Fixed Sum or a Percentage Division – How Should Property Orders be Drafted?

18 January, 2022
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Whether or not you reach agreement on property settlement orders by consent (i.e., filed under cover of a Form 11 Application for Consent Orders) or, whether you are considering your orders sought for a Family Court application, it is important to consider the practical outcome of the orders.

In accordance with the relevant legislation, when a property settlement order is considered by a judicial officer, it is necessary to consider and identify the overall percentage division of net assets between the parties.

In the final stage of the property settlement process, the Court must consider the practical outcome of the proposed division, including who shall retain each particular asset (and liability).

In our experience, the best outcomes are often those that require the least number of transactions or transfers to facilitate the final division.

Often, it is necessary property to be sold as part of a final order, including the repayment of encumbering mortgage.

Sometimes, depending on market conditions it is difficult to accurately identify the net proceeds that might result upon the sale of the property or, whether or not there will be a net shortfall.

This is also the case in circumstances where orders are made first, and then implemented a significant time later.

To avoid circumstances of an order being made that is impracticable (e.g., a division of net proceeds that does not eventuate, or possibly a resulting net shortfall), it is best practice to agree upon a percentage division of net assets, rather than reaching agreement on a fixed payment from one party to another.

There is significant case authority to support orders being drafted in percentage terms, rather than by way of a fixed sum payment.

In the recent case of Demeny & Ogden [2021] FedCFamC1A 21, the Full Court confirmed the comprehensive review of relevant authorities on this issue (as outlined in Sinclair and Sinclair [2000] FamCA 262) which outline the established principle that:

  • in the absence of a special consideration (such as one party wishing to retain property to the exclusion of the other party); and
  • where the value of the asset (or resulting net proceeds) is uncertain, or there is a significant delay between the date of an order and the implementation of the same; and
  • where the net value of the asset is to be divided between the parties,

the court should consider making orders for sale that includes a percentage apportionment of the net proceeds rather than payment of a fixed sum, unless there are good and sufficient reasons for doing otherwise.

Are you currently considering separation and how property settlement might look for you?

Getting advice in the early stages of separation can help you avoid costly and lengthy negotiations.

Call us now on 08 9443 1111 to get the advice you need.



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