The cost of not having a contracting out agreement …

Following a messy break-up, Helen applied to the Family Court for an order dividing the relationship property of her and Jeremy.  Jeremy also applied to the Court, but for a declaration that he and Helen were not in a de facto relationship.

The consequence for Jeremy of the couple being in a de facto relationship was that Helen would be entitled to half the value of the house they lived in – even though he bought and owned it!

Unfortunately for Jeremy, the Court found that the couple had been, without question, in a de facto relationship.  Even worse … one of the reasons for the Court’s finding was the fact that Jeremy had previously tried to have Contracting Out Agreements (previously known as ‘pre-nups’) drawn up!

If Helen and Jeremy had properly entered a Contracting Out Agreement prior to their separation, questions to do with ownership of property and division of assets would not have arisen.  The cost for Jeremy of him and Helen failing to complete and sign the Contracting Out Agreement was at least half the value of the house!

Jeremy’s costs continued to mount however … the Court thought that the matter never should have ended up in Court and that Jeremy never had any evidence to support his arguments.  For these reasons Jeremy was ordered to pay costs and expenses of $17,424 – on top of his own legal fees!  Nevertheless, Jeremy didn’t stop there … he appealed the Court’s decision; his appeal was dismissed; and he was ordered to pay a further award of costs!

Jeremy’s initial decision to have a Contracting Out Agreement drawn up was a good idea – these agreements provide certainty in the event of separation.

He fell down when he failed to finalise and enter the agreement with Helen.  The financial impact for Jeremy was significant; his time and emotional costs were immeasurable.