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  • Writer's pictureJarrod Carter

Pre-Action Procedures in Property Disputes

Pre-action procedures in family law property disputes are a crucial first step when a marriage or de facto relationship comes to an end and the involved parties need to divide their assets. This process is complicated because numerous details must be discussed and agreed. The Family Court mandates that parties attempt pre-action procedures before initiating court litigation. Pre-action procedures focus on addressing and resolving the minor disputes so that both parties have the ability to agree on the larger issues such as the overall percentage split.

One of the first tasks in this process is to reach a consensus on the content and value of the asset pool. This includes everything owned either individually or jointly by the parties. Assets can range from large items like superannuation interests, real estate, cars, caravans, boats, and trailers, to smaller items such as personal effects, refrigerators, clothes, and jewelry. The pool might also include more challenging-to-value items, such as unique collections or usual possessions.

Valuing the asset pool can be contentious. Parties often prefer that items they wish to retain be valued lower, while items the other party is likely to keep should be valued higher. This is because, when an agreement is reached on percentages, having items valued in this manner would lead to securing a higher-value share of the assets. The first step is to list all the items considered to be part of the asset pool and assign them a monetary value. This list should then be discussed with the other party to see if they agree with the identified assets and their respective values. While some assets, like bank account balances, superannuation, and mortgage debts, can be easily valued, others like houses and cars may require official valuations.

After establishing a comprehensive list of assets, liabilities, superannuation, and other financial resources, the next step in pre-action procedures is to agree on who is to retain each of these items. Often, this part can be straightforward, as people generally want to keep their personal property, like cars and personal items. However, complications can arise when both parties want to buy out the other's share in the family home, for instance. These are the kinds of sticking points that need thorough discussion and negotiation.

Alongside this, both parties should also discuss and ideally agree upon their respective contributions to the relationship. This encompasses what each party brought into the relationship financially, as well as what was earned during the relationship through employment or other means. It's also important to consider non-financial contributions like homemaking and childcare, which also have substantial value.

Looking forward, the parties must also assess future needs, which might include differences in earning capacities, ongoing responsibilities such as caring for children, and other factors like age and health that could impact future financial needs. While discussing these topics, it's essential to think about the types of documentation that need to be shared to substantiate claims or allay concerns. For example, if there's a suspicion that one party is hiding assets or making unwise financial decisions like gambling, reviewing each other's bank statements from previous years could be informative. Documentation could also include items like Notice of Assessments to verify income levels during the relationship.

The exchange of this type of information is not only a good practice for clarity but also legally mandated as part of pre-action procedures. Failure to engage in proper negotiation and disclosure could give the other party just cause to commence formal legal proceedings. Adhering to pre-action procedures is crucial because it encourages open communication about disputed matters, facilitating easier resolution or, if that's not possible, making the ensuing legal process more efficient.

Exchanging financial documentation is a must in pre-action procedures to properly establish the asset pool, understand each party's contributions—including negative contributions—and evaluate the future needs of both parties. This information should be discussed openly to pave the way for proposing potential settlements. Elements that should be addressed in a settlement proposal include a mutually agreed valuation of the asset pool, an outline of which items each party will retain, and a proposal regarding the overall percentage split of the total net assets. Additionally, it's essential to provide reasoning behind the suggested percentage split, justifying it as fair and equitable when considering both parties' contributions and future needs. This is what both parties should aim to accomplish before considering taking the matter to court.

So, when is it time to abandon pre-action procedures and proceed to Family Court? One clear indicator is if the other party refuses to participate in the process. For instance, you might send them written requests for disclosure or feedback on the asset pool's contents and values, only for them to not respond. Despite multiple attempts to engage them in discussion, they might continually avoid entering into these necessary conversations. There could be several reasons for this avoidance. One possibility is that they already control or own the assets they wish to keep and therefore have no incentive to negotiate. Another reason could be that they find the process intimidating and stressful, choosing instead to avoid dealing with the situation altogether.

Whatever the reason for non-participation may be, it's crucial for you to maintain polite and issue-focused communication. If the other party remains unresponsive or unwilling to engage, this inaction can be a valid cause to transition from pre-action procedures to formal legal proceedings in the Family Court. The primary goal is to resolve the matter amicably if possible, but sometimes court intervention becomes unavoidable to move the case forward.

Additionally, there may be circumstances under which you can bypass pre-action procedures and proceed directly to court. For instance, if there are urgent matters at hand—such as a suspicion that someone is transferring assets overseas or irresponsibly depleting a shared bank account—then those constitute immediate issues that the court should address. In such situations, seeking legal advice is crucial for determining the best course of action.

If the other party is unresponsive or uncooperative, involving a lawyer can also be beneficial. The formal correspondence from a legal professional may inspire the other party to participate more willingly in the process. Furthermore, consulting a lawyer can offer valuable insights into what a fair and equitable settlement might look like. It can help you identify potential pitfalls or issues that you hadn't considered. If you plan to represent yourself, at least one consultation with a lawyer is advisable to better understand the complexities of your situation.

When seeking legal advice, it's important to come prepared. You should already have a comprehensive understanding of the contents and value of the asset pool. You should also be familiar with each party's contributions to the relationship and have a clear view of what the future needs might be. Details like records of inheritance, financial windfalls, and employment history can all help to paint a clearer picture of the financial landscape. Having this information readily available will enable your lawyer to work more efficiently and help you keep legal fees at a minimum.

In essence, pre-action procedures are all about open and thorough communication aimed at resolving the smaller, albeit significant, issues that need to be sorted out before tackling the larger issue of settling the property dispute. It's a step-by-step process designed to encourage dialogue and agreement, making it easier for both parties to eventually come to a more significant resolution without the need for court intervention. But when communication breaks down or urgent issues arise, moving to formal legal proceedings may become the necessary path forward.

Thus, while pre-action procedures aim to facilitate out-of-court settlements through robust communication and disclosure, there are instances where taking the matter to court becomes unavoidable. It's a methodical system designed to resolve smaller issues, laying the groundwork for larger agreements. But like any system, it has its limitations, and understanding when to transition from negotiation to litigation is key to successfully navigating this challenging life event.

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