Being impar­tial on par­tial prop­er­ty settlements

Com­menc­ing Fam­i­ly Court pro­ceed­ings can be daunt­ing – not only because it’s an emo­tion­al time in your life, but because of the high legal fees that can result from what can be a long and drawn out process.

You might won­der, how will I be able to pay for a car, or replace­ment fur­ni­ture? How will I pay my press­ing debts? Or my legal fees?

In some cir­cum­stances, the Court will per­mit you (and/​or your spouse) to receive advances of funds along the way. These advances are to pay for things which you might need in the short term or to pay a press­ing lia­bil­i­ty or for your legal fees. They come out of the mar­i­tal pool of assets, and are known as ​‘par­tial prop­er­ty settlements.’

The word ​‘par­tial’ refers to the fact that these advances are not full and final prop­er­ty set­tle­ments. That will come at the end of the fam­i­ly law process (either at a final hear­ing, or a final set­tle­ment agreed between you and your spouse). Rather, they are inter­im dis­tri­b­u­tions to fund your expens­es whilst you are wait­ing for your final prop­er­ty settlement.

Of course, par­tial prop­er­ty set­tle­ments are not nec­es­sar­i­ly free mon­ey. Any advances along the way may be deduct­ed from your enti­tle­ment at the end of the process.

A par­tial prop­er­ty set­tle­ment is not appro­pri­ate in all cir­cum­stances. The most impor­tant fac­tor is whether there will be enough prop­er­ty remain­ing after the inter­im dis­tri­b­u­tion to meet the enti­tle­ments and rea­son­able expec­ta­tions of both par­ties at the final hear­ing (or set­tle­ment). Essen­tial­ly, the court will only grant you a par­tial prop­er­ty set­tle­ment if you are like­ly to receive that amount or more at the end of the process. There­fore, there is no harm in bring­ing the pay­ment for­ward in time.

Some­times the Court will not be able to say with con­fi­dence whether there will be enough left in the pot at the end of the process. This may be the case if there is doubt about whether a par­ty will be enti­tled to any­thing at all, or where there is doubt about the true val­ue of the assets to be distributed.

In these sit­u­a­tions, it may still pos­si­ble for one par­ty to obtain an order which enables him/​her to con­tin­ue fund­ing the lit­i­ga­tion. There should be a lev­el play­ing field between two par­ties to the lit­i­ga­tion. If one par­ty can fund the lit­i­ga­tion but the oth­er can’t, the court may make a ​‘dol­lar for dol­lar’ order. That means that for every dol­lar the wealth­i­er par­ty spends on legal fees, he/​she must pay the oth­er par­ty an equiv­a­lent sum which is to be applied to their legal costs. This enables the lit­i­ga­tion to con­tin­ue on an equal footing.

Again, the less wealthy par­ty will not be receiv­ing free mon­ey. Rather, the court will like­ly defer the char­ac­ter­i­sa­tion of that mon­ey to the final hear­ing (or set­tle­ment). It may be char­ac­terised in any of the fol­low­ing ways:

• as a debt due from the less wealthy par­ty to the wealthy par­ty; or

• as part of the less wealthy par­ty’s enti­tle­ment in a prop­er­ty set­tle­ment; or

• as a main­te­nance pay­ment for the less wealthy par­ty; or

• as a fac­tor tak­en into account, but for which no adjust­ment is con­sid­ered necessary.

The fam­i­ly law sys­tem moves slow­ly. It can take up to 3 years for a case to wind itself through the Court to a final judg­ment. Many expen­sive hur­dles have to be man­aged along the way. A par­tial prop­er­ty set­tle­ment can pro­vide par­ties with prac­ti­cal solu­tions to cash short­ages. These solu­tions allow par­ties to access mon­ey now, but for those funds to be account­ed for or char­ac­terised by the Judge at a lat­er date.