Insights and Inspiration
Too Expensive to Litigate, Too Free to Agree?
21 November 2018
The Federal Government has asked the Australian Law Reform Commission (ALRC) to report on various aspects of family law with a view to changing the law yet again. The one constant in the life of any family lawyer for the past 40 years has been change of the law and, to the extent that the government pays any regard to the ALRC report, more change is likely.
The ALRC referred to "a significant anecdotal evidence" that Financial Agreements did not produce the degree of certainty that was intended by the government when they were introduced. The idea was that people should be free to enter into Pre-Nuptial or Post-Nuptial Agreements so that if their relationships broke down, the outcomes were pre-determined and would not need court intervention. No doubt this was designed in part to lessen the load, and the cost, of the Family Court but also gave parties the freedom to negotiate their own outcomes.
There is no doubt that after the introduction of Financial Agreements into the Family Law Act, there was considerable uncertainty about them. Part of this was due to the drafting of the provisions, part to do with the reluctance of the judges at first to uphold them, and part due to the lack of skill of the lawyers preparing them. In our view, the law has been evolving quite rapidly to clarify the position about these Financial Agreements, and anecdotal evidence would appear to us to be an insufficient basis on which to change the law.
The ALRC concluded that it was reasonably arguable that Pre-Nuptial Agreements should be removed from the Family Law Act altogether.
The ALRC then posed the following possible approaches:
- Amend the Act to make it clearer when Financial Agreements are binding (but not how);
- Amendments to make is easier to set aside an Agreement where it is unfair to enforce it (that would seem to be contrary to their own position);
- Replacing existing provisions about Financial Agreements with court approved Agreements (this was the position in the Family Law Act for the first 20 years of its existence); and
- Removing the right to make Pre-Nuptial Agreements altogether while preserving any existing Agreements.
It seems odd to us, at least, that the government would consider removing Financial Agreements from the law. Many people applauded their introduction as giving the community the ability to regulate the outcome of their separations. Second, it was thought that would reduce the cost of court cases, by keeping them out of court. Nobody has measured whether court applications about Financial Agreements occupy more court time than the disputes that would have occurred on relationship breakdown without them.
There is no doubt that Financial Agreements require a great deal of thought and skill to properly prepare. But, there are many countries in the world where they are routine, much simpler than our law, and much much harder to escape from. Why the ALRC thinks this is a bad idea is not entirely clear to us and we find it rewarding to work with people to achieve the outcomes they want from carefully drafted Financial Agreements.
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