1. Pre-action Procedure for Financial Cases

2. Pre-action Procedure- Financial Cases
Rule 1.05(1)- each prospective party to the case must comply with the pre‑action procedures.
Schedule 1 part 1 of the Family Law Rules 2004 (“FLR”)- provides for the pre-action procedures in respect of financial cases.

3. Objectives of pre-action procedure
Under Sch.1, Pt. 1 cl.1(5) FLR :
To encourage early and full disclosure.
To help people resolve their differences and to avoid legal action.
To help parties identify the real issues in dispute.
To seek only those orders that are realistic and reasonable on the evidence.
It aims to avoid the need to start a court case and reduce the time and cost of the case.

4. Obligations of each party
Under Sch.1, pt.1 cl.1(1) FLR:
General Obligations- each prospective party is required to make a genuine effort to resolve the dispute by:
participating in dispute resolution;
If dispute resolution is unsuccessful, write to the other parties, setting out their claim and exploring options for settlement;
Comply, as far as practicable, with the duty of disclosure.

5. Obligations of each party
Under Sch.1, Pt.1 cl.1(6) FLR:
Each party must:
negotiate subject to the need to protect the interests of the child;
explore options for settlement, identify the issues and seek resolution of them;
avoid protracted, unnecessary, hostile and inflammatory exchanges;
seek only those orders that are reasonably achievable on the evidence
control costs;
make full and frank disclosure of all material facts

6. Obligations of each party
Under Sch.1, Pt.1 cl.1(7) FLR:
Parties must not:
use pre-action procedures for an improper purpose (to harass the other party or to cause unnecessary cost or delay)
raise irrelevant issues or issues that may cause the other party to adopt an entrenched, polarised or hostile position

7. Lawyers’ Obligations Under sch.1 pt.1 cl.6 FLR:
Lawyers must as early as practicable:
advise clients ways to resolve the dispute instead of legal action
advise clients of their duty to make full and frank disclosure
notify the client if it is in the client’s best interests to accept a compromise or settlement and whether the settlement is reasonable
advise clients of the estimated costs of legal action
actively discourage clients from seeking orders that is not reasonably achievable

8. Conflict of Clients’ interests and Lawyers
If there is Conflict between:
the duty as a officer of court of not misleading the court and,
The overriding duty to his or her client
lawyer has an obligation to take the appropriate action, that is, to cease to act for the client.

9. Exemption from pre-action procedures
under sch1,pt.1 cl.1(4), cases exempted from following pre-action procedures include cases:
Involving urgency;
involving allegations of family violence or fraud;
where one person refuses to negotiate;
where a person would be unduly prejudiced or adversely affected if another person became aware of the intention to start a case;

10. The pre-action procedure ~ step-by-step
Under sch.1 pt.1 cl.3: As suggested by the “Before you file – pre-action procedure for financial cases” of FC, there are five steps.
STEP 1 Invite the other parties to participate in dispute resolution
Give a copy of the pre-action procedures to the other prospective parties to the case
make inquires of dispute resolution services available and invite the other parties to participate in dispute resolution.

11. The pre-action procedure ~ step-by-step
STEP 2 Agree on a dispute resolution service and attend the service
agree on an appropriate dispute resolution service, and
make a genuine effort to resolve the dispute by participating in dispute resolution.
If an agreement is reached- enter into a financial agreement or apply to court for consent orders.

12. The pre-action procedure ~ step-by-step
STEP 3 Written notice of issues and future intentions
If no dispute resolution service is available or a person refuses or fails to participate, or agreement is not reached through dispute resolution
a person must give the other person/s written notice of the intention to start a court case setting out
the issues in dispute;
the orders to be sought;
a genuine offer to resolve the issues, and
a nominated time (at least 14 days after the date of the letter) within which the other person must reply.

13. The pre-action procedure ~ step-by-step
STEP 4 Replying to the notice of claim
After receiving the notice of claim, the other party must reply in writing stating whether the offer is accepted
If agreement is reached- enter a financial agreement or file an application of consent order
If the offer is not accepted, set out in a letter:
the issues in dispute
the orders you will seek if a case is started
a genuine counter offer to resolve the issues, and
a nominated time (at least 14 days after the date of the letter) within which the claimant must reply.

14. The pre-action procedure ~ step-by-step
STEP 5 Taking other action
Where an agreement is not reached after reasonable attempts to resolve it by correspondence, or
the proposed respondent does not respond to a notice of intention to start a case
a party may start a case and file an application in court

15. Disclosure and exchange of correspondence
Under sch.1 pt.1 cl.4
Parties have a duty to make timely, full and frank disclosure of all information relevant to the issues in dispute.
In summary, documents may include:
a schedule of assets, income and liabilities;
a list of documents in the party’s possession or control that are relevant to the dispute, and
a copy of any document required by the other party, identified by reference to the list of documents.

16. Disclosure and exchange of correspondence
In a maintenance case, document includes:
the party’s taxation return (most recent financial year)
the party’s bank records (previous 12 months)
the party’s three most recent pay slips (salary or wages payment)
any other document relevant to determining the income, expenses, assets, liabilities and financial resources of the party.
In a property settlement case, document includes
the party’s three most recent taxation returns
documents about any relevant superannuation interest

17. Disclosure and exchange of correspondence
For a corporation (business), trust or partnership where the party has a duty of disclosure, the document includes:
financial statements for the three last financial years
Business Activity Statements for the previous 12 months
For corporation, most recent annual return, constitution
For any trust, the trust deed
For any partnership, the partnership agreement

18. Disclosure and exchange of correspondence
Third-party disclosure
To provide written authority authorising a third party (for example, an accountant) to provide a copy of the document to the other party.
Inspection
Parties should agree to a reasonable place and time for the documents to be inspected and copied.
Undertaking
The documents will be used for the specific purposes of the case only.

19. Expert witnesses Under sch.1 pt.1 cl.5:
Parties may require information be obtained from an expert witness, provided that:
an expert must be instructed in writing and must be fully informed of his or her obligations;
information obtained must relate to an issue in dispute;
agreement to obtain information from a single expert;
Exchange of reports if separate experts’ report are relied on at a hearing.

20. Non- Compliance Under sch.1 pt.1 cl.1(2) & 1(3): Under sch.1 pt.1 cl.2
All parties are expected to have followed these pre‑action procedures before filing an application to start a case, otherwise
serious consequences, including costs penalties may result
Under sch.1 pt.1 cl.2
If there is Non‑compliance with the pre‑action procedures:
The court may take into account non‑compliance when making orders about case management and considering orders for costs.
Unreasonable non‑compliance- pay all or part of the costs of the other party or parties in the case.
The court may ensure that the complying party is in no worse a position as if the pre‑action procedures had been complied with.
Examples of non‑compliance with pre‑action procedures includes:
not providing sufficient information,
not following a procedure required by the pre‑action procedures etc.

21. Reference
This slide has been prepared in accordance with the brochure “Before you file – pre-action procedure for financial cases” of Family Court of Australia and Family Law Rules 2004 and for studying purposes only. Please refer to the sources for further detail.