“Hibernating” Family Law Property Settlement Proceedings during COVID-19

Article By: Enis Goktepe, Partner Cappello Rowe Lawyers Sydney

Governments and economies are currently struggling to get to grips in dealing with the COVID-19 pandemic, we have all seen varying commentary regarding the economic impacts of the pandemic, some say it is a recession, others say it is a great recession, while other say it is merely short term.

This is further muddled by the fast paced changes to the political landscape and in Australia we are now preparing for business “Hibernation”…..

Only one thing is clear, the future is uncertain.

People who are currently separating are generally already stressed and want to reach swift settlement. However, in some circumstances it may be in a party’s interest to hit pause and “hibernate” their property proceedings that are on foot.

Under the Family Law Act, specifically section 79(5) for married parties or section 90SM(5) for de-facto parties, the Court has the power to adjourn matters for a period of time at a parties request if it is of the opinion:

(a)   There is likely to be a significant change in the financial circumstances of the parties (or any of them), and that having regard to the time when the change is likely to take place, it is reasonable to adjourn the proceedings; and

(b)   That an order the Court may make in relation to the property of the parties to the relationship, if that significant change in financial circumstances (referred to above) occurs, is more likely to do justice than if the Court were to make an immediate order.

Originally the above amendments to the Family Law Act were introduced in 1983 to overcome issues relating to superannuation entitlements and family trusts and the court developed a practice of adjourning proceedings until all assets fell into the possession of the party in the near future. The applicability of the adjournment however, is broad reaching and has previously been applied to await outcomes of concurrent proceedings in other courts, or in relation to business valuations.

The case of In the Marriage of Grace (1997) 22 FamLR 442 explored the requirements to enliven the power of adjournment, the Court held in order to enliven adjournment the following is required:

(a)   A likely change in financial circumstances;

(b)   A change that is significant;

(c)    It is reasonable to adjourn the proceedings, in light of the change; and

(d)   An order made if that change occurs is more likely to do justice and equity between the parties than an immediate order.

Given the uncertainty of the economic outlook in the near future and the impact the fast-moving political landscape is having on day-to-day business operations, it may be in a party’s best interests to hit pause and hibernate.

If you would like to have a confidential discussion with our Family Law team, please feel free to contact us on (02) 8325 1520 or (02) 6962 3433.