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Separation Legal Advice: Are So-Called “Separation Agreements” a Basis for Dismissing a Property Application?

Separation Legal Advice: Do Court’s Have a General Power to Dismiss Property Applications When the Parties Have Entered Into an Informal Agreement?

When it comes to family law disputes, attempting to achieve a negotiated settlement should always be the first port of call. If a settlement is reached, then the parties should turn their minds to formalizing the settlement. Regrettably, this is often achieved by means of an instrument that is unenforceable against either party. Realizing this fact often causes the party seeking to rely upon the agreement to persuade the court that the instrument ought to enliven the court’s discretion to dismiss the opposing party’s property or maintenance application. This argument is usually put to the court on the basis that the orders sought would not meet the “just and equitable” requirement in light of the instrument. Whether a s 86 agreement supports the finding that the orders sought should be dismissed for failing to meet the just and equitable requirement was considered by the Full Court in Neale & Neale (1991) 104 FLR 414.

In Neale, the wife appeal against an order from the Family court dismissing the wife’s application for property and maintenance orders. The parties were married in 1947 and separated in 1983. They executed a s 86 agreement in 1984. The agreement provided that the husband would transfer his interest in the former matrimonial home to the wife. Part of the husband’s case consisted in an allegation that, in exchange for entering into the agreement, the wife would refrain from applying for relief under the Family Law Act 1975 (Cth).

The wife applied for property orders in 1990. At that time, the husband and wife had approximately $300,000 and $85,000 in assets, respectively. The trial judge determined the wife’s application should be dismissed because it would not be just and equitable to make property orders in favour of the wife. The wife appealed the decision of the trial judge on two grounds:

  1. the trial judge failed to give adequate reasons in support of his determination; and
  2. the orders were so manifestly unjust that they fell outside the range of judicial discretion.

Separation Legal Advice: The Full Court’s Decision

The Full Court allowed the wife’s appeal on the basis that the trial judge failed to exercise his discretion under s 79 in accordance with property principles. There are two reasons in support of this determination.

First, The Full Court was unable to ascertain the reasons in support of the trial judge’s finding that it would not be just and equitable to make property orders in favour of the wife. In determining whether it is just and equitable to make orders, the court must consider:

  1. the factors set out in s 79(4); and
  2. the spousal maintenance considerations set out in s 75(2), so far as they are relevant.

There was nothing in the trial judge’s decision to indicate that these matters had been considered. The Full Court arrived at this conclusion on the basis that the trial judge erroneously assumed that there was a general discretion to refuse making the order without first considering the above-mentioned matters.

Second, the trial judge’s decision was plainly unjust. Had the trial judge considered the above-mentioned matters, the great disparity between the parties’ respective financial circumstances would have been readily apparent. And such a finding could not have resulted in dismissing the wife’s application.

Separation Legal Advice: Concluding Remarks

Neale clearly demonstrates that the court does not have a general discretion to dismiss an application for property orders. Even when the parties have entered into an informal arrangement concerning their financial affairs, the court must nonetheless consider s 79(4) and s 75(2), so far as it is relevant, in determining whether it would be just and equitable to make an order.