Part 2
The family law system strongly encourages parties to settle their dispute out of court. In fact, the vast majority of family law matters settle without the need for a judge to make a decision. We covered these matters in the related article (Part 1).
In Part 1, we also referred to the fact that there is a whole industry of mediators/counsellors out there to assist people to negotiate and resolve children and property matters between them. The field is known as “alternative dispute resolution” or “ADR”.[1] Generally, ADR is an ideal vehicle to resolve a family law matter.
Optimal conditions to settle outside court
In order to have the optimum conditions for parties to negotiate a settlement between them, it would be necessary to have:
- Addressed any power imbalance between parties.
- Exchanged all relevant information between the parties.
- Both parties have received appropriate legal advice about the range of likely legal outcomes including costs involved.
- Both parties are properly prepared, including with appropriate strategic and tactical considerations, ideally with the assistance of an experienced legal adviser.
Provided that these conditions are present, and parties are prepared to negotiate in good faith, the range of outcomes that parties may achieve is limitless.
One is only limited by one’s own imagination
At Turini McKean Law we are passionate about ADR. We believe that it is more likely that parties in a family law matter may use the ADR process to reach a fair and reasonable agreement which they can live with, without being exposed to all the disadvantages of court proceedings.
ADR methods include:
- mediation
- Direct negotiations without a mediator involved
- Four-way meetings[2]
- Collaborative law[3]
- Assisting parties to resolve their dispute by themselves, i.e. around the kitchen table.
A court hearing a family law matter has more limited powers than parties have themselves to resolve their matter. Parties are only limited by their own imagination regarding the outcomes they can achieve via ADR.
Many lawyers also fail to think outside the “legal” box when negotiating a settlement for their client.
Possible scenarios outside the (legal) box.
Parenting Plans
An example is Parenting Plans (recognised by the FLA) whereby parents may negotiate between them how they will raise their children together. Parenting Plans are very popular among parents. Sometimes, parents come up with arrangements which lawyers and judges would not. Examples of what may be covered include:
- To take turns to care for the children maybe:
- on a week about basis; or
- a fortnightly basis; or
- a monthly basis; or
- on a school term each basis.
- Agreed routines regarding the child’s day.
- Agreed screen time limits.
Child Support Agreements
Parties may agree between them to “contract out” of government administered child support by entering into a Binding Child Support Agreement under the Child Support (Assessment) Act 1989 (“the Child Support Act”) whereby:
- The payer will pay a lesser periodic sum than assessed under the Child Support Act
- But will contribute equally to
- childcare expenses
- school fees
- orthodontic expenses for the children if and when required.
- other agreed expenses
Other Scenarios
A couple of assumed scenarios demonstrate how it is possible to settle a family law matter well when parties are prepared to think outside the “legal” box.
SCENARIO 1- entering into final consent orders now but delaying settlement for some years
The facts
In this scenario, a mother and father are negotiating a family law settlement. They have had a long marriage with 3 children and each has made roughly equal financial and non-financial contributions.
The 3 children live primarily with their mother in the former matrimonial home. The mother has recently returned to full-time work and is able to meet the mortgage payments for the home, which she would like to keep.
However, it will be a few years before she is able to obtain finance to pay out the father for his portion of the equity of the home.
If a Court were to decide this case, the Court would likely give the mother an adjustment for “future needs” because she has primary care of the children and a lower income. For example, it might be determined that she take a 60% share of the asset portfolio. The Court would likely only give the mother a short period, e.g. 3 months, to refinance and buy the father out or the property must be sold.
Thinking outside the “legal” box, the parties could instead agree to an outcome such as:
- the mother have five years to buy the father’s entitlements to the house or sell the house.
- the settlement would be not on a sixty-forty per cent basis (60%-40%) but, say:
- on a fifty-five-forty-five percentage basis (55%-45%); or
- on a fifty-fifty basis (50%-50%).
Both parties are happy with the outcome and feel like they have received a better deal that suits their needs.
SCENARIO 2– “the super or the house?”
The facts
In this scenario the parties are negotiating a family law property settlement. Party A wishes to retain sole title to the former matrimonial home. Party B has substantially greater superannuation entitlements than Party B and wishes to retain their superannuation entitlements intact.
They had a long marriage; each is close to retirement and financial and non-financial contributions were roughly equal.
The parties accept between them that the value of Party B’s superannuation entitlements is roughly equal to:
- Party A’s superannuation entitlements; plus
- The net value of the former matrimonial home.
If a Judge had to decide the case, the outcome would likely be that:
- The superannuation entitlements would be equalised
- The non superannuation pool would also be adjusted so each receives a share of that pool.
However, the parties could agree to the following outcome if each obtained advice, considered all factors and ultimately considers it to be reasonable and each can live with that outcome:
- Party A retains sole title to the former matrimonial home and her superannuation entitlements.
- Part B retains his/her superannuation entitlements intact. [4]
These are just two scenarios that we have for our clients in the past.
If you would like advice about negotiating a family law settlement, please contact us:
Email: [email protected] or
Phone: +61 2 61983384
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[1] https://www.ag.gov.au/legal-system/alternative-dispute-resolution
[2] https://www.ag.gov.au/sites/default/files/2020-03/Collaborative%20Practice%20in%20Family%20Law.pdf n2.9
[3] Collaborative law – Is a dispute resolution process in which the clients and their lawyers enter into a contract (Participation Agreement) to constructively negotiate an outcome without resorting to litigation.
[4] In that scenario, Party A should tread cautiously and ensure he/she is aware of all the facts. For example, some superannuation entitlements such as defined benefits entitlements could represent an income stream to the beneficiary in the form of a substantial periodic pension for life, say, $75,000 per annum for 35 years = $2,625,000.
