When a marriage or de facto relationship ends, two of the most important considerations are arranging suitable care for any children involved and ending the financial relationship between the parties. How this unfolds will look a little different for everyone. In this article, we’ll look at the functions, benefits and limitations of both Consent Orders and financial agreements.

Family Law Agreements: Binding Financial Agreement (BFA) vs Consent Orders

A Binding Financial Agreement (BFA) is a private contract between parties outlining financial arrangements post-separation. It does not require court approval but is enforceable under the Family Law Act. FAs can be an excellent option for legally informed parties who wish to keep their family law agreements private, but they can be harder to enforce legally and more costly to draft.

Consent Orders are court-approved agreements that are legally binding and enforceable. Unlike FAs, Consent Orders often contain property settlement and parenting arrangements and are required to adhere to judicial scrutiny for fairness and child welfare. Consent Orders can also cover agreements like spousal maintenance.

Consent Orders provide a clear framework for the division of assets and responsibilities, offering legal protection and enforceability of the agreed terms. They help prevent future disputes by clearly outlining each party’s obligations and rights, thereby providing certainty and stability in post-separation arrangements.

The court will review the Consent Orders to ensure they are fair and in the best interests of any children involved, and of both parties. Once approved, the Consent Orders have the same legal effect as a Court Order made after a contested hearing.

Consent Orders

Consent Orders are a type of agreement approved by the Federal Circuit and Family Court of Australia (FCFCOA) to settle child and property disputes. They can address things like property division, spousal maintenance, and parenting arrangements, and once approved by the court, they are legally binding.

They can cover:

Property division (who gets what), spousal maintenance, parenting agreements

They cannot cover:

Decisions that change over time without court approval, such as a parent relocating or a child moving in with one paren.

Benefits:

Affordable
Helps avoid court disputes and saves time
Gives both parties certainty about their rights and responsibilities
Easier to enforce

Considerations:

Both partners need to agree
Consent Orders need to be financially fair and in the best interest of any children involved
It’s wise for both parties to get legal advice, even though it’s not a legal requirement

Costs may include:

Legal or mediation fees to reach agreement or advice on existing arrangements
Legal fees for drafting and creating the Consent Orders
Court application, filing and processing fees
Possible court fees if modifications are needed later

Privacy Considerations:

After the judge signs and approves the Consent Orders, they become official orders filed with the court. Consent Orders are protected by the court’s prohibition on disclosing any information in a file.

Enforcing Consent Orders:

If a party fails to follow the Consent Orders, the other party can apply to the court to enforce them. Depending on the violation, the court can then take action, such as fines or even, in extreme cases, jail time.

How Can Consent Orders Be Changed?

Mutual Agreement: Both parties agree to changes and submit a new Consent Orders to the court.
Court Application: If there’s a significant change in the circumstances of a party or a child, one party can apply to the court to change the orders.
In the Best Interests of Children: Parenting orders can be modified if they no longer serve the children’s best interests.
Mistake or Misrepresentation: Errors in the Consent Orders or non-disclosure of material facts can lead to changes made by the court.
New Information or Evidence: New evidence can lead to a variation of the orders.
Mutual agreement: You and your former partner can change the operation of Consent Orders without having to go back to court – just make sure you do so in writing (or by email), so there is no misunderstanding about what you have agreed to change.

When Can Consent Orders Be Rejected, Changed Or Overturned?

Consent Orders are not often challenged as both parties agree upon the proposed orders. However, they may be rejected by the court if they are not in line with what a judge would order in a contested hearing. They are scrutinised by a Court Registrar, who has the power to reject them or propose changes.

Compliance: If one party doesn’t follow the orders without a good reason, the court may intervene.
Fraud or Dishonesty: Concealing information or misleading the court can result in the orders being set aside.
Duress or Coercion: If one party was pressured or coerced into agreeing, the orders can be overturned.
Failure to Meet Court Standards: If the orders are unfair or inequitable, the court may refuse to make them.
Change in Circumstances: Significant changes, like financial or health shifts, can lead to the orders being reviewed.
Not in the Best Interests of Children: Parenting orders can be overturned if they are no longer in the child’s best interests.

Financial Agreements

A Financial Agreement is a legal document that outlines how assets, debts and financial responsibilities will be divided between two people, either before, during, or after a relationship. They can cover property division and spousal maintenance.

Privacy Considerations:

FAs are confidential agreements. Both parties should ensure their financial details are disclosed accurately, as this is a legal requirement. Privacy laws protect the details of the agreement, but breach or non-disclosure can affect the agreement’s validity.

Enforcing FAs:

If either party doesn’t follow the agreement, it can be enforced by going to court. The court can impose legal consequences if the terms are not met.

How Can a Financial Agreement Be Changed?

Mutual Agreement: Both parties agree to change the terms, requiring new legal advice and a new agreement.
New FA: A new agreement can override the old one, with both parties seeking legal advice and agreeing to the new terms.
Court Order: A court may change a FA if there’s fraud, duress, or significant changes.
Significant Change in Circumstances: Changes like health or income can lead to a FA modification.
Mistake or Misunderstanding: If there’s a mistake, the agreement can be corrected.
Invalid Clauses: If terms are unlawful, a new FA will be required.
Mutual Agreement: The same applies as with mutually changing Consent Orders.

When Can a Financial Agreement Be Overturned?

Certain criteria must be met for a FA to be considered valid. If these conditions are not met, the FA may be overturned.

Lack of Independent Legal Advice: If one or both parties didn’t get independent legal advice before signing, the FA is invalid.
Fraud or Misrepresentation: If one party hides or misrepresents financial information, the agreement can be overturned.
Unconscionable Conduct: If one party was unfairly pressured or coerced into signing, the agreement can be set aside.
Change in Circumstances: A significant change in financial or health circumstances could make the agreement unreasonable, leading to it being reviewed or overturned.
Mistake or Error: If the agreement was based on a misunderstanding or factual mistake, it may be invalidated.

Financial Agreement Appeals

If either party feels that the FA or Consent Orders were made unfairly or without proper legal consideration, they may appeal the decision to a higher court. However, appealing family law decisions can be complex and costly, and the appeal must be based on legal grounds such as a procedural error, incorrect application of the law, or significant new evidence.

Family Court Discretion

Family courts have considerable discretion when deciding whether to set aside a FA or Consent Order. The court will consider whether there has been a substantial change in circumstances, whether the agreement was entered into voluntarily and fairly, and whether it serves the best interests of children.

Can Consent Orders and FAs Be Used Together?

In certain situations, you can use a combination of Financial Agreements and Consent Orders, but they serve different purposes.

Here’s how they can work together:

Before a relationship or during: You can use a FA to agree on how assets will be divided in the event of a breakup or separation. If you then decide to get married or go through a separation, you can use Consent Orders to formalise these agreements through the court.
After a separation: You may already have a FA in place to handle the financial settlement and decide to obtain Consent Orders to make arrangements for your children.

Important Considerations:

If you’ve already entered into a FA and want to make it enforceable by the court, you can convert parts of it into Consent Orders.
FAs offer more flexibility as they can be made without court involvement, but Consent Orders, which are court-approved, provide more certainty and enforceability.

Just make sure both agreements comply with the law to avoid complications later on. A legal professional can help you navigate both options and decide if using both makes sense for your circumstances.

The Importance of Independent Legal Advice

When entering into a Financial Agreement or Consent Orders, it’s crucial to seek independent legal advice. Both parties involved should obtain such advice to fully understand their rights and obligations. In the case of a FA, each party must receive independent legal advice to ensure the agreement is fair and legally enforceable. If both parties don’t do this, the FA is invalid.

Independent legal advice ensures that each party understands their financial resources, the implications of the agreement, and the financial circumstances surrounding the division of assets. This advice protects your rights and helps you make informed decisions.

Full and Frank Disclosure

It’s also important to note that full and frank disclosure of financial and property matters is required when entering into both FAs and Consent Orders. This means that both parties need to disclose all assets, liabilities, income, and financial commitments to ensure the agreement is fair and transparent. If one party fails to disclose critical financial information, it could impact the validity of the agreement.

Alternative to FAs and Consent Orders

You don’t have to use a Consent Order or FA to finalise your separation, but it’s important to understand the benefits and risks of proceeding in a way that is relevant to your personal situation.

Negotiation or Direct Discussions

Sometimes, a couple can negotiate directly with each other to resolve their parenting and financial issues. This can be more straightforward and less adversarial.
You may also choose to use lawyers for each side to help negotiate on your behalf, even without entering formal proceedings.

Consideration: This method can save time and costs, but it relies on good communication and cooperation from both parties. If one party doesn’t stick to the agreement, you may need to involve a third party (e.g., lawyers or courts).

Informal Agreements

Parenting arrangements: You and your ex-partner can reach a mutual understanding about parenting matters (such as care, visitation and other child-related decisions) without formalising it through legal processes. However, these agreements aren’t legally binding and can be difficult to enforce if disputes arise later.
Financial matters: Similarly, you could agree informally on how to divide financial matters, such as assets or debts. Again, informal agreements aren’t enforceable in the same way as FAs or Consent Orders.

Consideration: Informal agreements can be flexible, but they carry risks if the situation changes or if one party doesn’t comply. There’s no clear legal backup if the arrangement breaks down.

Mediation and Dispute Resolution

Mediation involves a neutral third party (a mediator) helping you and your ex-partner resolve disagreements regarding parenting and financial issues.
Mediation doesn’t involve a court, and it can be far more cost-effective and quicker than going through formal legal proceedings.
After mediation, if both parties are happy with the outcome, you may decide to formalise the agreement by making it legally binding through Consent Orders.

Consideration: While mediation is not legally binding, it can provide a clear structure and resolution that can later be turned into legally binding documents (if desired).

Parenting Plans

A parenting plan is a written agreement between parents that outlines how they will share responsibility for their children after separation.
These plans are typically flexible and can cover things like where the child will live, how time is spent with each parent, and decisions about their education, health, etc.
Unlike Consent Orders, parenting plans are not legally enforceable unless they are turned into Consent Orders.

Consideration: Parenting plans allow for ongoing flexibility but they lack the enforceability of a formal agreement. If disputes arise later, you can look at other options.

Collaborative Law

Collaborative law is a process in which both parties and their lawyers commit to resolving issues outside of court. It’s a structured, respectful process in which you work with your ex-partner to resolve issues in a mutually beneficial way.
This approach is used for both parenting and financial matters and aims to avoid litigation by using trained collaborative lawyers to facilitate the negotiation.

Consideration: Collaborative law can be a less stressful and more cooperative way to handle divorce or separation. However, if an agreement cannot be reached, you may have to go to court, and those lawyers cannot represent you.

Court Orders (Without Consent)

If you and your ex-partner cannot reach an agreement regarding parenting or financial matters, you can apply to the FCFCOA for a decision. This could lead to Parenting Orders or Property Orders that the court imposes on both parties.
Court Orders are legally binding and enforceable, but obtaining them in court is often a last resort due to the time, costs, and stress involved.

Consideration: Court proceedings can be lengthy and adversarial. It’s almost always more expensive than alternative dispute resolution methods, and the outcome may not be as agreeable as a negotiated solution.

Arbitration

Arbitration is a formal alternative dispute resolution method where an independent third party (the arbitrator) makes a binding decision after hearing from both sides.
Arbitration is more flexible and private than going to court but still results in an enforceable decision.

Consideration: Arbitration may be quicker than court, but the decision made by the arbitrator is final and binding, meaning both parties have to accept it. Arbitration has not proved popular in family law situations in Australia.

Conclusion

Whether you decide to use Financial Agreements, Consent Orders or one of the other options to resolve parenting and financial matters, it’s always worth speaking to a trusted family lawyer before signing anything.

The best option depends on the nature of your relationship with your ex-partner, the complexity of the issues involved, and how much flexibility you need in your agreements. It’s always a good idea to consult with a lawyer or mediator to ensure you’re choosing the best path for your situation. In cases where you want a formal, enforceable agreement, Consent Orders or FAs may still be necessary.

Binding Financial Agreement vs Consent Orders