Property & Financial Settlements in the aftermath of COVID-19
In addition to the personal and social impact of COVID-19, the subsequent shut down of many businesses and accompanying social distancing requirements, it has also had a profound effect on the global economy. As a result, there have been significant reductions in the value of many superannuation funds. This will impact post Covid-19 property settlements.
There have also been severe impacts on share portfolios, managed investment products and business values. COVID-19 is also likely to have an impact on other marital assets, including real estate.
If you have recently been negotiating a property settlement with your ex-partner, you may find that the impact of COVID-19 has changed the asset pool available for division.
In fact, the impact has been so significant that some valuations, even those prepared as recently as February 2020, may now be wholly inaccurate.
Superannuation
For many people, other than equity in the family home, superannuation is their most significant financial asset.
Whilst the value of all marital assets may need to be reconsidered, superannuation funds have seen significant losses due to the impact of COVID-19.
Dealing with superannuation splitting orders in property settlements can be a complex area at the best of times, and the financial impact of COVID-19 further complicates the issue.
Where property negotiations have proceeded based on (now) inaccurate valuations, and perhaps with a hearing or conference approaching, parties have the option to seek an adjournment to allow for updated valuations – and negotiations – to take place. The Courts are facilitating telephone and teleconference hearings in place of attended hearings in light of COVID-19, and are being extremely accommodating in all the circumstances.
Seeking an Adjournment
The Family Law Act gives the Court the discretion to adjourn property proceedings – even for significant periods – in certain limited circumstances. There is no automatic right to an adjournment.
The consent of both parties is not always necessary for an adjournment. This is important, because it is possible that only one party is adversely affected by recent events (especially with respect to superannuation arrangements), and therefore may be the only party seeking an adjournment.
In Grace v Grace,[1] the Full Court explained that the discretion to adjourn a property and financial settlement should only be exercised if all of the following conditions apply:
- There is likely to be a change in financial circumstances;
- The change must be significant;
- Having considered this likely and significant change, it is reasonable to adjourn the proceedings; and
- An order for an adjournment if that significant change occurs is more likely to do justice and equity between the parties than an immediate order would.
It is likely that the Courts will see an influx of matters seeking to rely on this discretion in the coming weeks and months.
Notably it is possible that an adjournment may cause hardship for one party in the short term, particularly if they were relying on an imminent settlement. Whilst this is a consideration that the Court will take into account when considering the adjournment, it may still make any interim orders it considers appropriate to address this issue if an adjournment is granted.
The bottom line is that an uncertain time for the economy is also an uncertain time for family law property and financial settlements.
If you have been affected by the financial impact of COVID-19 on your property pool, contact one of our friendly and knowledgeable family lawyers to discuss how we can help you on 08 8410 9294 or contact Stefania or Julia here – contact us.
[1] (1998) FLC 92-792.