Forte Family Lawyers
If 2019 was a year of review of the family law system, it seems that 2020 will be a year of change. The recent changes to the practice and procedures of the Family Law Courts which have already been implemented are explained in this article, but there are more changes to come. So far, the Family Law Courts have adopted Core Principles in case management and a small property pool case pathway has been introduced in the Federal Circuit Court.
The Federal Government is still seeking to merge the two family law courts. The Senate Legal and Constitutional Committee held an Inquiry into the proposed merger.
The Australian Law Reform Commission (ALRC) issued in its Final Report “Family Law for the Future – An Inquiry into the Family Law System” on 9 April 2019. The Federal Government has not responded to the recommendations but is conducting a further inquiry through the Joint Select Committee on Australia’s Family Law System which is due to report on 7 October 2020.
HARMONISATION OF THE RULES
Later this year a wholesale revision of the Family Law Rules 2004 (FLR) and the family law parts of the Federal Circuit Court Rules 2001 (FCCR) is expected. The harmonisation of the rules of the Family Law Courts was an ALRC recommendation. The ALRC stated (at [14.29]):
“Having two sets of rules for different courts exercising family law jurisdiction increases complexity, duplication, and confusion for professionals and parties”.
The ALRC’s recommendation 55 was that the Family Law Act 1975 (Cth) (FLA) and its subordinate legislation (including the courts’ rules) be comprehensively redrafted.
The Federal Circuit Court and Family Court of Australia Bill 2019 (FCFC Bill) proposed that the Chief Justice and Chief Judge of each division of the new merged court make the rules (s 76 and s 217) rather than the current process of consulting and obtaining agreement of a majority of the judges of the court (s 123 FLA and s 81 Federal Circuit Court Act 1999 (Cth)). Section 70 of the Bill requires that the Chief Justice and the Chief Judge “work cooperatively” together “with the aim of ensuring common approaches and case management”.
The Honourable Justice William Alstergren, who is both the Chief Justice of the Family Court of Australia and the Chief Judge of the Federal Circuit Court of Australia, announced a Joint Rules Harmonisation Working Group on 5 April 2019. This Group has yet to report publicly.
Joint Practice Direction 1 of 2020 – “Core Principles in the Case Management of Family Law Matters” which can be accessed here appears to be a precursor to the harmonisation of the rules of the two family law courts. The Practice Direction gives clear signals as to areas for change which are likely to be in the new rules. The Practice Direction came into effect on 28 January 2020 and applies to all family law applications whether filed before or after that date.
The Practice Direction implements recommendation 34 of the ALRC which was:
“The family courts should consider promulgating a joint Practice Note for Case Management which describes the courts’ approaches to the family law practice and procedure provisions”.
The 10 core principles are, in summary:
1. Prioritising safety of children, vulnerable parties and assessing risk.
2. The overarching purpose to be achieved is to ensure the just, safe, efficient and timely resolution of matters at a cost to the parties that is reasonable and proportionate in all the circumstances of the case, having regard to the significant impact of family law disputes on children and families.
The introduction of an overarching purpose is not controversial. Overarching purposes have been introduced for the Federal Court and State courts, so although some aspects of an overarching purpose are addressed in the FLR, the family law courts are behind in this regard. Section 67(1) FCFC Bill provides:
“The overarching purpose of the family law practice and procedure provisions is to facilitate the joint resolution of disputes –
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible”.
Parties are required to take account of the duty and act consistently with the overarching purpose (s 68(1) and s 191(2)) and legal practitioners must assist parties to comply with the duty (FCFC Bill, s 68(2) and s 191(2)).
Recommendation 30 of the ALRC’s Final Report was to introduce an overarching purpose. The recommendation proposed a slightly different overarching purpose than that in the Practice Direction but the difference when looking at the Core Principles as a whole is minor.
3. Allocation of court resources is to be done efficiently to achieve the overarching purpose.
4. Effective case management relies on:
a. A consistent approach to like cases;
b. Early triaging of matters to an appropriate case pathway;
c. Use of both internal and external alternative dispute resolution (ADR) in property disputes for as many appropriate cases as possible.
5. Parties are expected to make a genuine attempt to resolve their dispute, complying with the requirements and obligations of section 60I FLA, the pre-action procedures in Schedule 1 to the FLR and rule 1.03 of the FCCR as applicable. After commencing an action, parties are expected to:
a. “be proactive in identifying the appropriate time, and the appropriate way, in which they can participate in ADR, either by agreement or by court order; and
b. be prepared to consider reasonable offers of settlement at any stage of the proceedings. Failure to do so may have cost consequences.”
6. Non-compliance with court orders and the court rules may attract cost consequences including the possibility of costs being awarded personally against lawyers.
The FCFC Bill includes a provision that legal practitioners may be ordered to bear costs personally if they fail to comply with the duty to conduct the proceedings (including negotiations for settlement) in accordance with the overarching purpose (s 68(5) and s 191(5)).
7. “Parties and their lawyers are expected to take a sensible and pragmatic approach to litigation, and to incur costs only as are fair, reasonable and proportionate to the issues that are genuinely in dispute. Parties and their lawyers are expected to engage in cost budgeting, and regularly inform their clients and the court of the actual costs they have incurred and are likely to incur (see Part 19.2 of the Family Law Rules 2004).
The first part of this principle is consistent with the Legal Profession Uniform Law (Uniform Law) and r 1.08 FLR. It is unclear to what extent, if any, it is proposed that there be obligations on lawyers greater than those imposed by the Uniform Law or the legal profession rules of the States and Territories which have not adopted the Uniform Law, and by Part 19.2 of the FLR. Part 19.2 imposes obligations on legal practitioners in proceedings in the Family Court to:
- Advise a client of actual costs and estimated future costs if an offer to settle is made during a property case (r 19.03);
- Give written notice to their clients of actual costs and estimated future costs before certain court events and to give this information to each other party and to the court at the court event. In financial cases the notice to the other parties and to the court must disclose the source of the funds (r 19.04).
It is sensible that costs should be “fair, reasonable and proportionate” to the issues genuinely in dispute. The problem is how will the courts monitor this in cases such as parenting matters as they do not involve a monetary value. How does a lawyer or a client put a dollar value on whether a client spends three days per fortnight with a child? Or five days? Or seven days? How is a dollar value put on a parent’s concerns about risk to a child?
Other potential problems include:
- How does a lawyer deal with a client who wants and is prepared to pay for a high level of service but that level of service may be perceived as disproportionate?
- What about lawyers acting for clients where there is an intervention order and there are restrictions on how the parties can communicate?
- How will the court penalise lawyers who provide what the court perceives to be a disproportionate level of service?
- Are lawyers entitled to stop acting for clients who want or need an apparently disproportionate level of service for reasons such as mental health or family violence?
- If the courts are assessing that costs are fair, reasonable and proportionate, how can it do this without a client waiving privilege? What if the client refuses to waive privilege? Does the lawyer need to reveal the weaknesses in their client’s case and vulnerabilities of their client to the other party and the court in order to have a court assess the proportionality of the costs?
8. Issues in the case are to be narrowed to those issues genuinely in dispute. In particular:
a. All parties are required to make frank disclosure to assist the court in the determination of the dispute or the parties in the resolution of the dispute;
b. Applications should only be brought before the court if they are reasonably justified on the material available;
c. It is expected that parties will negotiate both prior to, and at court, in order to narrow the issues in dispute before having the matter heard;
d. When appropriate, a single expert or an assessor should be engaged to assist the parties and the court to resolve disputes; and
e. Costs consequences may flow if parties seek to reopen issues already resolved or unreasonably agitate issues.”
9. Parties and their lawyers are to be familiar with the specific issues in the case and prepared for court events and the final hearing in a timely manner.
10. Courts must act effectively and efficiently in achieving the prompt and fair disposition of pending matters. Judgments must be delivered as soon reasonably practicable and can be in short form reasons in appropriate cases.
CURRENT FAMILY LAW RULES
It is probably helpful to remind practitioners of the pre-action procedures in the FLR and the general requirements on practitioners and clients in the conduct of cases in the Family Court. These obligations are similar to those proposed by the new Practice Direction which applies to both the Family Court and the Federal Circuit Court.
Some of the relevant rules in the FLR are:
r 1.05 Pre-action procedure
(1) Before starting a case, each prospective party to the case must comply with the pre‑action procedures, the text of which is set out in Schedule 1.
(2) Compliance with subrule (1) is not necessary if:
(a) for a parenting case—the case involves allegations of child abuse or family violence, or the risk of child abuse or family violence;
(b) for a property case—the case involves allegations of family violence, or the risk of family violence, or fraud;
(c) the application is urgent;
(d) the applicant would be unduly prejudiced;
(e) there has been a previous application in the same cause of action in the 12 months immediately before the start of the case;
(f) the case is an application for divorce;
(g) the case is a child support application or appeal; or
(h) the case involves a court’s jurisdiction in bankruptcy under section 35 or 35B of the Bankruptcy Act…….
Note 2: The court may take into account a party’s failure to comply with a pre‑action procedure when considering whether to order costs (see paragraph 1.10(2)(d)).
r 1.06 Promoting the main purpose
The court must apply these Rules to promote the main purpose, and actively manage each case by:
(a) encouraging and helping parties to consider and use a dispute resolution method rather than having the case resolved by trial;
(b) having regard to unresolved risks or other concerns about the welfare of a child involved;
(c) identifying the issues in dispute early in the case and separating and disposing of any issues that do not need full investigation and trial;
(d) at an early stage, identifying and matching types of cases to the most appropriate case management procedure;
(e) setting realistic timetables, and monitoring and controlling the progress of each case;
(f) ensuring that parties and their lawyers comply with these Rules, any practice directions and procedural orders;
(g) considering whether the likely benefits of taking a step justify the cost of that step;
(h) dealing with as many aspects of the case as possible on the same occasion;
(i) minimising the need for parties and their lawyers to attend court by, if appropriate, relying on documents; and
(j) having regard to any barriers to a party’s understanding of anything relevant to the case.
r 1.07 Achieving the main purpose
To achieve the main purpose, the court applies these Rules in a way that:
(a) deals with each case fairly, justly and in a timely manner;
(b) encourages parties to negotiate a settlement, if appropriate;
(c) is proportionate to the issues in a case and their complexity, and the likely costs of the case;
(d) promotes the saving of costs;
(e) gives an appropriate share of the court’s resources to a case, taking into account the needs of other cases; and
(f) promotes family relationships after resolution of the dispute, where possible.
r 1.08 Responsibility of parties and lawyers in achieving the main purpose
(1) Each party has a responsibility to promote and achieve the main purpose, including:
(a) ensuring that any orders sought are reasonable in the circumstances of the case and that the court has the power to make those orders;
(b) complying with the duty of disclosure (see rule 13.01);
(c) ensuring readiness for court events;
(d) providing realistic estimates of the length of hearings or trials;
(e) complying with time limits;
(f) giving notice, as soon as practicable, of an intention to apply for an adjournment or cancellation of a court event;
(g) assisting the just, timely and cost‑effective disposal of cases;
(h) identifying the issues genuinely in dispute in a case;
(i) being satisfied that there is a reasonable basis for alleging, denying or not admitting a fact;
(j) limiting evidence, including cross‑examination, to that which is relevant and necessary;
(k) being aware of, and abiding by, the requirements of any practice direction or guideline published by the court; and
(l) complying with these Rules and any orders.
(2) A lawyer for a party has a responsibility to comply, as far as possible, with subrule (1).
(3) A lawyer attending a court event for a party must:
(a) be familiar with the case; and
(b) be authorised to deal with any issue likely to arise.
Note: The court may take into account a failure to comply with this rule when considering costs (see subrule 19.10(1) and subclause 6.10(1) of Schedule 6).
The Pre-Action Procedures provide in part:
1(1) Each prospective party to a case in the Family Court of Australia is required to make a genuine effort to resolve the dispute before starting a case by:
(a) participating in dispute resolution, such as negotiation, conciliation, arbitration and counselling;
(b) exchanging a notice of intention to claim and exploring options for settlement by correspondence; and
(c) complying, as far as practicable, with the duty of disclosure.
1(5) The objects of these pre-action procedures are:
(a) to encourage early and full disclosure in appropriate cases by the exchange of information and documents about the prospective case;
(b) to provide parties with a process to help them avoid legal action by reaching a settlement of the dispute before starting a case;
(c) to provide parties with a procedure to resolve the case quickly and limit costs;
(d) to help the efficient management of the case, if a case becomes necessary (that is, parties who have followed the pre-action procedure should be able to clearly identify the real issues which should help to reduce the duration and cost of the case); and
(e) to encourage parties, if a case becomes necessary, to seek only those orders that are reasonably achievable on the evidence.
1(6) At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to:
(a) the need to protect and safeguard the interests of any child;
(b) the continuing relationship between a parent and a child and the benefits that cooperation between parents brings a child (that is, helping to maintain as good a continuing relationship between the parties and the child as is possible in the circumstances);
(c) the potential damage to a child involved in a dispute between the parents, particularly if the child is encouraged to take sides or take part in the dispute;
(d) the best way of exploring options for settlement, identifying the issues as soon as possible, and seeking resolution of them;
(e) the need to avoid protracted, unnecessary, hostile and inflammatory exchanges;
(f) the impact of correspondence on the intended reader (in particular, on the parties);
(g) the need to seek only those orders that are reasonably achievable on the evidence and that are consistent with the current law;
(h) the principle of proportionality and the need to control costs because it is unacceptable for the costs of any case to be disproportionate to the financial value of the subject matter of the dispute; and
(i) the duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute.
Note: The duty of disclosure extends to the requirement to disclose any significant changes (see clause 4 of this Part).
6(1) Lawyers must, as early as practicable:
(a) advise clients of ways of resolving the dispute without starting legal action;
(b) advise clients of their duty to make full and frank disclosure, and of the possible consequences of breaching that duty;
(c) subject to it being in the best interests of the client and any child, endeavour to reach a solution by settlement rather than start or continue legal action;
(d) notify the client if, in the lawyer’s opinion, it is in the client’s best interests to accept a compromise or settlement if, in the lawyer’s opinion, the compromise or settlement is a reasonable one;
(e) in cases of unexpected delay, explain the delay and whether or not the client may assist to resolve the delay;
(f) advise clients of the estimated costs of legal action (see rule 19.03);
(g) advise clients about the factors that may affect the court in considering costs orders;
(h) give clients documents prepared by the court (if applicable) about:
(i) the legal aid services and dispute resolution services available to them; and
(ii) the legal and social effects and the possible consequences for children of proposed litigation; and
(i) actively discourage clients from making ambit claims or seeking orders that the evidence and established principle, including recent case law, indicates is not reasonably achievable.
SMALL PROPERTY POOLS
Practice Direction no. 2 of 2020 is “Case Management in Family Law (Priority Property Pools under $500,000) Financial Cases” and this Practice Direction adopts a recommendation made in the ALRC’s Discussion Paper “Family Court System”. The Practice Direction applies to certain cases filed on or after 1 March 2020 and is an expansion of a pilot program run at the Newcastle registry. The Practice Direction only applies at this stage to the Brisbane, Parramatta, Adelaide and Melbourne registries. The Practice Direction can be read here along with other important documents being a Guide for Practitioners and Parties in Family Law Priority Property Pools under $500,000 and the Financial Summary Form.
Why have a small property pools program?
The Federal Government announced the pilot as part of its Women’s Economic Security Package. Funding of $5.9m was provided for a two year trial of a simpler and faster process for dividing property between separated couples. In a media release issued in November 2018, the Attorney-General’s Department said:
- Property cases make up more than half of all new cases filed in the Family Court, and over a third of all new family law cases filed in the Federal Circuit Court, each year (Annual Report, 2016-17).
- A recent study conducted by the Australian Institute of Family Studies (AIFS) involving 10,000 separated parents, indicated that 57.5% of property matters have asset pools of less than $500,000. The AIFS study also showed the average time to finalise property arrangements is 15 months.
- Currently, the same process applies irrespective of the size of the asset pool (that is, regardless of whether the property is worth $10,000 or $10,000,000).
- This ‘one size fits all’ approach is seeing unnecessary complexity and procedural obligations being applied in straightforward cases, and is adding to the time, cost and stress of many separating couples. It is also placing a heavy burden on the courts.
- In some cases, the legal costs associated are outweighing the value of the property settlement. In a recent study, the Women’s Legal Service of Victoria found that the cost of legal fees can be between 50% and 126% of the value of the asset pool in small claims cases.
- The pilots respond directly to recommendations made by the House of Representatives’ Standing Committee on Social Policy and Legal Affairs; Women’s Legal Service of Victoria reports; and proposals put forward by the Australian Law Reform Commission (ALRC) in its Family Law Discussion Paper.
What is a small property pool case?
A Priority Property Pool under $500,000 case (PPP500) is defined as a case where:
- An Initiating Application (Family Law) is filed in the Brisbane, Parramatta, Adelaide or Melbourne registries after 1 March 2020; and
- The application invokes the jurisdiction of the Federal Circuit Court of Australia (may include a matter filed in the designated registries of the Family Court of Australia and subsequently transferred to the Federal Circuit Court of Australia); and
- The application arises out of a matrimonial cause or de facto financial cause under the FLA; and
- The value of the net property of the parties (including superannuation interests) is (or appears to be) under $500,000; and
- There are no entities (such as a family trust, company, or self-managed superannuation fund) owned or in the effective control of either party that might require valuation or expert investigations. (1.2.a.ii)
A PPP500 cannot be one of the following:
- cases where parenting orders are sought;
- cases where parenting and financial (property and/or spousal maintenance of other financial) orders are sought together;
- child support cases;
- child maintenance cases;
- contravention applications; and
- enforcement applications. (1.2.a.iii)
A case is not excluded from being a PPP500 case where:
- there are third parties;
- an item with property or liability is complex such as an interest in a defined benefit scheme;
- a party is bankrupt or potentially bankrupt;
- there is overseas property;
- an interim application is made at the start of the process or later;
- jurisdictional disputes arise, such as whether the thresholds for a de facto relationship are met;
- there are entities which arguably are not owned or in the effective control of either party: The Guide requires that “there are no entities (such as a family trust, company, or self-managed superannuation fund) owned or in the effective control of either party that might require valuation or expert investigation”.
A case may be designated as a PPP500 case by an applicant at the time of filing or the court may designate it at any time, before or after a response is filed.
Procedure for PPP500 cases
PPP500 cases commence with the filing of an Initiating Application (Family Law) and a PPP500 Financial Summary. The requirements under r 4.05 FCCR are waived until the court directs that a party file an affidavit or financial statement or ADR fails and directions for filing these are made in preparation for trial. (3.2)
The Registrar will assist the parties to resolve interim issues if possible. The application will be referred to a Judge if necessary. Whether the Judge will hear interim applications on the same day will depend on the Judge’s availability and the urgency of competing cases. (8.2)
The PPP500 case program has the following features:
(a) “Intensive monitoring of compliance with orders for production of documents and valuations.
(b) Reduced delays in getting financial cases through the alternative dispute resolution process.
(c) Expanded opportunities for parties to discuss and take ownership of their dispute resolution planning at any early stage.
(d) Opportunities for settlement at an early stage.
(e) Improved dispute resolution outcomes through close involvement in the preparation and case management of the case before ADR takes place.
(f) Where possible, unnecessary court appearances are eliminated and the number of court appearances reduced.
(g) Referral to appropriate services is made proactively.” (1.4)
There are 2 phases in a PPP500 case: Registrar-led resolution and then, if the matter has not resolved, Judge-led resolution. (1.3)
There are 6 steps in a PPP500 case:
- Step 1: Before the first Court date – preliminary orders will be made by the Registrar in chambers.
- Step 2: First Court date before a registrar – the balance sheet will be settled and the case will be referred to a conciliation conference, private mediation or Legal Aid conference.
- Step 3: Alternative Dispute Resolution (with a registrar, external mediator or Legal Aid conference).
- Step 4: Second Court date (if the case did not settle, the balance sheet will be checked and the case will be referred to the Judge).
Judge-led phase (only if the case has not already settled)
- Step 5: Procedural hearing (Judge).
- Step 6: Final hearing (Judge). (1.8)
Registrar-led case management processes are expected to last no more than 90 days. (4.2)
After an Initiating Application is filed, but before the First Court date, the Court or a Registrar may make certain orders in chambers without further notice to the parties as to:
a. “The filing and service of an PPP 500 Financial Summary (if not already filed).
b. The exchange of financial documents between parties and directions for each party to produce copies of these documents to the Court on the First Court date.
c. Directions to parties to liaise (if safe to do so) as to the ADR process.
d. Directing parties to liaise (where it is safe to do so) as to an expert witness to value property in dispute and jointly instruct an expert witness to conduct a valuation.
e. The filing of affidavits in respect of any interim applications”. (5.1)
As a result of this process, if a party does not comply with the orders made in chambers before the First Court date, by the time the parties reach the First Court date a party might be in breach of both the rules and a court order.
If the chambers order is not complied with in full, the case may be stood down so that the parties can:
a. “complete and file documents by leave (if necessary)
b. negotiate any urgent applications and formalise interim consent orders, and
c. agree on the value of certain items of property. If the value is agreed, a notation is made to the order containing the schedule. If the value is not agreed, parties can consent to a single expert (but not a panel of experts) or the court may nominate an expert”. (6.6)
Even if no order is made in chambers before the First Court date each party must, as far as practicable, exchange with each other party (where it is safe to do so) copies of the following documents prior to the first Court date:
a. the party’s three most recent taxation returns and assessments
b. documents about any superannuation interest of that party, including any document showing the value of that party’s superannuation interest for any fund of which that party is a member at that date, and
c. bank statements for any account held by that party for the 12 months preceding that date. (5.2)
This reflects the requirements of r 24.04FCCR where there are no businesses or entities, rather than the more extensive obligations (and costs) under the FLR.
Adjournments, including administrative adjournments will be discouraged and will rarely be granted. (6.4)
Parties will be encouraged to use single experts despite there being no provision for this in the FCCR. This suggests that the harmonised rules will include single expert rather than adversarial expert provisions. (6.6.c)
The requirement for procedural fairness to be given to trustees of superannuation funds by nominating a base amount (r 10.16(1) FLR) will be relaxed. When proposed orders are served on a superannuation trustee to give procedural fairness, the order can specify a high base amount or percentage for the proposed superannuation split. Provided the agreed base amount is less than that provided to the superannuation trustee, then the Court will make the orders without further procedural fairness being provided to the superannuation trustee (6.7).
By the time of the second Court date, it is expected that disclosure, valuations, ADR processes, an agreed balance sheet, and formal offers of settlement will be complete. The precise legal and factual issues that justify the matter being listed for judicial case management should have been identified (9.1). The Registrar will finalise the balance sheet if the matter has not resolved, and refer the case to the Judge for case management. The second Court event may be lengthy. A Registrar may discuss with the parties and their representatives the merits of their respective cases, reality-testing their positions and the available evidence (9.2 and 9.5). Where possible, the Registrar may make notations to the order, identifying the agreed facts and balance sheet (9.8).
Final consent orders made in chambers will not be made unless the Registrar is provided with:
a. one scanned copy of the minute of proposed final orders, signed and dated by both parties on each page
b. a clean, unprotected, Word version of the orders being sought, in exactly the same terms as the signed document
c. if a superannuation split is sought, a copy of evidence of value of the fund being split, and
d. a letter jointly signed by the legal representatives for the parties (or each party, if self-represented), containing sufficient information to ensure the Registrar is able to determine that the result is just and equitable (10.2).
In addition, the respondent must have filed a PPP500 Financial Summary or a Financial Statement for consent orders to be made. (10.4)
The PPP500 program is an exciting development. It offers clients, and their lawyers if they are represented, the opportunity of a simpler process which, combined with close management by a Registrar, should assist the early and cost-effective resolution of small property pool disputes.
The experience of legal practitioners in the Family Court is that involvement of Registrars at an early stage is beneficial. As we await the harmonised rules of the family law courts it seems clear from the PPP500 program and the new Core Principles, that aspects of the existing FLR are likely to form part of the harmonised rules.
14 February 2020
© Copyright – Jacqueline Campbell of Forte Family Lawyers. This paper uses some material written for publication in CCH Wolters-Kluwer Australian Family Law and Practice. The material is used with the kind permission of CCH Wolters-Kluwer.