As a family law practitioner, you can work in this area for eighteen plus years, attain Accreditation in the practice of family law, resolve hundreds of property settlement disputes, take quite a few to trial, and read most published decisions of the Appeal Court (okay, read some published decisions) yet still find yourself saying to a client – “I can’t give you a definitive answer as to your entitlement to property settlement“.
What generally ensues thereafter is a long-winded monologue about why that is, and why any practitioner that purports to guarantee an “outcome” reflects only their naivety in doing so.
As we approach the greatest global crisis in our generation’s lifetime with the COVID-19 pandemic, this uncertainty has never been more heightened. Hence, why the climate is so high for collaborative, focussed and less adversarial practice amongst our profession.
So why the ambiguity?
First and foremost, the Family Law Act prescribes a formula for determining entitlement that is highly discretionary, the considerations to be taken into account are wide-reaching and I would exhaust your patience to outline those considerations.
The law, and by implication the Judges exercising it and lawyers advising around it, then embark upon a process of weighing those considerations against each other. Personal value propositions must impact to some degree on that exercise, although the great majority strive for objectivity. Often a case will remain unresolved even thou there are not dramatic factual inconsistencies, rather parties simply differ as to how much they are respectively entitled to, based on the same factual scenario.
The discretionary considerations are then weighted relevant to the actual composition and value of the property pool. For example, if one party bought in $50,000 in cash to a relationship that commenced 5 years ago, what adjustment is that worth in a pool of $1 million dollars five years later?
There are tools employed to get to a point where the pool is readily identified and we agree on the value, but the relativity of that value is the problem and the fact that the world is not static. The significant drop in the market in the last month is a very clear indication of how much can change.
Taken with the prospect that a failure to resolve a dispute through negotiation or mediation today leaves only resort to a trial in 18 months to two years, values can change and so too can the pool. Examples? The one we are living: COVID-19, similarly natural disasters rob real property of significant value, the family business can slump and particularly if the owner-operator is distracted by relationship breakdown, jobs are suddenly lost with government intervention, people get sick, they stop work and they eat into savings. In short compass, things can change and 60% of today’s property pool, could ultimately be the same outcome as 80% of the property pool determined by a Court in 18 months’ time.
The delay could look greater than 18 months to 2 years when you consider that a Trial can proceed and then an over-worked and under-resourced Judge can reserve that decision, and then purely by virtue of the sheer magnitude of his or her workload not return to finalise that Judgment for a long period, in the worst of cases, another two years. Given the necessary Court slowdown in the context of the COVID-19 virus, the backlog and delays are likely to be longer than ever experienced as we move forward. Then when Judgment is delivered, if it requires the sale of property in order to pay out the interest of a spouse; that sale process can then take months thereafter to result in any actual payment to the recipient spouse. The potential delay is mind-boggling.
In addition to property values fluctuating, the very fabric of the case can change in the wait until Trial. Children grow up, they move residences as teenagers (and consequently financial obligations can shift from one household to the next). People re-train, they get better jobs. People get sick, they stop work. Remarrying can change the financial implications for the household. So much can change which will bear on the discretionary exercise outlined above.
All too often, the imposition of legal fees is also forgotten in the calculation. If you are going to spend another $50,000 on litigating for an outcome, you had better hope that you’ll be assured an outcome that gives you at least $50,000 more of the property pool in order to even break even. Not to mention the anxiety, stress, deterioration in health, and catastrophic impact on co-parenting communication that ensues with a court process. What if you put a dollar figure on that?
There is a significant prospect that three experienced family law Judges may each determine that a party has a different entitlement to property settlement. There is unlikely to be a significant divergence in those numbers, but a range is generally around 10%. Now if 10% is equivalent to $50,000 in your property pool, then there is a huge danger that when faced with an offer entitling you to 55%, you would ultimately need to achieve an outcome where a Court awards you 65% in order to justify the expenditure on legal fees for trial and the emotional cost.
Here is another complication. By resolving a dispute today, say on the basis that the pool of property is equally divided, taking a payment accordingly and then investing those monies wisely, you potentially stand to hold a sum which is equivalent to say a 60% entitlement to the property pool at the point when a Trial would otherwise have proceeded and Judgment rendered.
So, does all of this mean that stubbornness prevails?
In my experience, both parties will suffer as a result of one party’s stubbornness. Certainly adopting an entirely unrealistic position will result in a vulnerability to a cost order being made at the conclusion of a trial on the basis that the ‘stubborn’ party should properly have accepted an earlier offer of the other party, and ultimately they ended up worse off by rejecting that earlier offer.
In terms of avoiding a Trial and getting a matter resolved early, so much depends upon the manner in which a case is prepared. For example, clear articulation of those discretionary considerations, accumulating solid and reliable evidence to support any assertions made and ensuring that steps are taken to resolve the roadblocks to agreement before a mediation. The latter can include getting a joint valuation to resolve a difference in opinion around value, getting third party evidence around a factual dispute, and/or digging for those documents that will clarify the nature of contributions at the outset or during a relationship. The identity of your solicitor and the respect with which they are held by other lawyers and the Court will be an influential factor.
In my experience, even the most stubborn, positional and entrenched party will shift when faced with the glaring reality of the great unknown. Finding a Mediator who can effectively communicate the risk brought about by the considerations set out above is crucial and often breaks an impasse.
Without a doubt, the great unknown has the effect of rendering both parties to a dispute vulnerable to the risks of adopting an entrenched position in relation to these matters. The most effective family lawyers are ones that resist entrenchment and positional negotiation, and who can assist a client to negotiate these risks and reach the most pragmatic outcome given the risks at play.