Consent orders and binding financial agreements

Dividing your property after relationship breakdown

Following the breakdown of a relationship there are alternatives to contested litigation in the event the parties wish to settle disputes amicably. The most common of these are Binding Financial Agreements and Consent Orders. Sections 90B, 90C, 90D, 90UB, 90UC and 90UD of the Family Law Act allows for couples to enter into a Binding Financial Agreement (BFA) in order to resolve the division of their property without applying to the court. A Binding Financial Agreement can be entered into before marriage (or cohabitation in the case of a de facto relationship), during marriage/cohabitation or following divorce/separation. The agreement deals with the division of property and financial resources, spousal maintenance and other ancillary matters after separation. A Binding Financial Agreement is an entirely private contractual arrangement, allowing parties to determine what they consider to be an equitable division of their assets, with no consideration by the court as to whether the agreement is just and equitable. For an agreement to be enforceable each party is required to receive independent legal advice, and failure to do so renders the agreement void and unenforceable. Termination of a Binding Financial Agreement requires mutual consent of the parties, or the Binding Financial Agreement can be set aside by the court on establishment of one of the following circumstances set out by s90K of the Family Law Act 1975, though the list is not exhaustive:

  • Fraud (including failures of disclosure)
  • General laws grounds for refusing contract performance
  • Change in circumstances
  • Settlement of property disputes

    What is the difference between a Binding Financial Agreement and consent orders?

    Consent Orders are court enforced orders which can deal with property settlements as well as parenting matters, unlike Binding Financial Agreements which can only address property matters. Furthermore when considering issues relating to parenting, consent orders are, in practice, more enforceable than the alternative (and non binding) parenting plans. When consent orders regarding the care arrangements of a child are filed the court must be satisfied that the orders are in the child's best interests prior to granting the application.

    advantages of Consent Orders

    The primary advantage of Consent Orders is certainty with respect to enforceability. In addition consent orders are often more economical, when entered into early in the process (reduced legal and litigation fees). Though not strictly necessary, it is recommended that legal advice is sought before agreeing to consent orders (parties involved merely have to sign an affidavit stating that they are aware of their right to do so). It is strongly recommended that the party proposing the orders for consent should engage assistance with the drafting and this may place the other party at a disadvantage. Furthermore the financial disclosure required in the filing of consent orders is less invasive as those required by court proceedings. However, there remains a duty for disclosure between the parties (not to the courts) to be full and frank.

    Consent Orders are generally drafted on the basis of negotiations between the parties and their legal representatives. The court must still be satisfied that in the circumstances the orders are just and equitable as per s 79(2) of the Family Law Act.

    Though it depends on your individual circumstances, the enforceability, flexibility, utility, finality and all-encompassing nature of consent orders makes it the preferred option for addressing issues relating to settlement following relationship breakdowns.

    Family Court of Australia and the Federal Circuit Court

    Introduction to the courts

    Many litigants have difficulty differentiating the role of the Federal Circuit Court from that of the Family Court of Australia. In reality, and with a small number of exceptions, both courts are generally able to deal with the same subject matter.

    The Federal Magistrates Court of Australia was first established in 1999 to help relieve the excessive case load of the Family Court of Australia. The Federal Magistrates Court was renamed as the Federal Circuit Court in 2013 and provides a forum to hear less complex matters including all divorce applications. Where a complex matter is commenced in the Federal Circuit Court, the case will typically be transferred to the Family Court of Australia.

    Both Courts exercise jurisdiction under the Family Law Act 1975. Both Courts are able to hear both parenting and property disputes.

    The Family Court of Australia acts as a court of appeal with respect to decisions made by the Federal Circuit Court