I am consulted all the time by people who are ‘caught in the system’ after relationship breakdown – they, or their former partner, have commenced Court proceedings, seeking financial orders, but there is no discernible forward movement. They’re ‘stuck’ – they can’t ‘exit’ the system, because they are unable to reach an agreement with their former partner, and they can’t advance in the system, because their case has not been allocated a trial for a Judge to make a decision (or the trial allocation is many months, or even years, away).
Our Family Court system needs resources, but is presently underfunded. As Judges retire, they are not being replaced. Meanwhile, more and more couples are filing Applications with the Court. The result is that fewer Judges are having to determine more matters. That means that the entire system is in log-jam. It is a system which works (having been established in 1975, and therefore having a 40 year history), but like any system, without adequate funding, cracks begin to appear. The Federal Government is aware of this problem, but has not increased resources for the system. That situation appears unlikely to change.
For individual couples, this means that their cases are in a ‘holding pattern’. The Judges allocated to hear their case do not have the time resources to do so in under a few years. Consequently, the average financial case in the Federal Circuit Court in Brisbane is now taking approximately 22 months from the date of its commencement to reach a trial. The Judge’s decision at the conclusion of that trial is usually reserved, often for a further period of 6 months or more.
In real terms, this means that people are ‘in the system’ for about 3 years (longer if there is an appeal, the lifespan of which is up to a further 2 years). If they are only commencing their case today, their trial is likely to fall sometime in mid-2019, and they will then have their decision in late 2019.
The practical consequence of a broken Court system is that people are living in suspended animation for those 3 years, unless they are able to resolve their case in some other way. To illustrate, if those people have children who are now 7, those same children will be rising 10 by then. When cast in those terms, that is an enormous ‘chunk’ of time.
For people in business, the problem is exacerbated, as they endure the following consequences of being held hostage in litigation that has no end in sight:-
- Living with litigation has a personal ‘cost’. It is stressful, and a daily distraction. Time resources are required to be devoted to it – meetings with lawyers; providing instructions; and reviewing draft correspondence and documents. Those time resources are often found in those which were once dedicated to the business – to watching cashflow; tending to relationships with clients and suppliers; and to managing staff. At a time when it needs the most attention, a business is getting less of it from its owners.
- When an owner of the business is obviously involved in family law litigation, news travels the internal grapevine. Soon, the future of their business is in doubt, in light of the following unanswered questions – who will retain the business in the property settlement? If it is a very valuable enterprise, and a cash adjustment might be due to the other party, how much will that cash adjustment be? If that cash cannot be raised, or agreed to be paid over time, will the business need to be sold? All the while staff are wondering what might happen with the business, and therefore, their jobs. They too become distracted. Where separated spouses continue to work in the business, tension is often palpable, as staff loyalties are tested. Key staff may look for employment elsewhere, unable to live with the uncertainty, and ongoing tension between the owners. Staff productivity plummets.
- The business is often denuded of cashflow to fund personal expenditure in the post-separation period, often the costs of two separate households, and also the legal costs of the family law litigation. Suddenly there are far fewer resources for investment into key projects (campaigns to promote products; developing new products; purchasing new equipment; opening new sites; acquiring competitors), and the growth of the business plateaus (or even contacts). If opportunities for expansion must be deferred, that often leaves competitor businesses free to undertake them, meaning competitive edge is lost.
- Once the business becomes stressed from within, it becomes externally vulnerable. News of family law litigation ripples from staff to suppliers into the business community, and ultimately, to competitors. Knowing that the business is experiencing limitations, competitors may move up plans to roll out sales campaigns or competitive products, and take the opportunity to acquire market share.
It is difficult to bounce back from these things, and the damage done can sometimes be challenging to repair.
The people who consult me in this situation are usually despondent, as they can see the above happening to their families, and their business, but there appears to be nothing which can be done – their former partner will not accept any of their settlement proposals, and attempts to mediate the dispute have failed. Their family lawyers have told them there is nothing for it but to wait for the trial to come around.
Once upon a time, the job of lawyers was to ‘go to Court’, and intractable disputes were thrashed out before a Judge, who made a final decision. But modern family lawyers need to be far more creative. Going to Court is no longer a quick or easy solution, and their clients and their businesses are required to exist with the ‘pause’ button pushed while they await their hearing. Today’s family lawyers should be able to suggest other options to be able to help their clients.
While a trial may be the only way to end a dispute in some cases, that is not always so. For spouses who have, to that point, not been able to agree on an outcome, but who both nevertheless want to ‘exit’ the Court system, they can consider an arbitration.
Arbitration is essentially ‘decision-making for hire’ – you and your former partner will pay to have a ‘private’ trial conducted. You will, with assistance from your family lawyers, choose an arbitrator to make a final decision in your case. That person is often a retired Family Court Judge, or senior family lawyer (barrister from the family law bar, or senior solicitor). You will jointly instruct that person to determine your case, and to issue a written decision to bring it to an end.
For arbitrations in complex matters, they usually run just like a trial would run in Court. Written evidence is filed beforehand. There is oral examination of the spouses, and their witnesses, under oath. Parties are often represented by barristers, and their solicitor instructs the barrister at the arbitration. The lawyers deliver their arguments to the arbitrator at the conclusion of the evidence. The proceedings are tape recorded (so that a transcript can be prepared if necessary).
Some parties, in cases where the resources are limited, or where the issues in dispute are less complex, even decide to have the arbitrator determine the matter on the written evidence, and accompanying submissions, only, and without a formal trial. Similarly, where parties have been able to agree on all aspects, save for 1 or 2 ‘sticking points’, they can have a limited arbitration, where the arbitrator determines the contentious issues only, allowing them to then move forward with their agreed outcome.
Once the arbitrator is selected, he or she will work with the family lawyers for each party to deal with the procedural matters necessary to prepare for the arbitration – what evidence will be required; how many witnesses there will be; whether there are any objections to evidence or other preliminary evidentiary matters; the length of the arbitration and the sequence of witnesses. If the pre-arbitration steps run into difficulty, the arbitrator can conduct further hearings to get things back on track, and ensure that the case is ready to be arbitrated on the agreed day.
The Rules of Court specifically provide that, if you and your spouse are already engaged in litigation, you can agree to suspend that litigation and participate in arbitration. Further, once the arbitrator’s decision has been delivered, those Rules provide a mechanism for it to be registered in Court, so that it has the same effect as an Order of the Court, and is therefore binding on and enforceable by the parties.
Often the costs of an arbitration (the arbitrator’s fee, and the cost of hiring the venue for the arbitration) are shared between the parties, even if those fees are paid by one party in the first instance. For an experienced arbitrator, the fee will depend on the time required to determine the arbitration and prepare written reasons. However, that cost is usually significantly less than the cost of a trial, particularly when the hidden costs of delay until the trial are taken into account.
For those who disagree with the arbitrator’s decision, it can be appealed in the same way as an Order made after a trial. However, that appeal can only be filed on the basis that the arbitrator incorrectly applied the law (whereas Court Orders can additionally be appealed on the basis of asserted errors of fact). Some see this as an advantage – the decision of an arbitrator is arguably harder to overturn than a decision of a Judge, making the arbitration process more ‘final’.
In all respects, therefore, the arbitration looks like your trial would, save that you have ‘hired’ the Judge (the arbitrator), and the trial is being conducted, and paid for, privately.
Many people say “But my former partner will never go for it”. Certainly, there will be cases when an adversary is immovable, and wants their day in Court, no matter what. But my experience is that most people are not like that – they are stressed by the litigation, they are worried about the impact of conflict on any children, and payment of the legal costs of the process is a subject keeping them up at night. Even those who have not had to pay any legal costs to that point (because their lawyer has deferred their fees) will have in the back of their mind that their lawyer will require payment out of their ultimate settlement. Accordingly, your former partner is probably just as motivated as you to have the case concluded quickly, and at less legal cost.
I find that the best way to illuminate the real impact of arbitration is to extend an invitation to your former partner (directly, if you are able to communicate, or otherwise via your family lawyers) to participate, setting out a table containing the following information:-
|Time to hearing
||Time to publication of decision||Legal costs|
|Litigation||Not less than [22 months]*||Approx. 6 months||[$120,000]*|
|Arbitration||Approx. 4 months||Up to 2 weeks||[$60,000]*|
* This information will vary from case to case, and is for illustration only
Your family lawyer will be able to help with the data to be inserted into this table in your own particular case, but the difference between the 2 options is usually compelling. There are not many people who can ignore such significant savings in time and money. When cast in the following way – you could be out the other side of this dispute in under 5 months from now – arbitration becomes an attractive proposition for most people.
And even if your former partner is not able to think as rationally as you, you’ve got nothing to lose by trying to problem solve. After all, your former partner may surprise you, and accept the invitation to arbitrate. At very least, if you are forced to proceed to trial, you may regret not having ever extended the invitation, and at least try and avoid that outcome.
For those litigants who are languishing in the system, their children getting older, their businesses under duress, and the stress of that situation eating away at them day after day, arbitration can be the breakthrough they have been needing. They can, with the help of their lawyers, get ready for, and have, an arbitration, a decision of that arbitrator giving them a final outcome in a matter of months, and at a fraction of the cost of waiting for a trial.
If you have reached the point of ‘break down or break through’, take hope. An arbitration may be the ‘exit’ you are looking for. Talk to your family lawyer about it, and if it is right for your case, you have little to lose and everything to gain in proposing it to your former partner.