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Legal updates from Clelands Lawyers
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Welcome to the June 2016 Legal update from the team at Clelands Lawyers. 
Is Finality Necessary in Matrimonial Property Settlement Proceedings?
In a recent Family Court decision handed down on 3 May 2016, the Court was asked to review a decision of a Registrar who refused to make Consent Orders between two parties to a marriage.  The orders that the parties sought had the effect of allowing the husband and wife to continue to conduct childcare businesses through two companies of which both the husband and the wife were directors and equal shareholders.
When assessing whether to make orders for property settlement, the Court should have regard to Section 81 of the Family Law Act which states as follows:
In proceedings under this Part, other than proceedings under Section 78 or proceedings with respect to maintenance payable during the subsistence of the marriage, 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.”
The Judge in this particular case referred to a 2014 case where the Full Court of the Family Court confirmed that Section 81 does not bind the Court but rather is an expression of desire or an “exhortation to the Court” and that whilst Section 81 is a provision that must be taken into account, it is not a provision that is a head of power to be applied in every case and there are exceptional cases where there is not a financial separation or division of the parties’ financial interests.
The Judge in this particular case in question applied this principle and noted that both parties had each had the benefit of independent legal advice and that the Application for Consent Orders including a signed statement by each of the lawyers that the parties had been provided with independent legal advice.
It was also conceded by both parties that in the event of any future breakdown in the relationship between the parties with respect to the operation of the businesses, the remedy to such dispute would lie in the Corporations Act 2001 (Cth) and the parties would need to look outside of the Family Court to resolve any dispute between them as to the operation of the business.
On that basis, the Judge presiding over this particular case made the Consent Order that both parties wanted.
Therefore, in limited circumstances, parties to a marriage that has broken down may seek orders by consent from the Family Court that will not finally determine their financial relationship and in some instances that may mean continuing in business together and remaining directors and shareholders of companies that operate one or more businesses.  Please note that this is the exception and not the rule and ultimately, Section 81 referred to above should be considered as an important principle when negotiating matrimonial property settlements.  Often leaving separated parties in business together leads to more trouble than it is worth.

 

South Australian Attorney-General tables a Bill to reduce the jurisdictional limit for Minor Civil Claims from $25,000 to $12,000

 

What is a minor civil claim?

A minor civil claim is a small claim that is commenced by a person or company in the Magistrates Court of South Australia involving a dispute worth $25,000 or less. These claims often involve debt recovery claims, and minor neighbourhood and fencing disputes.

Despite the fact that in most court proceedings a successful party would generally be entitled to recover a portion of their legal costs from the unsuccessful party, in this jurisdiction that right is significantly limited.

In short, the basic idea behind minor civil claims in the Magistrates Court of South Australia is that the parties to a dispute run their own case to minimise their legal cost expenditure, so as not to make the prosecution of those claims uncommercial.

What are the proposed changes?

On 13 April 2016, the South Australian Attorney-General tabled the Magistrates Court (Monetary Limits) Amendment Bill 2016 to amend the Magistrates Court Act 1991 (SA) to reduce the value of minor civil claims from $25,000 to $12,000.

Therefore, if the Bill comes into force and retains its current transitional provisions, all newly commenced claims worth $12,000 or less will fall within the jurisdictional limit for minor civil claims in the Magistrates Court of South Australia.

In the meantime, the $25,000 or less jurisdictional limit for minor civil claims in the Magistrates Court of South Australia remains in effect.

Why use a lawyer for minor civil claims?

Parties are often unfamiliar with the substantive law applicable to their claims, which is often more complex than the modest value of the claim sometimes suggests, and most people are unfamiliar with the procedural rules of the court system.

Therefore, in the absence of obtaining legal advice, parties may struggle to swiftly and economically have their cases dealt with within the South Australian Magistrates Court system.

 

Review your affairs

Don’t put off having your estate plan checked and reviewed regularly, particularly if there is a change in personal or financial circumstances.


Consider the case of Barry, aged 44.  The facts are:
  • Sole proprietor of a travel agency in a medium-sized South Australian country town.
  • Happily married to Sandra, who is a part time aged care worker.
  • Has three children aged 4, 7 and 12.
  • Was in good health.
  • Owned a home in a joint tenancy worth approximately $600,000.It was mortgaged to BankSA – balance of outstanding loan $350,000.
  • Barry did not have any superannuation.As a self-employed business proprietor supporting a wife and three children, he never quite had enough money to put any aside for superannuation.
  • Life insurance – too expensive.
  • Barry had household contents, a fishing boat and a small amount of savings.
 
A short time ago, his father died, leaving him an inheritance of $300,000, which was expected to be paid within the next few months. Barry was intending to organise a will, but never found the time to do so.
 
Barry:
  • was extremely hardworking / dedicated to his clients
  • coached his son’s football team
  • he was a member of the local service club
  • was devoted to his wife and three children
Barry tragically died in a car accident.  He died without a will – “intestate”.

Result:
  • Barry’s estate was distributed in accordance with the “Rules of Intestacy”.
  • The house was in a joint tenancy, therefore automatically vests with Sandra.
  • Barry’s estate is comprised of a boat and savings, worth about $50,000, and an inheritance from his father, worth about $300,000.
  • Gross value of estate assets: $350,000.
  • is responsible for servicing the mortgage.
  • Under Rules of Intestacy, Sandra gets first $100,000 plus one half of the balance, i.e. $100,000 plus one half x $250,000 = $225,000.
  • $125,000 is held by Public Trustee for the infant children until they attain the age of 18 years.
  • $125,000 paid to Public Trustee could otherwise have been used to completely pay off the mortgage (of $350,000) if Barry had left a simple will leaving everything to Sandra, with substitution for children
    in equal shares if Sandra died before him.
Copyright © 2016 Clelands Lawyers, All rights reserved.


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