Husband’s Business Suddenly Gains Value Post Settlement – What’s a Wife to do?

$93 million dollars! The Age today made headlines with this splashy article about an-going legal battle that was brought before the Family Court of Australia. The parties have been given the pseudonyms of Mr and Ms Wills, and you can read their case here http://www.austlii.edu.au/au/cases/cth/FamCA/2017/183.html

In this case, the parties were married for 35 years before they split. On 27 April 2015, their property dispute was finalised where the wife received a division of assets worth $15 million. The Wife has then filed an application for this agreement to be disregarded, claiming that the Husband had failed to disclose relevant information relating to an interest in a business which later resulted in him receiving $93 million.

As it appears to have turned out, on 1 May 2015 the Husband was said to have “determined to take the initial steps to the making of an Initial Public Offering (IPO)” for the business. Their property dispute was finalised on 27 April 2015.

Having not seen the full details of the case, it is hard to say exactly who said what, knew what and when, and so we cannot comment definitely on what will happen. But there may be some value in looking at cases where the property ‘pool’ consisted mainly of lottery winnings (bought by the husband), as in the case of Elford v Elford [2016] Fam CAFC.

In Elford the Appeal Judge upheld the trial judge’s decision that the winnings were not a joint endeavour but rather recognised that the husband made the sole contribution to the winnings – therefore dismissing the wife’s appeal to a greater share in the property pool.

The question then is whether the wife receives any entitlement to the $93 million.

Only an experienced lawyer such as one from our family law team would be able to navigate you through complex scenarios such as the above – we are contactable on 03 9614 7111 or otherwise out of office hours on melbourne@nevettford.com.au

Risks in delaying property settlements

Parents, children and or family members who have endured or witnessed a relationship breakdown can certainly attest to the challenges and intimidation separated parties face as a result. Not only are they emotionally challenging, they involve life-changing and confronting decisions, particularly adjusting to the severance of any financial ties and or resolving care arrangements for the children.

 

It is not uncommon to come across clients who have separated and left finalising their property settlement for many years. Empathetically and understandably so, property negotiation with a former partner is probably the last detail on the minds of separated parties, given the need to also address emotional issues resulting from separation – however it is imperative that you know the considerable risks associated when discussions surrounding a family law property settlement are left for a significant period.

 

It is important to be aware of the time limits under the Family Law Act 1975 in brining proceedings for property settlement or spousal maintenance before the Court, which is designed to promote property settlements within a practical time frame.

  • For married couples, you have 12 months from the date of divorce;
  • For de facto couples, you have two years from the date of separation.

 

For married couples, we do not recommend applying for divorce until property settlement has been finalised or proceedings commenced seeking property orders. For de facto couples, we commonly run in to the issue of being out of time and we see parties expending legal costs to argue the exact date of separation – therefore reiterating the importance of finalising your property settlement at the first available opportunity following separation.

 

These time frames exist under the Act to provide certainty to both parties and is beneficial in cases where one party is deliberately skirting the negotiation process (usually the party required to pay maintenance or the party who has smaller future needs) and delaying a property settlement.

 

In the event you wish to pursue a property or maintenance claim outside the designated time frame, you can only do so with the Court’s permission, that is, leave must be sought from the Court to begin proceedings. The Court must be satisfied that hardship will be caused to you or a child if leave was not granted. In maintenance proceedings, you must demonstrate that at the time the ordinary time limit expired, you were unable to support yourself without an income tested pension, allowance of benefit.

 

Another significant risk associated in delaying a property settlement is that values of assets, liabilities and or superannuation, as well as the parties’ financial circumstances may change between the date of separation and when negotiations begin and or the matter is brought before the Court –the law looks at and considers the asset pool at the time of any trial, not at the date of separation. This means that any lottery wins or inheritances accumulated may be included as part of the asset pool for division. Similarly, delaying a property settlement whilst meanwhile disposing of any matrimonial assets prior to a settlement can be treated by the Court as that the person has already received part of their property settlement entitlement, thereby reducing their entitlement in the final settlement.

 

When property settlements are left for a significant period, this also increases the risk that one party may die before proceedings are initiated. Any property owned as joint tenants such as the matrimonial home will be transferred automatically to the surviving tenant (usually the ex-spouse), regardless of what the deceased’s Will states and regardless of whether the parties have separated.

 

It is for these complexities and risks involved in determining the parties’ entitlements after a long period of separation that we advise you to speak to one of our experienced family lawyers post-separation. Or, if you are in a position where the ordinary time limit has lapsed, we can tailor our advice to you accordingly taking into account your circumstances.

 

On the same note, if you have managed to reach an agreement with your former partner about a property settlement, we encourage you to document it in a legally binding and recognised manner, either through Consent Orders or a Binding Financial Agreement. The risks you face otherwise is that your partner later decides to change the agreement, which was never formalised in the first place. Putting the terms of settlement in a legally enforceable way would save considerable amount of time and costs in the future if the “informal” agreement was challenged.

 

Please do not hesitate to contact us on 03 9614 7111 or email us out of hours on melbourne@nevettford.com.au.

How long does a defacto relationship have to be?

De Facto Relationship:

A De Facto relationship arises when two people, who are in a relationship, are not married or related by family, and having regard to all the circumstances of the relationship, are a couple who live together on genuine domestic basis. Circumstances of the relationship that the Court will consider in determining whether a De Facto relationship exists or not include the duration of the relationship, living arrangements, whether there was a sexual relationship, financial arrangements, property owned jointly or individually, any registration of the relationship under State or Territory law, any children and public representation of the relationship.

Grounds for Property Claims in a De Facto Relationship:

If a De Facto relationship breaks down, the Family Law Act provides that a Court can make orders in relation to property of the relationship only if: 

  • The relationship has lasted for a minimum of 2 years; or
  • If there is a child of the relationship; or
  • A party has made a substantial contribution; or
  • The relationship was registered under a State/Territory law.

As a result, in the De Facto relationship that last for less than 2 years, a property claim can only be made if there is a child of the relationship, the relationship is registered or if the concerned party has made a substantial contribution.

Substantial Contribution:

Substantial contributions are contributions which are not ‘illusory’ and are ‘considerable or large’ having real worth or value. Contributions that would be considered by the Court as being substantial contributions include, but are not limited to, the following: 

  • Financial contributions made for acquisition, conservation or improvement of any property of parties

  •  Non-financial contributions made for the acquisition, conservation or improvement of any property of parties

  • Contributions made to the welfare of the relationship and/or children of the relationship including homemaker contributions.

When determining whether a contribution is a substantial contribution, the Court may also take into account other considerations, such as: 

  • Effect of any proposed order on earning capacity of any party

  • Matters such as age, health, income, care or control of child, any commitments, standard of living, extent of contributions to financial resources of the relationship

  • Any financial agreement/arrangement between the parties

  • Child support

There is a further requirement for claims based on substantial contributions. If a party makes a substantial contribution and in the absence of an order that party would suffer a serious injustice, only then can a claim for property be made by that party. The Court requires this injustice to be more than slight and a mere injustice will not suffice.

If you have been in a de facto relationship that has unfortunately broken down and you would like to discuss further what your entitlements are, please do not hesitate to contact one of our approachable family lawyers. The number to dial is 03 9614 7111, or email us out of hours on melbourne@nevettford.com.au

Binding Financial Agreements

Parties can enter into a BFA before marriage (s 90B), during the marriage (s 90c), after a divorce (s 90D), before entering into a de facto relationship (s 90UB), during a de facto relationship (S 90UC) or after the breakdown of a de facto relationship (s 90 UD). Both heterosexual and same-sex (LGBT) couples can enter into a BFA.


A Binding Financial Agreement (or BFA) is a written document signed by both parties to a relationship which contains provisions about the division of property in the event of a separation. It must comply with either Part VIIIA or Part VIIIAB of the Family Law Act 1975 and parties to the Agreement must obtain independent legal advice about the Agreement.
A Binding Financial Agreement is often referred to as Prenuptial Agreement (prenup or prenups), Cohabitation Agreement, Postnuptial Agreement (postnup or postnups), Property Settlement Agreement or Divorce Settlement Agreement.


Binding Financial Agreements entered into prior to or during a Marriage or De Facto Relationship
 

Some advantages to a Binding Financial Agreement:

  1. It allows parties to protect assets and financial resources which existed prior to the relationship from a claim for division after separation.
  2. It allows parties to protect an inheritance or gift they received prior to the relationship, during the relationship or after separation.
  3. In some circumstances, it allows parties to remove their respective responsibilities towards the other to provide spousal maintenance.
  4. It provides a degree of certainty to the parties as to how their assets, financial resources and liabilities will be treated in the event they separate and remove any anxieties they may have about entering into a relationship in the first place.
  5. It allows parties to be clear about the responsibility of debts such as credit card debts, home loan, personal loans, business loans, etc.
  6. In conjunction with a will, it allows parties to plan their estate and ensure that their children, especially any children from previous relationships, are not disadvantaged in the division of the estate.
  7. It allows parties to determine their property settlement without the intervention of the Courts and costly legal disputes.


Examples of when a Binding Financial Agreement may be useful

  1. When one party has significantly more assets and financial resources than the other, a BFA (whether entered into before or during the relationship) allows that party to keep those assets and financial resources safe from the other in the event that they separate.
  2. When both parties have significant assets and financial resources and they both wish to quarantine those assets and financial resources from the other in the event that they separate.
  3. When one or both parties have children from previous relationships and wish to protect all or part of their assets and financial resources for their children.


Binding Financial Agreements entered into after separation

Some advantages to this type of agreement:

  1. It allows parties to keep the terms of their settlement agreement away from the eyes of the Courts, the Australian Taxation Office (ATO) and other persons and organizations.
  2. It allows the parties more flexibility in how they wish to determine their financial matters.
  3. In some circumstances, it allows parties to remove their respective responsibilities towards the other to provide spousal maintenance.


Examples of when a Binding Financial Agreement may be useful

  1. When parties have complex property, business or trust arrangements which they wish to keep as private as possible.
  2. When the settlement terms are more in favour of one party and as a result may not be approved by a Court.
  3. When the parties need a quick resolution to their financial affairs and wish to avoid an agreement which requires the review and approval of a Court (consent orders).


We have a highly competent and approachable team of family lawyers who are able to assist you in determining the right kind of Binding Financial Agreement for your circumstances. We recommend you contact us on 03 9614 7111, or email us out of hours on melbourne@nevettford.com.au.

Preventing unlawful removal of children from Australia

Do you have concerns that your child may be removed from Australia against your permission? Have you agreed to your child traveling overseas with the other parent but there is a genuine fear that they may not return your child to Australia?

 

We understand that this would be a stressful situation for any parent.

If so, it may be important that you act immediately to prevent this. You will need to obtain a Family Law Watch List from the Family Law Courts preventing or limiting your child from travelling outside Australia. A Family Law Watch List is also otherwise known as an Airport Watch List. If the situation is urgent, the Courts may make an Order on an ex parte basis.

The Family Law Watch List directs the Australian Federal Police to put your child’s name on the Watch List which in effect, operates at all international departure points including sea ports until discharged by the Courts. It is crucial to note though that the Family Law Watch List does not restrict interstate travel. The Australian Federal Police will not place your child’s name on the Family Watch List without a Court Order, unless in very limited circumstances.

 

If a child does not have a valid passport, Australia requires the other parent’s signature on the Passport Application form. If this is the case, and you suspect the other parent may fraudulently make an Application, you may, at first instance, consider whether a Child Alert Request will suffice. A Child Alert Request is a warning to the Department of Foreign Affairs and Trade not to issue an Australian Passport for a child without first making further enquiries (https://www.passports.gov.au/passportsexplained/childpassports/Pages/childalerts.aspx).

If the other parent has an international passport, you can make enquiries with embassies/consulates about the possibility of the other parent obtaining an international passport for your child. If there continues to be a real risk your child could travel on an international passport, you can make an application for your child’s name to be placed on the Family Law Watch List.

When facing with an application for a Family Law Watch List, or an application for the child to travel overseas, the Courts uphold its primary consideration being the child’s best interests – Will a travel abroad be in the child’s best interest? What is the time period and reason for the intended travel? Is there a real risk that the child will not be returned to Australia? Is the intended/likely travel destination a Hague Convention country? To find out whether a country is a Hague Convention country, go to https://www.ag.gov.au/FamiliesAndMarriage/Families/InternationalFamilyLaw/Pages/HagueConventionontheCivilAspectsofInternationalChildAbduction.aspx.

 

On the other hand, if you are a parent considering removing a child from Australia without the other parent’s consent, or relocating overseas, you should think twice as your actions may constitute an offence punishable with imprisonment up to three years. If you wish to relocate with your child, you should consult the other parent seeking an agreement in writing, or seek Court Orders allowing your child to travel or relocate.

If you have a pressing fear that your child may be removed from Australia unlawfully, or you simply wish to know more about international travel arrangements, you can contact our attentive Family Law team on 03 9614 7111 or Melbourne@nevettford.com.au.

Protect Your Family’s Investment

Protect Your Family’s Investment

Many people choose to invest in property in Australia for their retirement, as a source of income, or to assist their children with somewhere to live. This is true of both local buyers and overseas purchasers. When you do this however, you should turn your mind to how Australian family law will consider this type property in the event that there is a separation involving yourself or your children in the future. 

What is urgency for parenting cases?

Parents in the heat of family law situations will often want to know if the Court can help them with their dispute urgently. To a parent in the middle of a dispute situation – they may not have seen their child for months, or they may want to change their current arrangements – their situation may appear genuinely urgent. However, this is not the test that the Court applies in determining whether a matter should be listed urgently in front of a Judge or Registrar.

Consistency and Understanding the Key for Courts Dealing with Family Violence

In August 2016, TC Beirne School of Law and the Australasian Institute of Judicial Administration released the initial version of their ‘bench book’ for Courts across Australia dealing with family violence. A bench book is a guide to Judges and Magistrates to assist them in applying risk assessment systems, case law, and making suggestions in coming to decisions.

It is a difficult task for lawyer, judges and people caught in the family violence systems to ensure they can assess situations with the impartiality, reality-testing and credibility required of them, and the guide aims to simplify this process for the judiciary, resulting in a more consistent framework that better protects those in need, and better recognises when people are not being genuine in their desire for, or opposition to, an order being made.

Clients will often speak of a Judge or Magistrates having taken a view about them personally and not treating them, in their view, fairly. This guide should help in ensuring that there is a consistent and clear approach and restore damaged confidence in aspects of the system.

Of course our lawyers  have many decades of experience dealing with family violence matters and providing clients with realistic and sensible advice in obtaining, opposing, or renewing orders and if you do have a concern about your situation, we encourage you to call us to discuss your situation.

We are available on 03 9614 7111 or by email on melbourne@nevettford.com.au.