What is involved in a property mediation?

By Christopher Ragozzino, Senior Associate

Both the Central Practice Direction: Family Law Case Management and the Before you file- pre-action procedure for financial cases require that before a person commences proceedings in the Federal Circuit and Family Court of Australia, except in certain circumstances, such as urgency, they are to invite the other party or parties to participate in dispute resolution.  The other party or parties must then agree on appropriate dispute resolution and make a genuine effort to resolve the dispute.  Failure to comply with this, amongst the other pre-action requirements, can result in costs penalties.

The obligations imposed by the Court are clear, parties are required to participate in dispute resolution before commencing proceedings.  Even if dispute resolution at the initial stage does not settle a matter, when proceedings are commenced, it is common that the Judicial Registrar at the first return hearing will look at ways to get the parties to participate in dispute resolution again, perhaps after disclosure or valuation issues are taken care of but,

What is it?

Dispute resolution is a service that is designed to help resolve disputes at various stages without the need for a judicial decision.

In a property proceeding under the Family Law Act, dispute resolution commonly includes mediation or a conciliation conference.

1. A mediation is a private event that is chaired by a person, usually a barrister that practices exclusively in family law, to assist the parties in reaching an agreement. At a mediation, both parties are generally represented by their lawyers or a barrister;
2. A conciliation conference is run at the Court by a Judicial Registrar who, if an agreement is reached on the day, can make final property orders by the consent of the parties. Both parties are generally represented by their lawyers or a barrister.

Whilst the outcomes of private mediations are difficult to quantify, as some parties may resolve their matters by way of a private financial agreement or by filing an Application for Consent Orders with the Court after a successful mediation, the 2022/2023 annual report for the Court reveals that 57% of total dispute resolution conferences conducted resolved on a final basis.  We often find that mediations have a high success rate, meaning that the benefits, including having certainty of outcome, reducing legal costs and reducing the delay in having a property dispute finalised, to properly participating in a dispute resolution event can often outweigh the costs.

What is involved?

Prior to a dispute resolution event occurring, being either a mediation or a conciliation conference, the parties will need to exchange financial disclosure in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 and prepare an Outline of Case (Dispute Resolution) document.

If there are real properties or a party hold business interests, such as a company or a trust, these need to be valued before the dispute resolution event occurs.  It is also helpful to obtain advice from a broker or bank regarding borrowing capacity and accounting advice.  If either party is seeking a superannuation split, then the superannuation trustee should be put on notice in advance of the event.

Once disclosure has been exchanged, valuations undertaken and Outline’s exchanged both parties will have a clearer understanding of the other party’s position.

During the dispute resolution event, the following usually occurs:

1. The mediator meets with both parties and their lawyers to discuss the process;
2. Although not always occurring, and provided there are no safety concerns, if the mediator considers that it will assist the parties, a joint session with all parties, their lawyers and the mediator occurs so that the mediator can discuss the process with everyone present;
3. The parties will often break out into their own rooms (either physically or online) so that they can have confidential discussions with their lawyers to discuss what the mediator said, what the other’s party’s position is and options for settlement;
4. The lawyers will then meet with the mediator to discuss their respective client’s positions, generally looking at the Outline’s prepared and, firstly, discussing the asset pool, including confirming the values of various assets to be included or excluded from the pool. Once the asset pool is agreed, or at least compromised positions reached in relation to the asset pool, offers can be exchanged;
5. The lawyers will then relay the offers made by the other party to their respective client’s and the mediator will generally come back to each party’s break out room to discuss their options and give a view, or opinion, of how they might see the matter going. The mediator is bound, however, to maintain the confidence of the other party and can only tell a party what another party has said in their breakout room with their express consent;
6. The lawyers may have a few joint sessions with a mediator to discuss the issues in the case or exchange offers. Depending on the progress being made, however, the lawyers may remain in the breakout room with their client and the mediator will go between the different rooms.

Mediations can take a whole day, maybe more, or conclude much sooner.  Much will depend on the attitude of the parties and the issues in dispute.

If an agreement is reached, the agreement is usually recorded on a document called a Heads of Agreement.  This document sets out the in principle agreement and allows the lawyers to prepare the formal documentation, either an Application for Consent Orders or a financial agreement, to be reviewed and eventually signed by the parties.

It is possible, however, that agreement cannot be reached.  Should that occur, the parties are compelled to make a genuine offer to resolve matters between them within 28 days of the conciliation conference or mediation.  This can lead to resolution or, if not, the parties can elect to seek a judicial determination.

Conclusion

Anecdotally, most people prefer to resolve their property dispute at a conciliation conference or mediation as they are able to control the outcome and walk away with a certain level of financial certainty.  The difficulty in seeking a judicial determination is that it both takes time for a Judge to hear the evidence in the case, go away and write their decision, which means more costs, but it also takes the control of the outcome out of the hands of the parties.

Given the Court’s emphasis on dispute resolution, it is helpful to know the process that is involved and also the benefits that can be achieved from a well prepared conciliation conference or mediation.

Feel free to contact us on 9618 7300 to discuss in more detail.