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Property Settlement Agreement – Can the Court Split Employment Bonuses?

What is Property?

When negotiating a property settlement agreement, one of the first steps to be considered is what property you and your former spouse have or own. This step is important as only property can be subject to a property settlement agreement. The Family Law Act defines property as “any property in the possession of either party, either vested or in remainder.”  Property of the relationship generally includes:

  • All assets that are owned, g. the family home, motor vehicles, personal items
  • All assets under your control, e.g. a business, superannuation, shares and funds at bank
  • All liabilities, e.g. mortgages, credit cards, hire purchase agreements

Are Employment Bonuses Property?

In the case of Ilannello & Ilannello (No 3) [2018] FCCA 3752 (19 December 2018) the Court considered the question of whether the wife’s future employment bonus payments could be the subject of a property order.

Facts of the Case

In this case, the husband had suffered a workplace accident and had been unemployed since 2013. The husband was living on a permanent disability payment from his super fund. While he owned about $78,000 in shares, he claimed that his legal fees were equally as much. On the other hand, his wife had a base salary of $190,000 per year plus employment bonuses. In the previous year, the wife received $54,000 in bonuses.

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Mediation and Your Family Law Dispute

Mediation and Your Family Law Dispute – Agreements that Suit Your Needs

WHAT IS MEDIATION?

Mediation is an alternative way to determine a family law dispute outside of the courts. The Mediator Standards Board defines mediation as: “a process in which the participants, with the support of the mediator, identify issues, develop options, consider alternatives and make decisions about future actions and outcomes.”

It is a process of problem-solving that is guided by an impartial third party called a mediator.

WHAT DOES A MEDIATOR DO?

In family law, the role of the mediator is to facilitate the process of dispute and conflict resolution while the content of the discussions rests with the parties. The mediator can assist the parties to clarify the most pertinent issues and consider ways to resolve these issues. A mediator will not, and cannot, give advice about your dispute or determine the dispute for you.

HOW IS MEDIATION DIFFERENT FROM COUNSELLING, CONCILIATION OR ARBITRATION

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Judicial Mediation: A New Option To Resolve Your Dispute

As of 1 January 2019, parties to a family law dispute and their marriage lawyer, in appropriate cases, may now have the option of Judicial Mediation in the Federal Circuit Court of Australia. Judicial Mediation is not intended to replace or substitute private mediation. Rather, the court expects that parties to a family law dispute exhaust all mediation alternatives, such as private mediation with a private mediator, prior to Judicial Mediation.

The Judicial Mediator

The Judicial Mediator may not be the Judge that would ordinarily determine the family law dispute. This Judge is referred to as the Docket Judge. Where both Judges consent, the Docket Judge may refer the proceeding for Judicial Mediation to another Judge.

How to Initiate Judicial Mediation

Judicial Mediation can be initiated in two ways. Firstly, you or your marriage lawyer can make an oral application in court. Alternatively, you or your marriage lawyer may apply for judicial mediation in writing to the Docket Judge. The written application must include a brief summary in bullet point format addressing why the matter is suitable for Judicial Mediation.

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Domestic Violence and Family Law

Domestic Violence can affect people of all ages, socioeconomic and demographic groups and unfortunately can often go unreported particularly when it occurs during a relationship with a spouse or partner. However it is not uncommon for historical and current domestic violence to come to light particularly in circumstances of a family law separation. In June 2012, the definition of family violence was amended to include other behaviours that constitute family violence.

The Family Law Act defines Family Violence as “violent, threatening or other behaviour by a person that coerces or controls a member of the person’s family, or causes the family member to be fearful”. The legislation includes behaviours such as stalking, repeated derogatory taunts, intentionally damaging property, causing death or injury to an animal and unreasonably denying a family member of their financial autonomy. With respect to children, the legislation also states that “a child is exposed to family violence if the child sees or hears family violence or otherwise experiences the effects of family violence”.

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Who Can Access My Family Court Records?

Like other family law lawyers, I am often asked whether non-parties (persons that are not directly involved in the family law litigation) are able to access the Court records relating to the case.

Documents filed in a family law case (and other documents relating to the case) are held in a Family Court case file.  This information is protected under the Family Law Act 1975 and the Family Law Rules 2004.  For example:

  • Rule 24.13 of the Family Law Rules 2004 limits those who are allowed to access the Court’s records in family law cases;
  • Section 121 of the Family Law Act 1975 limits the publication of reports of family law proceedings and of lists of cases. There are exceptions to this;
  • Family Law Judgments are reported by the Court in a de-identified form (for example, with pseudonyms replacing the parties’ real names).

There are also exceptions to the restrictions to a Court file, including research (Regulation 24.13(1)(d) Family Law Rules 2004) or by the Australian Taxation Office (Commissioner of Taxation & Darling (2014) FLC 93-583).

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Quick Questions Answered: Property Settlement Agreement

  1. What is a Property Settlement Agreement?

A Property Settlement Agreement contains the agreed terms to divide property between you and your former partner following separation. This includes assets, liabilities and superannuation.

  1. When Can I Get A Property Settlement Agreement?

You can finalise a property settlement agreement as soon as you and your former partner have decided to separate i.e. end your relationship.

  1. What if we are still living under the same roof?

You can be living under the same roof but still be considered ‘legally separated’. You do not need to be living in separate households; however, your relationship does need to have ended.

  1. What are the deadlines for obtaining a Property Settlement Agreement?

The Family Law Act 1975 (Cth) provides some “deadline dates” depending on whether you were married or in a de facto relationship. There are some exceptions however, the general rule is:

For married couples: You have 12 months from the date your divorce* comes into effect to make an application for a Property Settlement.

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I Didn’t Know – How You Can Get Out of A Property Settlement Agreement

The Family Law Act 1975 (Cth) s 79A(1)(a)  allows the court to vary or set aside a property settlement agreement where there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance. This includes where one party has failed to disclose his or her true financial circumstances. However, not every failure to provide full and frank disclosure during a property settlement agreement will amount to a miscarriage of justice. What is needed is to show that the failure to disclose has led the court to make an order that is substantially different from the order it would have made if full disclosure was made: Barker & Barker [2007] FamCA 13 [123].

 

Pendleton & Pendleton

In the case of Pendleton & Pendleton [2016] FCCA 285, the husband failed to disclose, among other things,

* A reimbursement of expenses amounting to $44,586.84,

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Property Settlement Agreement

The law encourages parties to negotiate and reach an amicable agreement as to the division of property following separation. If you have come to a Property Settlement Agreement with your former partner then you may wish to formalise this by entering into a binding property settlement agreement.

Sometimes parties come to an agreement without having properly considered the nature and effect of their agreement.

When negotiating a Property Settlement Agreement some things to keep in mind include the following:

  1. Property Settlement Agreements differ depending on your particular set of circumstances.
  2. A fair Property Settlement Agreement may depend on the length of your relationship or marriage and this is just one of the factors to be considered.
  3. There may need to be an adjustment for financial contributions made prior to the relationship by either party.
  4. There may need to be an adjustment for one of the parties’ future needs such as their age, health, ability to work and their earning capacity.
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