or suppression of evidence or false evidence. 
• Circumstances have arisen that make it impractical to carry out the Order.  
• Default in obligation and the circumstances make it just and equitable to vary the Order. 
• New and exceptional circumstances have arisen relative to the care, welfare and development of a child.

Final Orders made by the Family Court or Federal Circuit Court can be appealed and the Court has a process for hearing of Appeals from both Final Orders and Interim Orders.

Do I have to go to Court?

There are other ways of obtaining Final Orders and protection from future claims other than by making an Application to the Family Court or Federal Circuit Court.

Application for Consent Orders

If proceedings are commenced in the Family Court and the matter is resolved Consent Orders can be made by the Court.  In other words Orders can be made without the Court having a hearing of the property dispute.

The Family Law Act provides a system for parties who have reached an agreement in relation to property division to make an Application to the Court for approval of Consent Orders.  An Application for Consent Orders is prepared and the Consent Orders are prepared.  This process will usually be carried out by a Lawyer who will ensure that the Application sets out the assets, liabilities and financial resources of both spouses.  The Consent Orders will document the division of property which has been agreed and care must be taken to ensure that the Orders deal with all assets, liabilities and resources and properly document the division of property by preparation of Orders which are clear and capable of being complied with and complied within specified time limits.

Binding Financial Agreements

The Family Law Act also provides for documentation of a property settlement by the parties entering into a Binding Financial Agreement.  Sections 90C and 90D of the Act provide the rules for Binding Financial Agreement between separated parties before they have divorced (Section 90C) and after they have divorce (Section 90D).

The strict technical requirements and the drafting requirements required to ensure that a Binding Financial Agreement properly secures the outcome agreed to by the parties are complex.  Considerable care needs to be taken by the Lawyer preparing the document to ensure that the document deals with all the parties’ assets, liabilities and financial resources.

A Binding Financial Agreement is the only means available for the regulation or extinguishment of claims for future spousal maintenance.  It is often misunderstood that notwithstanding the fact the Court has made Orders (on a defended basis or on a consent basis) for the final division of property that that Order, does not prevent a spouse or former spouse returning in the future to make a claim for spousal maintenance.

As part of our advice at Watson & Watson we ensure that the documentation and/or Orders obtained are so drafted to ensure that future claims for spousal maintenance are excluded.

Protection of your Estate

It is also often overlooked that notwithstanding that there may be in place, Court Orders (defended or consent) and a Binding Financial Agreement regulating and extinguishing a right to claim future periodic spousal maintenance, that there are other areas where a future claim can arise.

There are Family Provision Act legislations in each of the Australian States.  In New South Wales the Succession Act of 2006 sets out the law in relation to challenging of Wills and making claims against the Estate of a deceased person.  Section 57 of that Act provides that an eligible person can within 12 months of the date of the death of the deceased make a claim against the Estate of the deceased for provision out of that Estate.  In other words an eligible person can challenge the Will. 

Section 57 nominates/identified eligible person and these person include a spouse or former spouse of the deceased in other words, though you may have been divorced your former husband or wife could challenge your Estate.

At Watson & Watson we recommend that documentation of a property division deal with:

1. Consent Order approved by the Family Court of Australia Division of the property available now. 
2. Binding Financial Agreement Prevent future claims for spousal maintenance. 
3. Deed of Release Succession Act - Prevent challenges against the Estate. 

If you are proposing to enter into financial/property settlement with your estranged spouse or de facto partner or are in current proceedings and have any concerns or seek assistance in the drafting of appropriate documentation ie Consent Orders, Binding Financial Agreement and/or Deed of Release please contact Richard Watson Senior Family Law Solicitor or his Personal Assistant Shereen Da Gloria to discuss your concern and seek appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.