Four Important Facts You Need to Know About Settlement

Courtney Barton 1. What is a Property Settlement?

When a marriage or a de facto relationship ends, the parties should always finalise their financial ties with one another.  This may involve the transfer of ownership of real estate, cash, superannuation or other property from one party to another.  For example, if the matrimonial home is in joint names the parties may agree that the house be sold and the proceeds divided. Alternatively, the parties may agree that one party receives the house and makes a cash payment of some nature to the other party to ‘buy out’ their interest.

When you are separating, it is important to obtain legal advice from a Solicitor specialising in family law, in order to determine your entitlements.

2. How do I formalise our property settlement?

Any agreement reached between you and your former partner should always be formalised (recorded legally).

There are two ways of recording a property settlement agreement between two separated parties:

  1. A Consent Order; or a
  2. Binding Financial Agreement.

A Consent Order is an Order which both parties have agreed to and the Family Court approves before making the Order, to ensure it is just and equitable.

A Binding Financial Agreement is an agreement between parties which has not been scrutinised by a Court to ensure it is just and equitable however the parties must consult with a Solicitor to make the agreement valid.

You should talk to your Solicitor about which form of agreement is right for you.

3. Why is it important to formalise your property settlement?

There are several reasons:

  • A Consent Order & Binding Financial Agreement are legally binding. This means that if the other party does not comply with the agreement, you have recourse to the Court to enforce compliance of the agreement.
  •  It finalises your financial relationship with your former partner. This means that your former partner cannot make a further property settlement claim against you.

4. Why is it important to do your property settlement promptly after you separate?

If you do not finalise your property settlement promptly after separation, this means your financial ties with one another have not been severed and you leave yourself open to a property settlement claim being made against you in the future, subject to relevant time limitations.

The value of the asset pool is not the date of separation it is when you make an agreement or when a Judge determines your matter.

This means that if your super interest increases, or you acquire a new asset or you improve the value of an asset post separation, but prior to a property settlement, it forms part of the property pool to be split between you and your former partner.

You should not leave yourself open to your improved superannuation entitlements,  or assets acquired/improved by you post separation,  forming part of your  property settlement.

Alternatively, if your former partner sells an asset or wastes away funds in the property pool, post separation, and applies the income for his/her own benefit, the property pool is reduced therefore reducing your entitlements. This is because the Court cannot deal with assets that no longer exist.

The only caveat to the above is that the Court has discretion to take into account financial contributions of the parties or wastage of matrimonial assets post separation.

It  is in your interests to formalise your property settlement sooner rather than later so that you can re-establish your financial position without a potential property settlement application hanging over your head in the future depending on time limitations.

Be careful of the promises you make….

PropertyA recent judgment handed down by the Supreme Court of South Australia has highlighted the dangers that exist in making rash promises, particularly where family members are concerned.

In Rodda v. Rodda, the Supreme Court of South Australia found that a son was entitled to a proprietary interest in the family farming business and properties as a result of promises that had been made many years earlier that the family farm would one day be his. The trial judge accepted evidence of the son that he had worked on the family farm for 18 years accepting a relatively low wage in the expectation that he would one day benefit from taking over the family business. He had conducted renovations to a house on the farm at his own expense and had not pursued any other career or form of self-employment because of the expectation that he would eventually take over the farming operations.

When the relationship between father and son broke down in 2002, the father attempted to deny the son any interest in the property and claimed that the family business was still owed $135,000.00 by the son for a loan that had been given some years earlier.

At the end of the day, the court found that the representations and promises had been made and that based on those assurances, the son had continued to work in the family business, not sought any alternate career, had expended his own time, money and energy in improving the property and had done so as a consequence of the inducements that had been made. Accordingly, it was found that it would be inequitable for the son to be denied a proprietary interest in the property.

Whilst the case is a rather extreme example, it serves as a reminder of the need to be careful about what you promise and to ensure that any commercial arrangement is well documented, less there be no misunderstanding.

Travis Schultz
Practice Group Leader
Schultz Toomey O’Brien Lawyers, Part of the Slater & Gordon Group
Ph: (07) 5413 8900
Fax: (07) 5413 8958

Contempt of Court for the Advanced Medical Institute: When a Court Order is Ignored

Sarah Dennis

Sarah Dennis, Lawyer

I am sure we can all recall, in recent years, the advertisements plastered over billboards for the Advanced Medical Institute (AMI), promoting treatments for premature ejaculation and erectile dysfunction: a nasal spray promising the dream of ‘long lasting, longer sex’ awaited.

About six months ago, the Australian Competition and Consumer Commission (ACCC) was successful in an action against the AMI for breaches of the Trade Practices Act and the Australian Consumer Law.  AMI was slammed by the Federal Court for its sales techniques, which were aimed at exploiting the anxieties of its target market.  In particular, the Court found AMI failed to provide any scientific basis for its treatments, nor did it diagnose the medical cause of the erectile dysfunction of its patients.

In his judgment, Justice Tony North found that by using high-pressure selling techniques, including telling potential patients they would suffer “psychological impotence” if they did not agree to treatment, the AMI failed to meet the standards of proper practice established by the medical profession.

Among the additional relief sought by the ACCC, the Court ordered an injunction against AMI to stop its advertising.

So, what’s happened since?

Well, whether it has been a matter of being uncertain of its legal obligations, or alternatively, flagrantly disregarding the law, AMI has recently been taken back to the Federal Court by the ACCC, this time for contempt of Court.  The ACCC alleges AMI, by continuing to make statements and/or representations through their website, television and radio advertising, has breached the previous Court Order.

One wonders what it may take for AMI to learn its lesson, in circumstances where the Court has previously found it consistently elevated its own commercial self-interests above the welfare of its patients.

The matter will be dealt with by the Federal Court over the coming months.  Watch this space.

Sarah Dennis,
STO Law, part of the Slater and Gordon Group
Ph: (07) 5413 8936
Fax: (07) 5413 8955

The Importance of Complying With Liquor Licensing Laws

AlcoholDuty manager, Mr Firth and company of a hotel on Kangaroo Island has pleaded guilty to seven offences under the liquor licensing laws after a drunk patron was served alcohol for a period of nine hours before being killed in a car accident on his way home.

Mr Read was served 20 drinks and purchased six cans of rum before he went home. The duty manager served drinks to Mr Read as he continued to tell him he wouldn’t drive home.

“[He said] he wasn’t going to drive his car home … that he’d made arrangements to stay in town overnight at a friend’s place,” Mr Firth told the hearing.

Mr Firth said a number of people drink and drive on the island due to the lack of public transport available and no police station.

Brevet Sergeant Brannan said “the offending was extremely serious and the court needed to send a clear message that intoxicated people should not be served more alcohol.”

No Binding Contract With High Class Escort

ContractThe recent dismissal of an appeal by “high class escort”, Madison Ashton, in the New South Wales Court of Appeal should be a salient reminder to those of us in business of the need to ensure that any contract we enter into is properly constituted, and recorded, so as to enable it to be enforced.

At issue in the case of Madison Ashton, were promises that were allegedly made to her by billionaire cardboard king, Richard Pratt, before he died. Ms Ashton alleged in her claim that she had been promised financial support if she remained his mistress, even though nothing was ever put in writing or signed by the parties.

The New South Wales Court of Appeal found that any promises of financial support did not create a binding contract and would, in any event, have been void as being against public policy. It was found that the arrangement between the late billionaire and his mistress failed to spell out important terms that would be required in order for there to be a contract (assuming that one could exist without being void on public policy grounds), such as the duration of the arrangement and how the promised trust to provide financial support would be created.

Whilst the case may be a somewhat extreme example of the difficulties in proving an oral contract, it highlights the need for contracting parties to:-

  • Ensure that there is agreement reached on all important terms;
  • To ensure that there is “consideration” for the exchange of promises in the form of money or money’s worth;
  • Preferably, to then ensure that there is some documentary record of the agreement which demonstrates that the parties have in fact reached agreement and intend that the arrangement be legally binding.

A simple promise, on its own, will not necessarily create a binding legal relationship, but if terms are set out in writing and signed by the parties, then there is a far greater prospect that a Court will enforce a contract if ever becomes necessary to do so.

Apple Failed To Trade Mark “APP STORE”

TrademarkApple has failed to trade mark “APP STORE” after the Federal Court rejected its appeal.

Apple has argued saying that when they initially filed the application for the trade mark in 2008 the term “APP STORE” wasn’t a common term used. They also said that they had been using the term before they even filed the application and that was how consumers distinguished that it was an Apple service.

However, the Court has come back saying that the term “APP STORE” is really only an “expression to describe a store” where customers can use the service. The court has also said that the words were only put to use 8 days before the initial application therefore there isn’t enough evidence to suggest that “APP STORE” in that short amount of time could be distinguished as a Apple’s Service.

Apple still has trade marks for “Appstore” and the logo “Available on the App Store”.

Bar Raised on Sexual Harassment Claims

Sexual HarassmentIn the past, claims for damages for sexual harassment have generally seen only relatively modest awards of damages made for the offence and insult caused by the conduct, but some recent Federal Court decisions appear to have raised the bar in terms of the award of damages in these types of cases.

In Vagara v Ewin [2014] FCAFC 100, an employee had been sexually harassed on four occasions by a contractor who was working for the same employer.  Her complaints to her boss were not taken seriously and ultimately she felt that she had no option but to resign.  She was recently awarded almost $500,000.00 in compensation including a significant allowance for economic loss that she suffered as a result of leaving the employer.

Subsequently, in Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82, an employee had been repeatedly sexually harassed over an eight month period.  After she made a complaint regarding the conduct, the Plaintiff found herself being put in another lower paying position by the employer instead of removing the sexual harasser from the workplace.  Ultimately, the Plaintiff left the employer and she was awarded, on appeal, $100,000.00 for pain and suffering and $30,000.00 for economic loss that she had suffered.

Some might argue that awards of that magnitude are difficult to reconcile with the award for pain and suffering in physical injury cases but for now, at least, the message is clear, sexual harassment is being taken seriously by the Courts and from an employer’s perspective, carefully crafted policies and systems to enforce them are an important risk management tool to stamp out sexual harassment in the workplace.

Travis Schultz
Managing Partner
Schultz Toomey O’Brien Lawyers
Ph: (07) 5413 8900
Fax: (07) 5413 8958

Death of 3 year old boy

Child AbuseLast month a toddler was found unconscious in a home in Oberon. The 3 year old boy suffered abuse which included being kept in an esky filled with ice. Other reports state that the man allegedly taped a ball in the boy’s mouth, kicked and hit him with a wooden spoon.

The boy lived with his grandmother from birth until they moved to Oberon in June 2014. It is expected that this is when the abuse started.

The court has heard from The Westmead Children’s Hospital that the injuries that the child sustained were to his head and face, also bleeding in the eyes and bruising to the lower back.

The 45-year-old man has appeared at Bathurst Local Court charged with manslaughter and recklessly causing grievous bodily harm.

If you know of anyone suffering from abuse, please contact our Family Law Department 1300 STOLAW or visit our website

Family Law Settlements – don’t get caught out by proposed new tax ruling

From as early as July this year a Final Tax Ruling is likely to issue which will reverse the Commissioner’s views on the taxation status of private companies paying money or transferring property in satisfaction of property orders made under the Family Law Act.

The draft ruling released for comment in November last year provides that where private companies are joined as parties to Court proceedings and ordered to pay money or transfer property to a shareholder or an associate of the shareholder such as a spouse/partner, the payment or transfer will constitute an assessable dividend requiring the recipient to pay income tax on the sum received or value of property.

This is a departure from the ATO’s previous position which did not construe such transactions under s79 of the Family law Act to be dividends.

The impact of the draft ruling also applies when private companies are not parties to Court proceedings but where a Court order requires the parties to cause the private company to transfer property of pay money to a shareholder or associate.

It is proposed by the ATO that the Final Tax Ruling will apply to private company transactions under Family Court orders both before and after the date the Final Tax Ruling issues. Although the Commissioner has advised the ATO will not undertake active compliance activities in relation to Court orders made before this date, if asked for example in a private ruling the Commissioner’s view will be consistent with the new approach.

We will always recommend you seek out specialist financial advice with respect to your matrimonial matters but now more than ever if these changes could apply to your property settlement.

Informal Wills

By Trent Wakerley

In a recent Supreme Court of Queensland decision, the Court declared a document typed and saved on the late Mr Yu’s iPhone to be a valid Will.

An Application to the Court was required because the document on the iPhone did not comply with the requirements for the execution of a valid Will referred to in the Succession Act 1981 (QLD) (“the Act”).

The Act provides that a Will must be in writing and signed by the person making the Will (or someone else who the Will-maker directs to sign the document on their behalf).

There must also be at least two (2) witnesses who also sign the Will in the presence of the Will-maker and the signature of the Will-maker must be made with the intention of executing the Will.

The Act enables the Court to dispense with the formal requirements if the Court is satisfied that:-

  1. A document exists;
  2. The document purports to state the testamentary intentions of the deceased; and
  3. The deceased intended the document to operate as the deceased’s Will.

There are a number of Queensland Court decisions where Orders have been made dispensing with the formal requirements for executing a Will under the Act and declaring a document to be the deceased’s last Will.

These types of Applications often relate to unfortunate circumstances where the Will-maker has realised they do not have a valid Will in place that reflects their wishes and have handwritten their intentions on a document (or in the case of Mr Yu, on an iPhone) shortly before taking their own life.

Other circumstances where these types of Applications have been made are where the deceased:-

  1. had met with a solicitor and provided their instructions regarding their Will and had signed the solicitor’s notes but not the final “Will” before passing away; or
  2. had been provided with an unsigned Will by their solicitor which reflected the instructions provided at the appointment but had not signed the “Will” before passing away.

Whether the Court orders that the formal requirements for the execution of a Will be dispensed with will depend on the particular circumstances of each case.  There have been a number of Applications to the Court for the formal requirements to be dispensed with that have not been successful.

In these types of Applications, a significant amount of time and work is required to collate the evidence to put before the Court and the costs associated with these types of Applications can easily be in the tens of thousands of dollars.

These type of Applications can be easily avoided if you have an up to date valid Will in place which reflects your current wishes.

If you require a Will or need your Will updated you can contact our team today.