Margaret Donoghue Lawyer

PROPERTY SETTLEMENTS

EMERGENCY FUNDS
(HOGAN ORDERS)

August 27, 2021

So, your relationship has broken down, you’ve got no money even though there should be heaps. You can’t afford a lawyer, you can’t afford the bond on a house, Centrelink say there are too many assets and you’re a partner in the family business, what do you do? This is a common scenario where one party has control of all of the assets and the other party has none. It may be that the controlling party has cleaned out the bank accounts or perhaps they are, well, “controlling”.

Whatever the reason, if there are assets and financial resources within the relationship, the law will give you access to what you need, if you have no other options.

A Family Law property settlement is about adjusting the assets and financial resources between the parties. How this is done is decided according to guidelines set out in the Family Law Act and cases decided by the Family Law Courts. (So, it’s vital make sure you have the right evidence before the court in the right way - see my previous blog ‘What’s Fair – Family Law Property Settlements (Basic Principles)’.

Getting to trial can take time, particularly if there are significant assets and financial resources, financial structures, trusts, companies or other business arrangements to be understood and investigated. Sometimes it can take two or more years.

In the meantime, life goes on and money is needed.

To make matters more difficult, it is unusual these days for lawyers to be prepared to wait for payment until the end of the case. Afterall, why should your lawyer have to pay interest on their overdraft or go without simply because you can’t pay for their work?

So, how do you obtain essential legal advice and representation if your ex holds all the money or assets?

The law and the courts enforcing the Family Law recognise that this is a serious issue and so provide short term remedies to ensure that the party who doesn’t control the money is still able to survive, obtain housing, live according to a reasonable standard of living and obtain their own legal advice and representation.

As we always say in Family Law, “each unhappy family is unhappy in their own way”. So, it is important for you to calmly and carefully work out what it is you are going to need in terms of short-term relief.

It’s best if you do this with a professional, usually a family lawyer, but it might also be a financial counsellor or an accountant.

If you need income support but you can’t access Centrelink and you don’t have work or sufficient work or if you are unable to work for some reason, then it might be appropriate for you to apply for what is called ‘spousal maintenance’. A spousal maintenance application can be made independently of an application for a property settlement and can be made at the Magistrates Court level.

On the other hand, you might have sufficient income to cover your basic necessities, but you don’t have sufficient to pay a lawyer or to obtain secure housing.

In these cases, you can apply for what is effectively an interim property settlement, seeking for the release of sufficient funds to enable you to engage a lawyer, possibly buy a car if you don’t have one, pay the bond on a home for yourself and the children etc.

Orders that are specifically designed to ensure that you have access to money for legal fees, so that you can have proper legal representation in your Family Law matter, are called ‘Hogan Orders’. The court makes these orders on the basis that it is essential to the administration of justice that one party is not disadvantaged by being unable to afford legal representation, particularly when there are sufficient funds available and the other party is able to pay for legal representation.

There are other forms of relief available too. If there is a delay in obtaining Child Support, for example because the financial structures within the family make it difficult to ascertain the correct level, you can apply to a court for urgent Child Support. Another remedy may simply be to enable you to access funds in bank accounts, provide access to a particular motor vehicle owned by the other party (but surplus to their needs) or the sale and retention of the sale proceeds for your own use of particular assets such as livestock, shares etc.

Very often, these matters or preliminary matters can be negotiated between the lawyers for each party because those lawyers themselves have an understanding of the parameters.

A word of warning, if you are seeking orders that are effectively an interim property settlement, you also need to be willing and able to commence proceedings for a final property settlement. It is not possible to obtain interim or short-term orders unless you are also applying for final property orders. The process is that, at the first return date of your application, the court is made aware that you are also seeking interim orders and will set aside time, either the same day or within a short period, for those interim orders to be argued and a decision made, pending final settlement.

Like any other court proceeding, these proceedings require significant and careful consideration, drafting of documents and, possibly, advocacy so it’s important to ensure that you have an experienced family lawyer representing you. In many cases, it should be possible to negotiate these orders without the need for a particular hearing but it’s always better to be prepared so that you are negotiating from a position of strength.

The critical thing, before you apply to court, is to carefully work out what it is that you actually need and to be reasonable in what you are seeking, so speaking to an experienced family lawyer can be a worthwhile investment.

WHAT’S FAIR – FAMILY LAW PROPERTY SETTLEMENTS (BASIC PRINCIPLES)

August 19, 2015

What do you think should happen to your assets when you split up? Everyone agrees that it should be fair, but fairness, like beauty, is in the eye of the beholder.

In Australia, if you were either married or in an eligiblei de facto relationship (including a same sex relationship), “who gets what” is governed by the Family Law Act. You can agree on a settlement, but if you want it to be legally binding, it must be within the rules set down by the law.

There are basically five steps that the law requires we follow in looking at a property settlement.

    1. The threshold step – is it just and equitable to make an order?

The law provides that an adjustment of property between the parties should only be made if it is “just and equitable” to do so. Most cases do meet the “just and equitable” threshold. Occasionally, the family law courts will decline to make an order at all, for example where each party has property registered in their own name and the court doesn’t consider it would be “just and equitable’ to make changes. There might be other circumstances where a court would also decide it’s not “just and equitable’ to make an order. In most cases, even to make this decision requires an examination of the other four steps!

    2. Which property –what is there to be divided?

This should be easy – but often it’s the bit that causes most problems. Very often people talk of "my car", "her jewellery" or "his tools in the garage". The Family Law Act however takes into account, for possible re-distribution, all of the possessions and property that either party owns or to which either of them is entitled. Debts or liabilities are treated the same way.

We work out what the assets (another word for "property") and liabilities of the relationship are and how much they total.

Valuation

In looking at property in terms of a Family Law settlement, we look at its market value; that is, what would the property fetch if it were sold at the time the decision is being made. The price you paid for it or the insurance value are generally not adequate.

If you can’t agree on the value of an asset, expert valuation evidence may be required.

Superannuation

At family law, superannuation is treated as property, even though generally it can’t be accessed until retirement. The method of valuing superannuation depends on the type of superannuation policy, however many policies are simple accrual policies and so the value of the superannuation can often be readily determined.

The court has a number of choices as to how to deal with superannuation. One option is to leave the superannuation in the hands of the party in whose name it has accrued and compensate the other party with alternative assets. Alternatively, the court may make a decision to “split” the superannuation in proportions that the court considers appropriate so that both parties receive a portion of the fund upon their retirement. Another option for the court is to simply “flag” the superannuation fund so that it cannot be accessed or dealt with until the court has made a further decision as to what should happen with it.

    3. Looking back –contributions

The third step is to work out who's contributed what – how did the parties get to the current financial position. Contribution may be financial or non financial, direct or indirect, it may be to the welfare of the family or it may be a contribution made on behalf of one of the parties of the marriage.

If one spouse has been the "homemaker and parent", instead of going to work outside the home, that contribution is usually regarded as equal to the income earning contribution of the other spouse. (However it's almost unheard of for working spouses who do most of the housework to be credited for more than 50% on contribution!)

Another example is where family or friends of one spouse have given that spouse money or other property (e.g. as an inheritance). This would usually be regarded as a contribution on behalf of the spouse whose family or friends made the gift.

In the majority of cases where parties have been together for a number of years, unless one party had substantially more assets at the time of marriage or there has been such a gift, parties' contributions are likely to have been equal. If the law stopped here, many property settlements would be 50/50.

    4. Looking forward – future needs

Fairness at law also means looking to the future. Perhaps one party has the responsibility of young children and therefore can't work full time or not without paid help, or that party will have more expensive housing needs to accommodate the children, or a disability. One party might always have a much higher earning capacity than the other or will receive substantial superannuation benefits in the future. The ages of the parties and their capacity to support themselves will also be taken into account. The payment of child support and its amount (or the nonpayment of child support) will also be relevant.

Depending on the circumstances, a court is likely to make a further adjustment to take account of those factors.

    5. Is it just and equitable – any other adjustments?

So back again – the first step is repeated. The law requires the court to make an order that is “just and equitable" in all of the circumstances. There may be other matters that need to be taken into account to reach this end, where the strict application of the factors above produces an “unjust” or unfair result. This means the court will make a further adjustment.

How to make it stick

If you are able to negotiate a settlement, you have some flexibility as to how to arrange your finances and assets. However, any agreement you make will not be legally binding unless it is formalized in accordance with the Family Law Act. This can be done either with consent orders, in which case a court will review the proposals in accordance with the legal principles above. The other alternative is a compliant Binding Financial Agreement – in which case both parties must have legal advice.

This article is a simple, introductory explanation of what can be a complicated process. The best advice is to speak to an experienced Family Lawyer!