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

Restaurant ordered to back pay workers $3.43 million

Chef CookingA restaurant in New York has been ordered by a Judge to back pay 11 workers $3.43 million.

The Korean restaurant had paid the employees ‘grossly substandard wages’ with tips also being diverted which is a violation of their rights.

The same company ‘Kum Gang Inc’ had previously been investigated and order to pay 66 workers US$1.95 million in back pay, however the New York Times has said the company is yet to pay.

Investor Rate Slug Overturned

A Supreme Court Judge’s ruling earlier this year which found that the Mackay City Council had improperly slugged investors with higher rates, is likely to have significant consequences for local Councils across Queensland.

For many years it has been common for Councils to set rates for various properties depending upon whether the owner was an investor or an owner occupier.  After all, from a Council’s perspective, it would seem reasonable to give owner occupiers a bit of a discount on their rates to those fees charged to investors and housing corporations.    But when Justice Duncan McMeekin handed down his decision on the 1st of May this year, he found that the Mackay City Council had acted improperly in setting higher rates for investors than owner occupiers.  In reaching his decision, Justice McMeekin found that in exercising their rating powers, a Council should not come to a conclusion as to the appropriate level of rates based on the ownership of a property from time to time.  In setting higher rates for investors, the Council was having regard to factors which should not enter the equation namely, the identity and financial position of the property’s owner.

In light of this decision, local Councils are going to have to be quite transparent about the way in which rates are set for properties so as to avoid the inference that they are purely seeking to improve revenues through playing Robin Hood with owners of investment properties.

I suspect it’s going to become a bit messy once investment property owners start asking Councils for a refund of overpaid rates at some stage in the future!

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

The Dangers of Social Media

The Dangers of Social MediaSocial media may be a great way to keep in touch with family and friends or to get your message across in business, but it is also an express ride to a real legal pickle for the reckless or careless poster.  Recently the District Court in New South Wales set a legal precedent by awarding damages of $105,000.00 to a school teacher who was defamed on Facebook and Twitter by a former student.  The student, whose father had previously taught at the school, had convinced himself that another teacher in the school’s music department had a significant role to play in his father having to leave the school and authored a series of posts on social media sites that were defamatory of the teacher who had taken over his father’s job.

Although the student had offered an apology after receiving a legal demand, it was found by Judge Elkaim to have been insincerely given because he subsequently continued to protest the truth of the comments that he made.

The informality of social media can create a temptation to author comments which are often made flippantly, carelessly or in poor humor but which can be disproportionately offensive or damaging to others.  As social media sites enable posts to be circulated and re-tweeted very quickly and efficiently, the potential for damage is enormous.

It’s fine to have an opinion and to exercise your right to free speech, but where your written views concern another person, think twice before “hitting enter”.  As a general rule, if you wouldn’t say it to their face, it is probably not a good idea to post the comment online.

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

Franchising Representations Must Be Accurate

FranchiseWhile the franchising of businesses has become a way of life in this 21st century world, the prevalence of licensing of intellectual property and a business name should not lead to complacency on the part of a franchisor who is looking to recruit franchisees to expand its business model.  Where franchisees are recruited through the making of representations, promises and feasibility studies, it is incumbent upon the franchisor to make sure that all representations are accurate or they could expose themselves to a significant claim for damages.

Recently, a District Court Judge in Brisbane awarded damages of over $200,000.00 to a franchisee who had agreed to buy a coffee bean franchise for $135,000.00. The franchisor had represented that it had conducted a “feasibility study” which it said was “so good” that “he could put three vans into the territory”. The franchisor guaranteed that if the prospective franchisees left their jobs (which were paying around $100,000.00 per annum in Canberra), they would sell at least 100 cups of coffee per day.

As it turned out, after the franchisees parted with $135,000.00 to buy the franchised coffee van “Espresso To Go Mobile Café”, they soon found that the business simply was not viable and closed it down and elected to pursue damages from the franchisor.

In awarding damages, District Court Judge McGill found that the so called “feasibility study” was simply “manifestly fatuously superficial”, and found that it was misleading and deceptive as it had no factual foundation for the assumptions.

The decision was perhaps unsurprising in the circumstances but goes to show how important it is for franchisors to ensure that any representations they make about the success or likely success of their businesses have a solid foundation in fact or they could find themselves on the receiving end of an unwanted Court Order to pay compensation.

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