In this video, OMB Solicitors Property Solicitor, Elisha Hodgson talks about nuisance communication particularly with respect to the day-to-day management of a body corporate.
Divorces can be an emotionally tough time for both partners, as well as affected third parties such as children, parents, in-laws and even friends. Unfortunately, divorces can also be a lengthy and tiring process.
Eligibility for divorce
Before a spouse can apply for a divorce, there are specific eligibility requirements that must be met. Either spouse must have been born in Australia or be an Australian citizen by grant or descent. They must otherwise be lawfully present in Australia and intend to continue live in Australia and have been in Australia for a period of at least 12 months.
The marriage between the spouses must be ‘broken down irretrievably’ and the applying spouse must consider that there is no reasonable likelihood of reconciliation and resumption. The spouses must also have been separated for at least 12 months and one day.
If the spouses have been married for less than two years, evidence of a counselling certificate, or evidence saying why this could not be provided, must also be filed.
If the spouses have, at any time, lived with one another during the 12-month period, extra evidence will need to be given to prove that there has been a change in the marriage.
Initiating an application
Once these requirements are met, an Application for Divorce form must be completed, either joint or sole. The application will be joint if both spouses involved in the divorce wish to mutually make the application. If the application is sole, one spouse is making the application and the other spouse is the respondent. The application must then be sworn or affirmed in the presence of a lawyer, a Justice of the Peace, or another who is authorised to witness your signature on the document.
It is advisable that the laws governing the State or Territory in which the application is being made are reviewed, to determine that the witness of the document is authorised to do so. If the applicant is overseas at the time he or she wishes to have the document witnessed, the document can be witnessed by Notary Public, an Australian Diplomatic Officer or Australian Consular Officer, or an employee of the Australian Trade Commission.
Filing and serving documents
Once the application has been completed, the past procedure was to the mail the application to the Family Law Registry along with two photocopies of the document and also a photocopy of your marriage certificate (though this does not need to be sworn, affirmed or certified). Once the Family Law Registry received the application, the court would then file it, and forward sealed copies of the application with a file number, along with a time and date of the scheduled hearing.
However, as our firm is registered with the Family Court portal, we are able to file the application online, and we will obtain a hearing date at the time of fling. We then print sealed copies of the divorce application to serve (with an information brochure from the court) on the other spouse.
The application must be served to the other spouse either by mail or by a third party within a time period of 28 days before the scheduled hearing date, if the spouse lives in Australia, or 42 days if the spouse lives overseas. If the other spouse’s residential address is unknown, an order to either dispense with service or enable substituted service can be applied for by the applicant spouse.
With a joint application, there is no need for service as both parties are applying together for the divorce.
Costs to file for divorce
The average cost of the filing fee for a divorce application in the Federal Circuit Court is usually $900. If financial hardship is an issue, the spouse applying can also apply for a reduction in the filing fee. In this case, the spouse must provide to the Court specific documents such as Centrelink income statements, health care cards, earlier government grants such as Legal Aid, payments for Austudy, or evidence that the applying spouse is a prison inmate or held in legal detention (if that is the case). This evidence would need to be provided by both spouses in a joint application, or solely by the spouse initiating the application if a sole applicant.
Children and previous names
If there are children of the marriage, the applying spouse must provide to the court the current particulars of the children and care arrangements. Children of the marriage include step, fostered, adopted or biological children, and the details for all such children must be included. This information would include whether the child or children were born before or after the separation, and/or whether the non-biological children were a part of the family before the separation. The particulars and arrangements of the children would include anything from where they primarily live; their contact with each parent or reasons explaining why contact is limited or no contact with a parent; which school they attend; any current arrangements involved, as well as their health.
The financial positions of each parent also must be provided to the court, and if applicable, details of non-provision of financial support by a parent. Additionally, if a spouse in the divorce has a different name to both the married or maiden name, an affidavit will need to be filed with the court, explaining the difference.
Granting of a divorce
Following the granting of a divorce, the divorce will take one month and one day to finalise unless the court makes a special order to shorten this time frame.
As described, a divorce is a long and tiring process, and legal assistance is advisable throughout the process.
Independent legal advice will assist a spouse to understand their rights and responsibilities, how the law both works and applies to their individual cases.
Please contact the family law team at OMB for assistance and advise for divorce and any other family law issues that are causing you concern. There are often strict time limits involved to do certain acts and file certain documents, and failure to obtain legal advice is not an excuse readily accepted by the Court for missing these time limits.
One of the first things to become clear when you are going through separation and divorce is that there is a lot of confusing legal jargon. There are technical terms about the property, financial and even parenting matters that inevitably surface as your relationship officially ends. For example, you may have heard of a ‘Conciliation Conference’ but can be forgiven for not knowing exactly what that means.
Also known as a ‘Property Settlement Conference’, this is simply a meeting where you and your former spouse or partner have a chance to reach consensus about the distribution of your property before going to court.
Unfortunately, you cannot schedule this meeting yourselves. Instead, the Court will schedule it for you, though this will only happen if you have not resolved your differences during or following a preliminary meeting with a Registrar of the Family Court in what is called a ‘Case Assessment Conference’.
Preparing for the Property Settlement Conference
If you cannot resolve your disagreement during the Case Assessment Conference, the registrar will let you know what you must do prior to the Property Settlement/Conciliation Conference.
After the Case Assessment Conference, you will usually have 28 days to exchange relevant information following the Registrar’s instructions. Along with new material relevant to your case, this may also include documents that were not shared prior to the Case Assessment Conference. Here is what you will need:
- Paperwork about any financial matters referenced in your respective financial statements;
- proof of joint and individual financial contributions made when cohabitation began;
- documentation of any inheritances, gifts or compensation payments received during cohabitation;
- documentation about the purchase or sale of property in the year before or since the separation, and any increase or reduction of liabilities since separation;
- detailed documents about superannuation.
Depending on the specific nature of your dispute, you may also need to complete a financial questionnaire and balance sheet as directed.
Within this context, it is crucial that you share all the facts and documents about any aspect of your application. Failure to do so can have grave consequences, including delays, added costs or even an order mandating that you pay any costs incurred by your former partner or spouse. At its discretion, the Court may also issue a greater order for a property settlement favouring the other person.
Understanding the process
Even with the proper legal, financial, and emotional support, preparing for a Property Settlement Conference can be stressful. But knowing what to expect at the meeting can help lessen your anxiety.
One of the first questions you may have is how long the meeting will take. The answer is based on the unique circumstances of your case, but you should be prepared to spend one to two hours in conference.
The meeting format depends upon the Registrar’s preferences. He or she will usually begin by speaking with each of your lawyers to confirm the specific nature of the disagreement. Based on this information and material submitted prior to the meeting, the Registrar will frame the ensuing conversation with your lawyers in a manner designed to achieve consensus. However, you should not be surprised if the Registrar also asks to speak with each of you directly.
You should be aware that in most cases, both you and your ex-partner or spouse must both attend this conference. If either you are worried about this for any reason, you should let your lawyer know so he or she can relay your concerns to the Registrar, who will make arrangements to address this issue.
You should also be aware that anything said during a Property Settlement Conference or Conciliation Conference is usually confidential. This means that you cannot refer to these conversations in any ensuing Court hearings if the matter is not resolved.
The three parts of the Property Settlement Conference
A Property Settlement or Conciliation Conference is usually a three-step process. These steps are the introduction, the settlement discussions, and the conclusion. Below is a simple description of each stage:
- Introduction: The Registrar will explain the general format for the meeting and lead a brief discussion about any points of contention. He or she will also give guidance for ensuing negotiations based on the specific circumstances of your case.
- Settlement discussions: This is when the Registrar will facilitate the actual conversation about how to resolve your disagreement(s).
- Conclusion: At the end of the meeting, the Registrar summarises everything that has happened and reviews any agreements. If all the issues have been successfully addressed, your lawyer will put the agreement(s) in writing so that the Court can issue consent orders accordingly.
What if we still do not agree?
In a perfect world, everything will settle at the Property Settlement or Conciliation Conference. If not, the only alternative is court intervention. In this case, you will have to attend a pre-hearing conference, which is usually held within six to 12 months, and a pre-trial conference.
You should be aware that you and your former partner or spouse (and your lawyers) can keep trying to reach a settlement until the final hearing. If you still have not been able to resolve the issues by that time, the Court will evaluate all relevant material and testimony. After it does so, it will issue an immediate ruling or announcement that it will issue its decision later.
If you and your partner and spouse are going through separation or divorce and cannot agree on property, financial or parenting matters, it is essential to get the proper legal advice. Contact us today.
Bob and Betty have both had terrible experiences in property settlement matters with their prior spouses. They are now in their 50’s and have been ‘going out’ for about 8 years. They have both sworn that they will never get involved in a de facto relationship or marriage again!
Bob and Betty do not live together. They have their own separate houses over an hour’s travel apart, and Betty still has 2 adult children from her earlier relationship still living with her.
They see each other 3 weekends a month. On 2 of those weekends Bob stays at Betty’s house for the weekend (2 nights) and on another weekend Betty similarly comes to stay with Bob. The reaming weekend they each stay at their respective homes and do not see each other. They ring each other once or twice during the week.
Bob and Betty do not have any joint accounts, nor do they share finances. They have their own assets and liabilities and do now own anything jointly. They have separate credit cards and neither of them is authorised to use the others card.
When they go out to dinner together, Bob, being the gentleman that he is, usually pays. They regularly go on overseas holidays together and pay their own way, though Bob again will pay for meals and drinks.
They have a sexual relationship but have no children together.
They are known as a couple to close friends and family, and when they are out together in public on weekends or on holidays they would be seen as a couple. However, on all other occasions during the week and on one weekend a month, they will be seen living their own separate lives, paying their own bills, buying their own groceries, doing their own washing, and cleaning, and maintaining their own homes, gardens, and lawns.
On the weekends that they are at either party’s property, they both make contributions to their food, groceries, and cleaning. Bob will ‘wipper snip’ while Betty is on the ride on mower, and so on. They both shared in the repainting the inside of Betty’s house.
Have Bob and Betty fallen into the trap. Are they in a de facto relationship, even though they do not live together?
What constitutes a de facto relationship?
Every person’s circumstances will be different to that of Bob and Betty, and each case will be decided by scrutinising all aspects of each relationship.
The Family Law Act 1975 (“the Act”) is a Commonwealth Act, so the same de facto laws apply throughout Australia. The Act deals with what factors a court must consider when deciding if a de facto relationship exists or not.
If (god forbid) Bob and Betty broke up, and Betty ‘turned nasty’ and wanted to file proceedings in the court for a property settlement alleging a de facto relationship, she would have to satisfy the Court that all the following circumstances exit:
- That she was in a genuine de facto relationship with Bob, which has broken down irretrievably; (can Betty prove this?)
- That the relationship meets one of the following four gateway criteria:
- That the period for the de facto relationship is at least 2 years (Betty could show this);
- That there is a child of the de facto relationship (not applicable in Betty’s case);
- That the relationship is or was registered under a prescribed law of a State or Territory (again not applicable in Betty’s case); or
- When assessing property or custodial claims in cases of a breakdown of a relationship, it is recognised that significant contributions were being made by one party and the failure to issue an order would result in a serious injustice (it would appear that neither Bob nor Betty made a significant financial or non-financial contribution that deserves an adjustment to solve any injustice).
- That Bob and Betty have a geographical connection to a participating jurisdiction (both Bob and Betty are Australian citizens and live in Queensland, so this is satisfied);
- That their relationship broke down after 1 March 2009 (Bob and Betty only recently separated, so this requirement is satisfied).
Having satisfied all the other gateway requirements, whether Betty is successful will depend upon her proving that they were in a genuine de facto relationship.
What makes a genuine defacto relationship?
In deciding whether Bob and Betty were in a genuine de facto relationship for the first gateway criteria, the court will have regard to the following matters.
Section 4AA of the Act defines a de facto relationship. The Act requires that Bob and Betty must have had a relationship as a couple living together on a genuine domestic basis for a defacto relationship to exist.
The Act then gives a list of factors to consider in deciding if Bob and Betty had a relationship as a couple living together on a genuine domestic basis.
Those factors are:
- the duration of the relationship (8 years – this is good for Betty);
- the nature and extent of common residence; (the parties lived separately and only spent holidays and 6 nights a month together – this is not good for Betty’s prospects);
- whether a sexual relationship exists or existed (it did – again this good for Betty);
- the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties; (Bob and Betty were financially independent of each other – this is not good for Betty);
- the ownership, use and acquisition of their property (Bob and Betty did not buy any assets together, and they owned their own homes and vehicles. Again, this is not looking good for Betty);
- the degree of mutual commitment to a shared life (this appeared to be in existence, however Bob says they were just taking one day at a time and if the relationship did not last, then so be it. Bob says Betty was of the same view, but non-surprisingly in her affidavit she claims that this commitment to a shared life existed. The Judge may need to decide based on credit, who is telling the truth in a “he said she said” argument, and objectively it is difficult to figure out from the facts, which are (like every case) so unique. Given that Betty has the onus of proving the facts I will give her a fail on being able to prove this joint commitment);
- whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship (this relationship was not so registered, and this issue is really for same sex relationships before amendments were made to the Marriage Act to allow same sex couples to marry – this is not relevant to Bob and Betty who were very much male and female);
- the care and support of children; (there are no children together, another blow for Betty) and;
- the reputation and public aspects of the relationship (I will give this one to Betty because all their family and close friends knew them as a couple, and when in public together they acted as couple).
No one factor is more important than any other. However, the more factors from this list that Betty can prove will aid her in convincing the Court that there was a de facto relationship. Likewise, the more factors that Bob can disprove will help show that there was not a defacto relationship in existence.
Betty is looking good on 3 of the above factors (duration of relationship, a sexual relationship and public perceptions), however Bob is looking much better on 5 of the factors (no common residence, financially independent of each other, property ownership use and acquisition, no mutual commitment to a shared life, and no children together).
There is not a certain number of factors from the list that must exist (or not exist) for a defacto relationship to be proven (or disproved for the absence of a defacto relationship).
There is also no minimum number of nights that the parties must spend together in a common residence, nor is there a need for the parties to have actually lived together at all before a defacto relationship will be found to have existed.
The Family Law Act also recognises that a person who is married, may also possibly be in a defacto relationship with another person at the time. A person can also be in several de facto relationships at the same time if the test is satisfied for each of those relationships.
Does Betty succeed?
If I were acting for either Betty or Bob, I would be able to argue very strongly in either of their cases of the existence or non-existence of a defacto relationship. Who will win will depend on how the evidence falls at the hearing, matters of credit and what factors the Judge considers to be most important in deciding the matter one way of the other. Judges have very wide discretion in deciding these matters, one Judge might say there was a defacto relationship, while another Judge (or the Court of Appeal) may decide that there was not.
If I were a betting man, my money in this case would be on Bob, but I would not put too much money on the bet. This is close to a 50/50 chance. It could go either way.
If I were advising Betty or her prospects of success, I would be telling her that she has a compelling case, but I would be testing her to see if she accepts whether it is worth the risk. If Bob opposes the existence of a defacto relationship (which he will) Betty will have to pay significant legal costs that will be involved if the matter goes ahead all the way to a final hearing. She will need to weigh that up with the amount that she is looking for, and her prospects of success. The normal rule in family law cases is that each party pay their own legal fees.
If I were acting for Bob, again I would be telling him that he also has a compelling case. I would recommend that he strongly oppose Betty’s application on the basis that there was no defacto relationship and gather as much evidence as he can to support this conclusion.
Generally, matters like this will settle at mediation, with both parties accepting that going to Court will be expensive, taxing on their time and their emotions, and involves a serious risk that they each might fail.
Time limit to start proceedings for financial orders
If (despite her legal advice on costs and chances of success) Betty still wishes to try to obtain financial orders, and settlement of the matter at a mediation fails (neither Bob nor Betty will shift from their positions), then Betty must apply to the court within two (2) years of the breakdown of the defacto relationship. After that time, she would need the leave (permission) of the Court to apply, and the Court does not readily give that leave.
Sometimes you simply must tell the truth, the whole truth and nothing but the truth. A lie by omission – something you do not mention when you should – is still a lie. Australian law dictates that people seeking resolution of certain issues related to separation or divorce must make certain information available to each other, and to the court. This is called the duty of disclosure.
When it applies
As stipulated in Family Law Rules 2004 (“the Rules”), the duty of disclosure applies to you when you are seeking resolution of financial matters in a separation or divorce. This means you must make certain information available to your former spouse or partner in property settlement, spousal maintenance, and similar cases.
You and your former spouse or partner must also exchange certain information when seeking resolution of parenting matters. This may include but is not limited to: living arrangements, visitation, and child support.
The timing and extent of disclosures
Legally, you must make “full and frank disclosure” of all information that has direct bearing on any point of contention in your case. In other words, you must give any pertinent material that you actually have, or that you have access to or authority over. And you must do so before the case goes to court.
It is best to be aware that both parties have this duty, and that it is ongoing. This means you must report any relevant changes – such as a job change or loss of employment – to the other person, and they must make similar information available to you. Your respective obligations to exchange pertinent information will not end until you reach an agreement, or the court issues a final order.
Finally, it is important to note that there are no legal stipulations about the way in which this material should be given, so it does not matter if you share electronic or paper records. The information you must give will also vary based on case type and your situation.
Your duty of disclosure in financial cases
In these cases, both of you must give comprehensive information about your respective financial circumstances. This usually means you must supply any or all the following:
- Documents reflecting your regular earnings;
- bank statements reflecting deposits and withdrawals from checking accounts, savings accounts and so on;
- tax documents;
- superannuation statements;
- material documenting the valuation and appraisals of assets;
- material about financial resources other than income, along with supporting documentation;
- information about interests in any company and/or trust, along with supporting documentation;
- information about any assets disposed of prior to and since separation.
Please bear in mind that this is not an exhaustive list, and you may need to give different and/or more material given that each case is unique.
Your duty of disclosure in parenting cases
In disputes over parenting matters, both of you must give information the court needs to make decisions about the care and living arrangements for a child. Specifically, you must supply any material relevant to the child’s welfare. As in financial cases, however, the type of information will depend on your unique circumstances.
The following is generally subject to disclosure in parenting cases:
- The child’s (or children’s) school reports;
- relevant assessments about the child/children and/or parents issued by doctors, psychiatrists, psychologists, social workers and so on;
- information about the amount of time the parent spends at work;
- information about the supervision of the child/children when they are not with you;
- information about any issues that affect each parent’s ability to care for the child, such as substance abuse, mental illness, or chronic medical conditions;
- official documents about any family violence, including intervention orders, police reports or relevant statutory body reports.
Penalties for noncompliance and dishonesty
Rule 13.01 of Family Law Rules allows the court to disregard any material that has not been fully and properly disclosed in finance cases. If you do not fulfill your duty of disclosure, the Court may also be reprimand you for contempt of court.
At its discretion, the court may also issue a costs order against you for failure to meet this obligation fully and truthfully. If it does, you will have to pay not only your own legal costs but also those incurred by your former spouse or partner. In the most drastic cases, you may be fined or incarcerated.
If either one of you finds out that the other failed to fulfill the duty of disclosure prior to the issuance of family law final orders, the aggrieved person can ask the court to change the order or set it aside. The court may also vacate or amend a final family law order if either of you have not fulfilled your duty of disclosure before it is issued.
As we have noted, each case is different. If you are going through separation and divorce, and you have questions about the type of information you have to disclose, contact us today.
Clarifying Binding Death Nominations in Superannuation
Re Narumon Pty Ltd  QSC 185
A recent decision in the Queensland Supreme Court, Narumon, emphasizes the importance of a valid Binding Death Benefit Nomination (BDBN) within superannuation funds and clarified whether an attorney has the ability to renew BDBN’s.
Summary: In Narumon, the deceased (Mr. Giles) was the sole member of the John Giles Superannuation Fund. Mr. Giles appointed his wife (Mrs. Giles) and his sister (Mrs. Keenan) as his attorneys under an enduring power of attorney (EPOA) for financial and personal/health matters. His attorneys were to begin making financial decisions on his behalf when Mr. Giles had been determined incapable of making his own decisions. In November of 2013, that very situation occurred and Mr. Giles was declared completely incapable of making his own financial, health, and lifestyle decisions. From then on, his wife and sister were authorised to act as attorneys on his behalf.
Mr. Giles made several BDBNs before he lost capacity. The most recently created BDBN was on the 5th of June 2013, which directed his attorneys to distribute his superannuation death benefits, a portion of which were obviously left to his wife and sister, who just so happened to also be acting as his attorneys. Additionally, 5% of Mr. Giles’ death benefits were to be paid to a non-dependent and non-legal representative. The 2013 BDBN stated that three years after the date it was signed, it would cease to have effect and must be signed within three years of the member’s death.
Issue: 5% benefit to non-dependant and non-legal representative
In order to ensure that the 2013 BDBN and its extension were valid, Mrs. Giles and Mrs. Keenan decided to change the 5% nomination to a non-dependant and distribute it between the dependant’s already nominated. The court, however, confirmed that the original 2013 BDBN was valid, despite the 5% nomination to a non-dependant. The reallocation was found to be a conflict of interest and, since there was no explicit language in the BDBN allowing such a conflict, the new BDBN would not be valid.
Issue: May an attorney make a BDBN?
The court held that, yes, an attorney has the power to make a BDBN on a member’s behalf. His Honour looked closely at the language of the deed. The deed did not prohibit such an act. In fact, another section expressly stated that an attorney would enjoy all of the rights that a member would have. Since there was no restriction under the Superannuation Industry (Supervision) Act of 1993 preventing an attorney from making a nomination, there was nothing to prevent Mr. Giles’ attorneys from making a nomination on his behalf.
Issue: Validity of the 2013 Binding Death Benefit Notice
The issue in question was whether or not Mrs. Giles and Mrs. Keenan would be allowed to renew the 2013 BDBN or make a new one, despite also being recipients. The Court considered whether or not there was a conflict created by the dual interests of Mr. Giles’ attorneys. In the end, the judge ruled that there was no conflict created.
The judge reasoned that because they were merely confirming existing estate planning intentions, there was no conflict. However, it is unclear whether making one from scratch would also be allowed or if that would be considered a conflict. Therefore, it is clear that the individual circumstances for each case will need to be considered in determining whether or not a BDBN renewal is likely to be valid.
“This is the first time it’s been considered as far as I’m aware of, that an attorney subject to the trustees of the super fund is able to renew a binding death benefit nomination for the person for whom they are the attorney,” said Scott Hay-Bartlem of Cooper Grace Ward Lawyers after the judgement.
Buying or selling a business can be a stressful time. Your business is often your dream and the motivation and income source for your family.
But the process of buying or selling a business can be difficult and requires expert assistance.
Investigate the business that you are thinking of buying. Do your due diligence.
Seek expert legal advice to draw up the contract. This is a critical stage as the contract will set out the essential terms of the purchase and sale. Is the contract subject to finance, verification by your accountant of the financial records or the assignment of the lease of the premises? Are there licences or approvals that are required to run the business, will there be a restraint on the seller or its entities conducting a similar business for a time in a certain area? Are there staff required to remain in the business and on what basis will they be offered employment? This is vital and your legal representative should be able to draft a contract that protects you and ensures that you will only be buying a business on the terms that suit you. Drafting of these conditions is an important task and the detail is often critical.
Once the contract is negotiated and signed it is time to satisfy those conditions, get your finance, check the financials and obtain the landlords consent to assign the lease or grant a fresh one. Again the documentation here is vital and it is important that you and your lawyer communicate clearly.
So the conditions have been approved and it is time for settlement. Your lawyer will have conducted the necessary searches and from these it will be clear what adjustments need to be made at settlement. Documents need to be checked and liaising with your bank regarding finance. Settlement will need to be coordinated with the seller and their financier, the landlord, and the buyer’s financier so that all parties are satisfied to proceed. It is essential for all parties that these matters follow the correct procedure as the buyer wants to ensure they take over the business with all items in place to continue its operation without any impediments or debts. The seller needs to be sure that upon the completion they receive their money for the sale and have been released from all liabilities, including personal guarantees of the business moving forward.
Once settlement has been effected your lawyer should attend to any loose ends which require attending to including lodgement of forms, registration of transfers, releases or any other items to perfect the completion and transfer ownership to the buyer and away from the seller.
Whilst the exact process varies from transaction to transaction the skill and knowledge of your legal expert should be relied upon to ensure the transaction proceeds.
At OMB Solicitors our expert team can ensure that your purchase or sale is handled in the most professional and competent manner with a common sense approach to the transaction having regard an understanding to your business needs
In this podcast, OMB Solicitors, Family Lawyer, Gary Mallett answers the commonly asked question, as to whether costs can be recovered in family law matters.
What is the General Rule About Costs in Family Law Matters
S.117 of the Family Law Act 1975 provides that each party to proceedings under this Act shall bear his or her own costs, subject to a few exceptions. In other words, the general rule in Family Law is that each party will have to pay for the costs of their own legal representation and should not expect to be able to recover any part of those costs from the other party.
Subsection 2 then goes on provide that if the court believes there are circumstances that justify doing so, the Court may make such order as to costs as the Court considers just.
What Matters do the Court Consider in deciding if it is “just” to depart from the general rule?
The Family Law Act provides that in considering what order if any should be made with respect to costs, departing from the general rule, the Court shall have regard to:
- The Financial Circumstances of each of the parties to the proceedings;
- Whether any party to the proceedings receives assistance by way of legal aid and if so, the terms of the grant of that assistance;
- The conduct of the parties to the proceedings in relation to pleadings discovery and inspection and directions to answer questions, admissions of fact, production of documents and similar matters;
- Whether the proceedings were necessitated by the failure of the party to the proceedings to comply with previous orders of the Court;
- Whether any party to the proceeding has been wholly unsuccessful in the proceedings;
- Where either party to the proceeding has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
- Such other matters as the Court considers relevant.
So, if I make an Offer to Settle and I beat that Offer at the Hearing, will I receive a Costs Order?
The purpose of the Court enquiring as to whether any offers to settle have been made in considering cost orders, is to ensure that offers to settle are considered seriously by both parties, to minimize the cost of litigation and reduce the workload of the over loaded Family Law Courts.
The Court also tries to eliminate any injustice that may occur if a financially stronger party is placed in a position where they can drag out the proceedings, mounting up costs and wearing out the other party.
The Court will consider the actual terms of the offer and possible outcomes of a settlement resulting from acceptance of that offer. A comparison will then be made to determine if acceptance of the offer would have resulted in a greater share of the assets to a party than what was ordered by the Court to that party at final hearing. If the comparison shows that the party would have been better off accepting the offer, then the court may make a costs order against the party who declined the offer.
As an example, in one case I was recently involved in, the Husband made an offer to the Wife before legal proceedings were even commenced that she have 65% of the property pool. The Wife rejected that offer. The matter went to trial and the Wife was awarded 62% of the property pool. The Husband had beaten his offer at the trial. Acceptance of the offer by the Wife would have given the Wife a greater share of the matrimonial pool then she was given at a final hearing, some two and a half years later.
The Wife would also have saved herself the significant legal costs, time, and the trauma of years of Court litigation, where all both parties’ dirty laundry is aired, and the property pool gets eaten away by legal costs, experts’ costs, barristers’ fees, mediator’s costs and other expenses.
The Husband applied to the Court for a costs order to recover his legal party and party costs on the applicable Court scale from the Wife, from the time the offer was made until the time of the final hearing.
As the Husband found out, the granting of a costs order to him because he had beaten his offer was not a guaranteed certainty. The Judge also looked at all the other matters required to be considered in deciding a costs order, to satisfy the Judge that it was just for her to use her discretion and part from the general rule.
The Judge noted the offer that was made and agreed that the husband had beaten it. However, the Judge went on to consider the parties conduct during the case. She noted that the Husband failed to comply on numerous occasions with his obligations to disclose documents, which resulted in lengthy delays and a waste of the Courts time and resources. The Judge further took serious note of the fact that the Husband had even breached The Judge’s own Court Orders for the Husband to disclose documents. Judges do not take lightly to their Court Orders not being complied with.
The Judge considered that the Husband’s conduct outweighed the effect of the Husband beating the initial offer that he had made.
The cost order was refused, and each party was ordered to pay their own costs.
If I am awarded a Costs Order, Can I recover all my Legal Costs?
If a standard costs order on what’s known as a party and party basis is made in your favour, you will not recover all your legal costs. You will only recover the costs for certain items of legal work on a scale prescribed by either the Family Court Rules or the Federal Circuit Court Rules.
Depending on how much your Lawyer has charged you, and what hourly rate you have been paying, often parties end up recovering less than 50% of their total legal fees on a party and party costs assessment.
However, if the Court goes one step further and considers that the justice of the case warrants an order that that the costs to be paid to the winning party by the losing party should paid on an “indemnity basis”, then all reasonably incurred costs by the winning party will be paid by losing party.
In determining whether the justice of the case demands indemnity costs, the court will consider the following:
- if a party, properly advised, should have known that they had no chance of success in their proceedings, then indemnity costs might be appropriate.
- If a party has knowingly made false allegations of fraud or irrelevant allegations of fraud during the proceedings, then an indemnity costs order should be considered. So be very careful when making allegations that the other party has been fraudulent (e.g. defrauded the government, forged a signature etc.) If these allegations are irrelevant to the case or are found to be untrue or have no substance, then you may find yourself looking down the barrel of an indemnity costs order.
- And finally if a party has conducted themselves in such a way that they wasted the time of the court and the other parties, or made allegations which should never have been made, or prolonged a case by groundless contentions or imprudently refused to offer to compromise or, consistently failed to comply with the Orders of the Court, indemnity costs order might be appropriate.
So, If the general rule is that each party pay their own costs, why do Solicitor’s letters always threaten to seek costs on an indemnity basis?
Occasionally it may be appropriate for lawyers to threaten to apply the Court for cost orders against the other party on the indemnity basis if their client’s demands are not met or orders are not complied with, but only where the justice of the case suggests that such a costs order might be made.
However, on most occasions when lawyers threaten the other party with cost orders, those threats are in reality ’empty threats’ and are generally made as a strategy to unsettle and intimidate the other party.
If in the context of family law proceedings, if you receive a letter from another Lawyer making certain requests or demands and then threatening to seek a costs order against you, you should immediately obtain our legal advice. Often, the costs threat will be a bluff, however, it might not be, and we can advise you when it should be taken seriously, and how to respond.
If you’re a business and you’re owed money and have received a court judgement to recover the debt, what are the next steps? In this podcast, Cameron Marshall, Business Lawyer of OMB Solicitors sets out the ways your business can recover the debt.
Dan: Cameron, where does a business start to recover this debt?
Cameron: Yes well that’s a good question. The first place to start is if we’re dealing with the civil courts in Queensland, the uniform civil procedure rules as they’re usually the best place to start. Now I’ll just talk about an individual today, but these can also apply to some, in some cases, corporations. So the first thing you’d be looking at is to enforce the judgement, which you would have, in the courts in the uniform civil procedure. So that’s after the judgment’s been given, and you make an application to the court.
Cameron: Usually the first step is what they call an enforcement hearing. Now that’s really a process just to ascertain what the debtor might has to do to pay your debt. So that’s a very important thing to start off with. So you can show up and you know which actual tool that you wish to use to be able to get your money back.
Dan: So Cameron is the fact that the the court judgment’s been done and dusted, is that sort of half the battle won?
Cameron: Oh definitely, that’s in some cases the easy part. We have a famous saying, you can’t get blood out of stone, but people don’t like paying money and a lot of the time you’ve got to drag them to make them pay, and the way to do that is through the recovery process. So yes.
Dan: Right okay so the person’s got the court judgement . Now practically what is the next step? So are they sending out a letter to the person who owes them the money or what happens?
Cameron: So we’ll just look at the Uniform Civil Procedure Rules procedures at this stage. So what the first thing you would do is what they call a Form 71, which is a statement of financial affairs or financial position, and you send that out to your debtor. Hopefully if they’re a good and honest debtor they’ll fill it out to the best of their ability and swear what assets they have. If they do that you can then take the next step of deciding how to enforce it if they don’t pay.
Cameron: But if they don’t return that you then make an application to the court. It’s fairly straightforward, however you need to know what you’re doing, and I’d of course advise you see a solicitor to do it.
Cameron: Now what that effectively does is allow you to decide the best way and the best angle to get try and get your money back. If they don’t turn up, you can apply to the court and have an enforcement warrant issued. Now I’ve done that a few times unfortunately, where the enforcement warrant’s issued, and in those unfortunate cases the police actually go and drag the debtor back before the court, so they’re required to answer the questions that you require of them. So it is a tool that’s used often, and it is useful because it allows you to identify what money that there is.
Cameron: Now once you’ve got that and you know what their financial position, you can go to the next step and try and enforce the debt. Now if they’ve got personal property or real property, which is land, you can get what they call an enforcement warrant in seizure and sale. And that will allow the bailiff to attend the property and obtain certain items, depending on what they are. There are some excluded items under the Bankruptcy Act. And he can sell them and you can get the money through that.
Cameron: Another good way is garnishing wages if the person is an income owner, PAYG earner, you can make application to the court to have their wages each week garnished and they can pay you. There’s also another useful one which I use quite often, is unfortunately I get the bank details and if they’ve got sufficient money in the bank that you can redirect the debt from the bank straight to you. But the one thing with those orders as well as the garnishing orders, you need to do attend to the enforcement hearings so you are not unfairly or harshly treating the debtor, so you’re not putting him or her into a point of destitution. So that’s one of the things that the court will need you to satisfy.
Dan: Now Cameron, you’ve got the judgement , is there like a certain timeframe that you need to recover the debt?
Cameron: Yes it does expire. It technically expires after six years but my advice is as soon as you’ve got that judgement you need to act on it sooner than later. The longer you leave it the less chance you’re ever gonna get paid. If it goes beyond the six years you have to ask the court and show the court why you didn’t enforce it previously. So yeah.
Dan: And what about legal costs to do so? So for example if somebody is owed a debt they’ve got the judgement and now they’ve taken heed of what you’ve said about getting some legal advice and help with this. Is there any chance that they can recover some of the legal costs on top of that debt?
Cameron: Yes it’s fairly procedural. As opposed to the legal steps that are required to get a judgement of going to trial et cetera which are very technical, the steps of enforcing a judgement are often more procedural. Now the court scales do allow you to add those costs into the recoverable amount that you’ll be seeking to be paid. And because they’re more procedural in nature then they generally are closer to the actual scale cost, the cost that you pay, and you can be paid them as well. They increase the debt that’s owed to you and is of course recoverable. You’re also allowed interest as well, that continues to be applicable under the various legislation.
Dan: You’d have to have rocks in your head not to seek legal help and representation in this respect, given that you’re gonna recover the costs anyway.
Cameron: Yes 100% because they can be very particular. A lot of the time they’ll require what they call personal service, a lot of these documents, and the courts are very stringent in the procedural application of it. So unfortunately if you make a little mistake in one of the forms or something like that which looks fairly insignificant, the magistrates or the registrars can sometimes or often refuse to allow you to take the next step, because the step … what you’re asking the court to do is basically sell someone’s assets and they take that very seriously. So you should get legal advice, yes.
Dan: Cameron, thanks for joining me.
Cameron: No worries, thank you.
In this podcast, OMB Partner, Juliette Nairn answers some commonly asked questions by bodies corporate.
Dan: The first question we have here is, in the event that an owner is requiring a copy of the body corporate roll, does the body corporate have to release all the information or just their name and address, or is there a privacy issue that might apply in this circumstance?
Juliette: Dan that is a great question. It is a question, which we often get, whether it’s from a lot owner, committee members or a body corporate manager. When I’m a lot owner and I write in and put my information on the body corporate roll or sometimes it’s called, The Strata Roll, all of that information is capable of being disclosed to anyone who pays the application fee to get that information. So if I’m a lot owner or a potential purchaser, the privacy rules don’t apply with respect to that information.
Juliette: So if I have my full name, my personal home address, a PO Box address, an email address or any other information like a mobile phone number, then all of that information must be disclosed as part of the body corporate roll. There’s actually quite a number of adjudicator’s decisions from the Commissioner’s Office which deal with exactly that point because people don’t want their mobile numbers being disclosed.
Juliette: It’s important at an early stage, if you’re a lot owner who doesn’t want that information to be disclosed, then you just put the minimal amount of information on so it’s included on the Strata Roll in that way.
Dan: Tremendous. Okay. Next question, which at sort of first blush might seem fairly remedial but I’m assuming also a commonly asked question and that is, can a body corporate charge GST on any fees payable to them?
Juliette: You would think that, that is actually quite an easy or straightforward question but the answer can be quite complicated depending on the size of your body corporate as well. The starting point is, there are some fees that are actually contained in the regulation. So for example, like we were talking about the body corporate roll before, if I’m a lot owner and I would like a copy of the body corporate roll, my only obligation and all that the body corporate can charge me is the photocopying fee for that body corporate roll because I’ve asked for a copy of that document.
Juliette: If I’m in a small Strata scheme that only has six lots, then it may not fall within that component of having a GST and that GST service fee charged to it. The majority of the body corporate fees actually don’t have a GST component but if you are in a very large body corporate such as Q1, then you might find that there may be GST component payable and it also depends sometimes on whether the lots an investment property and how the lot is structured.
Juliette: So the question can actually become quite complicated … well the answer can actually become quite complicated when we talk about GST and normally we refer those types of questions to our accountants depending on the individual lot owner but the general answer is, most body corporate fees do not have a GST component.
Dan: Now the next question which I’m assuming is relatively common and that is, how should body’s corporate respond to tenants who contact them about breaches of bylaws and maintenance issues?
Juliette: Dan that’s a really interesting question as well because particularly from a committee member or a body corporate manager’s point of view, there was always a view held that unless you’re an actual lot owner within the body corporate, you’re not entitled to receive information about the body corporate. That view has been around for a long, long time but it’s actually an incorrect view.
Juliette: As a tenant, I’m considered an occupier within a Strata scheme within a body corporate, and as an occupier all the bylaws apply to me and all the rules and regulations apply to me as well. So if I would like information from a body corporate, then I have a right as a tenant being an occupier to call a committee member or go through the normal communication channels to obtain that information.
Dan: Okay the next question is, the body corporate committee wants to call an emergency general meeting, now can it conduct what’s called the EGM by a postal vote?
Juliette: In most circumstances we only have on,e general meeting of a body corporate and it’s called, Our Annual General Meeting, and that’s the meeting where the majority of the lot owners go to because they’re going to vote on the next financial year of the body corporate. What amount of money do we need to raise for a budget, are we going to paint the building, what levies are going to paid during the year, all those normal body corporate questions that occur during a financial year of a body corporate.
Juliette: However, sometimes an emergency arises and an emergency might be a hole in one of the body corporate roofs, a water penetration issue, a burst pipe, electricity, so a failure of a utility of the structure, those sorts of issues and we may not have enough money in the body corporate to be able to pay to fix that type of problem. Normally what would happen is, we would get quotes together on behalf of a body corporate or the body corporate committee would go out and seek those quotes from different contractors and then motions would need to be put forward and the committee would request the holding of an extraordinary general meeting.
Juliette: An extraordinary general meeting is required to give 21 days notice. So it’s 21 days formal notice, plus usually add on another seven days for a postal rule. So normally 28 days is the total amount of notice a lot owner needs before we can hold an emergency or extraordinary general meeting. However, usually what we would do is we’d hold the physical meeting and everyone would turn up and you’d vote yes, no or abstain to the motions. In certain circumstances, if you are able to satisfy the rules and the regulations, that meeting can actually be held by what we call the postal way.
Juliette: So basically by email to make it more instantaneous so that the decision is happening faster in an emergency circumstance. You need to show that you can satisfy those requirements in the regulations. So there really does need to be a sense of urgency or an individual lot owner can actually make a complaint about that to a dispute resolution procedure, which is called our Commissioner’s Office. So yes, there is an ability in certain circumstances to hold that type of general meeting by way of what we call a postal vote.
Dan: Okay. Next question is, now can an un-financial owner submit a motion for a general meeting or be a part of a request for an extraordinary general meeting or emergency general meeting?
Juliette: See that’s actually a bit of tricky question that one and we’ve had quite a few adjudicator’s decisions handed down with respect to that. The normal rule that applies is if I’m a lot owner and I fail to pay my levies, so my contributions that are issued usually on, maybe two or three or four times a year, then I’m actually not entitled to propose a motion or go to a general meeting and vote at a general meeting and those types of things.
Juliette: However, in certain circumstances that normal rule doesn’t apply and one of those circumstances is when the motion being proposed at the general meeting is actually a resolution without dissent. So what that means is there can’t be a, no vote. So if I have 20 lot owners, and as a result of those 20 lot owners let’s say 10 of them turn up to the meeting, and out of that 10, 9 vote yes but one votes no. That means that, that resolution would fail because we’ve had one no vote.
Juliette: Even if I haven’t paid my levies, if there is a resolution that’s been put forward as resolution without dissent, then I’m entitled to vote at that particular motion because they’re the type of motions that are very poignant in this scheme. Like it might be the termination of the Strata scheme or those type of issues. So there are circumstances where, if I haven’t paid my levies, I am actually entitled to cast a vote or put forward a motion.
Dan: Great. Now I’m assuming that there’s probably lots of body’s corporate out there that have gone lots of other questions that they’d like to ask, how do they best get those questions answered?
Juliette: A great way to do it, and what we’ve found here at OMB Solicitors is we have obviously a specialised page on our website for body corporate and there’s an inquiry form. So if you make inquiry through our website at OMB Solicitors or either telephone us direct if you’d like to put just your question in writing, that’s no problem and just contact through the website and within 24 hours we’ll get back to you and have a chat with you or either talk to you through … we can email you back and provide you with the answers to any questions that you have and that’s for lot owners, body corporate managers or committee members.
Dan: Tremendous. Thanks Juliette.
Juliette: Thank you Dan.
For Australians going through divorce and separation, there are plenty of advantages of living in the ‘Information Age’. Now it is easier than ever before to access the court forms and other material you may need. This makes it possible to do more on your own, so you may save money on legal costs. There are also plenty of disadvantages, however, the most significant of which is the amount of misinformation readily available in the digital world. If you’re getting divorced or separated, following the wrong legal advice – be it from the Internet or even friends, family and workmates – can be costly, especially when you’re trying to figure out who gets what in a settlement. Here’s what you should know.
The first and most important thing to understand is that every case is different. Essentially this means that regardless of what you may have heard, read online or seen on television and films, everything is not always ‘split down the middle’. It also means there is no real basis for the belief that women always benefit from the property settlement, or that you must go to Court in order to get one. It is true that courts must approve related orders, but they actually intervene in only a small percentage of cases.
Having said that, there is a proven method that is used to ensure that couples going through separation and divorce arrive at fair settlements. It consists of four steps, which we will discuss in detail.
To begin with, you should prepare a comprehensive list of assets and liabilities that will be shared with the other person. By law, each of you must fully disclose all of your assets and liabilities. This means you should be sure to include everything, irrespective of whether the asset or liability is in one person’s name, both of your names, or held by one of you and a third party. Although it is technically considered a different type of property, don’t forget to include your individual or joint superannuation interests on a separate list at this point.
The second step is a little bit trickier because it involves the identification and valuation or assessment of each person’s contributions to the marriage. Contrary to popular belief, this evaluation is not strictly limited to each of your financial contributions. Non-financial contributions, such as home improvements or those you made as a stay-at-home mum are assessed as well. Furthermore, ‘indirect’ contributions to the household – or those made by your relatives – are also considered. Each contribution is then assigned a percentage on a scale specifically created for this purpose.
At the next stage, another set of factors is assessed. These include but are not limited to each person’s health, each person’s ability to make a living, how many kids you have, how old they are, who will have primary custody and the extent to which your ex-spouse will be involved in their lives. Another key factor that will be considered at this stage is whether or not any of your children require special care. If warranted at this point, the determination made in the previous step may be changed.
Finally, in the fourth step, the court takes one more objective look at the division of property to see if the outcome reached through this process is fair and reasonable to everyone involved. This final determination is based on all circumstances of the case. Although the court can make additional changes at this time, it will seldom do so.
The bottom line is that the decision to end a relationship is seldom easy. The prospect of separation and divorce can be intimidating and overwhelming, even when a wealth of information is so readily available. The best way to safeguard your interests and secure a fair outcome for everyone involved is to work with an experienced family lawyer. If you are considering separation and have questions or concerns about the process for reaching a settlement, contact us today.
Even in a best-case scenario – one in which you and your partner have decided to end the marriage on amicable terms – questions may arise about your legal rights and obligations. For example, you may both have questions and concerns about spousal maintenance. Specifically, you may be wondering if either of you is eligible and if so, how to apply, the deadlines for doing so, whether there are different types of spousal maintenance and so forth. Here are some of the things you need to know.
To begin with, spousal maintenance (known as alimony in America), is simply a legal term for the financial support one former spouse provides for the other following separation or divorce.
Ideally, you and your former spouse are still on good terms and you can agree on all of the issues related to spousal maintenance (such as the amount and a schedule for payment). When this is the case, you can simply put the terms into a legally binding Financial Agreement or Consent Orders that must be filed with and approved by the court.
If, on the other hand, you can’t agree on anything, much less the terms for spousal maintenance, you can apply for Spousal Maintenance through the Federal Circuit Court or Family Court.
Application is irrespective of whether you were in a traditional marriage or a de facto relationship (including a same-sex de facto relationship) but there are different standards of proof you must meet for eligibility.
To be eligible for spousal maintenance if you were in a de facto relationship, you must demonstrate that:
- you were in the relationship for at least two years, or
- you and your former de facto partner have a child together, or
- one of you made substantial monetary contributions to the other’s property, or
- one of you officially registered the relationship (at Registry of Births, Deaths and Marriages, or an interstate/overseas equivalent).
On the other hand, to qualify for spousal maintenance if you were in a traditional marriage, you must prove that:
- you cannot support yourself financially;
- your former spouse has adequate means to do so.
More often than not, the court will award spousal maintenance if you can show that your former spouse earns significantly more than you do and/or that you lack the potential to earn sufficient income based on factors including but not limited to your education and past work experience. For instance, the court may approve your application if you are a ‘stay at home’ parent and cannot secure outside employment. Your application for spousal maintenance may also be approved if you have had a prolonged absence from the workforce and now lack the skills or are too old to secure employment, or if an illness precludes you from working.
Be aware, however, that spousal maintenance is not automatic just because you don’t make any money of your own, or you don’t make very much. In other words, if you are capable of working and simply choose not to do so, the court is likely to deny your application.
You should also be aware that there are different deadlines for applying for spousal maintenance. With certain exceptions, if you were in a traditional marriage, you must apply for spousal maintenance within a year (12 months) after the divorce order is granted. Conversely, if you were in a de facto relationship, you must make this application within two years (24 months) after the relationship officially ends.
Another thing to keep in mind is, for the most part, spousal maintenance is not a long-term benefit. Usually, it is only in effect until you (the applicant) gain or regain your financial footing by getting a job or receiving training necessary to find work.
Furthermore, if you were in a conventional marriage, your right to receive spousal maintenance from your ex- husband or wife usually ends when you marry someone else. However, your right to financial support received after the break up of your de facto relationship won’t necessarily end when you start a new one. This is because the court will consider the financial dynamics between yourself and your new de facto partner when determining whether you can support yourself.
The way in which spousal maintenance payments are made will also depend on your unique circumstances. In some cases you may prefer one large (‘lump sum’) payment, and in others, you may prefer regular payments once a month, twice a month, weekly or even annually. If need be you can also apply for spousal maintenance on a limited basis. This may be your best option if you know you only need enough financial support to tide you over until your property settlement is finalised.
It should also be noted that spousal maintenance is not limited to monetary payments. Transferring ownership of a motor vehicle, investment property or other assets is also considered as legal payment of spousal maintenance.
Finally, we must also point out that, contrary to popular belief, child support and spousal maintenance are two separate benefits. While spousal maintenance provides financial support for you, child support payments should be used only to meet the children’s needs. This means courts can – and do – issue orders for the payment of both.
Divorce and separation are emotionally trying for anyone. Addressing complex legal matters on your own during times of stress can complicate things even more. For more information about the legal aspects of divorce, separation and related issues, including but not limited to spousal maintenance, contact the Family Law team at OMB Solicitors today.
Let’s face it, as responsible adults there are certain things we simply have to do whether we like it or not. We have to work. We have to pay bills. We have to pay taxes. We have to plan and save for retirement. And at some point, we have to put our affairs in order. For most of us, that final obligation involves making a will – a legal document in which we specify how our assets should be distributed and, in some cases, who should look after our children after we die.
But what happens when someone makes a will and then suffers a catastrophic injury or a sudden illness, such as a stroke, that profoundly affects their ability to comprehend and communicate? Or what if the person who made the will is now suffering from Alzheimer’s disease or another form of dementia? In other words, what happens if someone lacks the capacity – the legal term for intellectual ability – to make or change his or her will?
In such cases, Queensland law may allow for the creation of a ‘Statutory Will’. Also known as a ‘court-authorised will’ or a ‘court-made will’, this type of document is actually a Supreme Court order that permits “making, alteration or revocation of a will on behalf of a person who lacks the capacity to make, alter or revoke their own will”.
Technically, anyone can ask the court to issue this type of order on behalf of the testator (the person for whom the will must be made, changed or revoked). But there is a qualifier, which is that the court must agree that the person making the request has the right to do so.
In most instances, the person petitioning for a Statutory Will is related to the testator. However, courts have also established legal precedent for others, such as caregivers, powers of attorney, lawyers representing testators and – in some cases – close friends of testators, to make such requests.
Before you can actually apply for this type of will, you must ask permission to do so. Making this preliminary request allows the court to verify that you are acting in the testator’s best interests, and that you have legitimate reasons for seeking a Statutory Will. The initial part of this process is also designed to reduce or eliminate unnecessary and/or inappropriate applications.
For example, in a 2013 case heard by the Queensland Supreme Court, the issue at hand was whether the application for a Statutory Will had been made to safeguard any assets that may be passed on to the testator’s son, who was facing potential bankruptcy. After considering the arguments and evidence submitted, the Court determined the applicant’s reasons for pursuing changes through a Statutory Will were valid and allowed the application to go forward.
Once you have permission to file the ‘main application’, you may proceed. In general, this application should demonstrate that:
- the person is incapable of making a will and/or making necessary changes to a will; and
- the proposed will (or changes or revocation) is a truthful representation of what the person would want, as if he or she was capable of making a will and/or required changes to a will; and
- in light of all of the circumstances, it is logical for the court to authorise the will and make the orders.
Acceptable evidence that someone is no longer capable of making a will and/or making changes to an existing will may include written reports issued by their personal physician or specialist. The court will also accept medical opinions as to the potential for the person in question to gain or regain their essential abilities in the future. This is especially significant in cases where there does not seem to be an immediate need for a Statutory Will.
As a friend, family member or acquaintance, your testimony pertaining to the individual’s inability to make or change his or her will may also be considered. The court, however, will not regard it as highly as medical evidence.
Because the legal standard to determine intention in Queensland is whether or not the proposed will “is or may be one that would have been made by the proposed testator if he or she had testamentary capacity”, you should provide information that will help the court understand what the testator hoped to accomplish. This may include but is not limited to:
- an estimate of the size and nature of the estate;
- a draft of the proposed will;
- copies of any previous wills made and/or signed by the person in question;
- material that serves as proof of the testator’s wishes;
- verification of how the estate would be handled if the person in question died without a will;
- information about any relatives who are likely to make a family provision claim against the estate, and whether the proposed will would instigate or deter this type of claim; and
- information pertaining to anyone, including relatives and non-relatives, who can realistically expect to be included in the will.
The court may deny the main application (proposed will) if, for example, it concludes based on its review of all of the evidence that the person in question never planned on making a will at all.
That situation occurred in a 2017 case heard by the Queensland Supreme Court. In that matter, which involved a sizeable estate, the Court determined that it couldn’t approve the proposed will because the person in question didn’t really care whether he had a will – even when he had the ability to make one. Key to this determination was evidence that the man never followed through on making a will even though he had been earlier advised to do so, and even after he had consulted a solicitor about it in 2013.
If you are concerned about an ageing family member and his or her ability to make or update his or her will, don’t leave anything to chance. Speak with one of our qualified lawyers for a comprehensive assessment of the situation today.
Who gets what will depend on the facts
Australian statistics show that one third of relationships end in separation or divorce. The growing breakdown of relationships caused by divorce or separation has allowed for the distortion and generalisation of what is perceived to be ‘Who Owns What’ in a property settlement. The reason for the misinformation is due to there being no specific rules that indicate which party will retain what in the event of a breakdown in relationship. Each case is fact specific and will be determinable on those facts, each case differing from the one before and after it.
Property Settlement – the Law
Property settlement after separation is governed by the Family Law Act 1975 (Cth) (‘the Act”) and is applicable to married couples’ and De Facto (same sex and heterosexual) relationships. A property settlement may be applied for any time after the breakdown in relationship occurs and need not wait until divorced.
Get started quickly
Because a property settlement order will deal with assets and liabilities that exist at the time the order is made, it is strongly recommended that negotiations for a property settlement begin as soon as is practicable after separation. If you delay, and in some cases, parties have delayed for ten or more years, then the Court will deal with what property exits then, and not when you separated. One of the parties may have accumulated substantial additional assets since separation, and the other party may have run up substantial debts. The property settlement then (in 10 years) would look completely different to a property settlement reached within a reasonable time of separation.
Where a couple gets divorced they must commence property settlement proceedings (i.e. Bring a Court Application) within twelve months of the divorce. Whereas for a married and De Facto couple the application must be bought forth within two years of the breakdown in relationship. Where proceedings are not bought within these limits, a loss of rights may occur due to being outside the time frame. The law takes into consideration the below factors and does not considered the way in which the relationship deteriorated.
This the way a Court will tell you “Who Gets What”
Judges have a wide discretion to make orders for property settlement. In some circumstances, a court will not make any order at all dividing the property, if it appears to the judge that it is just and equitable that each party should keep the property they have without making any adjustment.
However, if the judge decides that an order is necessary to adjust property interests, then orders to divide the property on a just and equitable basis will be different in almost every case, as the circumstances of each particular case that comes before the court are all unique and different.
In applying the legislation over the years, the courts have defined a framework within which it must work to achieve what is a fair and equitable division. This framework involves an approach with four or five steps.
The Steps involved in working out “who Gets What”
The steps to working out a property settlement now may be summarized as:
- What are the legal and equitable interests of the parties in their property;
- Should these interests be altered;
- What are the contributions of each party and what weight should be given to the contributions;
- What is the future of each party and should there be any adjustment for that;
- How is the proposed division to be implemented?
Step 1- What are the legal and equitable interests of the parties in their property
The Court determines what the legal and equitable interests of the parties are in their property.
This will be all assets, liabilities and financial resources in joint names, and in each party’s separate names. Until an order is made, for family law purposes both parties have an interest in each asset in the property regardless of who owns it. The Court will take into account all of the property and financial resources in existence at the time that the order is made. Both parties have an obligation to make full and frank disclosure of all assets and liabilities that exist to each other and to the Court.
The Court then attributes values to each of the parties’ interests. Generally, the court will value the items as at the date that an order is made.
Step 2- Should the parties interests be altered
Once all the property is identified and valued, the Judge will take a step back and look at the length of the relationship, who brought what into the relationship, who owns what now, is there jointly owned property and/or bank accounts or did the parties keep their property separate, and was that their intention or agreement.
If the Judge is of the view that no adjustment in property interests is warranted, then no property settlement order will be made, and each party will keep what they currently own.
However, if relationship circumstances are such that an order is necessary to adjust property interests (and in most cases it will be), the Court proceeds to the next step.
Step 3 – What are the contributions of each party and what weight should be given to the contributions;
The Court determines the contributions that the parties have made to the acquisition, conservation and improvement of the property. The contributions can be direct and indirect, financial and non-financial as well as relating to a homemaker/parent role and otherwise to the welfare of the family unit. The Court will take into account the contributions made:
- at the commencement of the relationship,
- during the relationship, and
- since separation.
Some of the general principles that apply to the assessment of contributions are:
- There is no presumption that contributions are equal or that they were made in “partnership”;
- An evaluation must be made of the actual respective contributions of each party;
- Although in many cases the direct financial contributions of one party will equal the indirect contribution of the other as homemaker and parent, that is not necessarily so in every case;
- Care must be taken to recognise and distinguish a windfall gain;
- Whilst decisions in previous cases where special factors were found to exist may provide some guidance to Judges, they are not prescriptive, except to the extent that they purport to lay down general principles;
- It is ultimately the exercise of the Judge’s own discretion on the particular facts of the case that will regulate the outcome; and
- In the exercise of their discretion, the Trial Judge must be satisfied that the actual orders are just and equitable.
In a short relationship (up to seven years) the Court is more likely to adopt an asset by asset or “piecemeal” approach to the assessment. Relationships beyond that time will be regarded as a mid to long term relationship.
In mid to longer range relationships the Court is more likely to adopt a global assessment of contributions. When taking into account the contributions of the parties the Court will have regard to any period of separation prior to commencement of the relationship.
The assessment of contributions will not be equal in circumstance where:
- One party has made a greater initial contribution than the other; or
- One party has received a significant inheritance (particularly late in the relationship);
- One party has received a significant gift (particularly late in the relationship);
Step 4 – Future Needs
The Court then assesses the future needs of each party, having regard to the various factors set out in the Act. These factors involve looking at and assessing the difference between each of the party’s:
- current income;
- income earning capacity,
- property and resources,
- superannuation entitlements,
- deficits in health,
- closeness to retirement; and
- the need for one party to care for children of the relationship.
Step 5 – How is the proposed division to be implemented
The Court will then give consideration on how the proposed division of property is to be implemented. For example, an order may be structured where the wife gets to the retain the former matrimonial home as the primary care provider for the children, and the husband keeps his superannuation and business assets.
In Property Settlement Court proceedings, the Judge will decide “who gets what”. That judge has very wide discretion and may make a completely different order to the Judge in the next courtroom. You may like the order that is made, or you may detest it.
Before or during your relationship, enter into a binding financial agreement under the Act so that you (and not a Judge) can determine “Who Gets What” should you separate.
If you do separate without a Financial Agreement in place, it is important that you consult a family law solicitor to ascertain what your entitlements are likely to be, and then attempt to reach agreement as to “who gets what”, either personally, through your solicitors or at a mediation. If an agreement can be reached, your agreement can be finalised by consent orders of the Family Court or a Financial Agreement.
If you require assistance or advice with respect to:
- Your likely entitlements upon separation;
- Negotiation of a property settlement
- Preparation of a Financial Agreement,
- Organising a mediation,
- Commencing court proceedings or the preparation of consent orders.
In family law matters, you may have heard of the term, “family report,” but what is it and in what circumstances do they apply. In this podcast, Gary Mallett, our family lawyer at OMB Solicitors discusses the topic.
Dan: What is a family report?
Gary: A Family Report provides the Judge with an independent assessment of relevant issues in parenting disputes before the Court and assists the Judge to make decisions that are in a child’s best interests.
The primary focus in family law parenting proceedings is the child’s best interest.
Family reports will usually contain recommendations for the child’s future care, welfare and development and generally include suggested parenting arrangements as to whom the child should live with, and how and in what manner the child should spend time with the other parent.
These recommendations are made after the Family Consultant has interviewed all the parties concerned with the dispute over the child’s care, and others who are significantly involved or concerned with the child, including the children themselves, siblings, and often grandparents and the new partners of the parents.
The report may also provide important insights into the views of the children, relationship dynamics and family attachments of the children involved in the dispute. The report will identify areas of concern such as domestic violence, drug and alcohol abuse, child abuse and neglect. The Report will then make recommendations that endeavour to protect the child form these risk factors.
Dan: When will a family report be ordered?
Gary: A family report will often be ordered if the Judge believes it will help the Judge with the process of determining what is in a particular child’s best interests.
The Judge may order a family report on its own initiative, or after a party to the proceedings makes an application.
Dan: Who writes the family report?
The family report will be written by a family consultant, who will be either a psychologist or a qualified social worker. Family consultants are recognised by the Family Court as expert witnesses in children’s matters, and therefore only psychologists or social workers with the appropriate skills and extensive experience working with children and families are appointed.
Dan: What does a family report contain?
Gary: The Judge may ask the family consultant to create a report focusing on whatever matters the Judge directs.
When a Family Report is ordered by the Judge, the Judge is able to set out in detail the particular issues that need to be covered by the Family Report. There might be an older child and both parties are telling the Judge that the child wants to live with them. The Judge might then order that the report consider the child’s views.
However, in doing so it must be made clear to the child that the child does not have to express a view if they don’t want to, and the questioning of the child is not an interrogation.
A family report may include information on a wide range of issues, including:
- A child’s wishes and views;
- The nature of the child’s relationship with each parent and other significant adults;
- The likely effect that any change in circumstances may have on the child;
- The practical difficulty of the child spending time with either parent;
- Any risks to the child (as identified previously, family violence or abuse etc); and
- an overall history of the family and the personal histories of the parties and other significant people.
The report will also assess the parenting capacity of each party, considering:
- The capacity of each parent, and other significant adults, to provide for the child’s needs (including their intellectual and emotional needs);
- The attitude each parent demonstrates towards the child and the varied responsibilities of parenthood; and
- The willingness and ability of each parent to encourage and facilitate a continuing relationship between the other parent and the child.
Dan: How are family reports prepared?
Gary: A family report is compiled from information from a variety of sources, including interviews with the parties, affidavits and other reports filed in the case, and documents that have been produced to the Court under subpoena (e.g. criminal histories, medical reports, school reports etc).
After the report has been ordered, the family consultant will arrange appointments for interviews. The family consultant conducts individual interviews with all parties that the Consultant believes should be interviewed, which is generally all the parties and children involved in the case, including others with a strong connection to the child.
The child will be interviewed separately from the adults, thereby assisting the family consultant to ascertain the child’s views away from the potential influence of the child’s parents. The Family Consultant will also make observations of the interactions between the child and their parents and other significant people.
Interviews are usually conducted at the family consultant’s premises, and in most circumstances, they will take a full day.
Information provided to a family consultant is not confidential, and all relevant information will be included in the family report which will be filed in the Court and read by the Judge.
Dan: How should I prepare for the interviews?
Gary: Spruce yourself up for the interview, and wear something decent, as if you were going to Court, Church or a nice restaurant. The Family Consultant will take notice of and report on your appearance and demeanour.
Generally, you will be able to bring a friend for reassurance and emotional support, but you should think twice about bringing a friend who may argue with or intimidate the other party. Parties sitting in the waiting room are often being observed directly or indirectly by the Family Consultant, and observations of interactions, arguments or intimidation may end up in the Family Report.
Before the Interview it is important to read through your Affidavit material and any other Affidavit material that has been filed in your proceedings and make a note of any concerns that you have in the material. You can take notes into the Family Report Interviews if it assists your memory, however what you say in the interviews must be your real thoughts and feelings.
Try to relax during the Family Report Interview. You may feel that your life and your actions are under the spotlight, however the role of the Family Consultant is to help the Court make decisions in the child’s best interests, so focus on what arrangements you want for your child or children; and why you believe that those arrangements are best for your child or children.
Having said that, because the Judge will be focused on what is in the child’s best interests, proposals that simply suit you or the other parent, and suggestions of what you or the other parent believe you are entitled to, take a back seat if they are not in the child’s best interests.
You need to remember that because the Interviews are not private or confidential, anything that you show to the Family Consultant (for example photos or videos) and anything you discuss with the Family Consultant may end up in the Family Report and shown to the other party.
Under no circumstances should you coach children about what to say before a Family Report Interview or at any stage in Family Report Interviews.
If the Family Consultant considers that the children have been coached, that will be noted in the Family Report. When the Judge reads about the Family Consultant’s concern of coaching, whatever the children have said (even if it is really what they feel) may be doubted by the Judge and will certainly be contested by the other parent.
Do not, under any circumstances coach, put down or denigrate the other parent or party. You can express your concerns about the other parent’s parenting abilities or use of drugs etc, without denigrating them. Always remember to remain child focused and show that you are willing to foster the child’s meaningful relationship with the other parent, with the appropriate safeguards against risk factors in place if necessary.
Dan: Who pays for the family report?
Gary: The typical costs of a family report are between $3,000 to $4,000.
Family Reports are usually paid for by the parties to the proceedings equally. However, when one party has no money and the other party has a much higher income, the parent with the higher income may be ordered to pay. Where both parties have no money and only a small income, the Court may agree to fund the cost of the Family Report.
Never assume that the Court will fund a Family Report. The Court does not have the money to continuously pay for such Reports.
There are benefits of privately funding the costs of a Family Report. In such circumstances the parties can select and agree on the Family Consultant, and the Report is normally made available much quicker.
Dan: Who sees the family report?
Gary: The Court will release copies of the family report to each party involved in the case (or their lawyers), and to the Independent Children’s Lawyer. Only those persons may read and retain a copy of the report. Even if other people were interviewed for the report, they cannot see the Report without the Court’s permission.
Section 121 of the Family Law Act 1975 makes it an offence to publish or distribute to the public, any part of a family law proceeding that identifies one or more of the parties, witnesses or other persons. This would include showing the family report to other people.
The Family Report may contain recommendations to the Judge about parental responsibility, who the child should live with and how and when the child should spend time with the other parent. The Report may recommend that one or both of the parties attend counselling, a PPP Parenting Course, a Parenting Orders Program or other such courses.
The recommendations will reflect what the family consultant believes is in the child’s best interests, in particular, their care, welfare and development needs.
Family reports are often highly relevant pieces of evidence and very valuable to the Judge in making parenting orders. However, they are only one piece of evidence the court may consider, and the family consultant’s recommendations should not replace the court’s role in the family law process.
Judges can accept or reject the family consultant’s recommendations. The Judge will be aware that Family consultants do not usually have the opportunity to view all the available evidence, and their recommendations may be based on incorrect facts or assumptions.
If one of the parties wishes to contest or object to any of the facts, assumptions or recommendations, then they must call the Family Consultant as a witness for cross-examination at the trial.
Dan: Where do people go for further information?
Gary: There is more information and fact sheets on Family Reports and the role of Family Consultants on the Family Court’s website. There are also further useful family law articles and podcasts on our website about parenting matters and other Family Court proceedings.
Please do not hesitate to contact us for a consultation should you still have any further questions on the Family Report process, or if you require any assistance with parenting issues or proceedings that are currently before the Court..
When it comes to estate planning, you might be surprised that often the biggest asset that you may leave behind might not be your property pool, but rather your superannuation. In this context, you may not be aware that it does not automatically fall into line with your estate planning wishes unless you take care of a few things first. In this podcast, Steven Mahoney from OMB Solicitors discusses the ticking time bomb that may lie in your estate plan.
Dan: Steven, many people make a mistake by forgetting about their superannuation when it comes to estate planning. Is that your experience?
Steven: Thanks, Dan. Yes, that’s certainly the case. A lot of the clients that I deal with on a daily basis think that their superannuation automatically forms part of their estate and therefore they don’t need to deal with it. They think by doing a will, that will obviously encompass all their death benefits attached to their super, and that’s certainly not the case. They’re governed by independent pieces of legislation. You’ve got both the Succession Act, which deals with all of your personal assets, and then also the Superannuation Act, which deals with all of that separately. It’s important that we deal with both of these at the same time.
Dan: Steve, so for people listening to this podcast, and the penny has just dropped that they need to clean this up, where do they start?
Steven: Really good question. A lot of it depends whether or not you’re involved with an industry super fund, so whether it might be Sunsuper, QSuper, or whether or not you have a self-managed super fund. That’s the starting point. Once we assess that, we work out whether or not with your industry super fund, whether or not you have what’s called a binding death benefit nomination. Now, that’s just essentially lingo for a will for your super, and we then must establish who are the dependents, who are the potential people that you can distribute your death benefits to, and what’s the most appropriate format to do that.
Dan: Steve, what about those questions like, “Who will be the beneficiaries,” etc., Do they need to be asked as well in the context of considering your super?
Steven: It’s one of the main questions I get asked, because a lot of people wish to leave their super to someone they’re not actually legally able to do that. Let’s say, for argument sake, you’ve got a young person who has their super and wants to leave it to their parents. Their parents aren’t actually what’s classified as a dependent for the purposes of superannuation. The only dependents are either a spouse or a child or stepchild. That’s one of the main classes there. To make sure they’re a dependent, you can legally pass it to them, or if they do want to pass it to someone else, we need to pass it to their estate, which we can do via payment to their legal personal representative and can have the death benefits dealt with under the context of the will.
Dan: Steve, is there this inherent risk that perhaps if somebody tries to go and do this work themselves, that they could possibly make the nomination to somebody that isn’t eligible?
Steven: Absolutely, and then that may be, if there is an industry super fund, that reverts to the trustee’s discretion, so if, in the first instance, there isn’t, this isn’t taken care of, and you don’t have a binding death benefit nomination, which only lasts for three years, and that’s another very important point, because a lot of people complete these and think, “Okay, I never need to deal with that again,” but a lot of these nominations are only valid for three years. Once that time frame’s up, we go back to the drawing board.
Dan: It could be a bit of a ticking time bomb for some people, couldn’t it?
Steven: A lot of it is, and that’s exactly right, so especially with blended families, if you’ve got a vanilla family affair, husband and wife, three kids, it might not be such a complicated matter, but if there is blended families, or de facto wives, children to other partners, it really does become a complication, and we need to make sure we give this some serious thought.
Dan: Legal advice in this respect, Steve, is a no-brainer.
Steven: It is a no-brainer, and they think that spending the money might cost at the outset, but it saves considerable heartache and can keep families together if this is dealt with at the outset, dealt with properly, dealt with by a person who, obviously, has experience in this industry in estate planning matters.
In family law property settlement proceedings all assets and liabilities of each party, (whether they are owned jointly or separately) are combined to form what is commonly known as the “matrimonial property pool.” This pool of assets and liabilities is then subject to scrutinization and possible division by the Court upon separation.
A business interest, owned either separately or jointly, and whether in a partnership, sole trader, company or trust structure, can be treated by the court as “property” as defined in the Family Law Act 1975 (Clth) (“the Act”) and will fall into this asset pool. Each spouse’s business interests will need to be valued (if a value is not agreed to).
In the case of a small business operated as sole trader or a partnership between the spouses, it is generally the assets of that business that largely determine its value. If the business has little by way of assets, and generates income though one or both spouse’s efforts, skills or trade (e.g. a plumbing business), its value may be very little (nominal). Other businesses may have a corporate and/or trust structure, extensive assets and goodwill, and each spouse’s interest in that business will need to be valued. This may involve a valuation of the entire business enterprise, with the value of the share owned by the spouse (or spouses) then calculated.
If one spouse wishes to retain their interest in any business, they should be aware that the value of that interest will be attributed to that spouse’s portion of the overall split and will give them a financial resource to offset future needs.
Each spouse has an ongoing obligation to give full and frank financial disclosure of all documents relevant to the valuing of any business interest. This includes business records, financial statements, bank records, BAS and tax documentation
Different Types of Business Structures
A sole trader (like a tradesperson or professional consultant) is a “personal exertion” style of business, with few employees, if any.
Generally, the Court would order (and it is common sense) that the spouse who runs this business will retain the business, as he or she has the necessary skills and training to continue with the business.
A value needs to be attributed to the business, because it is an asset that the sole trader is keeping. Because a sole trading business generally just relies on the personal reputation and skills of a sole trader, a modest value is normally applied to such a business interest.
However, if there are multiple employees and the business has goodwill such that it may be sold as a going concern, then the value of business will be determined by the usual valuation processes by a business valuer, and full disclosure of the books and records of the business will need to be made.
It is also possible that in addition to being an asset retained by that spouse, the court may take the business into account as a future financial resource of the spouse retaining the business.
Partnership businesses may be constituted by both spouses in partnership with each other, or partnerships with a third party or parties.
Spouses in Partnership
When spouses are in partnership, they are normally running a “personal exertion” style of business. If one spouse wishes to retain the business, a value will be determined for the business, like valuing a sole trader business.
However, if the business has employees and goodwill and has been operating for several years, it will need to be formally valued by a business valuer.
For one partner to buy the other out of the business, the partnership will be dissolved and (often in exchange for paying to the other spouse half the value of the business), the continuing spouse will be operating the business as a sole trader.
Partnership with Others
Where the partnership involves third parties, the other business partners will be impacted by separation. The partner who has separated will be going through a tough time and may lose focus on the business. Third parties are also very uncomfortable with the obligation on the spouse partner to make full and frank disclosure of the business, its assets and its dealings.
There will usually be a written partnership agreement, which will generally say what is to occur if one partner was to leave the partnership, if one partner wants to sell his or her interest to the other partners, and what is required to bring the partnership to an end. Separation of a partner may trigger a buy/sell arrangement between the partners. These clauses will generally have been drafted to preserve the business and maintain its value.
If you are not separated and you are in a partnership with your spouse or third parties, I strongly recommend that you contact us with instructions to prepare a partnership agreement (if you do not already have a professionally prepared agreement), so there is certainly as to what will happen to the business if one or more of the parties go through a separation.
Company Owned Businesses
Where a company owns and operates a business, and that company is a “family company”, with the spouses being the only shareholders and office holders, then the Court will generally deal with the business as a type of partnership between the spouses. The business will need to be valued, and it will either be sold, or the party with the requisite skills to keep the business running may buy out the other party, and a share transfer between the spouses will be effected.
However, if the company has third party shareholders as well, it will again be necessary to determine the value of the shares in the company, by valuing the business and any other assets of the company. The value of each parties share in the company will then be determined by the Court, considering the company’s share structure to see if there is an equal or an unequal shareholding, and what rights and benefits attach to different classes of shares.
During the valuation process, director’s loan accounts will need to be considered, and whether the loan is in credit or debit. Repayment arrangements for these director’s loans will generally be made or suggested in the valuation process.
If one party has a majority of the shares in the company, that may affect the way the company is operated and valued.
If the separating spouse shareholder has a minority shareholding with a third party, then the value of the minority shareholding may be given a lesser value as the minority shareholder is unable to make determinations about the operations and the future of the company.
If the separating spouse shareholder has a majority shareholding with a third party, then that spouse will be able to exert a majority influence and control the operations of the business.
Any shareholders agreement entered between the shareholders will also be carefully securitized. Shareholding Agreements may include method to determine value and trigger events (such as separation from a spouse), leading to the implementation of a buy/sell arrangement.
Again, if you are reading this and you are not separated and have shares in a company with your spouse and/or third parties, I strongly recommend that you contact us with instructions to prepare a Shareholders Agreement, to give certainly as to what will happen to the company and business in the event of one or more of the parties going through a separation.
The company constitution may also be relevant.
Discretionary Trusts and Unit Trusts
“Who is in control” is the most important aspect of a Trust Structure.
In a discretionary trust, which includes what is commonly known as a family trust, the Court will consider the trust deeds, the identity of the appointor of the trust, and the history of use of the trust. The Appointer has the power to replace the Trustee, so the Appointer is the “Controller” of the Trust. If the Appointer is a spouse, then it is likely that the Court will treat the Trust as “matrimonial property” rather than a financial resource.
Family Discretionary Trusts are usually set up to hold a family’s assets or to conduct a family business. The Trustee of the Trust will own the assets and operate the business on trust for the beneficiaries.
The beneficiaries of discretionary trusts are usually immediate and extended family members, other family companies and charities. In a discretionary trust, beneficiaries have no interest in the trust property unless the trustee exercises its discretion to distribute to them.
The trust deed will need to be examined to determine how the Trust can be varied to remove a beneficiary spouse who will no longer be involved in the business due to separation. Generally, one spouse will take over the business, which will require a Deed of Amendment to be prepared and executed to remove the spouse as beneficiary, and possibly also to provide for a share transfer by that spouse of any shares owned in the Trustee (if the Trustee is a company).
If the trust is a unit trust, it may be treated with the same principles that apply to a company. The units in the Trust will be valued, and the trust deed examined to see if units can be transferred between unitholders. The trust deed (and any unitholders deed) must be examined carefully as to the duties, powers and obligations on the Unit Holders. The financial records of the business must also be considered.
So, what will happen to your business on separation?
Where both spouses have worked in the business and then go through a separation, this will have obvious and significant repercussions and likely impacts on business continuity and profitability. It may also affect the staff.
In most situations, one of the separating spouses will seek to retain the business free of the other spouse. If that agreement is reached, then orders will be drafted to make that happen according to the type of business structure. The transfer of interest in the business from one souse to another may also be accompanied by payment to the exiting spouse of a “settlement sum” which will often be the value of the exiting spouses share in the business. Otherwise the business will be an asset that one spouse is keeping, so its value will need to be considered in determining a just and equitable division of all assets between the parties.
Whilst it is quite uncommon for a business to continue to be operated by two spouses who have separated, it sometime does happen, generally for an agreed number of years, after which the spouses will meet to decide its future or sale and the division of sale proceeds. Whilst a Court would not make that order (the Court makes a “once and for all” property settlement so that all financial ties are broken), the spouses could agree to implement such an agreement in a Financial Agreement made under the Act.
If neither party wished to retain the business then the business (or their shares in the business) will need to be sold, and the sale proceeds divided in a just and equitable manner. Appropriate orders will be prepared by your solicitor for the sale or transfer of shares, according to the type of structure that operates the business.
As the spouse who retains the business will also have a continuing financial resource at their disposal, the court will take this into account when considering the “future needs” of the spouses before adjusting property between them.
Please contact our family lawyer Gary Mallett for any further information on what will happen to your business upon separation, and for legal assistance with
- Property settlement negotiations and mediations;
- Commencing property settlement proceedings in Court;
- Drafting the necessary orders to deal with your business as you have agreed;
- Prepare a Shareholders Agreement (for a company or unit trust); or
- Any other legal advice on separation.
Conflict is sadly a part of most relationships, be it business or otherwise, but in the context of former, litigation for many is often their preferred choice to resolve issues. In this podcast, Heath Berghofer of OMB Solicitors provides useful information on the processes available to you in resolving disputes.
Dan: Heath, why do people choose to litigate?
Heath: People choose to litigate most normally to recover a debt or potentially to resolve some form of dispute. Normally it’s around a commercial law issue, but sometimes it can also be to right what they call a wrong that’s been made against them.
Dan: Do people choose other alternatives like mediation, or the other options available to them?
Heath: Yes, they do. One of the things we like to discuss with people when they first come in or they want to sue someone else to recover money or potentially some sort of family law matter to resolve a dispute between their former partner, the question is always, what are we trying to achieve here? How much it’s going to cost? It’s an important thing to keep in mind from the outset because obviously litigating can be a very expensive exercise and there can be, in some cases, no winners at the end.
Dan: There’s often a winner and a loser, isn’t there? Worst still, you’re giving that discretion to somebody else to make the decision for you, potentially?
Heath: That’s right. That’s very important. So particularly at the outset of any sort of dispute, for example a monetary dispute, someone’s done work for another person and that person has decided for one reason or another not to pay, the question needs to be asked at the outset, ” yes, you may have been wronged, and yes you may have an action, but how much is it going to cost you to recover this debt?”
The first question is, how much is the money that’s owed? What are my options for recovery? So that leads to two potential avenues. The individual could go through our Queensland Civil and Administrative Tribunal, which is a very fast and effective dispute resolution process, which involves things like mediation and gives those options for people to potentially resolve their own dispute, and if they can’t resolve it, go before a judicial member to have their dispute resolved.
Alternatively, they can pursue their debt recovery matter through the state courts, depending on what monetary amount they’re seeking to recover. But if that amount, for instance, is $5,000.00 or $10,000.00, it would be very difficult in certain circumstances to engage a solicitor to effectively recover that debt. So then it becomes a question of the individual; do I want to pursue this myself through our tribunals? Because it’s not only a monetary decision they need to make, but also a time commitment as well. There’s an emotional component that touches every piece of litigation. Litigation can go for a number of years, and it can be quite a tax on an individual emotionally to go through the process.
Dan: Heath, how do people actually prepare themselves for litigation?
Heath: That’s a good question. It’s very difficult for people to properly prepare for litigation, because you really don’t know what the outcome is going to be. But I think a clear mindset of what a person wants to achieve at the start is the most important point. A good question to ask is, what’s this going to cost me? What am I going to achieve here? Because ultimately, if you walk into any sort of debt dispute matter or litigation with the objective of punishing the other person, well more often than not you can end up effectively just punishing yourself through your own actions. That’s not what you want to achieve. You want to be able to achieve a result here that’s beneficial to you, not the opposite.
Dan: So if a person wishes to litigate, what are the steps? I’m assuming that they need to go and seek some legal advice before contemplating this?
Heath: The person firstly should get some legal advice. They should go to a solicitor. If they can’t afford a solicitor, then they should go to one of our free local community centres in the Gold Coast region. After receipt of that advice, they’ll need to make a decision about what they want to do with the dispute. That may be at the first instance to contact the other side to see if they can resolve between themselves, which is always a very good option.
If the other side doesn’t want to discuss the matter or resolve the matter, then they need to make a decision as to whether they want to institute any sort of formal proceedings, either in QCAT or our state courts, or walk away from the dispute from a commercial basis, conceding that it’s going to cost a lot of time, money, and effort to do this. Maybe it’s better for me to spend my time with my family and with my job, because that’s going to be more beneficial.
If they do take the course of instituting the proceedings, then they can go in a number of directions. QCAT, for instance, it means preparing the required documentation, filing the first step for a mediation between the parties, which can be very effective in most circumstances. It can get the parties meeting each other to discuss the issues and potentially resolve it. If that doesn’t resolve the dispute, then they’ll be before a tribunal member who will resolve it for them. I think the key there, and the key with all of this is if you get before that tribunal member, that may be a decision that both parties ultimately are not happy with. So it’s something to consider at the very outset that, again I refer to what I said before, there may be no winners because ultimately the decision may be in no one’s favour, and everyone will come out unhappy.
Dan: I was just going to say Heath, the irony or the paradox of all this is that for those people that perhaps are wanting to punish the other side, the path to resolution does always involve mediation, so they’re going to have face off with this person at some point during the journey, aren’t they?
Heath: That’s right. It’s a really important step, particularly face-to-face mediation, getting the person in the room opposite you is normally the best way to resolve a dispute with someone facing you. You have to speak your complaints or the issues that you have and what you’re trying to resolve here, rather than doing it through paper or over the telephone. It seems to produce a better result for whatever reason.
Dan: So, okay. It’s gone to litigation, or has gone to court. Now what are the outcomes of litigating? What can be the orders given by the judge or the tribunal or whoever it might be?
Heath: So in a typical debt recovery dispute, it may be in the tribunal, for instance, that amount of money is awarded to one party or another, or no money is awarded either way and the action is simply dismissed. In a state court, again similar circumstance. But if the party’s actually represented, then they may get a cost order as well on top of that. Which can recover, in part, some of the legal costs incurred. But it will not be all the costs incurred under the proceedings.
Dan: So I suppose the take home message for people that are perhaps wanting to seek some sort of recourse, be it through mediation or litigation, is to get some advice at the outset?
Heath: It’s very important to get advice, that’s right. Very important to get advice, and particularly get an understanding of what this process will involve so you can make a really good informed decision before they start taking steps, rather than blindly running through thinking everything will be fine at the end of it, because it may not be. Because particularly from a solicitor’s perspective, we want to achieve the best result we can for our clients on a commercial basis. There are some instances where that may be a very difficult thing to do, and it may be that they have to do it themselves. But it’s better to, from the client’s perspective, to have that understanding from the start than to find that out halfway through the proceedings. So it’s quite important for people to understand that before they start.
There’s no doubt about it. Ending a relationship is never easy. But in Australia, ending a marriage is relatively simple – at least in the eyes of the law. This is because, unlike the divorce process in the United States, divorce in Australia doesn’t address some of the most emotionally volatile issues such as child custody, child support, spousal maintenance and the division of marital assets in detail. In fact, the only issues addressed when you apply for divorce here are whether you are legally eligible to do so and whether or not you’ve followed all of the applicable rules.
To be eligible to file for divorce in Australia, the only requirement in most cases is that you and your spouse have separated for one year. The only exception to this rule is if you are filing for divorce less than two years after you got married (inclusive of the time when you were separated). In such cases, you must see a court-approved counsellor with your spouse and file a signed counselling certificate with the court upon completion. If you and your spouse are unable to fulfil this requirement for any reason, you must ask the court’s permission to get divorced.
If you were married abroad, you may still apply for divorce here if you or your spouse:
- Regard Australia as your home and intend to live indefinitely in Australia and are an Australian citizen or resident, or
- Are an Australia citizen by birth or descent
- Are an Australia citizen by grant of Australian citizenship
- Ordinarily live in Australia and have done so for 12 months immediately prior to filing for divorce
If you meet one of these criteria, you can go ahead and prepare your application for divorce. If you aren’t comfortable filling it out yourself, you can also do so with help from a lawyer. If you choose to consult a lawyer, be sure to bring the following to your appointment:
- Marriage certificate
- Information about any children under the age of 18
- Any current or pervious orders associated with family law
Once you’ve completed the application you and/or your spouse must sign it so it can be filed with the appropriate court (along with any other applicable documents), and a hearing can be scheduled. If only one of you does so, it is considered an individual application, and if you both do so, it is considered a joint application. This is an important distinction, because it determines who must do what from now on.
For example, if you filed an individual application, you must serve a copy of the copy on your spouse. You must also file two documents related to the service with the court. The first of these is called an Affidavit of Service, and the second is the Acknowledgement of Service (when required).
Furthermore, if you file an individual application and you and your spouse have children age 17 or younger, you must attend the hearing. However, you need not do so in person, as long as you seek permission to participate by telephone. If need be, you can also attend at the relevant court registry. In this case, you must still serve the application on your spouse and file the paperwork specified in the previous paragraph.
Finally, even if you file an individual application, your spouse has the right to file a response seeking changes to the application if he or she disputes any of the details, or if he or she simply opposes the application. Another thing to keep in mind is that even if your spouse pursues this option, he or she is not required to attend the hearing.
At the hearing, you will be asked about the application, and if you have minor children, the judge will also ask questions to ensure that they will have a chance to spend time with you and your spouse. If all of these questions are answered to his or her satisfaction an order will be granted accordingly.
On the other hand, if you file a joint application, the ensuing process is much easier. This is because neither one of you will be required to attend the hearing, whether you have any minor children or not. This also eliminates the need to serve the application on your spouse or file related documents with the court.
In either case, the divorce order will take effect, or become “final,” one month and one day after the hearing. At this point, the court will send a copy to each of you, and you’ll no longer be legally married.
Conversely, failing to take any of these steps can result in denial of your application. If this happens, the court will usually give you time to correct any deficiencies prior to another hearing. If you need help correcting a mistake that resulted in the denial of your initial application or to lessen the chances that your divorce application will be rejected due to a technicality, contact us today.
If you have been excluded from a Will, it probably seems like a slap in the face. You may be feeling hurt and angry – especially if the person who passed away was a parent or another close relative. As a result, you may be wondering if there’s anything you can do. In Queensland, the answer is “yes.” In fact, there are a few ways in which you can challenge – or contest – a Will.
One way to do so is by making a Family Provision Application – but only in certain circumstances.
You may qualify to make this type of application if you were:
- The deceased’s spouse (including a de facto partner);
- The deceased’s child (including step and adopted children); and/or
- The deceased’s dependant (In order for any person to be a “dependant” they must have been “wholly or substantially maintained” by the deceased person at the date of the deceased person’s death).
and your needs have not been properly addressed through his or her Will, or because he or she died without making a valid Will.
If you meet any of these criteria and wish to pursue this option, you have nine months from the time the person died to file this type of application. However, it is important that you notify the Executor of the estate that you intend to do so as soon as possible. This is because he or she has the authority to make the allocations specified in the Will and wrap up related matters six months after the person’s death as long as he or she has not been notified about any potential claims on the estate.
Missing this deadline does not automatically invalidate your ability to make a Family Provision Application. However, you’ll have to convince the Court that you had a valid reason for missing the deadline before you can proceed.
It is also important to note that just because you feel you have been treated unfairly doesn’t mean the Court will agree. Ultimately, it is up to the Court to decide whether or not the Will fully addresses your needs. It will make this determination based on:
- Any provisions previously made to you by the estate
- Your financial situation and other circumstances specific to your case
- How much money the estate has on hand
- Whether anyone else is contesting the Will based on lack of adequate provision
- Your relationship with the deceased
Courts will also consider challenges based on some other contentions. The first is that the person who created the Will – and left you out of it – was bullied, intimidated or coerced into doing so. The second is if the person who made the Will in question was mentally or intellectually capable of doing so. And lastly, the Court will consider a contention that the person who made the Will made a legally binding agreement to craft the Will in a certain way, a breach of the agreement ensued and you were adversely affected.
Keep in mind, however, that you can only challenge a Will in Queensland if the person who died had land and/or a home in the State; or if he or she was a permanent resident of Queensland at the time of death, but held his her assets elsewhere.
Having said that, you do not have to live in Queensland in order to contest a Will here. In fact, you can do so without leaving home. Before you initiate the process, however, it is important that you fully understand it – so if you do live somewhere else, be sure to consult a Queensland lawyer before pursuing this option.
Finally, you may be wondering how much all of this costs. Generally, the Court decides who must pay the legal costs associated with the contention of the Will. In most cases, if the Judge rules in your favour, the estate will pay for any legal costs you have incurred. However, if the ruling goes against you, the Court may order you to pay the legal costs incurred by the Executor. This underlines the importance of seeking legal advice from a reputable law firm who have experience in this type of litigation.
Clearly coping with the death of a loved one is never easy – and discovering that you have been left out of his or her Will while you are grieving complicates matters even further. If you feel that you have been wrongfully excluded, it is important to consult a qualified lawyer about these and any other legal remedies that may be applicable to your case.