As family practitioners we are regularly advising clients that property settlement reached between separated husbands and wives or de facto spouses as the case may be must be documented in the appropriate legal manner. This is usually done via an Application for Consent Orders or, depending on the particular circumstances, via Financial Agreement pursuant to ss 90UC, 90UD, 90C or 90D of the Family Law Act.
It is safe to assume and is certainly the writer’s experience that the majority of property settlements formalised with the assistance of solicitors are effected via an Application for Consent Orders and Minute of Consent Orders filed in the Family Court.
There are the fundamental requirements associated with such an application with which we are all familiar, including:
- filing the original and two copies of the documents with the court;
- ensuring the consent orders and application are signed by both parties including completion of the statements of truth, including ticking the relevant boxes, which if not attended to can be the subject of an embarrassing requisition;
- provision of the relevant sections of the legislation as set out in the statement of truth to the client;
- according procedural fairness to the superannuation fund and providing a copy of the letter to and from the superannuation fund to the court, as well as the superannuation information form if it is a defined benefit interest; and
- provision of the correct filing fee, unless the parties are eligible for the exemption or fee reduction.
The regularity with which we prepare and file such documents can result in practitioners taking a somewhat laissez faire attitude to the completion of the application form and the drafting of orders. However, it is vital that practitioners remember that the filing of consent orders is not a ‘rubber stamping’ exercise and the orders will not simply be made by the court because the parties have signed the documents and agreed that the orders ought to be made.
Serious consideration needs to be given to the question of justice and equity of the adjustment of property provided for in the proposed orders. This is important in every case but perhaps even more important in those matters where the other party is self–represented. Sometimes in those cases the party who is receiving the greatest benefit from the settlement is eager to have documents drafted, signed and filed as quickly as possible and the other party does not wish to engage a lawyer for cost related or other reasons.
The recent case of Hale & Harrison [2014] FamCA 165 where consent orders were ostensibly consented to by the parties but were not made by the court is one such example. The facts of the case were:
- Ms Hale and Mr Harrison cohabited from 1998 to April 2009 and were in a de facto relationship. A separate issue was the date of separation and the jurisdiction of the court, however that is not relevant for the purposes of this article.
- There were four children of the relationship, aged 10, 10, 13 and 15. The children were living with Ms Hale and spending time with Mr Harrison pursuant to a parenting plan.
- Ms Hale was 36 years of age and Mr Harrison was in his fifties. Both were in receipt of government pensions and neither of them were engaged in paid employment.
- Ms Hale received a small sum of child support per month.
- There was a small asset pool:
- Property in New South Wales which was expected to sell for $80,000. However its municipal value was $60,000 and it appeared that Justice Cronin took the view the property would sell for between $60,000 and $70,000.
- Ms Hale’s mother loaned the parties $10,000 towards the purchase of the property, which remained outstanding.
- There was also a mortgage of $17,000.00 secured against the real property.
- Mr Harrison received an inheritance at some stage after 2009 which he asserted was in the vicinity of $150,000. However Ms Hale had not seen any evidence of this inheritance. Mr Hale said he had $12,000 remaining from that inheritance.
- Ms Hale and Mr Harrison filed an Application for Consent Orders on 8 October 2013 which provided:
- The real property would be sold.
- After repayment of the mortgage of $17,000, the proceeds of sale would be divided equally between the parties.
- From the wife’s share of the proceeds of sale, she would repay her mother the $10,000.
- Mr Harrison would also retain the $12,000 which remained from his alleged inheritance.
- Based on His Honour’s comments in relation to the possible sale price of the property and depending on the sale price of the property, Ms Hale would be left with somewhere between $11,500 and $24,000, and Mr Harrison with between $33,500– and $46,000.
- His Honour found that the loan repayment to Ms Hale’s mother in circumstances where Mr Hale had more property and more money was not just and equitable. It is apparent from the judgment that Mr Harrison’s solicitor argued before His Honour that the settlement was just and equitable because the parties had reached agreement. However when asked by His Honour, Ms Hale, who was unrepresented said she did not think the outcome was fair.
His Honour concluded that the parties having reached agreement was not a basis upon which the court should ‘waive away what is in reality its subjective judgement about what is fair’ and ultimately dismissed the Application for Consent Orders.
Justice Cronin’s decision in Hale & Harrison serves as a reminder of the essential and indeed overriding need for practitioners to consider what is just and equitable. Preparing consent orders must be a considered process and practitioners must focus on the justice and equity of the orders before filing them with the court to ensure there are not difficulties with the making of the orders which serve only to increase client costs and can be a professional embarrassment for practitioners.