To commence proceedings in Australia, statutory requirements in relation to a nexus to Australia (citizenship, residency, domicile, and/or geographical) must be met.1 Provided these are met, the Australian Family Courts will have jurisdiction to make Orders dealing with overseas assets in property settlement proceedings.
There are strategic considerations to take into account for parties who may need to compare their respective rights and entitlements under the applicable law of each country (and the risks and benefits of commencing proceedings in each of the competing jurisdictions).
In deciding if it is proper for the application to be heard, the Court looks at:
- The "clearly inappropriate forum" test;2 and
- The "stay" test.3
All assets in Australia and overseas are included in the asset pool available for division. Parties should not assume any overseas "pre-nuptial" agreements will be binding and enforceable in Australia, or that they will deal with Australian assets. Parties have a duty to provide full and frank disclosure of all assets, liabilities, and financial resources, including those held overseas. Some common issues arising when dealing with overseas assets include:
- Timing—where there are varying exchange rates, or global events;
- Language—the translation and interpretation of documents and reports; and
- The obtaining of expert evidence and the need to ensure that Part 15.5 of the Family Law Rules 2004 (Cth) are strictly complied with.
There are also issues relating to any penalties arising from divorce proceedings in fault-based jurisdictions, and the applicable law in foreign jurisdictions as it may relate to inheritances, wills and estate, and trusts, etc. It may be necessary to adduce evidence from a lawyer in the overseas jurisdiction.
Parties will need to consider the impact of any Capital Gains Tax for foreign residents, and any reporting issues with respect to overseas income and assets to the ATO.
Even though the Family Court may have jurisdiction to make a property settlement order dealing with overseas assets, practical considerations may also arise as to whether those Orders will be enforceable in the foreign country. There are some important things to understand from the outset:
- Can the client's final entitlements be recovered from available Australian assets?
- Is it possible and/or necessary to lodge a caveat over overseas real estate pending the determination of Australian proceedings?
- Are urgent Family Court proceedings necessary to preserve the asset pool?
- Does the law of the foreign jurisdiction permit the operation of the Australian Orders? Further, can a spousal maintenance and child maintenance order be registered overseas?
Clearly, there are potentially complicated issues that may arise where a party has overseas assets and seeking advice early to identify the issues and develop a strategy should be key.
Citations
1 Section 39 of the Family Law Act 1975.
2 Voth v Manildra Flower Mills Pty Ltd (1990) 171 CLR 538.
3 Deslandes & Deslandes [2015] FamCA 913.
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.