Why it’s important to formalise family law property settlements

Apr 26, 2022

The 2022 decision of Radney & Radney [2022] FedCFamC2F 53, is a timely reminder about the importance of formalising family law property settlements, even where there is agreement and assets have already been divided – and the risk you run of future litigation if you do not.

The case

The matter concerned a couple who were separated in 1985 after a marriage of 21 years. They divorced in 2000, after which they had 12 months in which to make an application to the court for property settlement.

After separation, the wife continued living in the former matrimonial home. Neither party pursued a property settlement, however, in 2019, the husband severed the joint tenancy in the property, which resulted in each party retaining half of the property (to pass to their respective estates upon death), rather than it being held and wholly retained by the surviving party upon the death of the other.

In 2020, the wife made an application for a property settlement, some 19 years out of time, seeking a transfer of the property in her sole name, meaning she needed the leave of the court to proceed with the application. To be granted leave, the wife needed to establish she would suffer hardship if her application was not heard, and argued that given her sole contributions to the property over the years since separation, she would suffer hardship if the husband retained his half share in the property.

The matter was unexpectedly steered off course by the unexpected death of the husband. Due to a technicality about the court’s power to hear the application after the death of the husband (as leave had not yet been granted), the wife’s application was dismissed.

Had the husband survived, however, the court may well have allowed the wife’s property settlement to proceed, notwithstanding it was made 21 years out of time.

The take-away

Given the circumstances of this case, it appears likely that the motivation for the husband severing the joint tenancy and wife’s application for property settlement was driven by the parties’ adult children and the husband’s de facto partner.

Future circumstances after separation cannot be predicted, such as new partners or other children. These new relationships can often play a big role, as it clearly did in this case.

Parties often reach agreement between themselves and implement their agreement to avoid involving lawyers, thinking this is the most cost-effective option and that their relationship is amicable enough that there is little risk of any future claim.

However, as can be seen from this case, as just one of many examples, without properly formalising their agreement by way of consent orders or a financial agreement, parties leave themselves (and by extension, their future spouses and children) vulnerable to an application being made against them down the track.