15 July 2021, By Niki Schomberg of Hartley Family Law
We have acted for many clients who are (unsurprisingly) shocked and horrified at having been served with an application from their ex-partner with whom they separated over 10 years ago.
As the assets and liabilities of each party are taken at the current date, and not the separation date, any wealth built up post-separation can be included in the property pool available for division between the parties. This can be particularly horrifying for the spouse who has built up considerable wealth since separation, where their ex has not.
It is therefore imperative to finalise your property settlement or spousal maintenance matters with your ex-partner in a legally binding way after separation. This can be done by documenting any agreement you reach with your ex in consent orders or a Financial Agreement.
What is the difference?
Consent Orders are lodged in court and stamped as a Court Order.
If you reach an agreement with your ex, one of your lawyers will prepare the documents to file in court. It is not necessary that either party be legally represented but drafting the orders can be complicated and usually requires the assistance of a lawyer.
Once the documents are lodged in court, a Registrar will review and approve the orders if they are satisfied the division proposed is within a range of just and equitable outcomes.
Once the orders are approved, the deal is final and cannot be set aside except in limited circumstances such as fraud or duress.
A Financial Agreement is a private contract between parties that is not subject to the court’s scrutiny. A Binding Financial Agreement will prevent the court from making orders dealing with the same matters in the agreement.
Both parties need their own lawyer to provide them with independent legal advice and sign a certificate annexed to the Financial Agreement.
Which document is more appropriate?
In most matters it will be more appropriate to enter consent orders. Drafting Consent Orders is less technical so they are generally more cost effective.
Common circumstances where a Financial Agreement will be more appropriate however, include:
- The agreement is not within the range of just and equitable outcomes. For instance, if the wife is entitled to 50% of the property pool but agrees to retaining only 10%, the court will not approve orders in those terms. The deal will need to be finalised by way of financial agreement.
- Spousal maintenance needs to be addressed. If the court makes orders for spousal maintenance, the orders can later be varied on the successful application of a party. If there is to be a payment of maintenance, it is therefore safer to document this in a financial agreement. If the agreement is binding and not subject to any vitiating factors, the maintenance payment cannot later be varied by the court. In a Financial Agreement, the parties can also each extinguish their rights to make any claim for spousal maintenance against the other.
- There are pressing time frames. Once Consent Orders are lodged in court, it usually takes around 1 to 3 weeks for them to be approved, depending on how busy the registry is. If a 30 June deadline is looming for trust distributions or transfers to occur, then signing a Financial Agreement will ensure important time frames aren’t missed.
If you need any assistance finalising your property settlement or spousal maintenance matters in a legally binding way, please do not hesitate to contact Niki Schomberg or any of our experienced family lawyers.