Australia’s family law system encourages litigants, wherever possible, to reach an agreement between themselves rather than having the Family Court adjudicate every dispute.
Following separation, where parties have reached an “in principle” agreement between themselves about the post-separation division of their asset pool, there are two ways in which this may be formalised legally:
A post-separation “Binding Financial Agreement” (BFA) or
A Consent Judgement, also known as “Consent Orders”.
For non-lawyers, the difference can seem a little academic, but it can nevertheless help clients to be aware of the two types of documents, as either may be referenced by family law professionals throughout your negotiation.
1.Consent judgments
A Consent judgment occurs where parties to a dispute jointly apply to the Court for binding (sealed) orders that ratify the terms of an agreement made between themselves. Essentially, the parties ask for the Court’s (literal) ‘seal of approval’. The Court will review the agreement to satisfy itself that any Consent Orders made would be ‘just and equitable’. If so satisfied, the Court will apply its seal to the Consent orders, which then have the same force legally as any other judgment or orders made in a contested dispute.
2.Post-Separation BFA
A post separation BFA (sometimes termed a ‘post-nup’) is a private agreement signed by both parties, but not lodged with the Court. There are a number of formalities that must be adhered to, the most important of which is that each party must have had its own independent legal advice about the implications of its terms prior to entering into it. Section 90C of the Family Law Act 1975 governs these agreements.
A post separation BFA is not lodged with the Court, although each party’s solicitors will typically keep a copy in their safe custody indefinitely. Once a BFA is finalised, the Family Court will generally not have any further jurisdiction, although it does retain its power to set aside such an agreement, in limited circumstances.
But which option?
Choosing one document over another involves considerations of cost, flexibility, and client requirements. There is no “one-size-fits-all” answer, and careful legal advice should always be sought and tailored to a client’s particular circumstances.
There was for some time a school of thought that preferred Consent Orders in almost all separations, as they gave finality to proceedings, whereas a post-separation BFA was at risk of subsequently being set aside by a court. In recent years however, these concerns have abated somewhat, and such instances have become quite rare. Typically only fraud (such as non-disclosure of financial assets) or unconscionable conduct (taking advantage of the other party) will be sufficient for a Court to order an agreement be set aside.
Nevertheless, obtaining Consent Orders remains a viable option in most cases for couples separating amicably. Crucially, for example, a post-separation BFA cannot deal with parenting matters, so where these require a resolution, a Consent Judgement can be more appropriate (and more cost-effective).
A financial agreement is not explicitly required under the Family Law Act to be assessed by a third-party observer as fair, whereas the Act does require any Consent Judgment to be approved only if it is “just and equitable”. This may or may not be a desirable threshold; for example, where a separating couple wants to include a particularly unusual, unique or bespoke term in their agreement which may be queried or disallowed by a Court.
A post separation BFA can be useful where the separation involves separating ownership in family businesses, for example, or where complicated trust and asset structures are involved. In some instances, it may be argued that reaching a private agreement can be more cost-effective than putting the relevant evidence before a Court Registrar.
Robinson + McGuinness has extensive experience in resolving and finalising all types of family law matters and can assist you in finding the best path to a fair and efficient outcome.
Our specialist family lawyers here at Robinson + McGuinness can guide and support you through your Court proceedings, from start to finish. To arrange an appointment with one of our family lawyers, please complete the enquiry form below or call us on (02) 6225 7040 or email info@rmfamilylaw.com.au, or get started now online.