Property Settlements

Intro:             Hi, everyone, and welcome to Dads online Podcast. We currently have Daniel Dalli with us       who is a friend of Dads Online. Daniel is a family lawyer. How are you?

Daniel:         I’m good. Thank you. Thanks for having me. I’m excited to, I guess finish our discussion focusing on property.

Peter:           We want to do it right. We want to do it fairly. So I guess, we certainly want to talk about what can help our listeners. So in the case that parents have been able to come to an agreement about property settlement, and that’s if they agree on it. Can they simply have a verbal agreement?

Daniel:        Yes. So a verbal agreement will be never something that I recommend for clients. It’s risky. What happens if one of them later goes on and changes their mind? What if one of them makes a great investment down the track? You’re simply not protected. So a verbal agreement is too risky. In my view, it’s essentially as good as no agreement. 

Peter:          Yes. I could imagine it’s like you said, I said. Who knows? 

Daniel:        Yes, that’s right. We’re constantly debating as to who said what or — there are always arguments about the conversation, and it’s just too unreliable.

Peter:          Yes, I could imagine. What about if, let’s say, for example, they thought — Okay. Let’s get a stat dec. Let’s write this out on a stat deck. I’ll get it from the post office, and I’ll get the lady at the local Chemist Warehouse to stamp it and sign it.

Daniel:        Yes, or, you know, the local police station. It might feel like it’s got a bit more authority. Still in my view, not good enough. A stat dec, it’s not really a contract. It’s a written agreement — sorry — it’s a written statement that somebody declares to be true. What’s true now, it might not be true down the track. A parent might be happy to receive $50,000 or $60,000 from a property settlement, but it doesn’t prevent them from deciding that they want
more in two weeks’ time. Not to mention it’s a document of a single party, and
it’s not enough in terms of a property settlement.

Peter:          Okay. So, Daniel, a verbal agreement is out. A stat dec is out. So what do you support as a good agreement?

Daniel:         So there’s a couple of options that I like. First is what’s called a binding financial agreement. And it’s a carefully and I stress carefully drafted the document and it states how, your assets, your financial resources, and your liabilities are going to be divided. The other option is consent orders, and we discussed this a little bit in the prior podcast about parenting arrangements. Consent orders can be used to finalise parenting and property arrangements at the same time. Just to catch the listeners up to speed, who haven’t listened to the last podcast yet. Consent orders take the form of an application. It can be prepared by a lawyer and it’s got a set of orders that is forwarded to the court for their consideration and approval. The orders dictate in terms of property, how properties to be divided. For example, the husband will retain the house and refinance the A&Z loan at the same time that he pays to the wife an amount of let’s say $100,000. So these applications actually set out the orders and set out what’s going to occur with regard to property. So if the court approves, an order is made, and it means the matter is finalised. And it’s very difficult to change the orders once they’re made by a court with regard to property. So, in that case, in terms of consent orders, parties don’t need to go through the stress of a court hearing, and they don’t need to spend money and create further tension between the two
of them. So the two options are a binding financial agreement, which is basically a document between the two parties and consent orders.

Peter:          Okay. So which option is cheaper?

Daniel:         I think, look, generally binding financial agreements are a bit cheaper. Consent orders have a filing fee. I think at the moment, it’s $160, and that’s payable to the courts.

Peter:          Okay. Can you give an indication of like, costs for each of them?

Daniel:         I’ll preface it by saying that, all firms charge different rates. But let’s speak generally, a binding financial agreement, that might be within the range of say, three and a half thousand to four and a half thousand. It might be a little bit more at some top tier firms. Consent orders, the price range might be from four and a half thousand to five and a half thousand. And obviously, there’s the filing fee in addition to that as well.|

Peter:          Okay. So can I just say too — this is under the pretext that we have agreement on a settlement?

Daniel:        Yes, that’s right. If we’re arguing, none of these options is viable. That’s a completely different story. It’s a completely different podcast for another day I think.

Peter:           It is. I’ll write that down.

Daniel:        But these options are for the parties that agree, what happens if we agree.

Peter:           Okay. Yes. Agreeing parties, that’s fine. So why the difference in price?

Daniel:        Consent orders are more comprehensive. They’re the option that a lot of lawyers prefer. The application to the court for consent orders has more detail than some binding financial agreements. But the real difference between the two of them is the risk of each option. A binding financial agreement, it’s not a court order. Meaning if someone were to choose not to comply, they’re not breaching a court order. It means that the other party might have to go to court and seek to enforce the agreement. Which is basically asking the court to adopt the agreement. Consent orders, the result of that is an actual order from the court. It’s an order of the court and that means that breaching it is more serious. We discussed breaches in terms of parenting orders in the prior podcasts. And there are also consequences for breaching a property order. So quite simply, there’s more risk to a BFA. Both to the client
and the lawyer. In saying the above, there is a significant amount of work that goes into a BFA in order to ensure that it’s capable of being enforced. In short, though, the answer to the question is, consent orders require more work.

Peter:           Can parents draft up their own plans or agreement?

Daniel:         Yes, Look, they can. The issue there is binding financial agreements are rather technical. If they’re not drafted correctly, it might result in the binding financial agreement having no effect. There might be deficiencies in it that give rise to certain applications. For example, spousal maintenance. It’s something that is a pressing issue that’s always behind the
main issues of a parenting matter and a property matter. If they’re not drafted correctly, then one of the parties might have the option to make an application to the court for spousal maintenance. The BFA should ideally be the end of the financial relationship of the parties. But if it’s not done correctly, it might leave the door open for one of the parties to still litigate the matter. And with consent orders, there are there were still difficulties in terms of putting it all together, but I think the one problem area is the actual drafting of the orders. So the orders that dictate how the property may be divided. So for example, this property is transferred, and this property is responsible for the costs. As an experienced Family Lawyer, I know the pitfalls to avoid when drafting these orders. Some parties may not so it’s important to be careful when drafting it. At the very least, a lawyer should review the orders just to make sure that there aren’t any potential issues that they do see. But
as to whether or not parents can do the work on their own? Yes, certainly.

Peter:           Okay. You talk about pitfalls, roadblocks, errors that somebody might make. What are some of the potential issues? Can you give us a couple of examples?

Daniel:        Okay. For instance, let’s say there are orders that seek an investment property to be sold. Something that parties might not consider is said, for example, capital gains tax, it might be payable on the property in the future. When you’re selling an investment property, a CGT event occurs, and there is a resulting liability out of that. So orders should ideally specify who’s going to be responsible for this or at the very least parties should be aware of the fact that this is a liability that will be present. I mean, there are hundreds of different examples and they’re always going to be unique to each particular case.

Peter:          Yes. Okay. So with agreements — I had a dad the other day send me a note. He’d been separated for a year. And a year can fly by with everything that they’re trying to manage. And he was concerned that there might be a time frame in actually getting the agreement. So can parents do these anytime? Is there a set time limit?

Daniel:        We’ll speak generally. But do you remember if that question you got gave any detail as to whether he was married or in defacto relationship or divorced perhaps?

Peter:          Yes, he was married. They had a family home. They also had an investment property. He’d moved out. He was renting. He was still paying the mortgage to the house, and he just wanted to know, because he’s not living there — And this is probably another question for another day — He wasn’t living there but he’s paying the mortgage. Was he entitled to anymore? But I think generally, his main question was, is there a time limit that we should
settle?

Daniel:        Yes. So there are time limits that people need to be careful of. If you’re married, applications for a property adjustment need to be made within 12 months of your divorce becoming final. So in your example, with regard to that question, he still has time.

Peter:          So it’s about divorce, not separation.

Daniel:        That’s right. And if you’re in a defacto relationship, applications for a property adjustment need to be made within two years of the breakdown of the defacto relationship. And if you don’t apply within these time limits, you need special permission from the court, which is not always granted. And when I’m in special permission, you’re asking for the court to
consider a property settlement.

Peter:          Right. Okay. So just to clear that up for me. If you are married, there is no requirement to get an agreement until you decide to get divorced.

Daniel:        More so the window for the order to do so closes after your divorce is finalised for 12 months.

Peter:          Right. So some people have separated for maybe five or 10 years before they decide to get a divorce.

Daniel:        Yes. So in those instances, they can still make an application for property orders for whatever reason they’re still separated for that long. I always encourage people to deal with these issues as soon as possible because you don’t know what’s going to up in the future. There might be health issues of either of the parties.

Peter:          That’s right. Some people are lucky enough to go and buy another investment property.

Daniel:        Yes, that’s right. Somebody might enter a new relationship. They might have more children. You want to finalise matters as soon as possible.

Peter:           Okay. So you spoke about permissions. How do you get permission?

Daniel:        So there’s a section of the family law Act, its section 44, I think its subsection 6. And that gives the court power to grant parties leave, which is essentially permission to file an application to the court for a property settlement if they’re out of time. In order to do this, the court needs to be satisfied that one of the parties or a child of the relationship, hardship would be caused to them if leave was not to be granted. Now hardship, it’s not defined within the act, and so the court has to consider what constitutes hardship on a case by case basis. In bringing this particular application out of time, you have to give your reason as to the delay in bringing the proceedings, and you’ll need to demonstrate how hardship is caused or else the leave may not be granted. So you need to keep in mind that the loss
of opportunity to bring proceedings is not in itself a hardship. And that reason alone is probably not sufficient enough to grant leave. So an application needs to make be made to the court, usually by way of what’s called an initiating application. That’s the application you make asking for a property settlement, and you’ll require an affidavit which is, somebody’s set of written facts, stating their argument in support of that application. I guess the best advice is to try and make your application on time. And if you are becoming close to that time limit, and you are concerned that you might not get it in on time on your own, then maybe you need to consider getting advice or assistance from a lawyer.

Outro:          Yes. I hear that loud and clear. So I think there are a lot of dads that have separated and settlement of property has not been finalised yet. So I guess, if there are questions they need help preparing an agreement, and they need you to help put that together, again, I’ll put your email details and mobile phone in the podcast notes. But Dads, if you’re out there and you’re listening, and you’ve got a pen, Daniel’s mobile number is 0423729686. And Daniel can help you right through all of those agreements and permissions if needed, all sorts of things. So there’s a lot in this, and I imagine that you do need specialist advice when navigating through these agreements. So Daniel, thank you. You’ve been really generous with your information. I look forward to the next series of topics. But is there anything you want to add before we sign off tonight?

Daniel:        I might just add that it’s not always the case that anything needs to be done with parenting orders or an agreement. Sometimes everything’s already been divided up, but parties come to me to formalise it. And what that will do is protect them from moving forward. So there are a couple of options out there for people who have an agreement and a seeking of a property settlement. And they need to just consider which one’s right for them. And hopefully, this podcast has given them some information about that. If anybody’s got any questions or feedback about any of this, I’m always happy to have a chat.

Peter:          Okay. All right. You have a good day and we look forward to talking to you again.