Consent Orders or Binding Financial Agreement: Which is the best way to formalise my property settlement?

What's the difference?

Consent Orders

  • Consent Orders are made by the Court upon application by parties following a de facto relationship or marriage.

  • Before a Registrar of the Court seals Consent Orders, they must be satisfied that the outcome of the agreement is just and equitable.

  • Consent Orders can only be entered into following separation.

  • There is no requirement for the parties to Consent Orders to obtain independent legal advice. Although there are often benefits in meeting with a lawyer, as a lawyer will give advice about what is likely to be a just and equitable agreement and also what the Court is looking for in terms of the wording of the Orders.

  • Consent Orders do not prevent either party from applying to the Court to seek spousal maintenance. However, there are time limits for doing so.

  • Consent Orders can also be used to formalise an agreement in relation to parenting matters.

  • In the event a party to Consent Orders has not complied with the terms of the agreement, the other party can make an application to Court to enforce the agreement.

Binding Financial Agreement (BFA)

  • A BFA is entered into by parties and the BFA does not need to be approved by, or lodged with the Court.

  • There is no requirement for a BFA to be just and equitable. It is often the case that couples who enter into a BFA have reached an agreement which may be considered outside of their likely entitlements under the provisions of the Family Law Act 1975.

  • A BFA can be entered into before cohabitation or marriage, during cohabitation or marriage or after cohabitation or after divorce. Different provisions apply depending upon whether a couple is a de facto or married couple, but they all have generally the same effect.

  • There is a requirement that both parties entering into a BFA obtain independent legal advice before doing so.

  • Parties to a BFA can prevent the other from applying to the Court to seek spousal maintenance.

  • A BFA cannot formalise parenting matters. To formalise agreements in relation to payments regarding children, couples can enter into a child support agreement.

  • A BFA will continue to apply in the event of the death of either party, and any money to which that person was entitled will form part of their estate.

  • In the event a party to the BFA has not complied with the terms of the agreement, a BFA cannot be enforced without the Court, first, conducting a hearing as to whether the agreement is enforceable. If the agreement is held to be enforceable, the Court will then hear an application for enforcement of the agreement.

Can Consent Orders or a BFA be challenged or set aside?

Consent Orders or a BFA can be varied or set aside in the following circumstances:

  • By agreement;
  • Where there has been fraud, duress, or failure to provide full and frank financial disclosure;
  • Where it is impracticable for the Orders or agreement to be carried out; or
  • If there has been an exceptional change in circumstances relating to the care, welfare and development of a child of the relationship, and the carer of the child would suffer hardship as a result.

A BFA can also be set aside in the following circumstances:

  • If the agreement was entered into for the purpose of defrauding a creditor, or another person who may have a legal entitlement to the property of either party;
  • If the agreement is void, voidable or unenforceable pursuant to the principles of contract law; or
  • In entering the agreement, a party to the agreement engaged in unconscionable conduct.

As Consent Orders are prepared after separation, the parties have more control over the outcome of the agreement. Whereas, a BFA entered into during or prior to a relationship may attempt to predict arrangements that are 10, 20 or 30 years into the future. Naturally, it is more likely that a party to the agreement would try to have the BFA set aside due to a change in circumstances.

Due to the nature of a BFA, in particular a pre-relationship or pre-marital agreement, there is much that cannot be predicted by either party in the event of a separation. For example, a party may fall ill or may no longer have the same capacity to earn an income that they did at the time of entering into the agreement.

For the above reasons, there are a number of specialist family law firms throughout Australia who are no longer willing to prepare or advise clients in relation to BFAs.

So, which one is best for me?

Ultimately, it depends on your particular circumstances.  If you would like advice about how best to formalise your property settlement, or what options may be available to you in relation to a BFA, contact our office for an appointment on (02) 6225 7040 or email us at [email protected]