Property Settlement Mediation
Property Settlement Mediation provides an opportunity for separated spouses or de facto partners to negotiate their financial settlement with the assistance of an independent mediator. When used appropriately, Mediation can help parties narrow the issues in dispute, explore practical solutions and potentially avoid the cost, delay and uncertainty associated with contested Court proceedings.
Importantly, a mediator does not decide how property should be divided. The parties remain responsible for deciding whether to reach an agreement and, if so, on what terms.
What Is Property Settlement Mediation?
Property Settlement Mediation is a form of dispute resolution used to help separated couples negotiate financial issues arising from the breakdown of their relationship.
The issues discussed at Mediation will depend on the circumstances but may include:
- the family home and other real estate;
- bank accounts and savings;
- businesses and companies;
- trusts;
- shares and investments;
- vehicles and other personal property;
- superannuation;
- mortgages, loans and other liabilities; and
- other financial resources.
Mediation can also address practical questions that may otherwise prevent a settlement, such as whether the family home should be sold or retained, how a business interest will be dealt with, or how and when one party will refinance a mortgage.
How Does Mediation Work?
Before Mediation takes place, each party will usually need to identify their financial position and provide relevant financial disclosure.
The mediator then facilitates discussions between the parties with the aim of helping them identify areas of agreement and disagreement and consider possible settlement options.
Depending on the circumstances, Mediation may take place with everyone in the same room, by video conference, or by a process sometimes described as shuttle Mediation, where the parties remain separate and the mediator moves between them.
Parties may also have their family lawyers present. In property matters, having legal advice before and during Mediation can be particularly useful because a proposed settlement needs to be considered against the principles that would apply if the matter were determined by a Court.
Legal Considerations When Dividing Property After Separation
There is no automatic 50/50 rule for dividing property after the breakdown of a marriage or de facto relationship.
Property Settlements are governed principally by the Family Law Act 1975 (Cth) (‘the Act’). The legislation expressly sets out the framework the Court applies when determining Property Settlement matters.
Broadly, this involves identifying the parties’ existing legal and equitable rights and interests in property and liabilities, considering the contributions made by each party, and considering their current and future circumstances. The Court must ultimately be satisfied that making an order is just and equitable.
Contributions can include financial and non-financial contributions, as well as contributions to the welfare of the family, including as a homemaker or parent.
The legislation also expressly recognises the economic effect of family violence in the Property Settlement framework where relevant. This can include the effect family violence has had on a person’s ability to make contributions and its effect on their current and future circumstances.
Financial Disclosure Before Mediation
Parties have obligations to provide relevant information and documents concerning their financial circumstances. Depending on the matter, disclosure may include bank statements, taxation records, payslips, superannuation information, property documents, company and trust records and evidence relating to liabilities.
Meaningful negotiations can be difficult where the parties do not have a reasonably complete understanding of the asset and liability position.
If there are concerns that assets have not been disclosed, property has been transferred, or financial information is incomplete, those issues should usually be investigated before a final settlement is reached.
Benefits of Mediation
A successful Mediation can give separated couples considerably more control over the outcome than contested litigation.
Rather than having a judge determine the matter, the parties can agree arrangements that take account of their particular circumstances. This can be especially valuable where a settlement requires practical arrangements concerning the sale or transfer of property, refinancing, a business or the timing of payments.
Mediation can also be less expensive and faster than proceeding to a final hearing.
There is, however, no guarantee that Mediation will result in agreement. Its value is not necessarily lost if every issue is not resolved. A Mediation may narrow the matters in dispute or clarify the information required before further negotiations can occur.
Is Mediation Compulsory Before Going to Court?
In most family law property matters, parties are expected to make a genuine effort to resolve their dispute before commencing proceedings, subject to exceptions.
The pre-action procedures applicable to financial cases can require parties to exchange information and explore dispute resolution before filing an application.
There are circumstances in which pre-action requirements may not be appropriate, including some matters involving urgency, family violence, fraud or other particular considerations.
This should not be confused with the requirement for a section 60I certificate, which is associated with Family Dispute Resolution in parenting proceedings. A section 60I certificate is not a general prerequisite for commencing Property Settlement proceedings.
Is Mediation Appropriate Where There Has Been Family Violence?
Family violence does not automatically mean that Mediation cannot occur. However, careful consideration needs to be given to whether the process can be conducted safely and fairly.
Family violence may affect a person’s ability to negotiate freely, particularly where there has been coercive control, financial abuse, intimidation or a significant imbalance of power.
Appropriate arrangements might include conducting the Mediation remotely, keeping the parties in separate rooms, controlling how offers are communicated, allowing lawyers to conduct negotiations on behalf of their clients, or deciding that Mediation is not appropriate at that time.
Safety and the ability of each party to participate effectively should be considered before Mediation proceeds.
If an Agreement Is Reached
The agreement should be formally documented. Depending on the circumstances, a Property Settlement may be formalised through consent orders approved by the Federal Circuit and Family Court of Australia (‘FCFCOA’) or through a binding financial agreement that complies with the requirements of the Act.
An informal agreement, including an agreement recorded in emails or a document prepared at Mediation, should not simply be assumed to provide the same finality or enforceability as properly documented family law arrangements.
How the settlement is documented can also have consequences for matters such as property transfers, superannuation splitting and implementation of the agreed terms.
If Mediation Is Unsuccessful
If no agreement is reached, further negotiation may still be possible. Sometimes Mediation identifies a particular obstacle to settlement, such as a disagreement about the value of a property or business. Obtaining further disclosure, a valuation or expert advice may allow negotiations to resume.
Where an agreement cannot ultimately be reached, it may be necessary to commence or continue proceedings in the FCFCOA.
Even after proceedings have commenced, parties may have further opportunities to negotiate and participate in dispute resolution before a final hearing.
Time Limits for Property Settlements
For married couples, an application for Property Settlement will generally need to be commenced within 12 months after a divorce becomes final.
For de facto couples, the general time limit is two years after the breakdown of the de facto relationship.
An application outside these periods may require permission from the Court, and permission is not automatic. It is therefore important not to allow ongoing Mediation or informal negotiations to cause a relevant limitation period to be overlooked.
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Related Blog – Property Settlement Consent Orders After Separation
