Encouraging Early, Cost-Effective and Amicable Family Law Settlements

Earlier this year the Australian Law Reform Commission published its findings after an extensive review of the operation of the current Family Law system.

One of the main reasons for this inquiry was to consider what reforms are necessary to achieve appropriate, early and cost-effective resolutions of all family law disputes.

The five (5) recommendations dealing with this goal are looked at here:-

1. A compulsory requirement for alternate dispute resolution before commencing financial and/or property settlement matters

Importantly the Report recommends that the legislation be amended to:

1. Require parties to take genuine steps to resolve their property and financial matters prior to filing an Application for Court Orders; and
2. Mandate that the Court must not hear an Application unless the parties have lodged a genuine steps statement.

Further, in the event that a party has not made genuine efforts to resolve the matter, the report recommended that costs consequences should follow.

This new approach would bring matters relating to financial and property settlement in line with what is the current requirement for parenting matters ie. to try alternate dispute resolution first.  It would be a positive step for separating families. All too often, people rush off to Court without thinking about what they can do to help resolve a family law dispute. Adding costs consequences into the mix may be particularly effective, as it would remind parties of the seriousness and importance of complying with pre-action obligations.

2. Acknowledging power imbalances in family law financial matters

It is commonly the case that one party in a relationship may be the “brains” behind the acquisition of the parties’ matrimonial property pool and possesses a high degree of financial literacy and commercial sense.  The other party who is often lacking this financial sense is left at a significant disadvantage in terms of the knowledge he or she possesses about the parties’ financial circumstances.

It is therefore proposed that the Family Law (Family Dispute Resolution Practitioners) Regulations 2008 (Cth) be amended to address this imbalance, referring to the ‘equality of bargaining power between the parties, including an imbalance in knowledge of relevant financial arrangements’ (own emphasis added) rather than just ‘equality of bargaining power between the parties which is what the Regulation presently states.

Identifying – and actually acknowledging – that the equality of bargaining power will be affected by power imbalances (such as a difference in financial literacy) in the Regulations, would leave dispute resolution practitioners in little doubt to ensure that such imbalances are mitigated to the fullest extent, where possible.

3. Requirement for certificates to be provided by Dispute Resolution Practitioners

Similar to parenting matters, the Report proposes to amend the legislation to require practitioners to provide certificates to parties following their attendance at Dispute Resolution evidencing their attempts to resolve the matters between themselves.

This amendment would encourage parties to engage in dispute resolution prior to commencing proceedings. A further advantage that may arise from the implementation of this recommendation is the possibility of the Court’s current workload easing and the time delays associated with litigation reducing, thereby allowing the most intractable matters to be dealt with in a more timely manner.

4. Extending the Protection of Confidentiality and inadmissibility of discussions and material in Dispute Resolution to property and financial matters

Confidentiality is an integral component of the Dispute Resolution process. There are various reasons why matters raised at mediation remain confidential and inadmissible, though perhaps the most obvious is the greater chance that people will be forthcoming and willing to participate frankly in the process without holding information back.

The Report proposes to extend the confidentiality and inadmissibility provisions already contained in the legislation to mediations of property and financial matters, with the exception of a sworn statement similar to a hybrid between a Financial Statement and Balance Sheet, which should be admissible.

The Report provides that this recommendation is based on the notion that it will support the implementation of dispute resolution “supporting disclosure, including through ensuring that parties provide disclosure and are aware of their obligations and the consequences of non-compliance in this regard”.

The difficulty with this proposal lies with matters where disclosure has not been forthcoming and the accurate financial circumstances of one party are unlikely to be discovered. There is a risk that malicious parties flagrantly breaching their obligations may draft a sworn statement that is not entirely accurate, while orally discussing financial matters more candidly and then having those discussions protected by the confidentiality provisions. However, in any event, is it understood that matters of this nature are more likely to proceed through the court process to the final hearing.

5. Clarifying disclosure obligations

The obligation of each party to provide full and frank financial disclosure is important when dealing with a property and/or financial settlement. Logically, it is difficult to ensure a just and equitable settlement when parties are not forthcoming with their financial positions.

Whilst the Family Law Rules 2004 (Cth) and Federal Circuit Court Rules 2001 (Cth) already outline obligations in relation to the duty of disclosure, the Report suggests amending the legislation to further clarify those disclosure obligations, together with the consequences for breaching those obligations.

It is hoped that clarifying the duty of disclosure, will especially benefit self-represented parties, as it will bring their attention in the first instance to the legislative requirements and the rules of the respective Courts requiring the same.

Key Takeaways

1. In most cases, Alternative Dispute Resolution options such as engaging lawyers to assist in negotiations, participating in a Collaborative Law process, or attempting mediation should be the first course of action if you are having difficulties with your ex-partner.

2. Should the proposed amendments be incorporated into the current legislation and you are experiencing a financial and/or property settlement matter, you may be required to attend mediation and obtain a certificate before you can file an Application in the Court.

3. Again, if the proposed amendments are taken up, beware of potential cost consequences that may befall those who do not properly satisfy the pre-action procedures.

4. The obligations in relation to full and frank financial disclosure continue to be stressed to potential litigants, with the hope that clarifying the rules in this regard will assist people to better understand how to discharge this continuing duty.

As 2022 starts it is worthwhile reflecting on these recommendations which at the very least encourage best practices among family lawyers and other professionals assisting people who are separating to achieve early cost-effective and amicable settlements.

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.