Abrum & Abrum - [2013] FamCA 897

FAMILY COURT OF AUSTRALIA

ABRUM & ABRUM

[2013] FamCA 897

FAMILY LAW – PROPERTY SETTLEMENT – FINANCIAL AGREEMENTS – whether financial agreement is binding – where the financial agreement deals with but one property and save for purporting to deal with the parties’ rights under the Family Law Act against that property leaves intact their other rights under that Act – where the onus on party relying on Binding Financial Agreement to oust jurisdiction of court to establish document is a BFA – Black & Black – strict compliance with section 90G requirements necessary –Whether an order under section 90G(1B) should be made – where the Financial Agreement found to be binding.

Family Law Act 1975 (Cth) ss 75(2), 79, 90G
Acts Interpretation Act 1901 (Cth)

Black & Black (2008) FLC 93-357
Hoult & Hoult [2013] FamCAFC 109
Senior & Anderson (2011) FLC 93-470

APPLICANT:

Mr Abrum

RESPONDENT:

Ms Abrum

FILE NUMBER:

SYC

791

2012

DATE DELIVERED:

19 November 2013

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Aldridge J

HEARING DATE:

10 October 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Gould
SOLICITOR FOR THE APPLICANT:	Fox O’Brien Lawyers

COUNSEL FOR THE RESPONDENT:	Mr Othen
SOLICITOR FOR THE RESPONDENT:	Southern Waters Legal

Orders

That pursuant to s 90G(1B) of the Family Law Act1975 (Cth) the court declares that the financial agreement entered into by Mr Abrum and Ms Abrum on 7 February 2007 is binding.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Abrum & Abrum has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 791 of 2012

Mr Abrum

Applicant

And

Ms Abrum

Respondent

REASONS FOR JUDGMENT

Introduction

Mr Abrum (“the husband”) seeks orders enforcing, between him and Ms Abrum (“the wife”), an agreement made on 7 February 2007 which purports to be a Binding Financial Agreement within the meaning of s 90G of the Family Law Act1975 (Cth) (“the Act”).
The wife seeks a declaration that the agreement is not binding on the parties because she was not given proper legal advice and because the Certificates of Independent Advice do not comply with the requirements of the Act. She did not seek to set the agreement aside under s 90K of the Act.
In the event that the agreement is found not to comply with the provisions of s 90G the husband seeks an order pursuant to s 90G(1B) that the financial agreement is, nonetheless, binding on the parties.
The financial agreement is unusual in that it deals with but one property of the parties and, save for purporting to deal with the parties’ rights under the Act in relation to that property, leaves intact their other rights under that Act.

Background

The parties were married in March 1997 and separated on 26 August 2011. They have two children who were born in October 2004 and in January 2006.
In May 2000 the parties purchased a property in Suburb E where they lived (“the Suburb E property”).
The husband’s parents lived at Property Y, B Street, which was a waterfront property at Suburb C, (“the waterfront property”). Between that property and B Street itself was a property known as Property Z, B Street, Suburb C.
The waterfront property had been owned by the husband’s grandfather.
It was, the husband said, his desire and his parents that someday the husband would live in the waterfront property and pass it on to his children.
In early 2007 the husband’s parents approached him with a proposal. The waterfront home was then valued at $2.2 million. They proposed to transfer it to the parties for a consideration of $500 000 – a considerable under value. The husband’s parents had received advice from solicitors and were prepared to proceed with this transaction only if the parties entered into a binding financial agreement so as to ensure the property, or at least a large part of it, would stay in the family’s hands and not be at risk of sale if the husband and the wife were to separate.
At that time the Suburb E property owned by the parties was valued at approximately $650 000 and had a mortgage of $55 000.
Whilst the husband was keen on the proposal the wife said she was not. The husband’s parents were to move out of the waterfront property and into Property Z, B Street, Suburb C. The wife did not have the best relationship with her mother-in-law and did not want to be neighbours. In any event, the husband was insistent.
On 7 September the wife was driven by the husband to the office of Mr Wayne Lodge, solicitor. Before then Mr Lodge had received three draft documents from solicitors for the husband’s parents. These were a Binding Financial Agreement, a Deed of Family Arrangement between the husband’s two parents, the husband and the wife and a Contract to Make Mutual Wills between the husband and the wife.
At the meeting with Mr Lodge the wife signed each of those documents.
It will be necessary to return to this meeting in some detail.
The documents were subsequently signed by the other parties.
Although the evidence makes no specific reference to it, it seems clear enough that subsequently the parties sold the Suburb E property, paid the husband’s parents the $500 000 and moved into the waterfront property.

The Financial Agreement

Recitals (F) and (G) to the financial agreement are significant and are as follows:
(F)[The husband] and [the wife] have had discussions with [the husband’s] father [Mr D], in relation to the proposal to transfer from [Mr D] to [the husband] and [the wife] the property situated at and known as [Property Y, B Street, Suburb C] in the State of New South Wales (Waterfront Property). The Waterfront Property has a value of $2,200,000.00 and is unencumbered. [Mr D] proposes to transfer the Waterfront Property to [the husband] and [the wife] for the amount of $500,000.00 on the basis that certain arrangements, including this Deed, are entered into between [the husband] and [the wife] to protect the very significant contribution that [Mr D] is making to [the husband] and [the wife] and also for the benefit of [the husband] and [the wife’s] children.
(G)To reduce the possibility of either party having to resort to litigation to determine his or her legal rights, each of the parties has agreed to enter into this Deed which represents their agreement on property settlement issues between them for the purpose of the Family Law Act 1975 (Cth) (Act).
[Emphasis as per original]
The relevant operative parts of the agreement are clauses 2 and 3 which are as follows:
2. The parties agree that this agreement constitutes a financial agreement in relation to the Waterfront Property for the purposes of the Act and that it relates to the whole of their respective interests in the Waterfront property only and that it is intended to operate in relation to such financial matters in substitution for any rights of either of the parties under Part VIII of the Family Law Act.
3.The parties do not intend to alter their rights in relation to any other property by virtue of this agreement and intend, in the event of the breakdown of their marriage, that the rights in relation to all property except for the Waterfront property be determined in accordance with the usual principles under the Act.

Requirements of the Act

The requirements for the validity of a Binding Financial Agreement are set out in s 90G(1) of the Act. Section 90G(1) in its present form is as follows:
(1) Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b) before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c) either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d) the agreement has not been terminated and has not been set aside by a court.
Although s 90G of the Act was in a different form at the time the agreement was entered into in February 2007 the parties correctly accept that the validity of the agreement is to be determined by the current provision. Thus the schedules of independent advice annexed to the agreement reflect the provisions of the Act as they then stood and not the current provisions which are set out above.

The Meeting with Mr Lodge and the Advice Given

The husband selected Mr Lodge as the person to give independent legal advice, required under the agreement, to the wife. The parents’ solicitors had recommended two solicitors for that purpose, one of whom was selected by the husband to be his solicitor to give him the requisite advice. Mr Lodge was the other recommendation.
The husband made the appointment for the wife to see Mr Lodge although he says the precise time was arranged in consultation with his wife. The husband paid Mr Lodge’s fees.
On arrival the wife was shown to Mr Lodge’s office and the husband remained in the waiting room. The wife disputed this and said the husband was present for most of the time. I accept Mr Lodge’s evidence that he was not. He was clear in his recall. It is also more probable than not that he provided independent evidence in the absence of the husband. That evidence is also consistent with the husband’s.
Prior to the meeting Mr Lodge had prepared a letter addressed to the wife with the heading “[Abrum] Binding Family and Finance Agreement – Retainer Cost Disclosure Statement”. That letter bears the signature of the wife on the first page. As Mr Lodge worked through the terms and conditions in the letter in the presence of the wife he ticked the paragraphs as he discussed them with the wife. The wife signed a copy of the letter in the presence of Mr Lodge.
The purposes of the proposed arrangement were obviously well understood by Mr Lodge because he described them in paragraphs 5 and 6 of the letter thus:
5.With respect to the Deed of Family Arrangement, in summary – you are entering into an agreement with your husband (as one party) and his parents (as the other party) wherein you and your husband will purchase the waterfront property worth $2,200,000.00 for the sum of $500,000.00. [The husband’s] parents are in fact giving to [the husband] $1,700,000.00 now in lieu of an inheritance under their Wills.
6.The purpose of these multiple agreements and the Financial Agreement in particular is to protect this gift to [the husband] in the event of a matrimonial breakdown.
7.If a matrimonial breakdown occurs – with respect to the waterfront property only, your interest or entitlement will be limited to 5/44ths of the value of the property (currently $250,000.00 or ½ of what you and [the husband] paid for the property (at the relevant time). This amount of your entitlement will increase as the value of the property increases over the years (assuming that property values increase). This does not affect your claim or entitlement to any other matrimonial property under the Family Law Act.
…
14.The advantage to you is that you will be living in a waterfront house and have a financial interest in that house (that should increase in value as time passes) as long as you are married to [the husband] – excluding intervening circumstances not contemplated at the present time.
[Emphasis as per original]
Parts of the letter deal with the advice that was given. These paragraphs are as follows:
4.You have read the Deed of Family Arrangement, the Financial Agreement and the Agreement to make Wills (and to not alter them). You understand the contents and the ramifications of signing the same.
…
9.You have been given an opportunity to consider and ponder the 3 agreements both prior and after the interview with Mr. Lodge today.
10.If you want to change your mind about entering into the agreement – you may inform us and we will not forward the documents to Warren McKeon Dickson but will destroy them.
11. If you choose to proceed the following are relevant:
12.In your considered opinion the Financial Agreement under the Family Law Act is to your advantage – financially and otherwise and you have advised us that this is so and on the basis of that advice requested Wayne Lodge to sign this Section 90G certificate attached to the Agreement.
13.You consider the Financial Agreement to be fair and you consider it prudent to enter into the agreement.
[Emphasis as per original]
In his oral evidence Mr Lodge did not suggest he gave advice other than in accordance with the letter.
Mr Lodge did not ask for, make or see a list of the parties’ assets and liabilities. He took no instructions about the history of the marriage, the wife’s financial and non-financial contributions to the acquisition, conservation and improvement of property or the welfare of the family. He took no instructions about her earning capacity or any effects of the children’s births on that capacity.
He did not explain the effect of s 79 or s 75(2) of the Act.
He did not discuss the basis on which the 5/44ths of the waterfront property was arrived at.
As to raising with the wife the possibility of negotiations about the terms of the agreement Mr Lodge said:
Now, I – I – as far as I was aware that the agreement was finalised, this is what the parties wanted to do. I wasn’t asked to comment or to negotiate any of the terms. I cannot recall any expression of any concern about any of the terms of the agreements – of the – any of the agreements.

Compliance with Section 90G

Strict compliance s 90G is mandatory (Black & Black (2008) FLC 93-357; Senior & Anderson (2011) FLC 93-470).
The wife asserts that s 90G(1) was not complied with because:
a)She did not receive the requisite advice;
b)The certificates of independent advice did not comply with the requirements of the Act; and
c)She did not receive the statement of independent advice given to the husband.

The Advice Given

Section 90G(1)(b) requires each party to obtain independent legal advice from a practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time the advice was provided, to that party of making the agreement.
A binding financial agreement deals with the parties’ rights in relation to the property or financial resources of the parties in a way that ousts the jurisdiction of the court to make orders in relation to that property or financial resource. Those rights thus ousted must be the rights that the parties had under s 79 of the Act to seek an order for the adjustment of the parties’ property rights. When making such an order the court takes into account the matters set out in s 79(4) of the Act (the parties financial and non-financial contributions to the property of the parties and their contributions to the welfare of the family) and the various matters set out in s 75(2) of the Act. The parties’ rights to obtain a property settlement thus depend on those factors.
It is true to say that a party does not have a “right” to a property settlement, or a “right” to a particular property settlement, because under s 79 the court is not giving effect to existing rights but rather is altering property interests in a manner that it considers is just and equitable and thus creates new rights. In doing so it evaluates and weighs many factors. It is necessarily an imprecise exercise.
Nonetheless, when s 90G(1)(b) speaks of “rights” it must be speaking of the entitlement to bring a case under s 79 and the factors that weigh in favour of that person’s case under ss 79(4) and 75(2) otherwise it would have limited meaning.
In order to give advice about the effect of an agreement on the rights of a party, that is their rights under the Act in relation to property, a legal practitioner must establish what those rights are at the time the advice is provided. This is because s 90G(1)(b) requires advice to be given on the effects of the agreement upon the rights of that party and the advantages and disadvantages of the agreement. If their rights are not known then it is impossible to advise as to the effect of the agreement on them.
It is unhelpful to advise a person that a financial agreement might adversely affect his or her rights if those rights are not identified. A party must know more than some unknown or undefined right is being given up. He or she must have some idea, at least in general, of his or her present entitlements or rights (to use the words of the section) with which he or she may compare the provisions of the proposed financial agreement. It is only in that way that there can be actual advice about the effect of the agreement on those present rights.
It is quite clear that a person may choose to enter into an agreement where he or she may very well be much worse off than if he or she were left to rely on their rights under s 79 of the Act. Thus, there is a requirement for specific legal advice to be given. That is the safeguard the legislature imposes when it permits the parties to deal with their property by agreement and without possible interference from a court.
Accordingly, the advice must be real and meaningful. It must be directed to the parties’ circumstances and their present rights.
Proper identification of a parties’ rights can only be done by identifying the property of the parties then held and a consideration of the parties contributions (financial and non-financial) to the acquisition of that property and to the welfare of the children. Any other relevant factors under s 79(4), including s 75(2), would then need to be considered. Only by doing so can advice be given that complies with the terms of s 90G(1)(b).
In the present case Mr Lodge did not obtain any list of the parties’ property and liabilities. He did not seek to ascertain what financial and non-financial contributions the parties had made to that property or to the welfare of the children. He did not explore any of the other s 79(4) matters and the s 75(2) factors with the wife. In those circumstances he was entirely ignorant of the rights of the wife and could not give her therefore any advice about her rights. Mr Lodge did not suggest that he did so.
Similarly, advice about the advantages and disadvantages for a party making the agreement must involve a consideration and weighing of what would be their rights but for entering the agreement and those advantages and disadvantages after having entered the agreement. No doubt each would have its advantages and disadvantages and they need to be compared.
It is clear enough that Mr Lodge gave the wife some advice about the advantages of entering into the agreement and this is set out in paragraph 14 of the letter prepared by Mr Lodge, quoted above.
Otherwise as set out in paragraphs 4, 12 and 13 of the letter, set out above, Mr Lodge noted the wife’s view that she understood the contents and ramifications of signing the agreement that it was to her advantage financially and otherwise and that it was prudent to enter into the agreement.
Noting the wife’s opinion is not the same as giving advice.

Even if this was infelicitous language it is clear from the letter and from the evidence of Mr Lodge that no advice was given as to the disadvantages.
For example, it can readily be seen that the 5/44ths share in the waterfront property was calculated by a reference to $250 000. It may be supposed that this was in recognition of one half of the purchase price of the waterfront property of $500 000. There is no recognition in the calculation of that figure of the possibility that the wife may have made a greater financial contribution to the sum of $500 000 paid for the waterfront property (which may have been entirely derived from the sale of the Suburb E property owned by the wife and the husband) than 50 per cent. It is not known whether any non-financial contribution or any contribution to the welfare of the children was represented in that figure.
There was no consideration of whether or not the wife would be entitled to a greater proportion to the Suburb E property by reason to any of the matters set out in s 75(2) of the Act than $250 000, or 50 per cent, whichever way it is looked at. If she was, then the 5/44ths interest to be provided could be significantly less than what she might have been entitled to receive under s 79. There was, similarly, no exploration of whether she was entitled to less than a $250 000 or 50 per cent interest in the Suburb E property.
There was, thus, no consideration of the effect of the agreement on those rights. It could not be determined whether the agreement enhanced or diminished the wife’s rights.
I am satisfied that the wife did not receive the advice required by s 90G(1)(b).

The Certificates of Independent Advice

The Certificates of Independent Advice to the Binding Financial Agreement, being Schedule A for the husband & Schedule B for the wife to that agreement, provide that advice was given as follows:
1.the effect of the Deed on the rights of the parties to apply for an order for property adjustment under the Family Law Act 1975 (Cth);
2.whether or not at that time it was to the advantage, financially or otherwise, of my client to enter into the Deed;
3.whether or not at that time it was prudent for my client to enter into the Deed; and
4.whether or not at that time and in the light of such circumstances as were at that time reasonably foreseeable the provisions of the Deed were fair.
Paragraphs 3 and 4 were requirements of the Act at the time the deed was entered into but are no longer requirements of the Act. Their mere presence therefore in the certificate is otiose. There mere presence does not derogate from the balance of the certificate and is not sufficient, of itself, to render the certificate non-compliant.
Section 90G(1)(b) requires advice to be given about “the effect of agreement on the rights of that party”. That is different to the “rights of the parties to apply for an order for property adjustment”. Similarly, the Act requires advice to be given about “the advantages and disadvantages” and not merely the “advantage, financially or otherwise” of entry into the agreement.
The certificates do not comply with the requirements of s 90G. As strict compliance with the requirements of the Act is essential this is, of itself, sufficient for the certificates to be non-compliant.

Provision of the Statement of the Other Spouse

The wife did not receive a copy of the Binding Financial Agreement until it was provided to her solicitors by the husband’s solicitor on 20 February 2012. It was at that time she received the Certificate of Independent Advice relating to the husband. This is because it is Schedule A to that agreement. The wife did not otherwise receive a copy.
Mr Lodge has never received a copy of the signed agreement from the husband’s solicitors.
The husband says that his solicitors sent a letter addressed to both the husband and the wife enclosing a completed copy of the agreement signed by all parties with all of the schedules attached. He says he placed this in a file to which the wife had access. The wife did not say that she had seen it and her efforts and those of her solicitors to obtain a copy, support her not having received it. I find that she did not receive it.
No time limit is provided for the provision of that statement by s 90G(1)(ca). The requirement would seem to have practical utility only if the statement was required to be made at or about at the time of the entry into the Binding Financial Agreement. The apparent purpose of seeing the other party’s Certificate of Independent Legal Advice is to determine whether they have, in fact, received the requisite legal advice. Such advice is, of course, essential if the agreement is to be binding under the Act.
If the other party’s certificate is deficient, or not given, the party entitled to receive it could then determine their course of action before acting in accordance with the agreement as a valid certificate is essential for the agreement to be binding. Of course, it may be assumed that by putting the agreement in effect, selling their property, paying $500,000.00 to the husband’s parents and moving in to the property may have been an indication that the agreement had been signed by the husband and the appropriate certificate given. The wife did not say that she believed that the husband had not signed or that the certificate had not been provided, merely that she had not seen them.
It would seem to follow that the statement required to be given to the other party as required by s 90G(1)(ca), if not given to the other party prior to the signing of the agreement, must be given to the other side shortly afterwards.
The legislation, however, does not provide a time or manner in which the certificates are to be exchanged.
I incline to the view that the better position is that the provision of the statement some five years after it was signed and some five months after separation did not comply with the requirements of the Act because a requirement for prompt exchange necessarily arises from the proper construction of the provisions of the Act. Given, however, the other findings, it is not necessary to express a concluded view on this matter.

Summary

Consequently, because of the lack of legal advice given and the incorrect form of the certificates of legal advice I find that the agreement does not comply with the requirements of s 90G(1).

The Husband’s Application

The husband seeks an order pursuant to s 90G(1B) of the Act.
Sections 90G(1A) and 90G(1B) are as follows:
(1A) A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b)one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d)the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e)the agreement has not been terminated and has not been set aside by a court.
(1B) For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application ) by a spouse party seeking to enforce the agreement.
It is necessary now to deal with the other agreements executed by the wife at the same time as the financial agreement. As identified earlier those agreements were the Binding Financial Agreement itself, the Deed of Family Arrangement and the Contract to Make Mutual Wills.
The Deed of Family Arrangement is also dated 7 February 2007. It is between the husband’s father, the husband’s mother, the husband and the wife. Recitals (C) and (F) to that Deed provide:
(C)In recognition of the assistance and support that [the husband] has provided to [Mr D] and to [Ms D], [Mr D] intends to transfer to [the husband] and [the wife] the Waterfront property for the sum of $500,000.00.
(F)The parties agree that the sale of the Waterfront Property to [the husband] and [the wife] represents a generous benefit to [the husband] and to protect that asset for the benefit of [the husband], the parties are agreed that [the husband] and [the wife] will enter into a Binding Financial Agreement (BFA) at the same time they enter into this Deed and in the form annexed to this Deed and marked “BFA”. [The husband] and [the wife] have also agreed, in consideration for the generous benefit being provided to them under this Deed to prepare Wills and to enter into a contract to make mutual Wills between each other in the forms annexed to this Deed and marked “Contract to Make Mutual Wills”.
The operative clauses of the Deed required the husband’s father to transfer the waterfront property to the husband and the wife and for them to pay him $500 000 within twelve months of the date of the Deed or within two months of the sale of the Suburb E property whichever occurred first.
Importantly clauses 4 and 5 provided:
4.Simultaneously with entering into this Deed, [the husband] and [the wife] will sign all documents and do all acts and things necessary to enter into the BFA.
5. Simultaneously with entering into this Deed, [the husband] and [the wife] will do all acts and things and sign all documents necessary to enter into the Contract to Make Mutual Wills.
The Contract to Make Mutual Wills was between the parties. It obliged each of them to make a Will in the form annexed to the contract. Each was in the same form. Each was to give their real and personal property to their spouse provided that they survived them for a period of not less than thirty days but, in the event they did not, the balance of their estate would be divided amongst their children in equal shares once they attained the age of twenty-one years.
Each of those agreements was signed by the parties.
It can be seen from the above that the husband’s father went to some lengths to ensure that the wife’s rights against the waterfront property were limited. The evident purpose was for the husband to receive the property which was to be substantially free from claims by the wife pursuant to her rights under the Act. Pursuant to the mutual Wills the property would be, most likely, left to his grandchildren on the death of their parents.
As correctly identified by Mr Lodge the husband’s father was, in fact, making the son a gift of $1.7 million on the condition that the wife’s interest in that property be limited to 5/44ths of its value.
Thus the requirements of s 90G(1A)(a) and (b) are satisfied.
The court must be satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in the circumstances from the time the agreement was made).
What are the relevant factors to be taken into account? Some of them were identified by Strickland and Ainslie-Wallace JJ in Hoult & Hoult [2013] FamCAFC 109:
307.We have referred to the fact that his Honour in paragraph 57 provided a range of factors that it would be appropriate to consider when exercising the discretion. The only factor that we would suggest is not available is the last one, but if there is to be a list of the factors identified we would prefer the following, all of which are to be found in his Honour’s reasons:
·The terms of the section, the nature of a financial agreement as a creature of the Act, and the place of Part VIIIA within the overall scheme of the Act.
·The nature and extent of the non-compliance with the requirements of s 90G(1).
·The facts and circumstances surrounding the making of the agreement including, in particular, if one of the parties has complied with all of the mandatory requirements necessary to render the agreement binding.
·How the parties have acted subsequently in relation to the agreement (bearing in mind that changes in circumstances cannot be considered).
…
309.… [It] is suggested that “[a]lthough the Act now undoubtedly allows parties to enter into bad or grossly unfair bargains it is perfectly consistent for the legislation to permit consideration of the fairness of the bargain (judged to the date of execution) in cases where the safeguards in s 90G(1) have not been met”.
310.Again with the greatest of respect to his Honour we fail to see how that can be. The point of the legislation is to allow the parties to decide what bargain they will strike, and provided the agreement complies with the requirement of s 90G(1) they are bound by what they agree upon. Significantly, in reaching agreement, there is no requirement that they meet any of the considerations contained in s 79 of the Act, and they can literally make the worst bargain possible, but still be bound by it. Thus, again, rhetorically, how can the fairness of the bargain be an enquiry that the court can make when it is seized of a matter under s 90G(1A)? Furthermore, it is not the case that to fail to consider the fairness or injustice of the bargain does not mean that the “discretion is exercised in a vacuum”. The factors set out in paragraph 307 above will be those that are addressed.
In the present case the parties have acted in reliance on and in accordance with the terms of the agreement.
Moreover, not only have the parties complied with the agreement but the husband’s father has also complied with the agreement. The transfer of the waterfront property at a gross undervalue was undertaken thereby effecting a gift of property to the value of $1.7 million to the husband. His parents moved out of that property and into Property Z, B Street, Suburb C.
It is a reasonable, if not inevitable, inference from the documents that were prepared, significantly, by the husband’s parents’ solicitors, that the existence of a binding financial agreement between the husband and the wife was an essential step in the transaction proposed by the husband’s parents and that their view was that the transaction would only proceed if the wife’s rights under the Act in relation to the waterfront property were clearly defined and limited, thus ensuring that the property would be available for the husband and his children. The significance is that it was the husband’s parents who engaged solicitors to prepare all documents which, presumably the husband’s parents and their solicitors considered necessary and desirable.
This is confirmed by the Mutual Wills.
There is no authority that expressly indicates that matters extending beyond the parties may be taken into account. As has already been pointed out the facts and circumstances surrounding the agreement are relevant matters to be taken into account. There is no reason why those facts and circumstances should be limited to the parties. Section 90G(1A)(c) is not so limited. Indeed, the discretion that is given to the court is largely unfettered.
It is, accordingly, appropriate to take into account all relevant facts and circumstances surrounding the agreement. This may, in appropriate cases, include agreements made with others conditional upon a binding financial agreement being entered into and the conduct of others at the time in relation to the agreement, the subject matter of the agreement and the parties. This will be particularly potent where third parties have acted in reliance on the agreement.
In this case the husband’s father made a gift of, effectively, $1.7 million on the basis that a binding financial agreement existed.
It is also relevant that the husband and in this case, indirectly, his father are entitled to rely upon the Certificate of Independent Advice given to the wife and are not obliged, indeed cannot (because of legal professional privilege), go behind it to ascertain the nature of the advice actually given to her.
These are powerful factors that would make it unjust and inequitable if the agreement were not binding.
What then is to be weighed on the other side of the scale?
The terms of the agreement, and their apparent fairness or otherwise, cannot. (Hoult & Hoult supra, per Strickland and Ainslie-Wallace JJ).
The changed circumstances of the parties and in particular the health of the wife cannot be taken into account by virtue of the express terms of s 90G(1A)(c).
In determining whether to find an agreement is binding it is appropriate to take into account the nature of the non-compliance with s 90G(1). Minor or formal breaches are likely to be given less weight than substantial non-compliance (Hoult & Hoult supra at [186] – [188]).
Here the non-compliance is both substantial and insubstantial.
The wife was not given the advice s 90G(1) requires.
The lack of proper advice in this case was significant. It cannot be said that the wife was given the opportunity to weigh her rights under s 79, then existing, against the rights under the agreement or how the agreement might be to her advantage or disadvantage.
This constituted a very substantial failure to comply with s 90G(1)(b).
Nonetheless, the lack of advice, or proper advice, is not, of itself, determinative. This was made plain by Thackray J in Hoult & Hoult supra, with the other members of the court agreeing. At paragraphs [186]-[188] his Honour said:
186.I accept the thrust of the husband’s submissions, which accord with what I have found to be the view of the majority in Parker & Parker. This interpretation of the scope of s 90G(1A)(c) is to be preferred to the construction seemingly advocated by the wife which would allow the discretion to be exercised only where there has been “technical” non-compliance. My reasons for preferring this approach are essentially the same as those stated by Murphy J. In endorsing that approach, I would emphasise two points.
187.First, the words of the provision are plain. There is no warrant to add a gloss to the text by suggesting that its operation is confined to “technical” breaches. Such a description is not helpful, since what the court must find to enliven the discretion is a breach of one or more of the provisions identified in s 90G(1A)(b). As the words are plain, there is no warrant for referring to extrinsic materials to limit the operation of the provision. See s 15AB of the Acts Interpretation Act 1901 (Cth).
188.Secondly, had the absence of the requisite legal advice been intended by Parliament to be a bar to relief under s 90G(1B), then that factor would have been treated in the same way as the absence of signatures. The legislature has left the door open for agreements to be declared binding even where there has been an absence of legal advice. Once that is recognised, it follows that it is necessary for a trial judge to consider the extent of the failure to give the required legal advice then waive it against the other relevant factors.
The non-compliance of the certificates with the Act and the non-provision of the husband’s Certificate of Independent Advice are not substantial failures to comply with the Act. They are minor breaches from which no particular issues seem to flow. For the purpose of s 90G(1A)(c), on the facts of this case, that non-compliance carries little weight.

Conclusion

In Hoult& Hoult Thackray J described the onus upon the party seeking to rely on s 90G(1A) as a heavy one. The remaining members of the Full Court did not specifically address that point.
The onus is on the ordinary balance of probabilities. Whether or not it is satisfied involves an infinite variety of factors.
As identified by Thackray J, the court might be more easily satisfied that it would be unjust and inequitable for the agreement to be binding where there are minor breaches of s 90G(1) as opposed to when there are more serious breaches. That is not a reflection of the onus but a reflection of the wide range of weight that can be given to various factors.

In the present case the non-compliance with s 90G(1)(b) was serious in that appropriate legal advice was not given as is required.
On the other hand, it is clear that the gift of the property would not have occurred but for the wife entering into the Binding Financial Agreement along with the Deed of Family Arrangement and the Contract to Make Mutual Wills. These agreements not only involved the parties to the marriage but the paternal grandparents. It is more likely than not that the gift would not have taken place without those agreements being entered into. The husband’s parents acted to their detriment in reliance on the Binding Financial Agreement.
Also to be taken into account is the fact that the agreement does not oust all of the wife’s property rights but only those against this specific property. This carries less weight in this case because the evidence does not suggest that there were other assets of substance, or of the magnitude of the waterfront property, available against which property orders could otherwise be made. The only asset to which the evidence referred as being owned in February 2007 was the Suburb E property.
The court’s task is to weigh the above matters. Taking them into account the court is satisfied that, in the circumstances of this case, it would be unjust and inequitable for the financial agreement entered into between the parties not to be binding.
Accordingly, pursuant to s 90G(1B) I find that the financial agreement entered into by the parties on 7 February 2007 is binding.

I certify that the preceding one hundred and six (106) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 19 November 2013.

Associate:

Date: 19 November 2013