Final property orders and COVID-19

Practical considerations for persons with final property orders made prior to, or which otherwise did not contemplate, the impacts of COVID-19.

COVID-19 has significantly changed the way people live their lives, operate their businesses and interact with each other. Given that family law touches on all facets of life, it follows that its practice has also significantly changed as a result of the pandemic.

This article will focus on property settlements and the options that may be available to persons who have finalised their property matters by way of final orders, but who face difficulties implementing the terms of those orders due to COVID-19.

Background

Under the Family Law Act 1975 (the Act), separated couples may apply to the Family Court of Australia or the Federal Circuit Court of Australia (the Courts) for orders in relation to the division of assets.

Specifically, sections 79 and 90SM of the Act are the relevant provisions which empower the Courts to make orders for property settlements.

What happens though, if final property orders are made but for some reason, including circumstances arising from COVID-19, one party wants to argue that the orders need to be set aside?

There are generally two options available to parties in these circumstances:

1. Try to negotiate an alternative agreement with the other party; or
2. File an application with the Courts, seeking to vary or set aside the final property orders.

Varying or setting aside final property orders

Whilst it is always preferable to reach a negotiated agreement, it is sometimes not possible to do so.

An application to the Courts to vary or set aside final property orders will need to be made pursuant to Sections 79A or 90SN of the Act. Those sections are remedial in nature and are applied in response to specific difficulties.

There are five grounds under which a party can seek to vary or set aside final property orders, being:

• a miscarriage of justice by reason of fraud, duress, suppression of evidence, false evidence or any other circumstance;
• circumstances have arisen which make the final property orders impracticable to be carried out;
• a party has defaulted in carrying out an obligation imposed on them by the final property orders, and because of that default it is just and equitable to vary the final property orders or set them aside;
• exceptional circumstances have arisen relating to the care, welfare and development of a child or where the party caring for the child will suffer hardship if the Court does not vary or set aside the final property orders; and
• a proceeds of crime order has been made covering property of the parties, or a proceeds of crime order has been made against a party of the relationship.

The Courts do not consider applications to vary or set aside final property orders lightly.

While sections 79A and 90SN provide some recourse for parties to vary or set aside final property orders where they have been impacted by the COVID-19 pandemic, successfully setting aside a final property order is not easy to do.

Whilst the economic downturn of COVID-19 has clearly had significant consequences, that of itself is unlikely to be accepted as a basis to satisfy the requirements of those sections. Clients who may quite properly think that their circumstances are exceptional or give rise to impracticability problems may not satisfy the legal test applied by the Courts.

One must also consider the issue of public policy. If the Courts were to accept the COVID-19 pandemic was a sufficient basis to vary or set aside final property orders, the number of claims to the Courts could be substantial. Litigants who were simply unhappy with the outcome at first instance may seek to obtain a better outcome at a second hearing. That is not the intention of the legislation. It may also be an opportunity for one party to perpetrate family violence on the other by relitigating matters that have resolved. That is not something the Courts would want to see take place.

Varying or setting aside final property orders is a difficult and complex area of family law. Specialised expert advice should be sought if you, or someone you know, is faced with difficulties implementing final property orders either as a result of the COVID-19 pandemic, or some other factor that has arisen since the final orders were made.

Authors' note: This article is only intended to provide a summary of some of the relevant considerations and practical recourses available to persons who have had final orders in respect of property matters made prior to COVID-19, or which were made without contemplation of the impacts of COVID-19.