Can I get out of my property settlement?

The current world circumstances are providing many unique circumstances. In the world of Family Law this may be leading some people to think can I change my property settlement because the world has changed.

The most important thing to keep in mind is that the Courts are very reluctant to set aside orders already made, as you can imagine the system would become completely ineffective if people were able to set aside orders already made just because they changed their mind.

However, there are limited circumstances where the Court would consider varying or even setting aside the orders made for a property settlement

Miscarriage of Justice

Firstly, orders for a property settlement can be set aside if the a “miscarriage of justice” relating to circumstances at the time the Orders by consent were made. The most common circumstance giving rise to this ground is where a party “failed to disclose relevant information”. It is necessary to established that this information if disclosed would have altered the merits of the settlement to an extent that it was no longer the settlement that the other party believed they were agreeing too.

Change in Value of Property

But what about if the value of items change, for example a drop in real estate values. A 2007 case of Barker & Barker FLA, concerned a Husband’s failure to disclose an offer to purchase real estate that was significantly higher than its assessed valued. The Full Court of the Family Court made a general comment that:

“..Unless there is some particular act which impugns the process by which the orders were obtained, the mere effluxion of time and the consequent changes in the market during that period, whether they be upward or downward, will not of themselves create an injustice, nor require either of the parties to make further investigations of value if they choose not to do so.”

So mere changes in value is not a sufficient ground to set aside the property orders.

Unfortunately for those whose share of property has dropped in value disproportionally to the other party’s property share, the miscarriage of justice must have some proportionate link to circumstances at the time the Orders were made and not to changes in values afterwards.

The Orders we agreed upon are now “impracticable”

If the Court is satisfied that circumstances have arisen since the Orders were made that make it “impracticable” for the Orders or part of the Orders to be carried out. Arguments about a change in financial circumstances pertaining to value or operation of business have not been successful because such matters have been held to be part of the ordinary “vicissitudes of life” or not something that could not be reasonably foreseen [see La Rocca and La Rocca (1991 FLC)] In a 1998 case Cawthorn v Cawthorn (1998) FLC ¶92-805 the Husband’s changed financial circumstances due a number of factors relating to a drop in property values and a business partner embezzling funds from his business was not sufficient to satisfy this ground.

But what if the reason for the “impracticability” of your compliance with the Order (which does not have to mean “impossibility”) is due to an unprecedented halt to economic activity due to government responses to a pandemic? Could this be “reasonably foreseen” or part of the usual ups and downs of life? This might be a question that entertains the Courts soon.

The other party does not comply with the Orders

In certain circumstances, where one party fails to comply with orders and circumstances change as a result the Court can set aside Orders and make new orders and thus new terms of settlement. In a 2017 case of Blackwell & Scott (2017) FLC a Husband’s failure to pay his wife a sum of money in the required time saw the property market rise during the period of the default. As such the Judge set aside the orders on the basis that the Husband’s default changed the merits of the settlement.

In reference to the current economic climate, it could be argued that a failure to transfer shares in the time required by the Orders resulting in a significant drop in share value is a basis to set aside Orders. Perhaps the same could be argued with respect to the transfer of property.

Exceptional change in circumstances relation to the care welfare and development of a child

The Family Law Act makes sets out a specific ground to set aside or vary Orders where financial hardship is caused to the welfare of a child or children which includes the primary care of that child or children. The financial hardship must be unforeseen and the circumstances considered “exceptional”. The court has a lot of discretion here but the facts of the successful cases in arguing this ground are peculiar. It remains unclear, perhaps doubtful as to whether an unexpected deterioration on the financial position of the primary carer of the children alone will be sufficient.

Possibly but in the context of the current economic downturn, given the welfare spending of the government in response to the deterioration in economic activity, this ground may be harder to argue notwithstanding the courts traditionally approach of disregarding government benefits in assessing financial need.

Parties can agree to set aside Orders

The Family Law Act makes it clear that parties can agree to vary the Orders and thus the terms of settlement by application to the Court. So, if both parties acknowledge that due to unforeseen events the settlement is now unfair to one party then they can apply to the Court to vary the Orders.

So what does this mean?

The conclusion from here really should be that the Courts are reluctant to change orders, that parties can agree to change orders if you are both willing and that any consideration of how you deal with orders if the value of assets have significantly changed should be urgently discussed with an experienced family lawyer.

Click here to book an online appointment with Accredited Family Law Specialist Sam McGee phone Sam on 0408 300 105.