It is often the case that separated parties avoid engaging lawyers from the get go, as they feel that it is an unnecessary step in deciding who keeps what (particularly when the asset pool is relatively conservative), or who gets to spend time with the children, and when.
Whilst parties may have reached an agreement, it is important to understand that an informal agreement is not legally binding on either party, and that as such, a lawyer may actually be required to formalise the agreement. In Coleman Greig's experience, it is incredibly important for agreements to be formalised, because in circumstances where they are not, it is possible for either party to apply to the Family Court of Australia for a completely new arrangement in the future.
Consent Orders vs Binding Financial Agreements
There are a number of key differences between Consent Orders and Binding Financial Agreements worth keeping in mind - these being that:
- A Binding Financial Agreement is not reviewed by a court, and is binding once both parties have signed;
- Both parties must each receive independent legal advice before a Binding Financial Agreement can be made legally binding; and
- A Binding Financial Agreement can only apply to financial matters.
A Binding Financial Agreement can be entered into before, during or after a marriage (or de-facto relationship), as opposed to a Consent Order, which can only arise following the breakdown of a relationship.
The drafting of a Binding Financial Agreement is a very technical and detailed process, so it is crucial that both parties engage the services of a solicitor to assist them throughout the process.
The most common way of formalising agreements is through the use of Consent Orders. Consent Orders are court orders entered into by mutual agreement, and can relate to:
- Property and financial settlement (including superannuation splits);
- Spousal maintenance; and
- Parenting matters.
Consent Orders must be filed with the Family Court alongside an Application for Consent Orders. An Application for Consent Orders outlines the relevant information required by the court in determining whether the proposed orders are just and equitable (within the context of a property matter) or in the best interests of the child/ren (within the context of a parenting matter).
Pursuant to the Family Law Act 1975 (Cth), Orders will only be made if the court is satisfied of these aspects. If the Orders are made, they become legally enforceable immediately.
Whilst it is not mandatory for lawyers to draft the documents, the Consent Orders do need to be drafted in a way that makes them enforceable, so in the vast majority of situations a lawyer will be best placed to draft the documents. It is important that the Orders are drafted correctly in order to eliminate the potential for issues, or further litigation.
There are very limited grounds upon which Consent Orders can be appealed, set aside, varied or discharged. These are covered in Section 79A of the Family Law Act, and include where:
- There has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
- In the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
- A person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
- In the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or
- A proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage.
For further information on the specific circumstances that might require the Family Court to either set aside, or vary a Consent Order, please click through to Section 79A of the Family Law Act 1975.
As with property matters, Consent Orders can be used for parenting arrangements. With this in mind, parties to a relationship breakdown also have the option of implementing a parenting plan, which is essentially the same, although not legally enforceable.
It is for this reason that parenting plans are generally a better option for parties who:
- Do not wish to involve lawyers; and
- Who are relatively amicable and unlikely to breach the agreement.
Parenting plans are flexible and can be changed at any time if agreed to by both parties, although the reality is that if one party chooses not to follow the parenting plan, it cannot be enforced.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.