Form 11 Consent Orders
It is stressful enough to go through relationship breakdown, but the experience could become much more traumatic if there are disputes about how assets and finances are to be divided. The good news is that majority of couples are able to reach an out of Court settlement.
Often, the key to avoid expensive and lengthy legal proceedings is to attend to the disputes and obtain sound legal advice at the earliest possible opportunity. Having a good understanding of your rights and responsibilities under the Family Law Act early will go a long way in your negotiations with your ex-partner, both in protecting your rights and enhancing the chance of a speedy resolution.
If you and your ex-partner are able to reach an agreement in relation to the division of property, you should document the agreement by way of a Form 11 Consent Orders Application which will need to be approved by the Family Court. Once approved, the consent orders will be sealed by the Family Court and they become binding on the parties in the same way as orders made in Court proceedings.
You do not have to wait until you are formally divorced before you can make a Form 11 Consent Orders Application. In fact, you can (and probably should) start negotiation with your ex-partner immediately after separation.
It comes as a surprise to many people that the Family Court may not approve a Form 11 Consent Orders Application even if parties have agreed to the terms voluntarily. This is because the Court has an overriding duty to ensure that the financial effect of any orders it pronounces by way of property settlement is just and equitable (fair) and if the Court is not satisfied, it may decline to make the orders despite the parties’ agreement.
When determining whether the proposed orders are fair, the Court takes into account a variety of matters which are discussed in MARRIAGE/Disputes on financial matters Spousal maintenance.
An alternative to Form 11 Consent Orders Application is to document your settlement by a binding financial agreement which is discussed in SEPARATION: PROPERTY/Binding Financial Agreement.
A binding financial agreement can be made after breakdown of a marriage or de facto relationship.
For financial agreements to be legally binding, the agreement must comply with all legal requirements set out under the Family Law Act or the Family Court Act including both parties must obtain independent legal advice (evidenced by a solicitor’s certificate) before signing the agreement. Once the financial agreement is made, it is binding on the parties and it can only be altered or terminated by making a new agreement or with orders from the Court.
A transfer of property pursuant to a valid binding financial agreement is free of stamp/transfer duty.
However, validity or enforce-ability of a financial agreement can be challenged by a person in the Family Court.
It may come as a surprise to many people that it is not uncommon for the Court to set aside a financial agreement. Broadly, the situations where a financial agreement can be challenged in Court include:
• the financial agreement is not binding because it was not drafted in accordance with the Family Law Act or it contain terms that contravene the Family Law Act;
• even if the financial agreement is binding, it is unenforceable because it contravenes the general law governing enforce-ability of contracts (e.g. it was entered into as a result of fraud, duress, undue influence, unconscionable conduct or misrepresentation); or
there are material changes in circumstances relating to the care, welfare and development of a child of the relationship which would result in hardship if the financial agreement remain in force.
The fact that there are a number of situations in which a financial agreement can be challenged in Court means the preparation of a financial agreement requires the solicitor to have sufficient experience and knowledge about the Family Law Act and received comprehensive instructions from the client with respect to financial and personal circumstances. As a practical advice, having a signed financial agreement which was not prepared properly may cause more chaos and cost you more money in the future than not having one at all in the first place.
It is because of the uncertainties (some of which may be unavoidable) surrounding the enforce-ability of a financial agreement, when it comes to a relationship breakdown, generally you should opt to document your settlement by Consent Orders instead of by a financial agreement.
Disputes on financial matters
If you and your ex-partner are unable to reach an agreement in relation to the division of property, you may have little other option but to commence proceedings relating to property matters in the Family Court.
Unfortunately, Court proceedings are inherently costly and lengthy but the good news is that most cases started in the Family Court (over some 95%) are settled during the proceedings and do not require a trial.
When determining how assets are to be divided between the parties, the Court adopts a four steps process:
- identifying the assets;
- determining the parties’ contributions;
- identifying the parties’ respective needs; and
- considering the effect of the above findings and resolving what orders are “just and equitable”.
As the first step, the Court will identify all the assets & liabilities of the parties and determine its value. In some situations, this could be a difficult process when there are assets located overseas or when some of the assets are “hidden” by a party.
Determining the parties’ contributions is arguably the most important step and the outcome of which is likely to have significant impact on the final orders to be made by the Court. In assessing contributions, the Court takes into account financial contribution (e.g. wages, savings and inheritance brought into the relationship), non-financial contribution (e.g. physically carrying out building work on a property) and contribution to the welfare of the family (e.g. looking after children or performing home duties).
The third step involves considering the future needs of each party. Generally, this requires looking at the parties’ age, health, education, earning capacity, income and responsibility for children. Once the needs of each party are considered, the Court may make adjustments to the property entitlements of each party based upon their respective needs.
The final step requires the Court to consider whether the final division of property is “just and equitable” and consider the orders that need to be made in order to carry out the finial division. In this process, the Court is often require to determine which party is to keep a particular property (e.g. the matrimonial home) or whether a particular property is to be sold.
An application for property division must be made within 1 year after the divorce orders become final.
Spousal maintenance is financial support paid by a party to a marriage to their former spouse in circumstances where they are unable to adequately support themselves. De facto partners may also seek orders for spousal maintenance after a breakdown of the de facto relationship.
In deciding an application for maintenance, the Court focuses on a party’s needs for maintenance and the other party’s capacity to pay. Generally, this requires looking at the parties’ age, health, education, earning capacity, income and responsibility for children. The Court will also look at whether the person applying for maintenance has any “ability to earn” which they are not exercising.
Once an order is made for payment of spousal maintenance, it can be either paid on a periodic basis or in a lump sum basis.
In the event that the financial circumstances of the parties change, either party can apply to vary or discharge a maintenance order.
An application for spousal maintenance must be made within 1 year after the divorce orders are made.