WHY MAKING AN EARLY OFFER IN FAMILY LAW CAN SAVE YOU A LOT OF CASH
Most people don’t like the idea of going to Court. They have heard the stories from family and friends that their family law matter cost a fortune by going through the court system. In most cases those stories are probably accurate. But with a bit of planning and foresight, a party can take steps to protect themselves against the expensive exercise of Court, in the event that the former spouse takes an unreasonable position.
The Family Law Act gives discretion to a Judge to make an order against an unsuccessful party that they pay the other parties costs. Section 117 of the Act starts with the premise that each party in family law proceedings shall bear their own costs. But the section goes on to say that if the court is of the opinion that there are circumstances that justify it in doing so, the court may make such order as to costs as it considers just. The court is then directed to matters it should consider in exercising this discretion. Such factors include:
- The financial circumstances of the parties;
- The conduct of the parties to the proceedings;
- Whether any party has been wholly unsuccessful;
- Whether a party has made an offer in writing.
There are some occasions when it is not in the interests of one of the parties to settle their family law matter. They may be content to let the matter drag out for as long as possible. An example of this might be a party who is living in the former matrimonial home rent free. It can be very frustrating for the other party who is keen to sever the financial ties and move on. In times like this, there can be a real advantage to making an offer of settlement early on, before matters reach the court, so that at the end of the day, if you are forced to go to court and you are successful, you can ask the judge to take into account your early offer and seek an order that the other spouse pay your costs.
The key is that the offer to settle must be a reasonable offer and a recent decision in the Family Court provides an example.
The matter involved a property pool of $2.39 million. The wife, who was 18 years older than the husband had brought into the marriage the substantial bulk of the asset pool. They were married for five years and had purchased property together and intermingled their finances. Both parties had obtained taxation advantages by arranging to distribute investments between them. After a hotly contested trial and then an appeal to the Full Court, the husband was awarded 25% of the asset pool. The court made an order that the wife pay the husbands costs. In doing so the court noted “from a very early stage in the proceedings, the husband was willing, if not anxious, to compromise at very modest levels in comparison to what has been determined by the Court”.
In this case, it is likely that the amount he received as a judgment would have been severely depleted by legal costs after a trial and then an appeal. However, his approach in making an early offer meant that most of his costs were covered and he was able to walk away with a fair and reasonable outcome.