Sometimes separted couples decide to reconcile after property settlement.
If two parties decide to reconcile after entering into a legally binding property settlement agreement, the issue arises as to what will happen with respect to that prior property settlement agreement, if they separate on a later date.
If you have previously formalised a property settlement with your former partner, reconciled, and then separated again, you should seek legal advice about your rights and entitlements.
You might be in one of the following situations:
- You are concerned that your former partner wants to enter into a new property settlement when you don’t wish to do so;
- You might be in a situation where you would like to enter into a new agreement about property settlement matters with your former partner.
In the latter situation, controversy is much more likely to arise if you are wanting to negotiate a property settlement taking into account the whole relationship (i.e. a re-run) as opposed to if you are wanting to negotiate a property settlement, having regard to the contributions made by each of you to the assets in your second relationship.
In either situation, it is important you obtain legal advice.
Can a court set aside a property order?
Section 81 of the Family Law Act, states that “the court shall as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.”
However, section 79A of the Family Law Act 1975 provides provisions which allow parties to set aside a property settlement order in certain circumstances. These circumstances are limited. For more information on the primary circumstances when a court may vary/set aside a property settlement order, click the link to our article: Varying Property Orders.
In light of section 81 and the Court’s desire to finally determine the parties financial relationship through orders, the Court will not lightly entertain an application to set aside a property order.
What if we reconcile after property settlement? Is my property settlement still valid?
If the Court made property settlement orders to divide your assets with your former partner, whether by consent or otherwise, the purpose of those orders is to sever the financial relationship between you and your former partner.
In a situation where the parties rekindle their relationship after the Court has made orders finalising their financial relationship, the Family Law Act 1975 does not provide specifically for what happens in these circumstances.
There are options available, albeit this area of law is quite complex.
In circumstances where parties reconcile after property settlement orders are made, a party will often attempt to rely upon section 79A(1A) of the Family Law Act 1975 which states that a Court may upon application by a person affected by an order made under section 79 in property settlement proceedings, and with consent of all the parties to the proceeddings, vary or set aside hte order if it considers appropriate and make another order.
The party wanting a ‘redo’ effectively argues that the previous orders should be set aside/varied on the basis that when the parties reconciled, their behaviour amounted to implied consent not to be bound by the previous order.
The onus on the Applicant to make an application to set aside the orders and to persuade the Court at a Hearing of their argument.
The central question for the court in these cases is whether the post reconciliation circumstances over the time frame of the reconciliation establish an inference that the parties did not intend to bring an end to their financial relationship.
If the applicant is able to establish that there was implied consent not to be bound by the previous orders following the reconciliation, then the Court has discretion to vary/set aside the order.
Case Study: Waterman & Waterman
In Waterman & Waterman [2017] FamCAFC 23, the husband and wife commenced living together in 1983, married in 1991, and separated in 1998. There were two children of the relationship born in 1991 and 1994.
Their first relationship was for fifteen (15) years, and their children were aged 7 and 4 at the time of separation.
Three months after separation, the Husband and the Wife reached agreement in relation to the division of their assets and the care of their children and had property settlement orders made to legally formalise their agreement.
The Orders provided for sale of the matrimonial home, and the division of the proceeds. Each party was to keep their car, superannuation and other assets in their name.
The Orders were implemented but the Wife did not receive her entire entitlement.
The Wife was in receipt of centrelink benefits and the Husband paid her child support.
In 1999, a few months after the property orders were made, the Husband and the Wife reconciled and went on a family holiday together with their children. Shortly afterwards they recommenced living together again. The Husband bought a home for them to live in, but it was in his name only.
The parties maintained separate bank accounts, and the wife financially supported the children.
By 2011, the Wife was in debt and the Husband helped her file for bankruptcy. In or around this time, they separated once again, after a further twelve (12) years. Including both relationships, they were together for a total of twenty-seven (27) years.
The Husband refused to negotiate a property settlement with the Wife, on the basis that the previous property orders had finalised their financial relationship with one another.
The Wife applied to set aside the previous orders.
The question for the Court was whether the previous orders made in 1998 should have any bearing on the property issues the second time around.
The Trial Judge dismissed the Wife’s application under section 79A to vary or set aside the orders made on 11 December 1998.
The Wife appealed.
The Appeal Court found in favour of the Wife on two grounds:
- There was a miscarriage of justice through suppression of evidence (failure to disclose relevant information);
- There was implied consent not to be bound by the orders.
In relation to the first successful appeal ground, that there was a miscarriage of justice, the evidence was that the Wife had literacy difficulties, the wife had received no legal advice, no disclosure had been exchanged between the parties, the wife was brought to the Husband’s solicitor’s office and the solicitor read to her the orders before she signed them in front of a clerk at the local court.
To learn more about the circumstances in which a miscarriage of justice can occur, check out our article: Beware failure to disclose may derail your consent order.
In relation to the second appeal ground, the Appeal court held that it could be inferred the parties impliedly consented to the setting aside of the consent orders made in 1998.
In making this finding the Court closely scrutinised how the Husband and the Wife carried on their finances post the reconciliation.
The evidence was that during the second relationship:
- The parties kept their finances separate, they did not have joint bank accounts, they did not own joint assets and the Husband paid the mortgage, and outlays associated with his property;
- The Husband paid the Wife fortnightly payments;
- The Wife was the homemaker and the parent whilst working part time (as was the case in the first relationship);
- The Wife paid the household and children’s expenses;
- The parties contributed jointly to purchase repayments;
- The wife represented to Centrelink that she was single and kept her address at her brother’s address at the direction of the Husband so she could continue to receive centrelink benefits;
- The Husband t old the wife that she should not disclose that they were together because he would not be able to afford to give her any more money in addition to the child support payments he was making to her;
- The Wife received centrelink up until 2006. She said she believed she was entiteld to it because the husband was not paying her sufficient money to provide for the children;
- The wife took significant loans to pay expenses relating to the household and the children which she could not service;
- The Husband did not further support the wife, and he told her to go into bankruptcy, which she did;
- During the second period of cohabitation, it was common for the parties to holiday separately from each other and with the children;
- The parties did not pool their resources together for the benefit of the children;
- During the second relationship, the Wife’s evidence was that the relationship had deteriorated and she was depressed and anxious but went along with it for the children’s sake.
The Court said that property orders are designed to bring an end to the financial relationship between the parties.
The relevant question was therefore, after the first divorce, whether the post reconciliation circumstances over the time frame of the reconciliation establish an inference that Husband and the Wife intended that their financial relationship be brought to an end, or not.
At trial, the Husband’s counsel and the Trial Judge, in dismissing the Wife’s application, relied heavily on the separateness of their financial lives after the reconciliation, including the separate bank accounts, separate loans and separate assets. However, the Court made no mention of the fact that both parties had the primary duty to support the children and yet the Wife made all payments in relation to the care of the children from a fixed some given by the Husband, which did not increase in a period of ten years, and which on the Wife’s evidence, was insufficient.
The Court said that the evidence did not show that there was a separateness of their financial lives but simply a separateness in responsibility for meeting expenses from the joint resources of both parties. Even though the husband allowed the wife to take responsibility for paying the family’s day to day expenses, this did not mean that their finances were separate.
The Appeal Court also questioned the relevance of the findings about the Wife’s representations to centrelink, which were made at the direction of the Husband because of his assertion that he could not pay her any more money in addition to the child support he was already paying her.
The Appeal court also said that the Trial Judge failed to consider the nature, type and extent of the contributions of both parties both before and after separation and in the second relationship. There was reference that after the reconciliation the Husband worked long hours but no reference to the Wife’s ongoing role as primary homemaker and parent, a role which she resumed post the reconciliation, whilst working part time, for approximately 12 years.
Finally, it was noted by the Appeal Court, although not an appeal ground by the Wife, that the Wife had never received the entirety of her entitlements and this was another ground, under section 79A(1)(c), which could have supported the variation/setting aside of the 1998 order.
The Court ultimately found that the orders that were made after the end of the first relationship did not bring an end to their financial relationship and the Trial Judge erred in not finding that the parties had not impliedly consented to the earlier orders being set aside.
The orders made on 11 December 2011 were set aside by the Court and the Wife’s application for property settlement continued through the court.
Learnings: what if we reconcile after property settlement?
Important learnings from the Waterman case, about your ability to set aside/vary a property order after reconciliation, are:
- The Applicant has the onus of proving that implied consent was given not to be bound by the orders, in order to have them set aside/varied;
- If the orders were not implemented in entirety this may support a finding that the parties did not intend to bring an end to their financial relationship;
- Not having legal advice is not a reason to have the orders set aside under section 79A(1A), albeit the context surrounding that may amount to a miscarriage of justice, which is another ground upon which property orders can be varied/set aside;
- Reconciliation is not on its own sufficient to show the parties impliedly consented to setting aside the orders. Any finding of this nature must be made considering all relevant facts pertaining to the party’s relationship by which the relevant intention is to be inferred.
- If parties reconcile after formalising a property settlement, the parties actions post the reconciliation are relevant in determining whether the parties have impliedly consented to set aside the orders, opening the door to a fresh application for property settlement in the event of a further separation.
- Separation of assets and finances is relevant but not determinative to the question of whether the parties impliedly consented not to be bound by the orders;
- Financial contributions and non-financial contributions of significance during the new relationship may indicate a lack of separateness.
Contact Us – What if we reconcile after property settlement
If you have reconciled after property settlement, and thereafter separated, contact us to obtain legal advice from on of our experienced family lawyers about your individual circumstances. Depending on the circumstances that existed following the reconciliation, you may be entitled to apply for a property settlement taking into account the entire relationship, if your circumstances are such that it could reasonably be inferred that you and your former partner impliedly consetned to setting aside the orders.
