So you thought you had an agreement

Sometimes I meet someone who happily tells me that they have “sorted” their property settlement, “just between us”. No paperwork, no orders, no lawyers. Sounds good? A recent decision of the Full Court of the Family Court (Bevan and Bevan 2013) highlights again, the risk in relying upon informal settlements.

The facts are interesting. The husband and wife had been married for 22 years and had two children. Their fortunes blossomed during the marriage but declined before separation in 1994. The downturn in their fortunes appeared to affect the husband significantly. He declared he would make a new life elsewhere. He told the wife and other people, that she could keep the Australian property. The husband then went to sea.

The wife subsequently dealt with their property, as she saw fit, including selling assets and making investments, without input from the husband. Over the next 10 years, the parties had holidays together and the husband contributed an inheritance and other funds to the parties’ accounts.

The parties divorced on 22 July 2010. An application for property settlement must be filed within 12 months of divorce. With 2 days to spare, and 17 years after separation, the husband filed for property settlement.

The matter went to trial in December 2012: lawyers engaged on both sides. None of the property at the trial existed at separation. The net property pool was over $1M. Despite the husband’s delay in bringing his application and his repeated prior representations that the wife could “have it all”, the trial Judge awarded the husband 40% of the asset pool. The wife would probably need to sell her home.

The wife appealed. In April 2013 the Full Court allowed the appeal but did not make a redetermination. Submissions were invited from both sides. And so the wait continued for these parties, some 19 years after they separated.

Hindsight is a wonderful thing. But we can be clear about this here and now: informal settlements are risky. People change their minds. What might’ve seemed “ok” at one point, may look “unfair” later on.

Reaching agreement at the end of your relationship, about the division of your property, is ideal. Be smart, though. Get advice from specialist family lawyers about the settlement – and get orders or a financial agreement made. Invest in certainty and management of risk – no doubt Mrs Bevan wished she had.