Defaulting on property orders can be disastrous

Case study: Blackwell & Scott [2017] FamCAFC 77 (28 April 2017)

Family Law orders frequently involve a cash payment from one party to the other when a jointly owned property is to be retained by one person as part of a property adjustment. However, if the property’s value increases after the orders are made, is there any grounds for an appeal or are you stuck with feeling ‘ripped off’?

In the case of Blackwell & Scott [2017] FamCAFC 77 (28 April 2017) the parties obtained consent orders for an equal division of their property between them. The orders required Mr Blackwell to make a payment to Ms Scott of $130,000 within 90 days and he was to retain the investment property. At the time the orders were made, the parties agreed that the payment represented an overall equal division of property between them.

Mr Blackwell delayed the payment for 13 months and in that time, the value of the investment property increased significantly, resulting in Ms Scott receiving much less than half of the value of the asset pool; and on that basis she commenced proceedings to set aside the original orders. Ms Scott’s application was successful before the trial judge and Mr Blackwell then appealed the decision to the Full Court of the Family Court.

Section 90SN of the Family Law Act 1975 allows a Court to vary or set aside property orders for various reasons, including if the circumstances of the default mean that the effect of the orders are no longer just and equitable. Judge Aldridge stated in the appeal:

Thus whilst it is entirely correct to say that the husband’s default did not cause house prices to rise, that is not the relevant enquiry. The relevant enquiry is whether circumstances have arisen as a result of the husband’s default that would make it just and equitable to reconsider the earlier orders. The circumstances that arose were that, as a common sense proposition, the wife received significantly less than an equal division of the property and the husband received considerably more. That difference resulted directly from the husband’s delay in complying with the orders. The primary judge was therefore entitled to find that the position of the wife had arisen as a result of the husband’s breach.

It is not the point that the wife got the bargain to which she agreed. The point is that by reason of the husband’s default, the agreed equal division of the parties’ property did not take place.

The Full Court in Blackwell & Scott accordingly dismissed Mr Blackwell’s appeal. This case shows how critical it is to comply with deadlines in Court orders. Had Mr Blackwell paid the monies as ordered within the 90-day period, he would have been entitled to retain any increase in value within those 90 days. Due to his default, he was required to pay Ms Scott half of the increase in property value, together with her legal costs of the appeal.

Streeterlaw’s Accredited Specialist in Family Law, Simone Green, urges anyone considering making property consent orders to obtain specialist Family Law advice.

“There are very real consequences for a breach of Court orders,” she said. “If you anticipate difficulties obtaining finance in order to meet payment obligations as part of a settlement, it is vital you request a longer time period or have a default order requiring the sale of the property if finance is not secured to avoid further litigation and expense.”

If you would like further help or advice about formalising a settlement with your former spouse, please contact the Family Law experts at Streeterlaw on 1300 293 593 or email advice@streeterlaw.com.au.