2019---03---27---Pigott-Stinson---Homepage_02

We already have an agreement. I just need you to draft some Orders.  By the way, I’ve put a deposit on a new place”

For those who regularly deal with family law clients, this scenario is common.  It can however cause problems that may be difficult to resolve, especially if there is a need for Orders to be prepared quickly.

It is reasonably well-known that when parties agree on a financial settlement after the breakdown of a relationship, they can apply to the Federal Circuit and Family Court of Australia (“the Court”) for Orders.  The Court then reviews the Orders without anyone attending in person, and then – all things going well – the Court issues Orders a few weeks later.

Applying for Consent Orders is the most common of the two main ways to finalise a property split after a couple separates.  In most cases where there is already agreement, Orders are relatively cheap to obtain.  If all necessary steps are taken when they are being prepared, Orders give separating couples certainty, as well as access to benefits such as stamp duty exemptions on some property transfers.  Simple!

Yes, usually it is.  However, as with any formal legal process, understanding what is involved when applying for Consent Orders may help non-family lawyers better assist and guide their clients with decision-making about a financial settlement after a separation.  This short piece aims to give an overview for non-lawyers on the key steps involved when applying for Consent Orders if the parties have already agreed on their preferred outcome.  It will also briefly comment on some common pit-falls and challenges that can happen along the way.

It is beyond present scope to discuss and explain the legal concepts that underpin what each party is entitled to receive, or the Court’s requirements for Consent Orders before it will approve them.  Additionally, the process and requirements for using Financial Agreements (also called “pre-nups” or “binding financial agreements”), which are the other way of finalising a property split, are not further discussed here.  Finally, plain language – not legal terminology – has been deliberately used.  None of the following is intended as legal advice. Parties needing advice specific to their circumstances should consult with a lawyer.

1. Applying for Consent Orders from the Court

Documents – what’s needed?

Once parties have agreed on their intended property split, applying for Consent Orders from the Court is done by completing, signing and filing two documents:

  • The Application for Consent Orders;
  • Consent Orders,

and paying the $170 filing fee.

The Application is a Court form that sets out essential details about the parties’ relationship, their assets, income, liabilities, and superannuation.  It also asks the parties to briefly list the relevant contributions they each made during the marriage/relationship, as well as the outcome the property split will achieve when it is put in place.

The Consent Orders are drafted by a lawyer and set out in paragraph form, each of the legally-binding steps that the parties will need to take.  Steps might include things like selling or transferring a home, investment property or shares, transferring registration on vehicles, splitting money in bank accounts or dividing home contents.  Every matter is different, because it depends on the parties’ assets, and the agreement they have reached about how the assets are being divided.

2. The finer details – what’s included in the documents?

The Application

In short, everything.  The information the Application form asks to be listed is detailed and exact.  It includes things like bank account numbers for all accounts, loans and credit/store cards, policy numbers for insurance policies, car registration details, superannuation member statements, weekly income and tax – the list goes on.  All items of property – which is broadly described in a property split – need to be disclosed to the other party and set out in the Application form.  The Application includes an affidavit that must be signed by both parties about the accuracy of the information included, and other matters.

Even if the parties agree with the property split, both of them still need to locate all of the required information and give it to their lawyers (or the other party’s lawyer if only one is represented), so that the Application can be completed and filed at Court.  What does all this mean?  It means that unless and until both parties can provide this information and the information is shared with the other party, finalising the document so that it is ready for signing will be delayed until this has happened.

The Consent Orders

These need to drawn up and agreed on by the parties – and their lawyers if they are represented – before they can be signed.  Parties and non-legal advisors should understand that an “agreement-in-principle” is not the same as agreement on how the Orders say that agreement should be put into effect, and what other things should also be included in the Orders.  Enough time also needs to be allowed for discussions about this to happen, and any disagreements to be resolved.

There are also very specific requirements for Orders that divide superannuation.  These mean it may take up to four weeks after Orders are prepared before they can be signed by the Parties and then lodged with the Court.  If this step is taken earlier in the drafting/negotiation process, it can help shorten any delays.

If parties have not undertaken a complete formal exchange of their financial documents as part of their negotiations before coming to an agreement, and are relying on (or asking for) further information from the other party after they have been sent the first draft of an Application for Consent Orders, then changes may need to be made to Orders.  Sometimes some parts of the agreement may need further negotiating.  This may then in turn slow down the finalisation of Orders.

3. Signing and Filing Consent Orders – the “how”

Once parties have agreed on both the content and detail in the Application for Consent Orders and the Consent Orders, they will usually need to attend appointments either with their lawyers (or a JP) to sign the documents.  The original signed documents then need to be exchanged between the parties, which usually happens by courier or post. Given the nature of a property split, unlike commercial transactions, it is very unusual for Consent Orders to be signed in any joint conference with all parties and their lawyers attending together.  Counterpart documents are also not accepted by the Court.  The need to sign the original documents and exchange documents by courier/post adds additional time to the process.  Sometimes signing can be done by emailed/scanned documents.

All filing for the Court is now done electronically through the Commonwealth Courts Portal (“Comcourts Portal”).  The filing process itself is relatively straightforward, once a user account has been set up.  It takes roughly 30 minutes to one hour to complete filing. Documents filed after 4.30pm are marked as being filed the next business day.

After filing, the Application can be checked via the Comcourts Portal by the Parties and/or their Legal Representatives, provided both have an active user account.  Depending on Court resources, most matters are considered by the Court within 6 weeks of filing.

If there are problems with either the proposed property split or technical aspects of the Orders, the Court will usually delay the matter for around six weeks to give parties time to fix any issues.  If there are no issues, and the Court is satisfied that the proposed Orders are appropriate, then the matter is marked as “approved” on the Portal.  It can take several weeks for the printed Orders that show the Court stamp to be published on the Portal.

Once the Orders have been approved, the matter will “disappear” from the active files list on the Portal, but is found by searching by the matter name or file number. Once the Orders have been uploaded by the Court, they can be downloaded from the Portal for printing as needed.

4. Common problems and pitfalls – FAQs

 

Once the Orders are made, is the matter be finalised?

Answer:  No.  Orders made by the Court are not self-executing.  This means parties need to allow time to carry out the steps to implement their agreement.  The steps that need to be taken will depend on what the Orders say.

Do both parties need to be represented by a lawyer?

Answer:  No.  Parties do not need to be represented by lawyers to lodge an Application for Consent Orders.  However, because the Orders – if made – are legally binding, it is very important that they are capable of being enforced by a Court if needed.  This means the Orders should be prepared by a lawyer who regularly does family law work, or preferably is an Accredited Specialist in Family Law.

Do we need to file any other documents with the Application form?

Answer:  Yes, often there are extra requirements for information to be given to the Court when documents are filed.  What is needed depends on parties’ individual circumstances.  For example, if one of the parties was born overseas, proof of citizenship or other supporting documentation will need to be filed before the Court will consider it.  The Court Website has a helpful “Do it yourself” guide to filing Consent Orders, that includes a checklist at:  https://www.fcfcoa.gov.au/fl/forms/app-consent-kit.

How is superannuation split?

Answer:  This can only be done by Court Orders or a Financial Agreement.  Orders about splitting superannuation need to have been approved by the Superannuation Trustee of the Fund before parties sign documents and they are filed at the Court.  The Court also needs to see proof that this has happened, which has to be filed with the Application.  Parties who intend to file their own Application should be advised by a family lawyer about any particular requirements their matter may have before filing, to avoid complications such as delays in the Orders issuing, or the Court declining to make the Orders.

Can we get exemption from Stamp Duty on a property transfer if we have Orders made by the Court?

Answer:  Yes.  Provided the property being transferred is appropriately identified in the Orders, Consent Orders are one of the documents that the OSR (in New South Wales) accepts for transfers to be stamped “exempt” from stamp duty.  For parties who are wanting Orders made to take advantage of this, it is critical that they allow enough time for documents to be drafted and lodged, and also then for the Court to consider and issue Orders (if approved).  For stamp duty exemption, a copy of the Orders bearing the Court seal needs to be attached to the OSR application form.  Parties need to be aware of these requirements if they are relying on Orders being made by the Court for stamp duty exemption on a property transfer that happens under the Orders.

Will the Court consider an Application for Consent Orders urgently?

Answer:  Yes.  In some circumstances the Court will consider Orders more quickly if there is good reason.  The request is made when the documents are filed and proof of urgency should be given.  Even if a request for urgent consideration is made by the Court, there are no guarantees the Court will accommodate the request.  For this reason, except where it is genuinely avoidable, parties should not rely on having urgent consideration.  For parties who have committed themselves financially to a new property purchase, relying either on stamp duty exemption that is expected to flow from the Orders being available, and/or on payment from the other party as part of the settlement to settle on their new property, delays in the Orders being considered, or problems with the Orders can have very significant consequences.  It is far better for parties to know before they make further plans that rely on the Orders being made, about the uncertainty of the Court’s timetable when it considers Orders, before they commit to a new property purchase or other significant financial obligation on the expectation that the Orders will be made by a particular date.

If a property is to be transferred, do both parties need to have a lawyer or conveyancer?

Answer:  Yes.  For parties that are transferring a property between spouses/partners as part of a family law property settlement, the transfer does not happen automatically.  If the property is encumbered by a mortgage or other security by a bank, the outgoing bank must release the existing security on the property, and the incoming bank must also be ready to settle.  The Orders should allow enough time for arrangements to be made for any proposed settlements.  Since October 11 2021, transfers of property in NSW are now all carried out electronically, and both parties must be legally represented by a lawyer or Conveyancer, who has access to the details of the electronic transaction.

What happens if the other party refuses to comply with Orders?

Answer:  If the Orders have been prepared carefully, and depending on what hasn’t been complied with, it may be possible to apply to the Court for help such as having a Court Registrar sign documents in place of the non-cooperative party.  For other types of non-compliance, the Orders should provide some alternative mechanism that will apply if the Orders have not, or cannot be complied with. In some circumstances, it may be necessary for the aggrieved party to apply for the Court to have the Orders enforced, if the other party will not comply.  Parties should seek legal advice if this occurs.

What happens if the other party wants to, but cannot comply with Orders?

Answer:  If this happens, it is a complex issue that needs to be resolved with the help of a lawyer.  As with deliberate non-compliance with Orders, if the Orders have been prepared carefully, unintentional non-compliance should also be capable of resolution by applying the “default” provisions that are usually included in Consent Orders.  One common oversight, is where an encumbered property is being transferred between former spouses/partners and/or where a loan is being secured on a property and needs to be refinanced to pay out the other party.  If parties have not checked they can borrow what’s needed to comply with the Orders, then it may then be impossible for them to comply.  It is possible for parties to have Consent Orders set aside in only very limited circumstances.  The less-expensive and safter option for both parties is to make sure the Orders include detailed default provisions, even if those additional Orders may seem unnecessary at the time the Orders are being negotiated between the parties.

What happens if I find out the other party didn’t disclose important information or hid assets until after Orders were made?

Answer: One of the very limited circumstances where Consent Orders can be set aside by a Court is if there has been fraud or non-disclosure by a party.  Making sure all of the required information is disclosed by both parties during negotiations, and/or as part of the process of preparing Consent Orders if parties engage their lawyers after they have agreed on a property split, is critically important.  Disclosure and non-disclosure is taken very seriously by the Court, and significant consequences follow if parties fail to provide the required information, or are untruthful when signing Court documents, such as the Application for Consent Orders.  The Court has considerable powers such as imposing fines, bonds or making findings of contempt of Court in dealing with non-complying parties.

What happens if the Orders are wrong or have unexpected outcomes?

Answer:  It depends on what the problems are. Some things like typographical mistakes in Orders can be fixed administratively by the Court if the parties apply together.  If however the Orders have outcomes no one anticipated, like unexpected tax needing to be paid, then fixing those issues could either be quite complicated, or simply not possible at all.  To avoid this happening in the first place, the better and safer course for everyone, is see a lawyer before negotiating their agreement.  As long as proper disclosure documents that show parties’ financial circumstances are available, an experienced family lawyer will recommend that parties obtain specialist accounting, tax and financial advice from appropriate professionals, where it appears necessary to investigate those matters further.

Final Words

Consent Orders are an efficient and cost-effective way of finalising a property split after the breakdown of a marriage or long-term relationship. Taken from the above information summary, some key tips when helping clients organise themselves to have Consent Orders made are:

  • Get legal advice from an Accredited Specialist in Family Law before negotiations begin;
  • Understand the options – reality-testing proposals and checking for practicality and affordability early on can save costs and time in the long run;
  • Have all of the right information organised and ready so a lawyer can prepare settlement documents;
  • Allow enough time for necessary procedural steps to be taken and documents to be prepared;
  • Consider carefully before deciding on any reinvestments or purchases that rely on the sale or transfer of property or payment of money pursuant to any Consent Orders.

 

Further Information and contact details

Pigott Stinson regularly advises and acts for clients on a range of family law matters. If you would like any further information, please contact our Family Law partner, Celia Oosterhoff.

This Newsletter is produced by Pigott Stinson. It is intended to provide general information only. The contents of this Newsletter do not constitute legal advice and should not be relied upon as legal advice. Formal legal advice should be sought from us in respect of the matters set out in this Newsletter. Liability limited by a scheme approved under Professional Standards Legislation