What are Consent Orders and why do I need them?
If you and your de facto partner or your spouse have separated (whether recently or some time ago), it is important to finalise your financial relationship. If you have reached an agreement between yourselves, your agreement can be documented either by way of Consent Orders filed in Court by agreement or through entering into a Binding Financial Agreement. This page outlines some frequently asked questions in relation to Consent Orders for property settlements.
What are the benefits of Consent Orders?
- The agreement becomes legally enforceable. This means in the future if things go pear-shaped, you will be able to rely on the Court Orders to make sure your former partner/spouse follows through on their end of the agreement. It also means that you avoid the risk of them coming back for more later down the track.
- You will avoid stamp duty. If you are transferring property (including real estate and cars) between spouses/partners, the transaction is stamp duty exempt. The stamp duty exemption is only effective if the transfer is pursuant to Court Orders (either by consent or otherwise) or a Binding Financial Agreement. In some States/Territories, if you are the party who is bought out of the property that was your former matrimonial home, then you may be exempt from stamp duty in relation to your next purchase.
- You will be protected in the future. This is important if for example one of you were to win the lottery or buy another property. If you have properly documented your financial agreement with Court Orders, you are not exposed to a potential further claim by that former partner.
What is an Application for Consent Orders?
In most cases when people reach an agreement about their property, we recommend that they formalise it by Consent Orders. This document sets out the specific Orders that you are seeking from the Court. There’s a form that goes alongside Consent Orders (called an ‘Application for Consent Orders’) that needs to be filled out completely for the Court to make the Orders.
Quite often people have agreed that their bank accounts or cars or superannuation will be kept out of their settlement. However, even in those circumstances, they are still required to complete the entirety of the Application for Consent Orders, which requires you to include all your property at the current value.
It extends to full disclosure about your income and expenses, assets, liabilities and superannuation, whether you’ve ‘included’ it in your deal or not.
The reason why this is important is so that neither party can later seek to set aside the Orders on the basis that they weren’t aware of the existence of certain assets. If those assets were clearly identified in the Application for Consent Orders, then the risk here is alleviated.
Why can’t we just reach our own agreement and sign our own document?
If you can reach your own agreement, fantastic!
Unfortunately, a handshake deal, emails confirming the agreement you’ve reached, or even a document signed by the two of you in relation to property settlement, is not legally binding. This means if one of you changed your mind in the future, you have no protection. Any agreement in relation to the division of property between spouses or de facto partners needs to be formally documented.
The Court also needs to be satisfied the deal is ‘just and equitable’, which it must be before it can make the Orders sought by parties (even if they are being made by agreement). For example, you and your spouse may decide to equally divide the equity in the former matrimonial home between yourselves, and to ‘keep superannuation out of it’. That could be fair, but it may not be if say one party has 10 times the amount of superannuation that the other party has. Depending on the size of the asset pool and a number of other factors, including the length of your relationship, the Court may not be inclined to make those Orders. The Court needs all that information to be satisfied that the overall deal is an appropriate one and that both of you are entering into it with full knowledge of all relevant facts.
When can we enter into a Consent Order?
If you and your former spouse have reached agreement in relation to the division of your property, you must file the Application for Consent Orders within one year of the date of your Divorce Order. If you are in a de facto relationship, you must apply to the Court within two years of the date your relationship comes to an end.
If you do not make your Application within those stipulated timeframes, you will need to seek leave from the Court (ask permission) before filing your Application. When doing so, you will need to explain to the court why there are special circumstances justifying an Application out of time. In most cases, leave is granted, but you may need to seek specific legal advice about this before filing your Application.
How long do Consent Orders take?
Once your Application for Consent Orders and Consent Orders are signed by both parties, you need to file them in the Family Court of Australia and pay the applicable filing fee. You can file your Application online, through the Commonwealth Court online portal.
Once you have filed your documents, your matter will be set down for a Consent Orders Hearing, which is usually between one and eight weeks in the future (depending on how busy the Court is and in which State/Territory you file the Application).
Attending Court for Consent Orders
Filing the Application for Consent Orders does not mean you have to go to Court or attend the Consent Orders Hearing. The Orders are reviewed and made by a Registrar in Chambers (in the absence of the parties). Those Orders have the same effect as Orders made by a Judge, so although the Court makes the Orders, neither of you is required to attend Court and the process is purely administrative.
If the Registrar declines to make the Orders, they will send a letter to the parties explaining the reasons why they have declined and require the parties to do certain things (which may include filing Affidavits or preparing a joint letter) to address her queries (referred to as “requisitions”).
How long do Consent Orders last?
Once made by the Court, the Consent Orders are considered to be “Final Orders”, meaning they will be in effect unless they are set aside or varied by the Court. Consent Orders can only be set aside or varied in very limited circumstances. Circumstances which may warrant the orders being set aside would include if there has been a miscarriage of justice (for example fraud), circumstances have arisen that make it impractical for them to be followed or there has been non-disclosure of a material fact.
What if Consent Orders are Breached?
Once the Consent Orders are made, both parties must comply with them within the timeframes set out in the Orders. Usually, Consent Orders pertaining to property are drafted in a way that includes ‘default provisions’. These default provisions would stipulate what is to occur if either party fails to comply with a certain Order. For example, if one party does not transfer sufficient funds to the other party in exchange for the transfer of the matrimonial home, an Order may be included which provides for the property to be sold in the event of non-compliance, and for the net sale proceeds to be used to fund the payment due to a certain party.
If your former spouse has failed to comply with the Orders, and there is no suitable default provision, you should first try to reach an agreement with your former spouse about how the breach can be remedied. If you are unable to reach an agreement, it is usually appropriate to make an Application to the Court for enforcement of the Orders. If your former spouse has breached your property Consent Orders, you should seek legal advice as soon as possible.
Each matter is different and requires careful drafting of the Consent orders to ensure they can be enforceable and to ensure they do not create issues in the future. Our team of family lawyers can assist you through the process of Consent Orders, whether you are on your way to negotiating an agreement with your former spouse and require assistance, or if you have already reached agreement and want a quick resolution to your matter.
Where is FGD located?
Although our physical office locations are in Sydney, Melbourne and Canberra we can service any client Australia-wide. FGD elects to practice only in areas in which we specialise and not as general legal practitioners.
We remember that our clients are people and we are in the privileged position of helping our clients, some of whom are at a point in their lives which is one of the most difficult they will encounter and are therefore vulnerable. We know that what we do matters and will impact on people’s lives – our clients, their children, their families and friends, their work, and their community.