ADAME & ADAME
[2014] FCCA 42
•16 January 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ADAME & ADAME | [2014] FCCA 42 |
| Catchwords: FAMILY LAW – Application to set aside binding financial agreement – whether agreement the result of duress or unconscionability – whether agreement fails to comply with s.90G of the Family Law Act 1975. |
| Legislation: Family Law Act 1975, ss.90G, 90K, 90KA, 90C, 90G(1)(b), 90K(1)(a), 90G(1)(c), 90G(1A)(c) |
| Crescendo Management Pty Ltd & Westpac Banking Corporation (1988) 19 NSWLR 40 Hogan & Hogan [2010] FMCAfam 1255 Saintclaire & Saintclaire [2013] FamCA 491 |
| Applicant: | MS ADAME |
| Respondent: | MR ADAME |
| File Number: | ADC 869 of 2007 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 11 July 2013 |
| Date of Last Submission: | 11 July 2013 |
| Delivered at: | Brisbane |
| Delivered on: | 16 January 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr McGregor |
| Solicitors for the Applicant: | Charles Cooper Lawyers |
| Counsel for the Respondent: | Mr Galloway |
| Solicitors for the Respondent: | Wiltshire Lawyers |
ORDERS
The financial agreement made between the parties on 19 January, 2011 be set aside.
The respondent’s application for orders set out in paragraphs 1 and 2 of his response filed on 8 April, 2013 be dismissed.
All outstanding applications be listed to 20 February 2014 at 9.30am for directions in the Federal made in the Federal circuit court sitting at Brisbane.
IT IS NOTED that publication of this judgment under the pseudonym Adame & Adame is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
ADC 869 of 2007
| MS ADAME |
Applicant
And
| MR ADAME |
Respondent
REASONS FOR JUDGMENT
On 19 January, 2011 the applicant and the respondent entered into a binding financial agreement for the purposes of s.90C of the Family Law Act1975.
By proceedings commenced on 14 February, 2013 Mrs Adame seeks:
a)orders that the binding financial agreement be declared non-binding and be set aside;
b)a declaration pursuant to s.79A(1A) of the Act that orders of the Family Court of Australia dated 1 March, 2007 be set aside;
c)declarations that the respondent holds certain real property as trustee for both parties;
d)an order pursuant to s.79 of the Act for property adjustment between the parties; and
e)certain parenting orders.
Mr Adame opposes the orders sought by Mrs Adame and seeks that her application be dismissed.
On 9 April, 2013 I ordered that the application for orders to set aside the binding financial agreement be adjourned to 11 July, 2013 for final hearing. The other relief sought by the applicant has been adjourned to a date to be fixed pending a determination of that application.
The Issues
Mrs Adame argues that the binding financial agreement should be set aside because:
a)she entered into it under duress;
b)Mr Adame did not properly disclose all of his assets to her when the agreement was made;
c)some substantive requirements of the Act were not met when the binding financial agreement was executed;
d)some formal requirements of the Act were not met when the binding financial agreement was executed; and
e)in any event there has been a material change in circumstances that means that the binding financial agreement is no longer just and equitable and ought not be held to be binding.
Having regard to the parties’ evidence, case outlines and the submissions made by each of their counsel at the conclusion of the trial, in broad terms, the issues appeared to be:
a)whether the binding financial agreement is vitiated by reason of:
i)fraud, and in particular, whether the Court should draw an inference that Mr Adame owned property in the United States that he failed to disclose to Mrs Adame when the parties entered into the binding financial agreement;
ii)duress;
iii)misrepresentations made by Mr Adame to Mrs Adame as to the effect of the agreement;
iv)unconscionable conduct on the part of Mr Adame;
b)whether Mrs Adame received legal advice for the purposes of s.90G(1)(b) of the Act; and if so
c)whether that legal advice was independent for the purposes of s.90G(1)(b) of the Act;
d)whether either before or after signing the agreement, Mrs Adame was provided with a signed statement by the legal practitioner providing advice about the binding financial agreement to Mr Adame stating that the advice was provided to him;
e)whether the fact that the parties have now separated is a material change in circumstances that means that the binding financial agreement would be no longer just and equitable and ought not be held to be binding.
The Agreement
Although there seems to be conjecture on the evidence about when and in what circumstances it was signed, there is no dispute that the parties entered into an agreement in early 2011. The agreement purported to deal with how, in the event of the breakdown of their marriage, all or any of Mr and Mrs Adame’s property or financial resources at the time when the agreement was made, or at a later time and during the marriage, was to be dealt with. The agreement purported to deal with maintenance as well.
The agreement had three schedules. Schedule A purported to be a list of the assets of Mr Adame, schedule B purported to be a list of assets owned by Mrs Adame and schedule C was a list of assets held by Mr Adame as trustee for the [B] Trust. None of the assets had values ascribed to them.
Schedule A (the property owned by Mr Adame) included:
a)“beneficial interest in the [B] property”;
b)“beneficial interest in Adame Family Trust”.
Schedule C (the property owned by [B] Trust) listed as the only asset: “[B] property”.
Recital J. to the agreement records that Mr Adame and Mrs Adame entered into a loan agreement dated 8 April, 2010. A copy of the loan agreement was purportedly attached to the financial agreement, but the parties agree that when the financial agreement was executed, no copy of the loan agreement was attached to it. Nonetheless, both recital J. and clauses 1.3 and 1.4 of the agreement make it clear that Mr Adame was indebted to Mrs Adame, although the loan does not appear as an asset in schedule B to the financial agreement.
Insofar as Mrs Adame was concerned, the agreement provided that in the event that the parties’ relationship ceased, or otherwise determined she had no claim, interest, entitlement, title or otherwise in any of the property, real or personal, listed in:
a)schedule A attached to the agreement except that Mrs Adame should have a half share in Mr Adame’s equity in the [B] property (owned by the [B] Trust) after taking into consideration the purchase price contributed by Mr Adame and/or the Trust, interest on those sums, settlement costs and other costs as set out in the agreement;
b)schedule C attached to the agreement (the property of the [B] Trust).
The trust deed for the [B] Trust is not in evidence. It is, therefore, impossible to tell if Mr Adame retained any beneficial interest in the [B] property. His case is that the [B] property was purchased by the [B] Trust. If that trust is a discretionary trust, it may be that Mr Adame retains no beneficial interest in that property at all and will not have an interest until such time as the trustee of the trust (Mr Adame) makes a distribution of the capital of the trust to him. If he retains no equitable interest in the property, then Mrs Adame’s entitlement under the financial agreement to half of his equity in that property may well be illusory.
Further, the financial agreement provided that Mrs Adame was not entitled to make a demand for payment of the loan between she and Mr Adame whilst the parties remained “reconciled” and no interest accrued on the outstanding loan whilst the parties were not separated (clause 1.4 of the agreement).
Insofar as Mr Adame was concerned, the financial agreement provided that in the event that the parties’ relationship ceased, or otherwise determined, he had no claim, interest, entitlement, title or otherwise in any of the property, real or personal, listed in schedule B to the agreement, save as was set out in clause 7 of the agreement.
Schedule B to the financial agreement included a property owned by Mrs Adame at Property G, South Australia. By clause 7 of the financial agreement:
The parties will do all things necessary and sign all documentation necessary to facilitate and implement any terms of the Order of 2007 which have not been implemented to date, specifically that Ms Adame transfer the property at Property G to Mr Adame and or his nominee forthwith so as to comply with the order of 2007.
7.1PROVIDED HOWEVER that Ms Adame shall not be obliged to affect such transfer while it is within Mr Adame’s contemplation to sell such property to a third party. In the event that the property is to be sold to a third party Ms Adame shall pay the proceeds to Mr Adame and or his monies (sic) forthwith upon receipt of the same and shall comply with Mr Adame’s reasonable requests to effect the sale to a third party including executing of all and any necessary documents.
The Facts
Mr Adame is 42 years of age. He describes himself as a [omitted] by occupation. Mrs Adame is presently 39 years of age. She is presently employed as an [omitted]. The [workplace] is owned, indirectly, by her parents. Both parties have significant experience in business.
The parties commenced a relationship in or about 1992. They commenced living together in or about 1993. They married in 1995. The parties have three children together: [X], aged 17; [Y], aged 14 and [Z], aged 5.
The parties agree that their relationship was tumultuous and they separated and subsequently reconciled on a number occasions between 1995 and the parties’ final separation. There is a dispute about when the parties finally separated.
During one of the more significant periods of separation commencing on or about 16 February, 1997 Mr and Mrs Adame consented to the Family Court of Australia making property adjustment orders pursuant to s.79 of the Act. Those orders were made on 12 June, 1997. However, in late 1997 the parties reconciled. The parties did not give effect to the terms of the consent orders, although the orders remained in place.
The parties’ relationship continued, punctuated by short periods of separation. Another more significant period of separation commenced in January, 2007.
At that time the parties owned, either jointly or separately:
a)their home situated at Property C, South Australia (registered in Mrs Adame’s sole name);
b)a commercial property situated at Property G, South Australia (registered in Mrs Adame’s sole name);
c)all of the shares in [N] Pty Ltd which operated a business from the Property G property. Mr Adame was the sole director and secretary. He held 60% of the shares and Mrs Adame held 40% of the shares in the company;
d)all of the shares in [A] Pty Ltd, a company of which Mr Adame, as Trustee of the Adame Family Trust, was the sole shareholder;
e)$7,486.82 in superannuation (Mr Adame) and $5,000.00 in superannuation (Mrs Adame);
f)a 1996 Ford Explorer motor vehicle registered in Mr Adame’s name;
g)a 2004 Ford Territory motor vehicle registered in Mrs Adame’s name.
The trust deed for the Adame Family Trust, established by deed dated 25 June, 2003, is not in evidence. However, it seems uncontroversial that both parties were trustees and at least within a class of persons who might be beneficiaries of the Trust. Apart from the shares in [A] Pty Ltd it is not clear whether any other property was held by the parties or either of them as trustees of the Adame Family Trust.
Following separation Mrs Adame signed a contract for the purchase of a property at Property M. The approximate purchase price was $490,000.00.
On 1 March, 2007 the parties again attempted to formalise their financial arrangements by consent property adjustment orders made by the Family Court of Australia. Those orders, made on 1 March, 2007 discharged the earlier orders made on 12 June, 1997 and provided that:
a)Mrs Adame would retain:
i)$520,000 which was to be paid to her by Mr Adame;
ii)her clothing, jewellery and personal effects;
iii)the 2004 Ford Territory motor vehicle;
iv)the real property at Property M, South Australia;
v)the balance of any bank account she then had; and
vi)her interest in any superannuation interest she then had;
b)Mr Adame would retain:
i)the real properties situate at Property C, South Australia and Property G, South Australia;
ii)[N] Pty Ltd;
iii)the Adame Family Trust;
iv)his clothing and personal effects;
v)his tools of trade, some furniture, chattels and household effects;
vi)100 ordinary shares in [A] Pty Ltd (held by him as trustee of the Adame Family Trust);
vii)an interest in a business trading as [F];
viii)1996 Ford Explorer motor vehicle;
ix)the balance of his bank accounts;
x)the balance of any superannuation interests he then held.
By the orders, Mr Adame was also responsible for:
a)the liabilities of [N] Pty Ltd;
b)a loan from the NAB to Mrs Adame (which was estimated to be approximately $101,000) which was used to fund extensions to the Property G property;
c)any loan to fund the cash adjustment to be paid to Mrs Adame pursuant to the order; and
d)any mortgages secured over the properties he was to receive under the orders.
The purchase of the Property M property did not settle until after the March, 2007 consent orders were made. In order to settle the purchase of the property, Mrs Adame required funds. Mr Adame paid Mrs Adame the sum of $10,000.00 in part property settlement before the orders were sealed and then paid her $450,000.00 in part property settlement shortly after the orders were sealed. Mrs Adame used those funds to settle the purchase of the Property M property.
There is a dispute between the parties as to whether they reconciled again in about July or August, 2007. Mrs Adame asserts that they did and that they were reconciled before their third child, [Z], was born on [omitted] August, 2007. She says that the family lived in the Property M property. Mr Adame says that the parties lived separately between late 2006 and 2010 when they discussed reconciliation following a family holiday to Queensland in early 2010.
On balance, I am satisfied that the parties were separated from 2007 until the beginning of 2010. Indeed in cross-examination Mrs Adame agreed with the proposition put to her by counsel for Mr Adame that the parties did not reconcile until 2010. She put the time of reconciliation as either late 2009 or early 2010.
There is no dispute that Mrs Adame sold the Property M property in mid-January 2008 for about $600,000.00. Mrs Adame deposes that following the sale, she received approximately $350,000.00 nett as the proceeds of sale. That, however, makes little sense given that the property was purchased for $490,000 and only about $40,000 of that might have been borrowed funds. Mrs Adame deposes that she used the $450,000 paid to her by Mr Adame following the 2007 consent orders to settle the purchase of the Property M property. It is not, however, necessary to determine this anomaly for the purposes of the present application.
Mrs Adame says that she invested the balance proceeds of sale and lived off the interest to support herself financially. It is not clear, however, why that was necessary given that, according to her, the parties were no longer separated. Her evidence in this regard supports my conclusion set out above that the parties were separated between 2007 and the beginning of 2010.
There seems to be no dispute that subsequently, Mr Adame paid
Mrs Adame the remaining $60,000.00 in accordance with the 2007 consent orders. However, the Property G property was not transferred by Mrs Adame to Mr Adame as provided for in the orders.
The evidence suggests that even though the parties were separated, their relationship continued in one form or another. For example, the parties and their children came to the Gold Coast for a family holiday in about March, 2010 in an effort, as Mrs Adame says: “to try and bond as a family, to give Mr Adame and [X] time to reconnect, and to give Mr Adame and myself time to talk.”
It was during that time, I find, that the parties resolved to attempt to reconcile their relationship and to move to Queensland to make a fresh start. They returned to Adelaide following the holiday and commenced looking for properties in Queensland in which to live.
The parties found a property in [B], Gold Coast, in April, 2010 in which they wished to live. They both inspected the property and approved its purchase. The evidence satisfies me that Mr Adame arranged to purchase the property and signed a contract for its purchase although Mrs Adame was not present when the contract was signed. I accept her evidence that she did not know that the property was purchased by Mr Adame in his capacity as trustee for the [B] Trust.
Mr Adame gave evidence, which I accept, that in 2010 he set up the [B] Trust and the [V] Trust. He did so because he wanted to protect “my assets from claims by third parties and by Ms Adame”. Mrs Adame disavows any knowledge of the trusts. It was put to her in in cross-examination that she had seen the trust deed for the [B] Trust, but she denied any knowledge of it. I accept her denials.
The trust deeds are not in evidence, but it seems that Mr Adame was and perhaps still is the trustee of the [B] Trust. In his capacity as trustee of the [B] Trust, he signed a contract in April, 2010 to purchase the [B] property for $1,422,500.00. The purchase settled on 14 May, 2010.
Mr Adame claims that he contributed approximately $1,333,000.00 to the purchase of the [B] property and “the trust” borrowed the balance. Mrs Adame asserts that Mr Adame needed her to lend him $250,000 to complete the purchase. He agrees that he borrowed at least $200,000 from her, but there is a dispute about the use to which the funds were put. Mr Adame rejects the idea that the funds were used to complete the purchase and asserts that they were used to fund some renovations to the property after it was purchased. It is unnecessary to resolve this issue.
There is a dispute between the parties about the conversations they engaged in about this time. Mr Adame swears in his trial affidavit that prior to purchasing the [B] property Mrs Adame initiated a conversation with him in which she indicated that it was her intention to keep the parties’ respective finances separate. He says that both parties wished to keep their financial arrangements separate. He specifically asserts that Mrs Adame wanted to enter into a ‘‘pre-nup” to ensure their property was kept separate. He says that she also wanted a loan agreement with respect to the funds she was going to advance to him at the time the [B] Trust acquired the [B] property.
For her part, Mrs Adame denies the assertions from Mr Adame. She says that on 6 April, 2010 Mr Adame emailed her a draft loan agreement prepared by his lawyer, Ms P of [P] Lawyers. Her trial affidavit conveys the sense that the agreement came to her out of the blue, as it were, but the text of the email to which a draft of the loan agreement was attached suggests that there had been previous discussions between the Adames about the loan agreement and another agreement, simply referred to in the email as “the other agreement”. It was suggested to Mrs Adame in cross examination that she instigated the creation of the loan agreement to protect her own interests. She denied that assertion and when asked whether she would have loaned Mr Adame the money that he was requesting without a written loan agreement, she replied: ‘Yes, I would have”. I accept that evidence.
In cross-examination it was suggested to Mrs Adame that she and Mr Adame dealt with each other in writing and documented their financial transactions “with formal commercial documents”. Mrs Adame suggested that Mr Adame wanted matters dealt with that way. I accept her evidence about that.
In the email of 6 April, Mr Adame says: “. As for the other agreement I am getting this done soon so then no one can take the property away. We will have no choice but to put it into the family trust. Hope this is still okay for you”, perhaps suggesting that the [B] property would be purchased as an asset of the Adame Family Trust, although it is not at all clear. In any event, his email uses an interesting turn of phrase given that it is now Mr Adame’s case that the [B] property was his, or it belonged to the trust that he controlled, and that the parties’ expressed intentions at the time were to keep their assets separate. His suggestion that the property be put “into the family trust” seems inconsistent with the parties keeping their assets separate from each other.
In cross examination, counsel for Mr Adame suggested to Mrs Adame that she knew that Mr Adame intended to purchase the [B] property as trustee for the [B] trust. Mrs Adame denied any knowledge of the trust. I accept her denials.
The parties entered into a loan agreement on 8 April, 2010. The agreement is in evidence and reflects a loan of $275,000 from Mrs Adame to Mr Adame, such sum:
a)to attract interest at 5% per annum paid annually (or 2% per annum paid annually if the provisions relating to concessional interest were engaged); and
b)to be repaid upon 180 days written notice requiring repayment.
According to Mrs Adame’s evidence, Mr Adame required $250,000 to settle the purchase of the [B] property and $25,000 for his own purposes. Counsel for Mr Adame suggested in cross-examination that the money loaned by Mrs Adame to Mr Adame was to be used for renovations. Mrs Adame denied that assertion and insisted that the money advanced by her to Mr Adame was used by him towards the purchase price of the property. I accept her evidence about that. The timing of the advance is more consistent with it being used to complete the purchase than it is to fund renovations. The loan agreement drawn by Mr Adame’s lawyer was executed on 8 April, 2010 at about the time the contract to purchase the [B] property was executed. If the funds were intended to fund renovations to the property, there would have been less urgency to document the transaction and the funds would probably not have been required for some time following completion.
There is a further dispute between the parties about the amount advanced by Mrs Adame. She says it was $250,000 and Mr Adame says that it was $200,000. Whatever the amount, Mr Adame was unable to assist with the details of the account into which those funds were deposited when he received the loan from Mrs Adame. He did accept, however, the funds were paid into a bank account. His evidence in cross examination was not particularly helpful:
MR MCGREGOR: What account did you use to pay back the two hundred and – sorry, what account did the $275,000 that [Ms Adame] paid you on 8 April 2010 go into?‑‑‑Sorry, could you repeat that question.
What account did the $275,000 that [Ms Adame] paid you on 8 April 2010 go into?‑‑‑Sorry, just one more time. The $275,000 which‑ ‑ ‑
Remember the $275,000 that [Ms Adame] paid you?‑‑‑Yes.
That was paid to you on 8 April 2010?‑‑‑Right.
What account did it go into?‑‑‑I’m not quite sure. Maybe St George or – I don’t recall.
Right. Okay. And whose name is the St George account?‑‑‑Might be the trust – one of the trusts. Maybe ATA or maybe ‑ ‑ ‑
Mrs Adame says that the loan was repaid in about January, 2011 and that she received $275,000 “from Mr Adame’s overseas account, I transferred $25,000.00 into his account in $5,000.00 lots as this was my limit per day for electronic transfers until the $25,000.00 “extra” was paid to him”.
As I have recorded above, it is Mr Adame’s case that it was Mrs Adame who wished for there to be a “pre-nup” between them and that she was the instigator of the financial agreement. In cross examination
Mr Adame agreed with the proposition that it was his idea to get a financial agreement organised. He agreed with the proposition that he organised it and instructed the lawyer who prepared it.
On 23 April, 2010 Mrs Adame received by email a draft of a binding financial agreement from Mr Adame. The email asked her to “read it to make sure this one is ok so we can get this sorted please”.
Mr Adame agreed with the suggestion put to him in cross-examination that he wished for the financial agreement to be signed and for it to be binding on the parties because at the time he sent it to Mrs Adame for her consideration, he was “in the middle of buying the [B] property”. He agreed with the proposition that he wanted to make sure that
Mrs Adame could not make any claim to that property.
There is no dispute that Mr Adame asked Mrs Adame to get an independent lawyer to give her advice about the financial agreement. Mr Adame’s lawyer was Ms P (the lawyer who also drew the loan agreement). I accept Mrs Adame’s evidence that Ms P referred her to Mr B of [B] Lawyers for advice about the financial agreement.
Mrs Adame met with Mr B on 3 May, 2010. The next day, she received some oral advice from Mr B. According to Mrs Adame’s evidence:
I was strongly advised by Mr B to not sign the binding financial agreement for several reasons, including the lack of full and frank disclosure of all relevant matters, there were no valuations of assets, liabilities and financial resources of our relationship, there was no disclosure of the structure and financial circumstances of the various companies and Trusts, there was no disclosure in respect of each of our superannuation entitlements, there was no provision for me to receive any future increase in the value of assets owned by Mr Adame despite the contributions I was going to make to the children and to the family and to those assets, financially and non-financially in the years ahead. I was advised that the Agreement was not equitable, fair, reasonable or satisfactory under the law, that I should not sign it.
There is no contention between the parties about the advice that
Mr B gave Mrs Adame. Mrs Adame says that when she told
Mr Adame about Mr B’s advice he “got quite angry because of all the money this was costing him.” Mr Adame’s own evidence is that he can recall feeling frustrated that Mr B was not willing to sign the certificate of independent legal advice particularly given that, at least according to Mr Adame, Mrs Adame wanted to enter into the financial agreement notwithstanding that advice.
Mrs Adame refused to sign the agreement. She says: “It created a lot of issues between Mr Adame and I” although she does not elaborate upon the issues that she says were “created”.
Mr B’s file notes that are in evidence tend to corroborate
Mrs Adame’s case that Mr Adame told her that the [B] property should not be put in their names so as to protect that property from creditors. Mr B notes: “h has told her the house not put in her name because doesn’t protect it from creditors these days - incorrect”.
Mrs Adame says that Mr Adame told her not to go back to Mr B but to seek advice from another lawyer. I accept her evidence about that - it is entirely consistent with Mr Adame’s frustration with Mrs Adame’s reluctance to sign the financial agreement. In cross examination
Mr Adame suggested that the reason that Mrs Adame did not go back to Mr B was because he charged too much for his work. I reject his explanation for the change in Mrs Adame’s lawyers. I am satisfied that Mr Adame organised for Ms P to provide Mrs Adame with the name of an alternative lawyer to provide her with advice about the financial agreement.
Mrs Adame withdrew her instructions from Mr B and asked for an account (no account had been rendered by Mr B at the time the decision was made to change lawyers). I accept Mrs Adame’s evidence that Mr Adame was to pay Mrs Adame’s costs incurred with Mr B. That seems consistent with a file note kept by Mr B which notes “send out dual bills to h & w. h to pay w’s costs”.
I accept that on 6 May, 2010 Ms P called Mrs Adame and then sent her an email suggesting that she contact Mr C of [C] & Associates, Solicitors for the purpose of receiving further advice on the binding financial agreement.
On 7 May, 2010 Mrs Adame received a letter of advice dated 6 May, 2010 from [B] Lawyers. The second paragraph of the letter consisted of one sentence: “For several reasons, we strongly advise you not to sign the Agreement in its present form.” The letter thereafter set out the “several reasons” in the clearest of terms.
Mr and Mrs Adame fell into dispute with Mr B about Mr B’s very reasonable account for the quality advice that he gave to Mrs Adame. I accept Mrs Adame’s evidence that Mr Adame was the driving force behind that dispute because he was to meet the account. The dispute was eventually settled and Mr Adame paid the account. However, I reject Mr Adame’s assertion that he paid the account because Mrs Adame refused to do so. I am satisfied that Mr Adame always intended to pay the account rather than have Mrs Adame pay it.
I accept that Mr Adame was applying some pressure to Mrs Adame to sign the financial agreement and told her that she needed to sign the financial agreement so that the recently acquired [B] property bought for the family to live in could be held by “the Trust” and be safe in case he was sued “through his business for any reason by anyone”. I accept that he told her that the parties would risk losing their home if
Mrs Adame did not sign the financial agreement.
Mrs Adame was cross-examined about the proposition that the parties risked losing the [B] property if she did not sign the financial agreement. She gave evidence that the parties had a history of purchasing real property in her name. She said that the transactions were structured in that way so as to protect their assets from any possible action by Mr Adame’s business creditors or associates. When the [B] property was purchased, Mrs Adame says that Mr Adame told her that the financial agreement was necessary to protect that property from creditors (as recorded by Mr B in his file note) so that it would not be “at risk”. Her answers were consistent with her understanding that Mr Adame wished to purchase the [B] property in such a way that it was protected from creditors and, at least according to him, executing a binding financial agreement would assist in that regard. I accept her evidence about that.
Mrs Adame made an appointment and met with Mr C on 31 May, 2010 to get advice on the financial agreement. Mr Adame accepted that Mrs Adame told him after meeting with Mr C that he too advised her against signing the financial agreement. The next day he sent an email to his lawyer, Ms P in which he said (speaking of Mr C):
He said he will call you. He also advised her not to sign and was going to call you to discuss this matter. What can we do now? She is pissed off. Can we just get a simple agreement made that she doesn’t have to take to another solicitor that might give us a little bit of an edge, just in case things go pear shaped.
Not much appears to have happened between that email of 1 June, 2010 and early September, 2010, although at one point in June (I am not able to more precisely identify the date) Ms P sent a list of asset values to Mr C. Having heard nothing since that email in June, it seems Ms P was keen to get the matter finalised. She emailed Mrs Adame on the afternoon of 2 September, 2010 informing her that she had spoken with Mr C and that Mrs Adame was to pay some money into his trust account and make an appointment with
Mr C to discuss his letter of advice to her, which at that stage, Mrs Adame had not received.
Mr C wrote to Mrs Adame on 6 September, 2010 providing her with advice as well as his retainer agreement, a letter about likely costs and a draft response to be sent back to Mr Adame’s lawyers. Although some changes had been made to the draft financial agreement to take up some of the matters raised by Mr B, Mr C also advised Mrs Adame not to sign the financial agreement for reasons not unlike those raised by Mr B.
Based on the advice from Mr B and Mr C, Mrs Adame did not sign the financial agreement. I accept that Mr Adame was not at all happy that Mrs Adame would not sign the agreement. I reject Mr Adame’s evidence that Mrs Adame expressed some frustration to him that Mr C would not sign the certificate of independent legal advice. I am satisfied by Mrs Adame’s evidence that she did not wish to sign the agreement having regard to the advice that she had received from both Mr B and Mr C.
Mr Adame paid for Mrs Adame’s legal advice from Mr C.
Meanwhile, and in September, 2010 Mr Adame sent an email to his lawyer, Ms P in the following terms:
Okay, I was. Well, let’s see what happens from here. By the way, I bought another house in California at [L] Beach. So nice. It’s down the road from [omitted] Hotel. Next time you come to LA let me know. You can stay here. Let’s catch…
Mr Adame was cross-examined about that email:
MR MCGREGOR: …Another house in California. Did you have more than one house in California?--- No. I was looking at homes at the time and the first one wasn’t that good, I suppose, and I had a look at another house, which is what this one says, and – at California at [L] Beach – and the guys that we were selling to at the time wanted to rent it off me but that never went through, either. Had two mortgages on it from two different banks and it was just too hard to settle.
So, you said I’ve bought it?--- I – I shouldn’t have said that, no.
Not only I’ve bought it but you can stay here?---Yes.
Is it the case – I’m just trying to get to grips with exactly what’s going on with you, Mr Adame. Are you – are you just loose with the truth or did you, in fact, buy it?--- I think I was just big noting myself to my solicitor.
Were you?--- Yes.
From the time that the purchase of the [B] property settled until December, 2010 the parties and the children undertook regular trips from Adelaide to the Gold Coast to ready the [B] property for occupation. Mr Adame’s evidence was that certain renovations were done to that property before the parties commenced living in it.
On 6 October, 2010 Mr Adame had a telephone conversation with
Mr F, solicitor and principal of [F] Law, a legal practice based on the Gold Coast, Queensland. Mr Adame had no previous dealings with [F] Law, but had been referred there by a friend. Mr Adame sought advice from Mr F about whether he would be prepared to assist Mrs Adame with legal advice about the draft financial agreement.
Mr F gave evidence in these proceedings. His evidence was that he was contacted by Mr Adame and asked if he was prepared to represent Mrs Adame for the purposes of advice in relation to a binding financial agreement and the execution of that agreement. Mr F told Mr Adame that he was prepared to do that.
Over 6 and 7 October, 2010 emails were exchanged between Mr Adame and Mr F whereby Mr Adame provided a draft of the binding financial agreement to Mr F, together with some other information, as and when Mr F requested.
On 7 October, 2010 Mr F told Mr Adame that he would be happy to confer with Mrs Adame, at her convenience, to discuss the binding financial agreement and, subject to her agreement, to attend upon her executing that document. Mr F caused a file to be opened in the name of Mr Adame. The relevant contact details for the client were all Mr Adame’s contact details. The email address used by Mr F to subsequently contact Mr and Mrs Adame belonged to Mr Adame. Mrs Adame was cross-examined about that. Her evidence, which I accept, was that:
a)in December, 2010 and January 2011 she had her own private email address;
b)she did not give any email address to Mr F;
c)she specifically denied giving to Mr F an email address that both she and Mr Adame could access;
d)Mr F never contacted her directly - always through Mr Adame; and
e)
all correspondence sent by Mr F to Mrs Adame was sent via
Mr Adame’s email address.
Her evidence is unsurprising given that it was Mr Adame who located and instructed Mr F. In his oral evidence in chief Mr F said that
Mrs Adame had indicated to him that she did not have an email address for herself and to send all communications through Mr Adame. Later, in cross examination, Mr F said that it was his personal assistant who had told him that Mrs Adame had indicated that she did not have an email address. That Mrs Adame would have said that to Mr F, or his personal assistant, seems inconsistent with the matters that I have set out above. I think that Mr F is probably mistaken about Mrs Adame telling him, or his personal assistant telling him, that she did not have an email address. It is quite clear from the evidence before the court that at the relevant time she did have an email address because
Mr Adame was sending emails to her. Thus, even though Mr Adame knew of Mrs Adame’s email address, he did not provide it to Mr F either. I am satisfied that he provided only his own email address because he wished for all communications from Mr F to Mrs Adame to go via his email account so that he could see those communications.On 7 October, 2010 Mr Adame forwarded to Mrs Adame an email and letter from [F] Law, confirming Mr F was willing to meet with her and provide the necessary advice.
I accept that Mr Adame suggested that Mrs Adame make an appointment with Mr F when Mrs Adame was next in Queensland and that he would accompany her so that he could discuss other matters with Mr F at the same time. Mrs Adame did not, however, make an appointment with Mr F.
Mr F continued to consider the agreement and sought from
Mr Adame, and Mr Adame’s lawyers in Adelaide, information that
Mr F needed to properly consider the terms of the agreement.
During October, 2010 Mr Adame continued to be in contact with his own solicitor, Ms P in Adelaide. On 19 October, 2010 she sent
Mr Adame an email which, amongst other things, said:
I’ve updated financial agreement. See highlighted areas. I’ve included the new Queensland property and California one in schedule A. Put the proper addresses in.
On 20 October, 2010 it seems that two further emails passed between Mr Adame and Ms P. There could have been more but the evidence is unclear. The relevant emails were put to Mr Adame in cross examination, but not tendered and so only those parts read into the evidence are before me. It is clear, however, that on 20 October, 2010 Mr Adame sent an email (or emails) to Ms P in response to her email of 19 October, 2010 in which he said:
Oh well she does not know about the US property. It’s under a trust fund for the kids so better take that one out or I will be in a shit.
and
At this stage, I would rather not disclose that property. Things in the USA work a little different. That here I’ve spoken to a solicitor before I purchased the other property. All is okay, don’t worry. Please make amendments so I can forward to [Mr F] fucking ha, ha, ha. Bye, banana
and
So sorry wise one. Please take that one out. Catch up soon. X. Regards, Mr Adame.
Ms P replied to Mr Adame by email on the same day wherein she said:
Okay but failure to make full disclosure is a reason she can have the agreement set aside. Perhaps tell her???
When cross-examined about these emails, Mr Adame denied that he had any property at all in the United States. I will return to this issue later in these reasons.
There is a dispute between the parties about when Mr Adame moved to Queensland. He says that he moved to Queensland in 2009.
Mrs Adame says that he did not move to Queensland permanently until November, 2010. As I have found above, I am satisfied that from the beginning of 2010 the parties were reconciled. They were most probably living together in Adelaide although Mr Adame continued to travel for his business purposes. An email between Mr F and
Mr Adame dated 7 October, 2010 is consistent with Mrs Adame’s case that the parties were living together in Adelaide and travelling regularly between Adelaide and the Gold Coast until permanently moving there in late 2010. In that email, Mr Adame says to Mr F: “We will be back up on the Gold Coast November some time…”.
I am satisfied that Mr Adame moved to the Gold Coast in November, 2010 as Mrs Adame swears and that she and the children moved to Queensland in December, 2010.
On 16 December, 2010 Mr Adame emailed to Mrs Adame another version of the binding financial agreement. His email asked her to “please read let me know” .
Mrs Adame replied by email the same day. She said:
I’m not signing it. And I’m not going to Fiji to play happy family in front of ur american friends, this agreement goes to show exactly what u think of us, our marriage and our family. Keep all ur money [Mr Adame]. Hope it buys u happiness. I’ll take the kids back to adelaide with me.
(faithfully reproduced)
That email response from Mrs Adame is inconsistent with Mr Adame’s assertions that she was happy to sign the agreement. It is more consistent with Mrs Adame’s case that she was never happy to sign the agreement that had been proposed by Mr Adame, or any agreement at all. It is inconsistent with the proposition advanced by Mr Adame that it was Mrs Adame’s idea that there be some form of financial agreement between them. I reject his evidence that she suggested that the parties enter into a “pre-nup” when they decided to reconcile.
Mr Adame’s response, sent the next day, is consistent with his desire that the agreement be signed notwithstanding Mrs Adame’s reluctance to sign the agreement:
I c how u feel now I know what u say what u intended from the beginning were two different thoughts……
If we together forever what’s the big deal…… U not looking at big picture u just reading the words and not trusting me in what I’m saying
Do as u want just never blame me its was your decision and u just made the wrong one(faithfully reproduced)
Mr Adame made an appointment for Mrs Adame to meet with Mr F on 21 December, 2010. The purpose of the appointment, was recorded in an email between Mr Adame and Mr F, was to “discuss the agreement together” and to “get some advice for future investments we have going”.
Mr and Mrs Adame met with Mr F on 21 December, 2010. It was the first time that Mr F had any communication at all with Mrs Adame. There is a dispute between the parties about how this meeting occurred. Mrs Adame says that Mr Adame was present for the whole of the meeting that she had with Mr F. Mr Adame says that he waited outside in the reception area and only joined Mrs Adame and Mr F when he was invited to do so. Mr F’s evidence was that he met with both of the parties. His file notes record a conference with “A A and R A” between “10.00 – 10.40”.
I prefer Mrs Adame’s evidence about how this meaning occurred. I am satisfied that she did not meet privately with Mr F but rather, she and Mr Adame met with Mr F and discussed the financial agreement.
It is important to record that according to Mr F: “The purpose of the meeting was to meet Mr Adame and be – and meet Mrs Adame and to discuss, as I understood, the commercial terms of that agreement to make sure they were what they had agreed to.” It is significant, in my view, that according to Mr F the purpose of the meeting was not to provide advice to Mrs Adame about the terms of the financial agreement and its advantages and disadvantages for her. In Mr F’s own words: “I didn’t discuss anything in relation to the Family Law Act or anything.”
According to Mr F, his file notes kept of the meeting confirm that the discussions between he and the Adames concerned clarification of the commercial terms of the agreement and his efforts to confirm that the agreement reflected what the parties intended.
Having regard to the notes kept by Mr F of that meeting, it seems that the discussion about the financial agreement concerned the loan made by Mrs Adame to Mr Adame and the way in which any “equity” in the [B] property might be divided between the parties. Mrs Adame raised with Mr F some of the issues that had concerned the previous two lawyers she had consulted about the financial agreement, but having regard to Mr F’s evidence about what was discussed at the meeting, I am satisfied that he provided no advice to Mrs Adame about those issues.
Mrs Adame asked for some changes to be made to the document. It was put to Mrs Adame by counsel for Mr Adame that the changes she required were “trivial”. She agreed with that proposition.
On 22 December, 2010 Mr F wrote a letter to Mrs Adame in the following terms:
Dear [Ms Adame]
RE: [MR ADAME] AND YOU: BINDING FINANCIAL AGREEMENT
I refer to my conference with you and Mr Adame on 21st December, 2010 and the copy of the Binding Financial Agreement forwarded under separate cover.
If the amended Binding Financial Agreement is in a form acceptable to you, please arrange to attend at my Offices to execute the same at your convenience.
In the meantime, as requested by Mr Adame, I attach my Tax Invoice for acting in relation to this matter to date.
If you do not have any queries with respect to same, please let me have a cheque in payment at your earliest convenience.
…
Yours faithfullyThe letter to which I have just referred was sent by email to Mr Adame’s email address at [omitted]. The terms of the letter confirm that:
a)Mr and Mrs Adame together attended the meeting with Mr F; and
b)any advice given by Mr F to Mrs Adame in relation to the terms of the binding financial agreement must have been given in Mr Adame’s presence.
No written memorandum of advice from Mr F to Mrs Adame was prepared by Mr F. His diary notes kept in relation to his meeting of 21 December, 2010 do not reveal the extent of any advice that he gave to Mrs Adame about the financial agreement.
The evidence also reveals that whilst Mr F chased up Mrs Adame (by sending letters to Mr Adame’s email address) in relation to payment of his costs for providing her with advice in relation to the binding financial agreement, Mr Adame ultimately paid those costs.
On 3 January, 2011, Mr Adame sent an email to Mr F’s assistant asking for an appointment “to sign the docs in front of Mr F” and asking “when can we do this between the 13th and the 16th Jan 2011”. In response, on 4 January, 2011 Mr F emailed Mr Adame telling him that he was still awaiting a response from “the lawyers in Adelaide” and asking Mr Adame to chase them up. He suggested some times for an appointment. Mr Adame replied the same day asking for details of the information that was to come from the lawyers in Adelaide. Mr F replied on the same day saying “copied your wife with the corro”.
On 4 January, 2011 [F] Law emailed [P] Lawyers attaching a clean copy of the financial agreement, a marked up copy and a letter. That email was copied to Mr Adame’s email address.
It is clear from the email correspondence between Mr Adame and
Mr F’s assistant that Mr Adame made another appointment with Mr F for 14 January, 2011. The purpose of that appointment was for
Mrs Adame to sign the financial agreement.Mr and Mrs Adame went on a holiday with some of Mr Adame’s customers in early January, 2011. They returned to Australia on 13 January, 2011 – the day before the appointment with Mr F. Mrs Adame says that Mr Adame was disappointed with the way the holiday had transpired with his customers. I accept that he complained to her that “I was just using him for his money like his customers”. I accept
Mrs Adame’s claims that he told her that if she really loved him and wanted to make their marriage work in Queensland, she would sign the financial agreement. She says that he told her that he was “doing this for no other reason” than to protect their family home, so that if he was sued through his business, the family home would not be at risk. I accept that he told Mrs Adame his accountant had given him this advice and told him that until Mrs Adame signed the document a trust could not be set up for the home. I accept that he said words to the effect of: “Baby this is our new start. This is our forever. I regret everything I’ve done in the past and want my family with me forever. This document is just a safety net for our home. Once you sign it, we can stick it under the carpet ‘cos we’re never gonna need to sight it again. I made you promises that I’m going to keep”.Against that background Mrs Adame contends that she had no knowledge of the appointment with Mr F to sign the agreement until shortly prior to it taking place. I accept her evidence about that.
Mrs Adame met with Mr F on 14 January, 2011. There is a dispute about whether Mr Adame accompanied Mrs Adame to the appointment. Mr Adame says that he did not. Mrs Adame says that he was present when she signed the financial agreement in Mr F’s presence. She says that after she signed the financial agreement
Mr Adame and Mr F started having a conversation about other matters. She alleges that Mr Adame was trying to sponsor a work colleague from South Africa and his family to become permanent residents in Australia. She says that Mr Adame and Mr F discussed that matter for about 15 minutes.Mr F gave evidence about the meeting in the following way:
MR MCGREGOR: 14 January 2011?--- I saw Mrs Adame on that morning.
Did you see Mr Adame at all?--- I don’t recall seeing him at all.
Right. Did you make notes?--- No, I didn’t. Sorry, beg your pardon. I believe I did, but for the life of me I can’t believe I haven’t been able to find them, or they’ve been misfiled. I’ve looked everywhere.
And then later in his cross-examination:
MR GALLOWAY: Mr F, the wife has, in these proceedings, sworn an affidavit, and I’m going to read to you some of the things that she has put into that affidavit. Excuse me a moment, your Honour. She says, your Honour, in her paragraph 96 – she says this:
The certificate, signed by my lawyer, which is attached to the binding financial agreement provides that I attended upon him on 14 January 2011, and he attested my signature on the agreement in the absence of Mr Adame. This is not true, as Mr Adame was with me in Mr Freeman’s office while I signed the agreement.
Can I pause there. Can you make a comment on that allegation?--- In the – relying on my declaration and the correspondence, my practices, and discussions with my PA, he was not present when I signed the declaration. I do not recall if he drove there and was outside, but he wasn’t present.
I understand your answer, sir. Do you have any recollection of whether he was present? --- My recollection is he wasn’t present.
I am satisfied that Mr Adame was not present in Mr F’s office when Mrs Adame signed the financial agreement. To the extent that she suggests the contrary, I think she is mistaken. I accept Mr F’s declaration contained within the financial agreement that it was signed by Mrs Adame in the absence of Mr Adame. It may well have been the case that Mr Adame accompanied Mrs Adame to the solicitor’s office but I am satisfied, as I have said, that he was not present when she signed the financial agreement. Mrs Adame’s recollection that
Mr Adame and Mr F discussed other matters after she signed the financial agreement might be confused with the earlier meeting between Mr Adame and Mrs Adame and Mr F on 21 December, 2010. Mr F’s notes of that meeting contain a reference to discussions about other matters unconnected with the financial agreement which occurred at the conclusion of the meeting. It is likely, I think, that Mrs Adame has mistakenly thought that those discussions took place after she executed the financial agreement when in fact they occurred at the first meeting.Mr F gave evidence that in the conference on 14 January, 2011 he went through the document with Mrs Adame. He formed the impression that she was satisfied with the document. He had her sign the document and then he signed the declaration. He made some formal amendments to the declaration that was attached to the financial agreement. His evidence then continued: “But to the best of my recollection, without the benefit of notes which annoys me, I just rely on that declaration.”
Mr F was taken to the relevant declaration in his evidence in chief. His evidence about the declaration ad the advice that he gave Ms Adame was as follows:
MR MCGREGOR: Okay. So I just want to show you, then, the declaration that you’ve referred to. This is a copy of the Binding Financial Agreement?---Yes.
…
… Can I then just take you to your certificate?--- Yes.
The lawyer’s certificate?---Yes.
And I just want you to tell the court, precisely or in the best manner that you can, what you told or what advice you gave to Mrs Adame?--- To the best of my recollection, without the benefits of file notes, I advised her in relation to – and without – without Mr Adame being present – the requirements set out in that declaration as regards section 90K and 90KA, as setting aside of documents, the legal implications and legal effect, advantage finally or otherwise, whether or not it was prudent for the party to make the agreement, whether or not at the time circumstances were at the time reasonably foreseeable.
All right? --- And to the best of my recollection, that’s what happened.
Okay. Well, I just need you to be more particular, if you don’t mind, about what you said the legal implications and legal effect of the agreement and the effect of the agreement on the rights of that party were, when you gave the advice to Mrs Adame?--- I honestly can’t recall.
Okay. I need you to be more particular, now, about what you say the advice was, what was said when you gave the advice to Mrs Adame about whether it was to her advantage financially or otherwise to make the agreement?--- I honestly can’t recall.
I need you to be particular, if you can, about the words that were used when you gave advice to Mrs Adame about whether or not at the time it was prudent for her to make the agreement?--- I honestly can’t recall.
I want you to be particular, if you can, about the words that were spoken when you gave the advice to Mrs Adame about whether or not, at the time and in the light of such circumstances as were at that time reasonably foreseeable, the provisions of the agreement were fair and reasonable? --- I honestly cannot specify.
Mrs Adame signed the financial agreement in the presence of Mr F. There is no question that when she signed the agreement she fully and completely understood its terms. In answer to a question from counsel for Mr Adame, Mrs Adame said that she understood what she was signing; she just did not want to sign it. She later repeated in her cross-examination that she knew what she was signing.
She conceded in cross-examination that she had, on at least two previous occasions (with Mr B and Mr C) had the agreement explained to her and how it would affect her rights if she entered into it. Mrs Adame, however, denied that Mr F explained to her, in any way, the nature of the agreement or the advantages or disadvantages of the agreement for her.
It is not surprising that Mr F was unable to give any particulars about the advice that he gave to Mrs Adame. On 13 February, 2013 Mr F wrote to Mrs Adame’s lawyers (in these proceedings), in response to a request for information they had sent him. In that letter he says:
I respond to the numbered points in the letter as follows:
1. I was forwarded a copy of the Binding Financial Agreement prepared by Messrs. [P] Lawyers with a request that I witness the signature of the above-named to the Binding Financial Agreement and provide the Lawyer’s Certificate attached to the Binding Financial Agreement. I did those things. Relied on disclosure of the assets set out in the Binding Financial Agreement which were confirmed as an accurate list by the above named.
2. There was no letter of advice given to the above-named as I felt my instructions were simply to witness the above-named signature and provide the Lawyer’s Certificate as advised above.
I am not satisfied about the nature or the extent of any advice that was given by Mr F to Mrs Adame at the meeting of 14 January, 2011 when she signed the financial agreement. I am not persuaded by the generalised statements made by Mr F in his evidence, which merely conformed to the declarations made in the certificate attached to the financial agreement, that he gave Mrs Adame any particular advice at all when she executed the financial agreement. It may well have been the case that both Mr F and Mrs Adame knew that the giving of such advice was unnecessary in circumstances where she had already received advice from two other lawyers about the financial agreement and she had nonetheless resolved to sign the document. Despite the certification attached to the financial agreement, I am not persuaded on the balance of probabilities that Mr F provided the advice set out in the certificate to Mrs Adame when she executed the agreement.
Mrs Adame swears that at the time she signed the financial agreement she was under a lot of pressure because:
a)she had recently relocated with the parties’ three young children to Queensland;
b)she had no friends or family support in Queensland;
c)she was trying to make her marriage work with a “fresh start” in Queensland;
d)Mr Adame was constantly reminding her that the parties could risk losing their house if she did not sign the financial agreement;
e)she had no employment in Queensland;
f)Mr Adame was present in the two meetings she had with Mr F;
g)Mrs Adame’s reluctance to sign the financial agreement caused many arguments with Mr Adame since about April/May 2010 when he first asked her to sign an agreement;
h)Mrs Adame felt like she had no choice but to sign the financial agreement if she wanted to give the parties’ marriage and their family another chance;
i)Mrs Adame had sold her house in Adelaide and had loaned a substantial part of the net proceeds of sale to Mr Adame which he used to assist with the purchase of the [B] property.
Save for the matters set out in paragraph subparagraph f) above, I accept Mrs Adame’s evidence as to her state of mind at the time she executed the financial agreement as set out in the previous paragraph. I accept that Mrs Adame just “gave in” and signed the financial agreement.
Mrs Adame alleges that when she signed the document Mr F said to her that she appeared to be signing that document under duress. Mr F was cross-examined about Mrs Adame’s assertions:
MR GALLOWAY: All right. The certificate that you have signed? --- Yes.
… has a paragraph 4:
The said Ms Adame gave to me apparently credible assurances that she was not acting under coercion or undue influence and that she appeared to me to freely execute such agreement.
Can I just ask you to keep that in your mind. In the paragraph 93 of the mother’s affidavit she says this:
When Mr Adame and I were in Mr F’s office I still hesitated with signing, but I recall Mr F commenting words to the effect of “You don’t seem to want to sign this. You seem to be signing this under duress”.
Did you say anything like that to her?--- No.
She said:
I was sick of the fights it was causing between Mr Adame and I, and considering everything he had said to me before we got there, I just gave in and signed the agreement.
? --- I don’t know what she would have said before, but…
No. But you are quoted. “You don’t seem to want to sign this. You seem to be signing this under duress.”? --- I didn’t say that. I don’t use words like that.
…
If she said it, I wouldn’t have let her sign it.
…
All right. She says in this case, you may know as you may ..... that she was under duress when she signed?--- I didn’t see any evidence of duress.
All right? --- Or hear anything said.
I accept Mr F’s evidence about that. He is a solicitor of some 37 years standing. He has some past experience in family law matters, although he does not presently practice in the area. I have no reason to doubt that, had Mrs Adame been exhibiting any obvious signs of being overborne or under duress sufficient to prompt Mr F to say the words he is reported to have said, he would not have permitted Mrs Adame to execute the agreement. I reject Mrs Adame’s evidence on this point.
Mr F wrote to Mrs Adame (via Mr Adame’s email address) on 14 January, 2011 confirming the conference that took place that day and enclosing a copy of the financial agreement executed by Mrs Adame for her records. The letter records that “Mr Adame will execute the binding financial agreement in his own right and as trustee for the [B] Trust next week and return a copy to the fully executing Binding Financial Agreement to me thereafter.”.
What then became of the original signed financial agreement is something of a mystery. Mr F gave evidence that he sent the original executed financial agreement to Mr Adame’s solicitors in Adelaide. However, his file at the time of the trial did not contain any evidence that the agreement executed by Mrs Adame had been sent to
Mr Adame’s solicitors. The original executed agreement, however, was not on Mr F’s file either. He was presented with a copy of the financial agreement executed by both Mr and Mrs Adame during the course of his evidence. That was the first time he had seen the completely executed financial agreement. Mr F had requested a copy of the fully executed financial agreement from Mr Adame’s lawyers in Adelaide, but one was never provided. Mr F had one of his employees telephone Mr Adame’s lawyers in Adelaide. His employee was told in that telephone conversation that “they never received a copy of the signed Binding Financial Agreement”.Mr F gave evidence that he has never at any time received either the financial agreement signed by Mr Adame or a copy of it from
Mr Adame or his lawyers. He gave evidence that he has never provided to Mrs Adame a copy of the declaration made by the lawyer in whose presence Mr Adame signed the financial agreement. I accept his evidence about those matters.The original financial agreement executed by each of the parties is not in evidence. Mr Adame, in whose possession the original agreement last existed, was unable to produce it at the trial. Mrs Adame says that the first time that she saw a fully executed copy of the financial agreement was when Mr Adame’s solicitors in these proceedings sent it to her lawyers on 6 February, 2013. I accept that evidence. There is nothing in the evidence to the contrary.
Mrs Adame seems to suggest that Mr Adame may not have executed the financial agreement at about the same time that she did. The copy of the agreement which is in evidence suggests that Mr Adame signed it on 19 January, 2011 in front of Ms A a solicitor from [P] Lawyers, Adelaide. Mrs Adame says that Mr Adame was not in Adelaide on 19 January, 2011 as he was with she and the children in Queensland. She keeps a diary and according to her diary, after she and the children moved to Queensland permanently in December, 2010 Mr Adame’s first trip to Adelaide was on 27 March, 2011. She alleges that he returned to Queensland on 29 March, 2011.
Whatever the case about the original agreement and when it was signed, Mrs Adame’s application to this Court presupposes the existence of a binding financial agreement executed by each of the parties.
At some point in January, 2011 (the evidence is unclear as to whether it was before or after Mrs Adame executed the financial agreement) the advance that she made to Mr Adame of $250,000 was repaid.
Mr Adame again borrowed funds from Mrs Adame on 4 October, 2011. The parties agree that the sum borrowed was $200,000. There was no loan agreement in respect of that sum. There seems to be no dispute between the parties that the loan has not been repaid.
Consideration
Having regard to the above facts, it seems uncontroversial that:
a)Mr and Mrs Adame were parties to a marriage;
b)they made a written agreement;
c)the written agreement was with respect to how, in the event of the breakdown of their marriage, all or any of the property or financial resources of either or both of them at the time when the agreement was made, or at a later time and during the marriage, was to be dealt with;
d)neither Mr Adame nor Mrs Adame were parties to any other binding agreement with respect to any of the matters set out in subparagraph above;
e)the agreement was expressed to have been made pursuant to s.90C of the Act.
I am satisfied, by reason of the matters set out in the previous paragraph, that the agreement entered into between the parties and executed by Mrs Adame on 14 January, 2011 and Mr Adame on
19 January, 2011 was a financial agreement for the purposes of the Act.
In my view, however, the agreement is voidable at Mrs Adame’s election because it was entered into by Mrs Adame on the basis of a misrepresentation by Mr Adame as to his assets. Recital K. of the financial agreement provides:
K.The parties have detailed their assets herein below within Schedule A (Assets of Mr Adame), Schedule B (Assets of Ms Adame) and Schedule C (Assets of Mr Adame as trustee of the Trust).
Although it is not stated expressly, there is a clear implication arising from that recital that all of the parties’ assets are detailed within the schedules attached to the agreement. I am satisfied that all of Mr Adame’s assets were not set out in Schedule A to the agreement. I am satisfied that Mr Adame owned, or had an interest in, property in California, United States of America form at least September of 2010. The exchange of email correspondence between Mr Adame and his solicitor, Ms P, in September and October, 2010 (detailed above) clearly indicates that Mr Adame had other assets in the United States. According to one of the emails from Ms P, a schedule of assets prepared by her for the purposes of the binding financial agreement had details of the “proper addresses” for the Californian property and the recently acquired Queensland property. Notwithstanding that
Mr Adame says in his email correspondence that the property in California was purchased in the name of a trust for “the kids”, I am satisfied that whatever the property was in California, Mr Adame considered it to be his.
The email correspondence with Ms P reveals a plan by Mr Adame to conceal the fact that there was property in which he had an interest in the United States. I reject his evidence that he was simply “big noting” himself to his solicitor. The emails are not written in language which suggests that Mr Adame had a plan to purchase property, but rather, that he had already purchased property and was in a position to make offers to his solicitor to permit her to use those properties when she was in the United States. She had the “proper address” for the property.
I am satisfied that when Mr Adame signed the agreement he knew that the representation that all of his assets were detailed in Schedule A to the agreement was false. I am satisfied that he knowingly made that representation to Mrs Adame. I am satisfied that he intended that she rely on that representation. Although he did not expressly give evidence to that effect, his intention must be implicit given the stated purpose of the financial agreement. I am further satisfied that he intended that she should execute the financial agreement based on her understanding of his asset position as set out in that agreement.
I am satisfied that Mrs Adame relied upon Mr Adame’s statement set out in recital K. of the financial agreement to the effect that he had detailed his assets within Schedule A to the financial agreement.
In those circumstances the financial agreement was voidable at
Mrs Adame’s election. By these proceedings, she has elected to have the agreement set aside. In my view, she is so entitled and there is nothing suggested by Mr Adame that would disentitle Mrs Adame to that relief.
Further, I accept Mrs Adame’s argument that there was non-disclosure of material matters by Mr Adame. The financial agreement purported to identify and then make provision for the parties’ assets and financial resources. As I have indicated above, the terms of the financial agreement, at least implicitly, purported to deal with all of those assets and financial resources. It must necessarily be material then for there to be complete disclosure of those assets and financial resources. It may not be necessary for that disclosure to occur on the face of the financial agreement. There may be other dealings between the parties, including negotiations leading up to a settled form of financial agreement, which makes it clear that there has been proper disclosure of all material matters between the parties. Where, however, the terms of the financial agreement provide, either expressly or by implication, that the parties assets and financial resources are recorded within the terms of the agreement itself, the failure to include particular assets or particular financial resources may well amount to non-disclosure of a material matter for the purposes of s.90K(1)(a) of the Act.
I do not, however, think that it is generally necessary that such disclosure extends to the provision of values for those assets and financial resources in the financial agreement, or otherwise. Each case needs to be determined according to its own facts, but parties are generally entitled and able to satisfy themselves about the values of the assets and financial resources disclosed for the purposes of the financial agreement. That the parties or a party might choose not to do so is, in my view, a choice that is open to be made by that party. It is the identity and existence of the relevant assets and financial resources which is material to the financial agreement.
It is clear from Mr Adame’s cross-examination, however, that there were many assets not disclosed by him in the schedules of the financial agreement in this case. I repeat the findings that I have made above about property in the United States. But Mr Adame also gave evidence about the existence of banking accounts into which funds (such as the amounts borrowed by him from Mrs Adame in 2010) were paid. Those banking accounts (indeed no banking accounts) were disclosed by
Mr Adame in the schedules to the financial agreement.
Mrs Adame also sought to have the agreement set aside on the basis that she was under duress when she signed the agreement and further that she entered into the agreement as a result of Mr Adame’s unconscionable conduct. I was not addressed at any length on these two matters, although the claims were pressed in Mrs Adame’s outline of case filed for the purposes of the trial.
There was no attempt by Mrs Adame to articulate the precise matters that she said amounted to the duress to which she was subject by Mr Adame. At its highest, her case seemed to be that Mr Adame wished for the financial agreement to be signed and harassed her until she signed it. Her evidence, both written and oral, was that her refusal to sign the financial agreement throughout 2010 caused problems between she and Mr Adame but few particulars were put to that allegation. It is of some significance, however, that Mrs Adame’s evidence about that, general as it was, was not seriously challenged in cross-examination.
The law, both at common law and in Equity, relating to duress was examined and summarised by Neville FM (as his Honour then was) in Hogan & Hogan [2010] FMCAfam 1255 at [11] – [23]. I will not repeat his Honour’s examination and summary of the law but express my respectful agreement with his Honour’s conclusions.
Mrs Adame does not suggest that duress, in the common law sense of physical pressure, was brought to bear upon her by Mr Adame. Nonetheless, she says that pressure was brought to bear upon her, as a result of which she resolved to finally sign the financial agreement.
I am satisfied that Mr Adame brought pressure to bear upon
Mrs Adame to sign the agreement. That pressure took the form of repeated requests to sign the document and expressions of displeasure and anger by him towards her for not wishing to sign the agreement. Apart from Mrs Adame’s direct evidence, general as it is, about these matters I also infer that there was pressure put upon Mrs Adame by
Mr Adame to sign the financial agreement having regard to the following matters:
a)it was Mr Adame who wished for there to be a financial agreement between the parties;
b)it was Mr Adame who suggested that the financial agreement was necessary to protect the parties’ assets, and in particular the home on the Gold Coast, from potential creditors;
c)in truth, Mr Adame wished to protect his assets and in particular the Gold Coast home from any claims by Mrs Adame;
d)it was Mr Adame who organised three lawyers to give Mrs Adame legal advice about the financial agreement;
e)
Mr Adame knew that at least two of those lawyers, Mr B and
Mr C, advised Mrs Adame not to sign the agreement and each time that occurred, he organised a new lawyer for her;
f)Mr Adame met Mrs Adame’s costs of obtaining that advice;
g)
Mr Adame accompanied Mrs Adame to the first meeting with
Mr F; and
h)Mr Adame organised and took Mrs Adame to the meeting at which she signed the financial agreement in Mr F’s presence.
To secure relief in Equity, Mrs Adame must establish that the pressure that was brought to bear upon her by Mr Adame to sign the financial agreement was, in all the circumstances, illegitimate. Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct: per McHugh JA , with whom Samuels and Mahoney JJA agreed in Crescendo Management Pty Ltd & Westpac Banking Corporation (1988) 19 NSWLR 40. As Neville FM pointed out in Hogan and Hogan (above) McHugh JA also observed:
It is not necessary for a victim to prove that the illegitimate pressure was the reason for him entering into a contract. It is sufficient that the illegitimate pressure was one of the reasons for the person entering into the agreement. Once the evidence establishes that the pressure exerted on the victim was illegitimate, the onus lies on the person applying the pressure to show that it made no contribution to the victim entering into the agreement.
It must be Mrs Adame’s case that the pressure that was brought to bear upon her by Mr Adame to sign the financial agreement was illegitimate because it amounted to unconscionable conduct. There is no evidence that there were any unlawful threats made to her by Mr Adame.
The doctrine of unconscionable conduct is widely established in common law and the elements were summarised, in the current context, by Ryan J in Saintclaire & Saintclaire [2013] FamCA 491 at [108]:
·if a stronger person enters into an improvident transaction with a weaker person who, in relation to the former, is in a position of special disadvantage that affects the weaker person’s ability to protect his or her own interests and;
·the stronger party either knows of the special disadvantage or knows of facts that would lead to constructive knowledge of that special disadvantage; and
·the stronger party takes advantage of the special disadvantage, either actively or by passively allowing the transaction to proceed; then
·the transaction may be set aside for unconscionable dealing or another equitable remedy may be applied. (The Commonwealth Bank of Australia v Amadio (1983) 151 CLR 447 per Gibbs CJ at [459]; Louth v Diprose (1992) 175 CLR 621)
In cross-examination Mrs Adame accepted the following propositions:
a)she had been comprehensively advised by two solicitors in Adelaide, about the agreement;
b)she had been left with absolutely no doubt about the operation and effect of the agreement;
c)they had both advised her not to sign the agreement;
d)there was no doubt in her mind about what she was being asked to sign;
e)the effect of each amendment made to each successive draft of the financial agreement was discussed with Mrs Adame by the lawyers in Adelaide;
f)further changes were made to the document by Mr F, but the effects of those changes were discussed with him and understood by Mrs Adame - those changes were relatively trivial;
g)she had been long since advised about the nature of the binding financial agreement and that it operated in substitution for her rights under the Family Law Act;
h)there were advantages and disadvantages, to which she was directed by those solicitors;
i)in each case, they suggested that they would not recommend that she signed the agreement;
j)she knew what she was signing in front of Mr F;
k)she was not an unsophisticated person;
l)she understood the need to have regard for what she was signing;
m)she knew which loan agreement was referred to in recital J of the agreement;
n)she knew exactly what that loan agreement provided and that there was nothing secret about it;
o)she knew exactly what she was signing and although she didn’t want to sign, she nonetheless did; and
p)she understood what she was signing.
However, given the findings that I have made about Mr Adame’s misrepresentations, I have no difficulty with finding that the pressure that was brought to bear upon Mrs Adame by Mr Adame contributed to her decision to execute the financial agreement. Mrs Adame was in a position of special disadvantage because Mr Adame knew the real facts about his assets and concealed them from her. Moreover, he knew that she was unwilling to sign the document, but nonetheless insisted upon her doing so and organised lawyers for her to see until one was willing to sign the certificate of independent legal advice. I accept
Mrs Adame’s evidence that those matters weighed upon her until she simply “gave up”. He created a false sense of necessity by reason of his assertions that execution of the agreement was required to properly protect the family home from creditors. I am satisfied that Mr Adame knew that the pressure he applied to Mrs Adame to sign the agreement as set out above, overcame her will to resist executing it.
Mr Adame actively brought pressure upon Mrs Adame to sign the agreement, and although Mrs Adame exercised her own free will and voluntarily signed the financial agreement, that she did so was the result of the disadvantageous position in which she had been placed by Mr Adame’s conduct. In my view he unconscientiously took advantage of the position that he had established through his failure to properly disclose to Mrs Adame the full extent of his assets and financial resources and the false sense of necessity he created by his assertions that execution of the agreement was necessary to safeguard the family home.
I find that Mr Adame’s conduct in all the circumstances amounted to unconscionable conduct and that the pressure that he brought to bear on her to sign the financial agreement was in that sense, illegitimate.
Having made that finding, the onus lies on Mr Adame to show that the illegitimate pressure he brought to bear on Mrs Adame made no contribution to her entering into the agreement. He does not discharge the onus upon him. To the extent that his case is that it was
Mrs Adame who was anxious to have the financial agreement in place and that he did not harass her to sign the financial agreement, as set out above, I reject his evidence in that regard.
On these grounds, as well, Mrs Adame is entitled to have the financial agreement set aside.
If I am wrong about those findings and conclusions, it is necessary to consider whether the financial agreement, otherwise valid, is binding upon the parties. In that regard Mrs Adame argues that critical requirements of s.90G of the Act are missing. She argues that:
a)there is no certificate signed by a legal practitioner that gave her the advice required by s.90G; and
b)she received no copy of the certificate given by Mr Adame’s lawyer to him as required by s.90G.
There is no doubt that before signing the agreement Mrs Adame was provided with independent legal advice from two legal practitioners. Mrs Adame accepted that the advice she received from Mr B and Mr C was about the effect of the agreement on her rights and about the advantages and disadvantages, at the time the advice was provided to her, of making the agreement.
There is also no doubt, that despite the certificate signed by Mr F,
Mrs Adame did not receive advice about those matters from Mr F. He was concerned entirely with the “commercial terms” of the agreement and whether those terms reflected the parties’ intensions.
In those circumstances, the issue for determination is whether the signed statement that must be provided to a party signing a financial agreement pursuant to s.90G(1)(c) must be a statement signed by the legal practitioner who gave the advice pursuant to s.90G(1)(b) or whether it can be another legal practitioner.
In my view, the signed statement provided for the purposes of s.90G(1)(c) must be given by the legal practitioner who gave the advice for the purposes of s.90G(1)(b) of the Act. I reach that conclusion for the following reasons:
a)s.90G(1)(c) uses the definite article “the” before the words “legal practitioner” which tends to suggest that it is a direct reference to the legal practitioner referred to in s.90G(1)(b); and
b)if it were otherwise the case, the legal practitioner signing the statement for the purposes of s.90G(1)(c) would have to make such inquiries so as to satisfy him or herself that the advice under s.90G(1)(b) had been given.
The absence of a signed statement by the legal practitioner who gave Mrs Adame the advice required by s.90G(1)(b) means, in my view, one of the critical requirements of s.90G(1) of the Act is missing. The financial agreement is not, for that reason, binding on these parties.
Although the matter was not the subject of argument before me, it is necessary to consider whether, notwithstanding the finding that I have just made, it would be unjust and inequitable if the agreement were not binding on the parties: s.90G(1A)(c).
Given the findings that I have made above relating to the failure by
Mr Adame to properly disclose his assets and financial resources, I am not satisfied that it would be unjust and inequitable if the financial agreement were not binding on the parties.
Conclusion
The financial agreement between the parties is voidable at Mrs Adame’s election because of Mr Adame’s fraudulent misrepresentations. She has elected to have the agreement set aside. She is entitled to that relief.
She is also entitled to have the agreement set aside in Equity by reason of the illegitimate pressure that Mr Adame brought to bear upon her to sign the financial agreement.
In the event that Mrs Adame is not entitled to have the financial agreement set aside for the reasons I have just articulated, the agreement is nonetheless not binding on the parties for the reasons I have set out above.
I make the orders set out at the commencement of these reasons.
I certify that the preceding one hundred and sixty-two (162) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 16 January, 2014
Deputy Associate:
Date: 16 January 2014
Key Legal Topics
Areas of Law
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Family Law
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Contract Law
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Equity & Trusts
Legal Concepts
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Breach
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Contract Formation
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Remedies
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Res Judicata
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