Divorce & Family Lawyers North Shore

Doolan Wagner Family Lawyers provide trusted divorce and family law advice and assistance to people on Sydney’s North Shore & North Sydney.

Are you looking for an Accredited Family Law Specialist lawyer on Sydney’s North Shore? Doolan Wagner Family Lawyers are pre-eminent family law solicitors you can rely on. For more than two decades our family lawyers have been assisting people in Sydney with their family law matters.

Our family lawyers’ expert experience and skills are recognised by the Law Society of New South Wales through its Accredited Specialist Scheme.

Our Services

We are expertly placed to assist you in relation to all family law matters including:

  • Divorces
  • De facto relationship matters
  • Same-sex relationship matters
  • Financial/property settlements
  • Parenting matters (including pertaining to assisted fertility issues)
  • Child support & Child Custody
  • Strong court representation
  • Assisted reproduction technology and Surrogacy
  • Some of the Issues Our Clients Face
  • Do you know the difference between a Divorce and a separation?
  • What about the difference between a property/financial settlement and a Divorce?

Believe it or not, although the words are often used interchangeably each of these matters is a very different legal issue with different ramifications. We can help you understand the differences and guide you through the family law process as it applies to your particular circumstances.

  • Did you know that until recently the law treated couples living in a De Facto arrangement very differently from couples who were married?
  • Did you know that the date of your separation can affect how the law applies to you?

If you’re living with someone else and you’re uncertain about your rights, we can help you work out what you’re entitled to.

  • You’ve probably heard a lot in the media about recognition of same-sex relationships and same-sex marriage.
  • Did you know that in recent years there have been significant reforms to the Australian legal framework which have allowed better recognition of same-sex couples and their children?

If you’re contemplating separating from your partner and you’re uncertain about your rights or responsibilities or how this may affect your children, we can help you understand your entitlements.

  • Have you used assisted fertility procedures to help you have a family?
  • Have you used a surrogate or donor to help you create your family?
  • Do you know what your rights and responsibilities are? Do you know theirs?
  • Do you know how your child legal rights may be affected by assisted fertility issues?

Family Law Accredited Specialists are required to undertake continued learning specifically in respect to issues relating to family law. Our divorce solicitors are well positioned to advise you in relation to all family law issues. We will provide appropriate legal assistance to you as you navigate this difficult new terrain.

  • Do you know what factors influence the calculation of child support by the Child Support Agency?
  • Do you know what changes in your or your former partner’s circumstances would allow for a change to the child support assessment?
  • Do you need a Binding Child Support Agreement?
  • Did you know you can be paid child support for a child aged over eighteen years of age if they’re still attending school?

Our highly experienced family lawyers are well versed in respect of the “rules” pertaining to child support and can provide you with clear advice on your rights and responsibilities in relation to all aspects of child support.

Why Choose Doolan Wagner?

We understand that people are often worried about involving themselves in what they fear are complex and expensive legal processes. We will give you clear and concise legal advice and guidance.

We are a specialist firm located conveniently in St Leonards on Sydney’s Lower North Shore. Visiting us is relatively stress-free and will help you avoid the congestion of Sydney’s CBD and the North Sydney Commercial Precinct. We are an easy 15-20 minute drive from Hornsby, Ryde, Gladesville, Chatswood and St Ives and there is ample street parking nearby. We are also only a short 2-3 minute walk from St Leonards train station. There are regular trains from Central, Hornsby and Epping. St Leonards station is a major stop for various local buses.

Affordable Family Lawyers North Sydney

And as a smaller firm, we don’t have the same overheads as some of the larger “city-based” firms. We understand that families facing a family breakdown are often facing added financial pressures as well. We do our best to keep your costs down by offering highly competitive rates. Our competitive fees don’t mean you will get anything other than top-quality legal advice and assistance because we promise that you will not just be a file in a cabinet to the family lawyers at our firm. We believe in giving all of our client’s personal care and attention.

Also read: How Much Does a Divorce Cost?

We also recognise that often clients may be confused about what the “real” or “live” issues are. Knowing how best to approach obtaining appropriate legal solutions in their divorce and separation is important. As a firm that only practices in the area of family law, our family lawyers have the level of experience that clients are looking for to assist them to face their separation, divorce and other family law issues with confidence. We can get to the “heart” of your matter quickly and won’t waste your time or money focusing on issues that don’t matter.

We will guide you through every aspect of your family law matter, from the first stages of legal planning through to finalisation of your family law matter. It is our view that, no matter how complex or simple your matter appears to be, it is essential to obtain early legal assistance from an experienced family lawyer (preferably an Accredited Family Law Specialist) so that you can get the answers you need. This will enable you and your family to positively move forward with your lives. It is very important that you have a clear legal plan prepared prior to engaging in any family law processes, whether it be approaching the negotiating table or filing an Application in the Court. We can help you with developing your legal strategy and assist you throughout the family law process.

Expert Divorce Lawyers North Sydney

We know that our help can put you in the best position to secure the optimal outcome that works for you and your family. Our Accredited Family Law Specialists are skilled at negotiating the often challenging family law setting. Their approaches, together with their sensitive and personal service and support, will put you in the best position free from uncertainty and unnecessary worry.

Whatever your circumstances are, we promise you that we will handle your matter with your personal circumstances at the forefront of our minds. We will listen to you to ascertain your wants, needs and concerns so that any advice we provide to you is tailored to your specific needs. We are not afraid to adapt our methods and approaches to suit your family’s needs and can either provide a sensitive approach or strong court representation, depending on your needs.

We have family lawyers who have had extensive experience in the collaborative law process and are collaboratively trained. By being able to engage in a more collaborative legal process in the majority of our family law matters we attempt to enable our clients to have the utmost input and control over their matter. This approach also allows independent professionals to contribute to the legal process to ensure that the parties will have the most appropriate, effective and positive outcome possibly achievable in their matter. And it also helps keep our clients costs down because we will do our best to settle matters by alternate dispute resolution mechanisms such as negotiation, roundtable settlement conferences, mediations and arbitrations.

If you’re still not convinced we can help you, perhaps reading some of our client testimonials will set your mind at ease…

Take the Next Step…

Facing issues in relation to intimate family or relationship matters can be stressful, daunting and worrisome. These matters have the potential to affect your emotional wellbeing, as well as have a substantial effect on the wellbeing of other family members and your finances. Obtaining timely specialist family law advice, guidance and support in relation to all family law matters will set you on the best path forward.

If you live or work on the North Shore of Sydney and:

  • are experiencing a relationship breakdown; or
  • need advice regarding your family’s circumstances; or
  • want to know more about your rights and responsibilities; or
  • just need to know where you stand…

We can help you because Lisa Wagner & her family law team is made up of highly experienced Accredited Family Law Specialists and highly regarded registered Family Dispute Resolution Practitioners. So, take the next step and call us on 9437 0010 or email enquiries@familylawyersdw.com.au to find out how we can help you.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Divorce Lawyers North Shore FAQ’s

Back to School Costs After Separation – How Far Can Your Child Support Payments Go?

The payment of Child support continues to incite much heated conversations.  Whilst a government report commissioned a few years ago found that of those people surveyed:-

  1. many believed that the amount of child support being paid was considered to be about right; and
  2. many said that the actual child support that was being paid was being paid in full and on time.

we often hear people complaining that they are paying too much child support or not getting enough child support.

The basic child support formula is complicated and multi-layered. It relies upon detailed research into the costs of raising children in different age bands as its starting point. The basic formula then takes into account the parents respective relevant incomes and the amount of time that each of the children spend with each parent in determining an appropriate level of child support to be paid and/or received. The formula also makes allowances for new siblings and other dependents and for other “life” considerations. There are grounds upon which you can seek to change an administrative assessment of child support if, for example, you can satisfy the Department of Human Services that the income of one or both parents is not properly taken into account or the costs of raising your child or children are special in all of the circumstances. Provided you meet particular provisions these matters can also be considered by the Family Court.

However, how relevant is the basic formula for separating families living in most areas of Sydney?

Perhaps two of the biggest factors relevant to large parts of Sydney that are not necessarily captured in the basic child support formula are:

  1. The high costs of housing in Sydney; and
  2. The growing propensity to send children to private schools especially at the secondary school level.

These two factors weigh heavily on the budgets of most families not just those experiencing separation. Creeping housing costs in Sydney are difficult to escape. The cost of education and in particular “back to school” fees are also significant and are costs that we cannot have a great deal of control over.  Availing yourself of the second hand uniform stall or recycling hand-me-down clothes and books goes only a small way towards making ends meet.

The basic child support formula is meant to cover the costs of public school education and associated expenses including uniforms, shoes, stationary, books and the like.

Payments of child support do not “spike” in January/February each year to take extra “back to school” costs into account. If you are receiving child support and are obliged to meet all the “back to school” costs yourself then you either need to try to budget for this expensive time of year over the course of the previous twelve months, or as most people do, use credit cards and spend the next few months playing “catch-up”.

Private school fees and the extra expenses charged at most private schools along with the extra “back to school” costs generally are only payable by an ex-spouse if you have secured a departure order from the Court or have entered into a Binding Child Support Agreement with your former spouse or partner requiring that all or a proportion of those expenses are paid. In either case provision can be made for the payment of a raft of “back to school” expenses that are incurred at the start of the year or at other times including:

  • Laptops, IPads and IT expenses (even maintenance, repair and replacement costs)
  • Hockey sticks, team uniforms sports equipment and registration costs
  • Musical instruments, tuition and examination charges
  • Incursions, excursions and even overseas immersion trips
  • Camp fees, Cadets and Duke of Edinburgh

No matter what your budget or your circumstances after separation, it is vital to understand what all your true child costs are and also what they are likely to be moving forward, including non-recurring costs like “back to school” expenses. It is also essential to determine what real income will be available to meet all of these costs. “Back to school” costs which spike at the start of each year are a strong reminder of how important this is. This is true for all families but particularly so for families experiencing separation. Clearly setting out who will be responsible for all of these child related expenses is crucial and these obligations should be clearly included in a Binding Child Support Agreement or Court Orders. Without any settlement being documented in this way there is no real obligation for either parent to meet these costs and these costs can be really felt as children get ready to return to school each year.

Doolan Wagner Family Lawyers offer specialist family law advice in St Leonards on Sydney’s North Shore.  If you would like some more information about child support or have a Family Law enquiry, please contact us on (02) 9437 0010 or send us an email at enquiries@familylawyersdw.com.au to discuss your matter in complete confidence.  Lisa Wagner is the founding principal of Doolan Wagner Family Lawyers, an Accredited Family Law Specialist and a nationally registered Family Dispute Resolution Practitioner on Sydney’s North Shore.  We also have a team of experienced and caring professional family lawyers available to help you in this difficult time.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Neutral Bay Family Law

Doolan Wagner Family Lawyers have been providing expert advice to people in Neutral Bay and surrounding areas for close to three (3) decades and understand the common issues and questions that arise for the local community.

Located on Sydney’s lower north shore, Neutral Bay continues to appeal to young professionals, wealthy families and retirees.

According to the Australian Bureau of Statistics in 2016 Neutral Bay had a population of 10,488, most of who were aged between 25 and 44 years, comprising married (37.6%) and couples in a de-facto relationship (17.7%). About half of the families in Neutral Bay had children.

Often our clients from Neutral Bay and its surroundings:

  1. Are concerned about the division of their respective hard-earned assets and their entitlements in relation to their ex-partner’s assets.
  2. Are considering future parenting arrangements and how to meet the payment of private school fees and best achieve sensible child support agreements.
  3. Are wanting to secure their superannuation and retirement income ensuring stability and certainty in retirement.

Engaging a family lawyer can be a daunting step. At Doolan Wagner Family Lawyers we understand that each matter is unique and we tailor our advice to suit you. Each and every one of our clients are important to us and we endeavour to achieve the best result for all of our clients bearing in mind that engaging a family lawyer means that you are likely experiencing one of the hardest times in your life.

If you are looking for an Accredited Family Law Specialist near Neutral Bay, along with an experienced and dedicated team of family lawyers, then contact us at Doolan Wagner Family Lawyers to arrange an initial consultation for a reduced fixed rate and have all of your family law questions answered.

Read on to learn about some of the commonly raised Family Law issues that may be important to you. And also view our range of family law services.

It’s often not 50/50

A lot of separating couples seek legal assistance to divide their assets and liabilities however are not aware of what factors will be considered, what they’re entitled to and how the Court will assess their situation.

So how does the Court approach a matter where both parties have made their own respective contributions? And, how would the Court consider a situation where one party had been predominantly a “homemaker” or “stay-at-home parent” and the other the “breadwinner”?

In relation to Family Law matters, the approach normally taken in all property applications is a four-step process. These four steps are:

1. Identifying the net asset pool which includes the value of all the property of the relationship, less the debts of the relationship.

2. Assessing the contributions made by each of the parties. Basically, contributions may be any of the following:

2.1. Direct financial contributions including being towards the acquisition of assets.

2.2. Indirect financial contributions, for example where one party’s income is used to buy the groceries each week to enable the other party’s wages to be applied directly towards the mortgage.

2.3. Non-financial contributions, including contributions as a homemaker and parent.

3. Making any adjustment needed to be made to take into account “future needs” factors such as the age and state of health of each of the parties, financial circumstances, care of children and earning capacities.

4. Structuring a settlement that is just and equitable.

It is important to remember that each matter will be assessed on its own particular facts.

Also read: Lane Cove Family Lawyers

Are inheritances included in a property settlement?

An inheritance received by a party can be included as an asset available for distribution in the matrimonial pool of assets however may be treated differently to other property depending on the particular facts of a case. For example, an inheritance received early in a long relationship and applied towards a mutually owned asset of the parties is characterised as a financial contribution by that party however the significance of it will diminish over time.

If an inheritance is deemed to be unavailable for distribution as it is not yet available, an adjustment can be made to the remaining assets when taking into account the future needs of both parties and the benefit the particular party has as a consequence of a prospective inheritance.

How is superannuation considered?

Ordinarily, the current values of parties’ entire superannuation entitlements are included in any Balance Sheet. This does not, however, prevent superannuation benefits or entitlements as at the commencement of a relationship or accrued after a separation, from being asked to be considered outside a Balance Sheet or excluded/quarantined. Each case will turn on its particular facts. Generally, parties may negotiate how their superannuation entitlements are considered and/or divided and the Court will likely accept any agreement the parties achieve in the event that it is part of an overall just and equitable resolution of their financial matter.

Can I make a claim for ongoing financial support from my ex?

A party may make a claim for spouse maintenance in the following circumstances:

  1. If the party is unable to support herself/himself adequately;
  2. If the other party has the capacity to provide financial assistance.

An application for spouse maintenance is separate to a property settlement in family law. It is more likely to be considered by a party where that party to the relationship was predominantly a “homemaker”, is of poor health, is required to care for children in addition to themselves and in any event, has a lower employability level and capacity to support themselves.

An example of a person who may wish to claim spouse maintenance from their former partner would be a party who had been in a lengthy relationship and considered a “homemaker” and became financially dependent on their former partner.

Can I prevent my ex from making a claim for ongoing financial support?

In short, the answer is yes. A Financial Agreement can operate to prevent future claims for spouse maintenance. As the name suggests however, it is an “Agreement” which is required to be entered into by both parties and comply with specific legislative requirements in order for it to be valid. This includes obtaining independent legal advice.

Neutral Bay Family Lawyers
Separation can be hard at any age and at Doolan Wagner Family Lawyers in Neutral Bay we can make the process so much easier.

How can I protect my estate from a potential claim from my partner in the future?

Importantly, achieving a property settlement by way of Consent Orders also does not protect your estate from a claim being made against it by your former partner upon your passing.
Similarly, Consent Orders do not prevent you from making a claim against your partner’s estate after their passing.

This could be a significant consideration for a retiree, particularly where the separation from their former partner was on “bad terms”. A Deed of Release however can be entered into at any stage to protect one’s estate from a former partner’s potential future claim on their estate.

Without this documentation being prepared, both you and your former partner are eligible to make a claim against the other’s estate. Some people are of the view that the possibility of a further claim being made against their estate by their former partner is to be expected or is a fair outcome. In certain circumstances clients may not want to abandon their ability to make a claim against a former partner’s estate at a later time should their ex pre-decease them. Other people feel very strongly about the need to protect their estate against such a possible claim. A Deed of Release will assist in finalising all possible claims between them and their former partner, both now and upon their death.

How do I formalise parenting arrangements in relation to my children?

Often when parties separate, the child/ren of the relationship are caught in a battle between their parents in respect of parenting arrangements.

Separating couples with children have to additionally consider future parenting arrangements and child support issues.

Parenting Consent Orders can deal with a huge number of the issues parents face in a separation including where the child will live, the time spent with the other parent, parental responsibility, school holidays, special occasions and communication. The primary consideration in parenting matters is the best interests of the child. It is a distinct principle in family law and it will be paramount in all parenting matters.

Child Inclusive Conference (“CIC”)

In the event that parents cannot reach an agreement about parenting arrangements, a CIC is an available option as part of the Court process to assist families.

A Family Consultant selected by the Family Court will conduct your CIC and will hold separate interviews with you, your former partner and your child/ren in order to understand your family’s situation and your respective perspectives. We note that a CIC has a particular emphasis on assisting the Court to understand the experiences of the children after separation and at the present time.

It is important to note that a CIC is not a confidential process. After your CIC, a memorandum will be released including conversations, information obtained by the parties and child/ren and the Family Consultant’s recommendations arising from the process.

Binding Child Support Agreement

Many parents who would be able to make an application for an Administrative Assessment through the Department of Human Services prefer to enter into an agreement on their terms and so opt to enter into a Binding Child Support Agreement.

A Binding Child Support Agreement will formalise your agreement with the other parent in relation to child support payable for the child/ren and provides certainty about financial support for the child/ren in the future.

Applying for a Divorce – what’s involved?

Most parties choose to get divorced soon after separation in order to formalise the end of their marriage. In Australia, a person may not remarry if they are still married to another person. Preparing a Divorce Application, waiting for a Divorce Hearing and obtaining a Divorce Order from the Family Court, all take time. The process may be prolonged if your former partner is not agreeable to the divorce. Proactive steps can be taken to ensure this process is not unnecessarily delayed.

In order for a Divorce Application to be accepted and a Divorce Order to be made, the Court must be satisfied that the parties separated and thereafter lived separately and apart for a continuous period of not less than twelve (12) months immediately preceding the date of the filing of the Divorce Application.

Family Law authorities have established that there are three (3) elements which need to be present for separation to be proven, namely:

1. Intention;

2. Communication; and

3. Action/Change in behaviour.

Parties to a marriage may be held to have separated and to have lived separately and apart however notwithstanding that they have continued to reside in the same residence or that either party has rendered some household services to the other. In each case, the question of whether parties have separated will be a question of fact. Broadly, some factors that the Court may consider include the:

1. The financial situation of the household and relationship;

2. Nature of the relationship and household;

3. Sexual relationship of the parties; and

4. Public knowledge of the separation.

It is important to note that an application for property orders must be made within twelve (12) months of your divorce order taking effect. Once this time lapses, you will have to obtain the Court’s permission to initiate property proceedings and this is not obtained lightly.

Are psychologist notes really confidential in family law matters?

Most information that is shared with health professionals will be confidential and is prohibited by law from being shared with anyone, except in limited cases where there is a greater need to protect the safety of the patient or another member of the community.

Evidence such as counselling notes must be relevant to the issues presented before the Court in order to be admissible. If the evidence cannot “rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding” it would not be relevant to the case (s55 Evidence Act 1995 (Cth)).

Therefore, information is legally confidential will not suffice in protecting it from being exposed in family law proceedings. Family law courts are flexible in accepting evidentiary material in order to understand and successfully resolve parenting matters involving children and are willing to assist a party in protecting particular aspects of evidentiary material in order to render the remaining relevant material admissible.

Are there any alternatives to Court?

Alternative dispute resolution affords parties different processes to assist them in resolving their matter out of Court.

Mediation is a very common form of alternative dispute resolution where parties to a dispute, with the assistance of a mediator, identify issues, develop options, consider the respective parties desires and endeavour to reach an agreement. The mediator simply conducts the mediation however does not have an advisory or determinative role.

Collaborative Law is another process available that is led by lawyers representing each of the parties and where it is agreed that the lawyers will cease to act for their clients in the event that the matter proceeds to litigation.

Court is a time-consuming, costly and unpredictable process that most clients wish to avoid. Engaging in alternative dispute resolution in family law matters should be an important consideration for most parties. It would not be suitable however for matters involving violence.

Lisa Wagner - Doolan Wagner Family Lawyers
Meet Lisa Wagner from Doolan Wagner Family Lawyers

Doolan Wagner Family Lawyers – how can we help you?

We are a reputable specialist family law firm located conveniently on Sydney’s lower north shore. We are local to Neutral Bay residents and consistently strive to achieve the best outcome for our clients.

Every matter is different and we explore all available and suitable options including mediation, negotiation, collaborative law and litigation for our respective clients in potentially the most challenging period of their lives.

We have a dedicated team of experienced family lawyers prepared to handle your matter effectively and efficiently, providing you with reliable, direct and practical advice.

Being less than a ten (10) minute drive from Neutral Bay and located only a block away from St Leonards train station, come see us for an obligation-free confidential consultation and understand where you stand.

Doolan Wagner Family Lawyers offer specialist family law advice in St Leonards on Sydney’s North Shore. If you have recently separated or have a Family Law enquiry, please contact us on (02) 9437 0010 or enquiries@familylawyersdw.com.au to discuss your matter in complete confidence. We have a team of experienced and caring professional family lawyers available to help you in this difficult time.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Share Options

Are you separating and you or your partner entitled to a share option?

 Are you unsure how share options are valued or treated in a Family Law matter? 

Read on to find out more about share options and how they are valued and characterised in Family Law disputes.

Share options are increasingly issued to employees as part of their remuneration package or as an incentive-based or performance-based term of employment. It is used as a means of linking employee performance to shareholder value. Typically there is a period of time before an employee is able to exercise the option by purchasing shares which raises two (2) important questions to be answered related to share options in family law property proceedings:-

  1. Are share options considered property or a financial resource?
  2. How are share options valued?

WHAT IS A SHARE OPTION?

Before considering how the law answers these two (2) questions it is important to understand what a share option is and the terminology surrounding options.

A share option is the right to buy a share or defined quantity of shares, at a specified price (the “exercise price” aka the “strike price”). As the name suggests it is not an obligation to purchase.

There are two varieties of share options namely:

  1. American options, which are the most common form, and allows for the option to be exercised at any time up to a specified date (the “expiration date”); and
  1. European options which allow for the option to only be exercised on the expiration date.

Usually the options that are granted do not vest immediately and the employee will only be entitled to the options after some time and often over a period of years. The shares are said to have vested on the date which the employee becomes entitled to the beneficial interest in the option, that is, the date the options are exercisable. However, it may be that, pursuant to the agreement between the employer and employee, there are still restrictions on the transfer of the options (e.g. that they cannot be transferred to another person or that they can only be transferred for a specific price). Vested options constitute those options where the vesting criteria have been satisfied (e.g. the specified period of time has passed or the employee remains gainfully employed by the employer) and the employee is able to exercise the option, but has not done so. An option is unvested when the vesting criteria has not yet been met.

The exercise date refers to the date on which the option is exercised, that is, the shares are purchased by the employee that is the subject of the option.

ARE SHARE OPTIONS PROPERTY OR A FINANCIAL RESOURCE?

What is the difference between property and a financial resource?

The Family Law Act 1975 (Cth) (‘the Act’) provides a circular definition of property as “property to which [the parties are jointly or a party of the relationship is] entitled, whether in possession or reversion”. The Act does not define what a financial resource is but it can be considered as a financial benefit that is likely to be given to a party in the future such as impending inheritance under a will, long-service leave entitlements, employment/partnership pension schemes or payment as a beneficiary of a discretionary trust, but is not property that a party currently has or is not currently entitled to receive.

The consequences of this distinction are that as an asset, the Court has the power to make orders with respect to property (pursuant to sections 79 and 90SM of the Family Law Act 1975 (Cth)). A financial resource however can only be considered when deciding on a just division of the rest of the property. At best it may result in an adjustment of property to the other separating party. Nonetheless how the Court treats share options can be critical when large portions of the net matrimonial pool are tied up as financial resources.

How does the Court characterise share options?

The Full Court of the Family Court in Hurst v Weber (2009) FamCAFC 137 overturned the decision of Federal Magistrate Baumann who treated the unvested share options as a financial resource due to performance hurdles, including remaining employed with company, which was required in order for the options to vest. The Court determined that they should have been treated as property.

The Court affirmed this view in Nielson & Nielson (2012) FamCA 70 maintaining that employee share options are to be treated as property not as a financial resource with the value of the property to be ascertained by discounting for various risks. Loughnan J commented that property is not determined by its ability to be sold. Importantly in this case the Husband agreed with the Wife that they were property, but submitted that they should be “treated” as a financial resource. The Court rejected this argument holding that if it is accepted to be property, then it cannot be dealt with in some other way.

Crisford J in Beaton & Ballam [2014] FCWA 20 held that unvested employee share options ought to be treated as a financial resource adopting the reasoning of Ryan J in Beklar & Beklar [2013] FamCA 327. Some factors which point to share units being characterised as a financial resource rather than property include whether they can be sold or dealt with before they vest, whether the holder receives nothing more than dividends on the underlying shares prior to them vesting, and evidence showing that the holder is unlikely to be employed when the share units vest.

The Federal Circuit Court of Australia held in Russel & Russell [2016] FCCA 137 that unvested share options were to be considered a financial resource. In this case the husband was granted a number of unvested shares over a number of years, however those shares would only vest and consequently he would only have the right to sell those shares, three (3) years after they were allocated to him, on the condition that the company satisfied a number of performance indicators.

How share options are characterised by the Family Court remains unsettled. Presently each matter is determined by the facts of the particular case. It is arguable that options that, at the time of hearing, are free to be exercised and are ‘in the money’ (that is the share price exceeds the exercise price) ought to be treated as property because they have a net value that can be realised (once various adjustments have been made by a valuer).  On the other hand, some factors pointing towards the Court treating share options as a financial resource (assuming they cannot be exercised at the date of the Hearing) include:

  • their value is contingent on the share price exceeding the exercise price at some future time but prior to expiration date and they are inherently uncertain and unpredictable;
  • they are often contingent on the continuation of employment and/or employee performance targets (that may be affected by forces outside of the employee’s control);
  • there may be restrictions on the transfer of the options;
  • there may be restrictions placed on the sale of the shares once the option is exercised.

Ultimately a careful analysis of the employee share option agreement is required to assist in determining whether they are likely to constitute property or a financial resource for family law purposes.

HOW ARE SHARE OPTIONS VALUED

The intrinsic value of an option is broadly the difference between the exercise price of the option and the value of the share. For example, the intrinsic value of an option to buy a share for $10 in XYZ Pty Ltd that currently has a share price of $100 is $90. The value of the option lies in the opportunity to take advantage of increases in the share price, hopefully as a result of employee performance, over the period of time before the expiration date.

The longer the period of time until the expiration date the greater the opportunity for the share price to increase and as such the greater the value of the option. As the time period before expiration draws to a close the less prospect there is of an increase in the share price and as such the total value of the option converges with the intrinsic value. This is known as the time value of an option and will impact any valuation that is undertaken in a determination of the value of a share option in a Family Law matter.

Valuing share options will often require an expert valuation by an accountant and can involve a number of methodologies. Each share option will be different and subject to its own agreement which will need to be examined to determine a valuation.

There are a number of factors that affect the value of the share option including:

  • the underlying value of the share;
  • the exercise price;
  • the time to expiration;
  • the stability and predictability of the share;
  • the risk-free rate;
  • the dividends expected during the life of the option (if any).

In valuing share options a number of discounts are typically applied to account for a range of factors, most fundamentally that they are an uncertain asset that may or may not provide value to the holder at some time in the future. Discounts are also applied for:-

  1. Lack of marketability, that is, the liquidity of the option is low (relevant to unvested options only);
  2. Tax liabilities;
  3. Risk of the holder ceasing to be employed before vesting date (usually only if there is some evidence of likelihood of the employee not remaining employed);
  4. Accounting for inflation and the opportunity cost of interest earning;
  5. Restrictions on transfer;
  6. Performance hurdles that are outside of the option holder’s control;

WHAT ALTERNATIVES ARE THERE IF PARTIES CANNOT AGREE ON HOW TO CHARACTERISE SHARE OPTIONS OR THEIR VALUE

Unfortunately, due to the uncertain nature of how to characterise and value share options, parties in a Family Law property dispute may disagree considerably as to these two (2) issues. The parties can obviously allow the Court to reach a determination, however, in circumstances where they cannot agree and do not want the expense of litigation there are some other alternatives that should be considered.

Parties may consider a deferred settlement arrangement for unexercised options based on an agreed distribution once the options are exercised and a determinable value is realised. Alternatively parties can enter into an ongoing maintenance Order, may allow for reimbursements or cash adjustments to be made in the future once the options have been exercised.

In any event it is clear that the law surrounding share options is not clear and legal advice, as well as the advice of an accountant or forensic valuer, should be obtained.

Doolan Wagner Family Lawyers offer specialist family law advice in St Leonards on Sydney’s North Shore. If you have recently separated or have a Family Law enquiry, please contact us on (02) 9437 0010 or enquiries@familylawyersdw.com.au to discuss your matter in complete confidence. We have a team of experienced and caring professional family lawyers available to help you in this difficult time.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Separation and Tax Debts

Can the Family Court direct that my ex take my tax debt?

 The High Court of Australia was recently asked a question as to whether a party to a marriage could be substituted for the other in relation to a Tax Debt under section 90AE of the Family Law Act (“The Act”). The Commissioner of Taxation (“The Commissioner”) intervened in the matter to suggest that the Family Courts did not have power under the relevant section.

In accordance with procedural requirements the question was reverted from the Federal Circuit Court to the Full Court of the Family Court of Australia (“The Full Court”). The Commissioner was not satisfied with the answer provided by the Full Court and appealed to the High Court of Australia (“The High Court”).

The specific question posed to the High Court was, “Does section 90AE(1)-(2) of the Family Law Act 1975 (Cth) grant the court power to make Order 8 of the final orders sought in the amended initiating application of the wife?”

The order sought by the wife was in the following terms:

“Pursuant to section 90AE(1)(b) of the Family Law Act 1975 (Cth) in respect of the [Wife’s] indebtedness to the Commissioner of Taxation for the Commonwealth of Australia [for] taxation related liabilities in the amount of $256,078.32 as at 9 August 2016 plus General Interest Charge (GIC), the [husband] be substituted for the [wife] as the debtor and the [husband] be solely liable to the Commissioner of Taxation for the said debt”.

 Section 90AE(1)(b) of the Act allows the Court to direct a creditor of the parties to substitute one party of the marriage for the other in relation to a debt owed to that creditor. The Commissioner submitted that as a Commonwealth body they should not be bound in the same way as other third-party creditors. That submission was rejected by both the Full Court and by the High Court, although it was conceded by the High Court that the circumstances under which a party should be substituted for another pursuant to section 90AE of the Act in relation to a tax debt would be rare when considering the criteria set out under section 90AE(3)(b) and (d).

By way of background, the husband and wife were married in 1992 and separated in July 2009. On 5 November 2009 the husband was declared bankrupt. On 12 November 2009 the wife had a default judgment made against her for $127,669.36 with General Interest Charges (GIC) continuing to accrue such that by August 2016 the total amount owing to the Commissioner was $256,078.32.

There is a general principal when interpreting legislation that the Crown should not be bound. Although this is the starting point for interpreting legislation, the ultimate question is whether that presumption is rebutted and, if so, the extent to which the legislation intends to bind the Crown. Holding to this principle, the Commissioner submitted that section 90AE of the Act should not bind the Crown, and accordingly the Family Courts did not have the necessary jurisdiction to make the orders sought by the Wife.

In reviewing the statutory framework of the Act, The High Court noted that the Act had been expanded over the years to specify that a debt owed by a party was to be included as ‘property’ of the marriage for the purposes of the Act. The Act makes provision for a debt to be transferred and describes a creditor as a relevant third party to proceedings under the Act.

The Commissioner accepted that they were a creditor for the purposes of some sections of the Act but not for the purpose of section 90AE. This submission was rejected by the Court.

The High Court said that the operation of section 90AE could leave the Commissioner ‘no worse off’ and noted that the operation of section 90AE of the Act should protect Commonwealth Revenue and would not ‘disrupt’ the operation of taxation law.

When considering the facts of this case, in particular the husband’s bankrupt status, it is helpful to understand the criteria that a court must look to when making an order under section 90AE as sought by the wife.

Section 90AE(3) of the Act relevantly states:

                “(3) The court may only make an order under subsection (1) or (2) if:

  • the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and,
  • if the order concerns a debt of a party to the marriage – it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full; and
  • the third party has been accorded procedural fairness in relation to the making of the order; and

 (d) the court is satisfied that, in all the circumstances, it is just and equitable to make the order…” (emphasis mine)

 When considering subsections (3)(b) and (d) it is clear that in this case the Court could not be satisfied that the tax debt would be repaid by the husband and so the Court would not be empowered to make the order for substitution sought by the Wife under section 90AE of the Act.

An alternative power for the Court to substitute a party for a tax debt is set out in section 80(1)(f) which allows a court to make an order that “payments be made directly to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage (emphasis mine).

An order directing payment under section 80(1)(f) requires that some form of liquid asset exists to meet this payment, or that assets are readily saleable for the purpose of satisfying the payment. If the funds or assets are not available for an order directing payment pursuant to section 80(1)(f) the High Court notes that it is unlikely, even requires the conclusion, that the criteria in section 90AE(3)(b) could not be met and therefore an order under that section would be precluded.

The High Court concluded that although section 90AE of the Act confers the necessary power to make an order directing the Commissioner to substitute one party for another in respect of a tax debt the Court cannot answer that question in any specific case without directly addressing the factors set out in section 90AE(3) which require, amongst other things, a consideration of whether that debt can be paid in full and that it is otherwise just and equitable to make the order.

Doolan Wagner Family Lawyers offer specialist family law advice in St Leonards on Sydney’s North Shore.  If you have recently separated or have a family law enquiry, please contact us on (02) 9437 0010 or enquiries@familylawyersdw.com.au to discuss your matter in complete confidence.  We have a team of experienced and caring professional family lawyers available to help you in this difficult time.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Family Lawyers Mosman

Divorce Lawyer servicing couples and families in the Mosman area.

Divorce Lawyers helping separating couples for over 20 years.

Are you looking for an experienced family lawyer to help you with your separation and divorce?

We are keenly aware that dealing with a relationship breakdown is distressing and seeing a lawyer can be a very daunting experience. Having practiced almost exclusively in the area of family law for more than 20 years we believe that we are the best placed family law firm in the local area to deal with you and your matter sensitively and with the best interests of you and your family foremost in mind.

We recognise that no two families (or indeed family breakdowns) are the same. We are not a cookie-cutter law firm and will take the time to get to know you, your family and the distinct facts and circumstances of your case – that is our promise to you. We do this so that we can offer you advice which is tailored to your personal circumstances and can secure a resolution of your matter which reflects the specific needs of you and your family.

Why use Doolan Wagner, your family lawyers Mosman, in your family law matter?

We have been helping separating couples for over 20 years and during that time have assisted hundreds of couples resolve their family law matters in the most cost-effective way both with and without the Court’s involvement.

  1. We only practice in the area of family law. That means we are in the best position to assist you to resolve your matter because:
    – we have established relationships with many of the local family law practitioners (including local lawyers, barristers and court staff), Child Contact Centres, Meditators, Family Law Arbitrators, etc.
    – we can quickly grasp the important elements of each family law matter; and
    – we are expertly familiar with how family law processes work.
  2. We have lawyers who are Accredited Family Law Specialists registered with the Law Society of NSW – these are experts in all areas of family law and are best placed to assist you in relation to your family law matter.
  3. We have registered Family Dispute Resolution Practitioners for separating couples who are not yet ready to undertake the formal engagement of a solicitor or who want to try to informally resolve their matter using alternative dispute resolution.
  4. Your file will receive personal attention from experienced family lawyers including our Principal and the handling of your matter won’t be passed around the office to junior lawyers unless specifically requested by you.
  5. Every day we:
    – draft family law documents including but not limited to Court Applications, Balance Sheets, Superannuation Splitting Orders, Financial Agreements, Binding Child Support Agreements, Consent Orders, Applications for Divorce and Affidavits;
    – assist clients to formulate sensible parenting plans and negotiate appropriate financial property settlements;
    – review financial disclosure documents, court documents, parties’ evidence and applications for child support assessments;
    – prepare clients for attendances at Court and engaging with the Family Law processes such as attending with Family Consultants; and
    – guide clients through the many challenges that can arise in their lives and within the family unit as a result of separation and divorce.
  6. We are a boutique law firm with overheads to match – we pass on those savings to you so that our fees and charges are competitive. We should be considered the “go to” company for getting real and good old fashioned divorce law advice.
  7. Our practice has been built up from word of mouth referrals from satisfied current and past clients and local professional people – that’s 20 years of business built up largely from word-of-mouth referrals…enough said.

By engaging us:

  1. You will be choosing an Accredited Family Law Specialist, an expert who practices family law daily.
  2. You will benefit from our ability to quickly (and therefore cost effectively) understand the important issues in your matter and formulate the right action plan for you and your family.
  3. You will be provided with proper guidance through the separation and divorce processes – we know that separation and divorce are some of the most stressful and challenging experiences which our clients will have to go through during their lifetimes. Having steered many client’s through the various stages of each of these processes we are best positioned to offer you practical feedback on how to approach many of the situations that separated families may face.
  4. You will be provided with clear advice on what forms part of the “pool of assets” and how best to protect the assets of the relationship.
  5. You will receive sensible, realistic and proactive family law advice in relation to both parenting and financial matters which will stand the test of time.  We will try and anticipate the things that may happen in your future and provide for them in the advice that we give you and work with those “futures” in mind when we negotiate your settlement. Many of our former clients have kept in touch with us over the years to update us about their families and have provided feedback that both the advice we offered and the resolutions we negotiated for them have been appropriate to meet their family’s needs for many years.
  6. You can be confident that we will secure the best financial outcome for you.
  7. You can be assured that we will always act with the best interests of your children in mind.
  8. You will receive our full commitment to resolve your matter as quickly as possible. Your positive experience with us assures our good reputation within the local community.
  9. Don’t make the mistake of choosing the wrong lawyer. The decisions you must make after separation are critical. You and your children’s wellbeing and your financial security are not worth the gamble.

Our founding principal, Lisa Wagner is a local North Shore mum and an Accredited Family Law Specialist having looked after separating parties on Sydney’s North Shore & Mosman for almost 30 years.

Trained as a Family Dispute Resolution practitioner and in Collaborative Family Law Practice, Lisa and her team possess honed skills to secure favourable and timely out of court settlements.

Many people following separation seek discreet advice and our ongoing specialist family law advice service can prove invaluable to help you along the way navigate issues of child support, parenting and financial settlements.

Taking the first step is never easy however with our proven track record of assisting local couples to resolve their family law matters successfully we urge you to get the ball rolling and get in touch with us.

Call me, Lisa Wagner of Doolan Wagner Family Lawyers on 9437 0010 or email me on enquiries@familylawyersdw.com.au. We offer Accredited Family Law Specialists and are experts in all family law matters.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Bankruptcy and Binding Financial Agreements (Part 2)

Picking up from Part 1 of this Article, we now turn to a couple of family law cases that were handed down after the Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth) was passed.

In CPPIB Credit Investments Inc v Ren [2017] NSWSC 771, Ms Kong and Mr Ren had been married for approximately 10 years. They divorced in September 2016. In November 2016, the parties entered into a BFA pursuant to section 90C (that is, during marriage). The BFA provided that a Warrawee home worth $11.5 million be transferred to the Wife, which at the time was owned by the parties as joint tenants.

An action was commenced by CPPIB Credit Investments in the New South Wales Supreme Court against the Husband to recover an amount in excess of $50 million, for which the applicant argued that the Husband was liable under a guarantee.

On 28 April 2017, the New South Wales Supreme Court made an order freezing assets including the Warrawee home. Ms Kong (who was now the former Wife of Mr Ren) filed a notice of motion seeking that the freezing order be dissolved so far as it affected her. Ms Kong argued that the freezing order be lifted on the ground that the Warrawee property was subject to the BFA and that Mr Ren no longer had any interest in the property.

Ball J stated that it was common ground that, should the Court find that the Warrawee property was the subject of a BFA, the freezing order should not continue against Ms Kong.[1] However, should the converse be true, the freezing order was to stay pending further order of the Court.

CPPIB submitted that the BFA was not binding, primarily for two reasons:-

  1. Firstly, that the agreement was entered into after Mr Ren and Ms Kong divorced and therefore, was not an agreement pursuant to section 90C (which deals with Financial Agreements during marriage); and
  2. Secondly, that the Court could not be satisfied that Mr Ren received a copy of the Certificate of Independent Legal Advice signed by the Wife’s lawyer pursuant to section 90G(1)(ca) given that there appeared to be some inconsistencies with respect to the dates.

Ball J accepted both these submissions.

In relation to the first point, Ms Kong unsuccessfully submitted that the Court could not be satisfied that her divorce would be recognised in Australia, given that she had filed divorce proceedings in China in or about April 2016. Ball J rejected this argument, positing that the circumstances were sufficient to conclude that the divorce satisfies the requirements of section 104, and therefore, would be recognised.

In relation to the second point, Ball J acknowledged that, under section 90G(1A), a Financial Agreement may be binding if section 90G(1)(ca) was not formally complied with “if a court is satisfied that it would be unjust and inequitable if the agreement were not binding” – however, went further to say that there was no evidence before the Court to come to this conclusion.

Ms Kong also unsuccessfully submitted that, even if the document was not found to be a BFA, the freezing order should not be continued because there were multiple freezing orders over the property, each with differing conditions as to how the proceeds of sale were to be dealt with, which in turn may not be possible to comply with.

The Court ordered that Ms Kong’s motion be dismissed with costs and that the freezing order made by the Court continue pending further order of the Court.

The Husband became bankrupt on 5 April 2018.

It appears that, had the parties complied with the strict legislative requirements to render a BFA binding in nature, the outcome of this case may have been starkly different.

In Official Trustee in Bankruptcy v Galanis [2017] FamFC 20, a separated Husband and Wife entered into a BFA requiring the Husband, a discharged bankrupt, to transfer all his right, title and interest in the former matrimonial home to the Wife.

The Official Trustee in Bankruptcy (“Trustee”) had filed an application seeking orders that the BFA between the Husband and Wife be set aside.

The Family Court of Australia was tasked with the question of whether it had the jurisdiction to hear and determine this matter, given that the Appellant was arguing that the primary judge erred by failing to find that proceedings brought by the Official Trustee fell within the definition of a “matrimonial cause” in sections 4(1) and 4A.

In this matter, Ms Galanis (the first respondent) and Mr Dukas (the second respondent) commenced their relationship in 1999 and purchased a property together in 2002 as tenants in common with Ms Galanis owning 60 per cent and Mr Dukas owning the remaining forty (40) per cent. Despite the unequal ownership, Mr Dukas submitted that Ms Galanis provided the entirety of the purchase price. The parties married in 2006 and subsequently separated in October 2011.

In 2008, Mr Dukas (the Husband) became bankrupt. He was subsequently discharged from the bankruptcy in October 2011 – at the same time of his separation.

In February 2013, the parties entered into a BFA pursuant to section 90D (after a Divorce Order is made) requiring the Husband to transfer to the Wife all of his right, title and interest in the former matrimonial home. The Wife was also to discharge the mortgage and indemnify the Husband against any further liabilities relating to the property.

In July 2013, the Trustee filed an application in the Federal Circuit Court of Australia seeking that:-

  1. The Financial Agreement between the First Respondent and the Second Respondent be set aside;
  2. Forty (40) percent of the net proceeds from the sale of the matrimonial home be paid to the Applicant for distribution amongst creditors in the bankrupt estate of the Second Respondent Husband; and
  3. That the Court considers the issue of costs.

In January 2014, the Wife filed an Application in a Case seeking that the proceedings be dismissed, successfully arguing that the Court did not have the jurisdiction to hear the matter because the application by the Trustee did not constitute a “matrimonial cause” as contained within section 4(1). Upon its transfer to the Family Court of Australia, the matter was dismissed. The Trustee appealed.

On appeal, the Trustee contended it was a “government body acting in the interests of the creditor” pursuant to section 4A(1)(b)(iii). The Wife again, submitted that the Court did not have jurisdiction. The Court expressly stated that the Trustee was not a government body under that definition, contrasting the role of the Trustee with ASIC, which is a Commonwealth entity.

Accordingly, the appeal was dismissed with costs.

Thus, BFAs are entered into to provide certainty and predictability to parties in relation to the division of assets or the maintenance of a party when a relationship breaks down. Put simply, they are intended to protect a party’s financial position. Ultimately, there is no effective method of predicting the future with certainty when dealing with a change of circumstances or impracticability of adhering to the agreement – which appears to be the biggest weakness of using BFAs as an asset protection vehicle.

In terms of its use as an asset protection vehicle when a party subsequently becomes bankrupt – evidently, it was often misused to the bankrupt’s advantage prior to the amendments to the Bankruptcy Act 1966 (Cth) following ASIC v Rich and Anor [2003] FAMCA 114. However, apart from the result in CPPIB Credit Investments Inc v Ren [2017] NSWSC 771 which occurred due to a drafting error and deviation from the strict legislative requirements, the cases discussed above were found in favour of the parties seeking to uphold the BFA in the face of bankruptcy – albeit, due to technicalities. It appears that whilst the effectiveness of BFAs in protecting assets from attack in a bankruptcy has diminished somewhat, they have also done what was intended to be achieved.

Key Takeaways:

  1. It is important to remember that Binding Financial Agreements are not “bulletproof” and can be set aside in certain circumstances such as fraud, duress, a change in circumstances and so on.
  2. The 2005 amendments now allow creditors to have standing to apply to set aside a Binding Financial Agreement.
  3. Those seeking to enter into Binding Financial Agreements are well advised to obtain a second opinion from another legal professional and obtain financial advice from other professionals.

Doolan Wagner Family Lawyers offer specialist family law advice in St Leonards on Sydney’s North Shore. If you have recently separated or have a Family Law enquiry, please contact us on (02) 9437 0010 or enquiries@familylawyersdw.com.au to discuss your matter in complete confidence. We have a team of experienced and caring professional family lawyers available to help you in this difficult time.

[1] CPIBB Credit Investments Inc v Ren [2017] NSWSC 771 at [5].

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

Bankruptcy and Binding Financial Agreements (Part 1)

What happens when parties enter into a Binding Financial Agreement and one party subsequently becomes bankrupt?

What do you do when the one asset pool to be divided is in circumstances where there are competing claims between the bankrupt’s spouse or partner and the bankrupt’s creditors?

If you find yourself in a situation like this and are unsure of the next steps, read on.

Broadly speaking, individuals thinking about asset protection are primarily concerned with protecting assets from attack either through a family breakdown, poor business or investment decisions, bankruptcy or a family provision claim.

So, what happens when family law and bankruptcy intersect?

In such circumstances, the non-bankrupt partner may find him or herself competing against claims from unsecured creditors for a share in the bankrupt’s assets. Conversely, in a scenario where one party intends to frustrate or prevent their former partner from obtaining a share of assets, that party may attempt to use bankruptcy proceedings to put assets out of the reach of their former partner. In a situation like this, the non-bankrupt partner may find him or herself competing for a share of the assets against “fake creditors”.

Generally, in relation to both married and de facto couples, the presence of a third party in proceedings and the subsequent conflict between the claims of the former partner and creditor(s) is dealt with extensively in Part VIIIAA (subsections 90AA to 90AK) of the Family Law Act 1975 (Cth).

With respect to Binding Financial Agreements (‘BFAs’), the items of property that can be dealt with by parties in a domestic relationship under such a document may comprise of assets including domestic and international real estate, personal property, superannuation, spousal maintenance, child support, and future inheritances. There are strict legislative requirements to enter into same and, of course, one needs to consider the grounds for review as to what circumstances may set them aside.

In relation to bankruptcy proceedings, they are dealt with under the Bankruptcy Act 1966 (Cth). A person may be made bankrupt either by a creditor’s petition[1] or through a debtor’s petition.[2] A trustee in bankruptcy is then appointed and the bankrupt’s property then vests in the trustee,[3] albeit he or she is permitted to retain certain household items and any interest in a regulated superannuation fund.[4] The bankrupt’s property consequently becomes available to be divided amongst his or her creditors.[5]

So how do BFAs hold up in the face of bankruptcy?

Prior to the Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth), BFAs held up pretty well in that the tax man was generally unable to obtain a share of a bankrupt’s assets once a BFA had been correctly executed. This was seen in the case of Australian Securities and Investments Commission v Rich and Anor [2003] FAMCA 114 wherein O’Ryan J was tasked with answering the question as to whether the Family Court had the jurisdiction to set aside Financial Agreements on the application of a third party, in this case – the Australian Securities and Investments Commission (‘ASIC’).

In this case, the Husband was a founding Director of One.Tel Ltd and had numerous business interests. Between 17 May 2001 and 4 June 2001, the Husband transferred and altered the ownership of his assets. On 29 May 2001, the board of Directors of One.Tel Ltd resolved to place the company into administration. On 31 May 2001, the parties entered into the Financial Agreement pursuant to section 90C (during marriage). On that same day, ASIC started investigating the Husband in relation to suspected contraventions of the Corporations Act 2001 (Cth).

ASIC tried to rely upon sections 90KA and 90K(1)(b), arguing that the Financial Agreement was void or voidable. However, this point was futile if ASIC did not have standing, being the ability to bring an action before the Family Court.

Both the Husband and Wife in that case filed responses seeking an order that the application by ASIC be dismissed for similar reasons. The Husband submitted that there was no jurisdiction to grant the relief whereas the Wife submitted that the application should be summarily dismissed as there was an absence of a triable issue and that the application was so flawed that it could not succeed.

The Court reasoned that the definition of a “matrimonial cause” provided that the proceedings be “between the parties to a marriage”. Accordingly, given that ASIC cannot be a party to the marriage – the application by ASIC was not a “matrimonial cause”. Thus, the Court did not have jurisdiction to hear the matter by ASIC and subsequently dismissed the application. His Honour did note, however, that “there are good policy reasons why” it is appropriate for the Family Court to determine whether third parties may apply to set aside BFAs – however this did not address the issue of jurisdiction.[6]

Further, His Honour went on to state that:

it is of concern to me that the consequence of my finding is that the Family Court has no jurisdiction to deal with an application by an unsecured or contingent creditor to set aside a financial agreement in circumstances where the interests of such a third party are or may be adversely affected by the terms of the agreement. This position in contrary to that taken by the court over a number of years in circumstances where an order was made under section 79 or an agreement approved under section 87.”[7]

Following this case, the legislation was amended to rectify this position and it is now easier for trustees in bankruptcy to attack BFAs resulting in them being more susceptible. Why? Because prior to the amendments, the Bankruptcy Act 1966 (Cth) exempted a ‘maintenance agreement’ from its purview. This is no longer the case. The definition of ‘maintenance agreement’ contained within s 5(1) of the Bankruptcy Act 1966 (Cth) was further clarified so as to exclude “Financial Agreement within the meaning of the Family Law Act” following interpretation issues.

We will continue looking closely at the intersection between Binding Financial Agreements and Bankruptcy in our next article, so remember to return to our website soon. In particular, in our next post we will look at a couple of cases following the amendments to the Bankruptcy Act 1966 (Cth) and how this affects BFAs in Family Law.

[1] Bankruptcy Act 1966 (Cth) s 43.

[2] Bankruptcy Act 1966 (Cth) s 55.

[3] Bankruptcy Act 1966 (Cth) s 58.

[4] Bankruptcy Act 1966 (Cth) s116(2).

[5] Bankruptcy Act 1966 (Cth) s116(1).

[6] Australian Securities and Investments Commission v Rich and Anor [2003] FAMCA 114 at [95].[7] Australian Securities and Investments Commission v Rich and Anor [2003] FAMCA 114 at [115].

Doolan Wagner Family Lawyers offer specialist family law advice in St Leonards on Sydney’s North Shore. If you have recently separated or have a Family Law enquiry, please contact us on (02) 9437 0010 or enquiries@familylawyersdw.com.au to discuss your matter in complete confidence. We have a team of experienced and caring professional family lawyers available to help you in this difficult time.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

December 2018 Family Law Case Watch

What is required to initiate Property proceedings when you separated from your de-facto spouse a significant time ago?

Section 44(5) of the Family Law Act 1975 (Cth) (“the Family Law Act”) allows de-facto parties to initiate proceedings in respect of property or maintenance orders in de facto relationships if the application is made within the period (the standard application period) of:

  1. Two (2) years after the end of the de-facto relationship; or
  2. 12 months after a financial agreement between the parties was set aside or found to be invalid; or
  3. Both parties consent to the application.

The Act provides that proceedings may be instituted “out of time” in certain situations. In the recent case of Gadzen & Simkin [2018] FamCAFC 218, the Family Court considered in detail the application of that law and explained what type of circumstances qualify.

Background

Mr Gadzen (“the de facto husband”) and Mrs Simkin (“the de facto wife”) commenced cohabitation in 2001. The de facto husband was then aged 51 years and the de facto wife was aged 45 years. There were no children of the relationship and the parties separated in 2009. The parties since married other parties, with the de facto wife commencing cohabitation with her current husband in 2013 and marrying him in 2016.

At the beginning of the relationship the de facto wife had net assets worth a total of $83,000. The de facto husband’s total net assets were valued at $4,750,000, which included various residential properties, businesses and trust interests.  It was undisputed that the de facto wife made no direct or indirect financial contribution to the acquisition, conservation or improvement of the de facto husband’s various properties or businesses.

During the relationship, the de facto husband contributed significantly to the de-facto wife’s finances. The de facto husband added the de facto wife to his self-managed super fund, contributing $100,621 to her membership in that fund. On 27 March 2015 the de facto wife withdrew her membership with that fund and an amount of $213,118 was rolled out to the de facto wife’s nominated superannuation fund.

Later in their relationship, the de facto husband established a family trust for the de facto wife and transferred fifty (50) per cent of his shareholding in one of his companies to that trust for no consideration. The de facto wife’s shareholding in that Trust was transferred back to the de facto husband following separation in about 2015 for $25,000, a sum significantly less than its initial value.

It was undisputed that following separation the de facto husband continued to make financial contributions to the de facto wife by way of informal agreements between the parties, including:

  1. Paying a deposit of $100,000 on the purchase of residential premises in the de facto wife’s sole name and making interest-only mortgage repayments on behalf of the de facto wife until the end of December 2017, totalling $268,301;
  2. Paying the de facto wife’s rent from separation in April 2009 until the purchase of the above property in October 2010, totalling $31,199;
  3. Purchasing furniture and electrical equipment for the de facto wife in the sum of $20,000;
  4. Providing a legacy to the de facto wife in the sum of $1,000,000 in his Will with the terms of such Will to remain unchanged for two (2) years; and
  5. Giving to the de facto wife one third of the balance of his superannuation account, The Gadzen Superannuation Fund.

The de facto wife filed an application on 25 January 2018 seeking orders under section 90SM and 90SE of the Act for the purpose of property and maintenance orders. The Application filed by the de facto wife was seven (7) years out of time and therefore required the Court to determine whether leave should be granted for the proceedings to be dealt with.

Family Law

As set out above, section 44(5) of the Family Law Act provides the standard application period for initiating proceedings, generally speaking, this requires proceedings to be initiated within two (2) years of a de facto relationship breaking down (in the case of a marriage, section 44(3) provides the standard application period as twelve (12) months from the date of divorce or decree of nullity).

Pursuant to section 44(6) of the Act (or section 44(4) in the case of a marriage), the Court may grant a party leave to apply after the end of the standard application period if it is satisfied that:

  • Hardship would be caused to the party or a child if leave were not granted; or
  • In the case of an application for an order for the maintenance of the party – the party’s circumstances were, at the end of the standard application period, such that he or she would have been unable to support himself or herself without an income tested pension, allowance or benefit.

Section 44(4) in the case of a marriage and section 44(6) in the case of de facto relationships are in identical terms and, for practical purposes, the requirement for granting leave under section 44(6) will follow the authorities in respect of section 44(4).

Section 44(4) was considered in the earlier case of Whitford and Whitford in which the Court emphasised that hardship within the meaning of the section must first be established for the Family Court to exercise its discretion and grant leave. In discussing hardship, the Full Court in Whitford said:

The hardship referred to in section 44(6) is the hardship which would be caused to the applicant… if leave were not granted. The loss of the right to institute proceedings is not the hardship to which the subsection refers.

In Sharp the Court noted that:

Hardship is more than the loss of a right to commence proceedings. It is the consequences attending the loss of the right to commence proceedings that constitutes hardship.

In assessing hardship… the applicant must have a prima facie claim worth pursuing or a “real” possibility of success.

The meaning of “hardship” in subsec. 44 (4) is akin to such concepts as hardness, severity, privation, that which is hard to bear or a substantial detriment.

These authorities provide that, in determining an application for leave, the applicant must demonstrate a prima facie or arguable case and, having regard to all of the circumstances, that if it were not heard would result in hardship to the applicant or a child of the marriage. This will take into account the costs or likely costs to be incurred in pursuing a claim.

At First Instance

In the present case of Gadzen & Simkin the trial judge found that the de facto wife would suffer hardship if leave were not granted for her to bring property settlement and maintenance proceedings against the de-facto husband and made an Order granting leave.

In determining the question of hardship the trial judge extracted a segment of the de facto wife’s Affidavit, outlining her current income and expenses and the fact that the de-facto husband ceased paying mortgage payments. On this evidence the trial judge found that hardship was established.

On Appeal

It was found that the trial judge erred in determining the question of hardship as she failed to undertake any consideration of whether the de facto wife had a prima face or arguable claim and whether the loss of her right to make that application would lead to hardship that was substantial having regard to all the circumstances of the case, including her potential costs in pursuing that claim.

The Full Court found that in all of the circumstances, the de facto wife received very significant benefits post-separation. In total it was estimated that the de-facto wife had received $467,121 in post separation benefits and it was estimated that she would expend approximately $150,000 pursuing her claim.

Taking into consideration all the evidence, the Full Court found that even if the de facto wife’s potential claim succeeded, it was unlikely to equate to, let alone exceed, the benefits which she already held, together with what she had received from the de facto husband following separation.

Conclusion

It is possible to initiate Court proceedings where separation occurred a significant time ago however hardship must be proved in order for the Family Court to grant leave to make an application after the standard application period. In making this determination, the Court must have regard to all of the circumstances of case.

We hope that our December 2018 Case Watch has provided you with some clarity about the role of the Family Court where proceedings are initiated out of time.

If you have separated or have a Family Law enquiry, please contact us on (02) 9437 0010 or enquiries@familylawyersdw.com.au to discuss your matter in complete confidence. We are conveniently situated in St Leonards on Sydney’s Lower North Shore and have a team of experienced and caring professional family lawyers available to help you.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

International Family Law and Asset Division

How do I protect my overseas assets during separation?

My relationship has ended but my partner and I are in different countries what do I do?

I have properties and trusts held in several countries but where is the best place to commence my divorce proceedings?

These are the questions being raised by family law clients more regularly as more family law matters are being brought to the Courts attention involving international aspects. This may include overseas properties, monies held in international accounts, international shareholdings and pensions held outside of Australia.

When determining the best way for such matters to be determined, as part of working towards a division of the matrimonial asset pool, the following considerations arise:

  1. Does the Family Court or the Federal Circuit Court of Australia have jurisdiction to determine the case.
  2. Given that various assets may be held in a number of countries, is there a foreign jurisdiction that would also be able to determine your case and are there advantages or disadvantages to your case being heard in a jurisdiction outside of Australia.
  3. If the Australian courts are determined to have jurisdiction to deal with the assets, what is the likelihood of an Australian judgement or court Order being enforced in the country where the asset/s are held.
  4. If proceedings were commenced in another jurisdiction outside Australia, do the Australian courts have the ability to grant an anti-suit injunction to restrain such proceedings from continuing.
  5. Are there multiple jurisdictions that could determine your matter and could certain aspects of you matter be dealt with in Australia and other aspects in the applicable overseas jurisdiction, so as to achieve the best outcome for you.

Another issue to consider is how secure are your overseas assets when they may be held in your former spouse or partners name. You may need to consider if there is a risk that your former spouse or partner may dispose of those assets without your knowledge. If there is an urgent risk you may need to consider obtaining injunctive relief from the Court to prevent assets being dissipated or wasted.

The Family Court of Australia has powers which are in personam in nature. Put plainly, this type of power allows the Court to make an Order compelling a party to deal with a particular (foreign or otherwise) asset. It cannot compel or direct or secure the outcome per se. It does not have the ability to enforce its Orders overseas as such, except to direct a party to comply with its directions.

In some instances, overseas jurisdictions will recognise an Order or decree made in Australia, and will enforce same as if it were an Order or decree of that country. This however varies from country to country and it will be a question for the foreign jurisdiction to decide whether they will recognise an Australian judgment and enforce the judgment against the particular property or asset.

In the recent case of Kent & Kent [2017] FamCAFC 157 one party to the marriage commenced proceedings by way of a Petition for Decree of Dissolution of Marriage in the National Court of Justice in Papua New Guinea. The other party commenced proceedings for settlement of property in the Family Court of Australia. Both parties filed applications seeking anti-suit injunctions against each other and the party in Papua New Guinea also sought a permanent stay of the Australian proceedings.

In this matter the parties met in 1968, were both Australian citizens and following their marriage the parties moved to Papua New Guinea where the husband ran his own business. The wife returned to Australia in 1997 and both parties then visited each other in the two countries up until 2013, when the wife stopped returning to Papua New Guinea. The parties held real estate in Australia and the husband’s business assets were situate in Papua New Guinea.  At the time of separation, the parties had been together for 48 years.

The Full Court found that the stay application was required to be addressed prior to the competing anti suit injunctions and looked at what matters needed to be taken into account in determining if Australia was a “clearly inappropriate forum”. The Full Court took from the case of Henry v Henry (2011) 45 FamLR 269 some of the following considerations:

  1. Whether both Courts have jurisdiction to hear the parties case;
  2. If both Courts do have jurisdiction, will each jurisdiction recognise the other’s orders and decrees;
  3. Which jurisdiction may be able to provide resolution to all of the matters involved;
  4. The time when each of the proceedings were commenced;
  5. The stage at which the proceedings in each of the jurisdictions had reached;
  6. The costs that the parties had incurred;
  7. The connection between the parties and each of the respective jurisdictions;
  8. Whether both parties were able to participate in each of the jurisdictions on equal footing (i.e. in cases where there may be a language barrier); and
  9. Taking into consideration the issues that are particular to that case and the general circumstances of the case.

There are many factors that need to be addressed and properly considered before even reaching the stage of commencing proceedings in such cases. This may seem overwhelming however as an Accredited Family Law Specialist firm, our team can assist you through the process so that you can rest assured that the best approach is taken, for you to achieve the best outcome possible, no matter where your assets may be located.

Please contact us on (02) 9437 0010 or enquiries@dev.elevatebusiness.com.au to discuss your matter in complete confidence. We are conveniently situated in St Leonards on Sydney’s Lower North Shore and have a team of experienced and caring professional Family Lawyers available to help you.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.