Are you in a situation where final property orders have been made but you are having difficulty complying with the orders? Perhaps your financial circumstances have changed or personal circumstances have arisen resulting in a delay in you being able pay your ex partner out? No matter your situation, defaulting on property orders is dangerous.
If you are defaulting on property orders, you are at risk of an application by the other party to force your compliance with the court order or an application to set aside the orders and replace them with new orders more favourable to them, and you may be required to pay your ex’s legal costs of the application if you are found to have defaulted on the property orders without a good reason.
The case of Blackwell and Scott highlights the need to promptly comply with property orders and the dangerous consequences of failure to comply.
Case Study: Blackwell & Scott [2017] FamCAFC 77 (28 April 2017)
In the case of Blackwell & Scott, final orders were made by consent of both parties for an equal division of their property between them on 24 February 2014. The parties owned two properties. The orders provided for Mr Blackwell to make a payment to Ms Scott of $130,000 by 23 May 2014 in exchange for him retaining one of the properties to effect the equal division of property agreed. Mr Blackwell delayed payment to Ms Scott for 13 months resulting in Ms Scott commencing proceedings on 11 September 2014 seeking to have the consent orders set aside and new orders made due to his non-payment. Mr Blackwell paid Ms Scott $130,000 on 18 June 2015 and interest in November 2015. During the period of Mr Blackwell’s default in compliance with the orders, the value of the value of the investment property increased significantly and as a consequence Ms Scott received much less than half of the value of property pool.
The matter came before a Judge in the Federal Circuit Court for hearing on 29 February 2016.
Ms Scott relied on section 90SN of the Family Law Act which 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:
The evidence before the Trial Judge was that the relevant property was valued at:
Value of property at time of agreement on 24 February 2014 – $600,000 – $650,000
Value of property on 16 December 2014 – $860,000
Value of property on 26 October 2015 – $1, 000, 000
Ms Scott’s application was successful due to Mr Blackwell defaulting on property orders. The Judge set aside the orders made on 24 February 2014.
Mr Blackwell appealed to the full court of the Family court but was unsuccessful.
The Full court denied his appeal stating that as a direct result of Mr Blackwell’s default, Ms Scott did not get the deal she had negotiated, that is a property settlement order that provided for an equal division of the assets. The Full court decided that in the circumstances, it was just and equitable to set aside the orders and make new orders.
Mr Blackwell was required to pay Ms Scott’s legal costs of the a
ppeal.
Moral of the story – Defaulting on property orders is dangerous
Petrie Family Law expert Courtney Barton of Barton Family Lawyers says:
“If you foreshadow difficulties obtaining finance to make a payment in compliance with your property settlement orders, you should urgently obtain consent of the other party to an extension of the time frame to pay, to avoid further litigation and legal fees.
Otherwise, you may find yourself the respondent in an application for enforcement of, or setting aside of those orders. You may also be at risk of having to pay the legal costs of the other party’s application, particularly if you do not urgently remedy your default.”
If Mr Blackwell had complied with the orders and paid the money to Ms Scott within the requisite period, he would have been entitled to any increase in value in that period and thereafter. Due to Mr Blackwell’s failure to comply with the orders within the 90 day period, he was required to pay Ms Scott half of the increase in the value of the property, as well as her legal costs of the appeal.
If you are defaulting on property orders or are in need of advice to formalise your property settlement, please contact our family law expert Courtney Barton at Barton Family Lawyers, and take advantage of our first consultation at a reduced rate of $99.
