Balodis & Balodis

Case [2021] FamCA 499

FAMILY COURT OF AUSTRALIA

Balodis & Balodis [2021] FamCA 499

File number(s): SYC 4140 of 2019
Judgment of: GILL J
Date of judgment: 9 July 2021
Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Financial agreements – Whether financial agreement is binding – Whether side agreement is binding – Where parties did not receive legal advice in relation to side agreement – Whether unjust and inequitable not to enforce both agreements – Whether side agreement a collateral contract – Whether wife should be estopped from refusing to comply with side agreement – Whether side agreement voidable due to misrepresentation – Whether side agreement vitiated by unconscionable conduct – Where financial agreement is binding but side agreement is not binding – Where parties did not intend to be bound by side agreement
Legislation: Family Law Act 1975 (Cth) ss 90C, 90G, 90K and 90KA
Cases cited:

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1

Hoult & Hoult (2013) FLC 93-546

Thorne & Kennedy (2017) 263 CLR 85
Number of paragraphs: 140
Date of hearing: 3 and 4 September 2020
Place: Canberra
Counsel for the Applicant: Ms Gillies SC
Solicitor for the Applicant: Watts McCray
Counsel for the Respondent: Mr Lethbridge SC
Solicitor for the Respondent: Edwards Family Lawyers

ORDERS

SYC 4140 of 2019
BETWEEN:

MS BALODIS

Applicant
AND:

MR BALODIS

Respondent

ORDER MADE BY:

GILL J

DATE OF ORDER:

9 JULY 2021

THE COURT ORDERS THAT:

1.It is declared that the document titled “Section 90C Financial Agreement” executed by the parties on 6 September 2018 before Mr B and annexed to these orders as Annexure A constitutes the s 90C agreement between the parties and is binding upon the parties.

2.The wife shall forthwith obtain the discharge of any extant orders that prevent the implementation of the binding agreement referred to in Order 1 above.

3.The wife’s Further Further Amended Initiating Application filed 1 September 2020 is otherwise dismissed.

4.The husband’s Further Amended Response to Initiating Application filed 28 May 2020 is otherwise dismissed.

5.Any party seeking an order as to costs in this matter is to file and serve an application in a case in accordance with Rule 19.08 within 28 days of the delivery of this judgment.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

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

REASONS FOR JUDGMENT

  1. The parties to this matter are Ms Balodis, the applicant wife, and Mr Balodis, the respondent husband.

  2. The…

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Balodis & Balodis [2021] FamCA 499
Case
[2021] FamCA 499
Decision Date

CaseChat Overview and Summary

In the matter of *Balodis & Balodis*, Gill J of the Family Court of Australia considered a dispute between the applicant wife and the respondent husband concerning the enforceability of financial agreements made between them. The parties had initially entered into a financial agreement which they later concluded was not binding due to a lack of requisite legal advice. Subsequently, they executed a second financial agreement and an associated "side agreement" on 6 September 2018. The wife sought to enforce both the second financial agreement and the side agreement, alleging the husband had not complied with the latter regarding the sale of a property.

The central legal issues before the court were whether the second financial agreement was binding, and whether the associated side agreement was also binding and enforceable. The court was required to determine if the side agreement constituted a collateral contract, if the wife was estopped from refusing compliance, or if the side agreement was voidable due to misrepresentation or vitiated by unconscionable conduct. The court also considered the parties' intention regarding the binding nature of the side agreement, particularly in light of the fact that legal advice was not obtained in relation to it.

Gill J reasoned that while the second financial agreement, executed with the benefit of legal advice, was binding upon the parties, the side agreement was not. The court found no evidence of a relevant special disadvantage on the part of the wife that was exploited by the husband, nor did the circumstances indicate an intention for the parties to be bound by the side agreement, especially given the absence of legal advice concerning it. Consequently, the court declared the second financial agreement to be binding.

The court ordered that the second financial agreement, titled “Section 90C Financial Agreement” and executed on 6 September 2018, was binding on the parties. The wife was ordered to forthwith obtain the discharge of any extant orders preventing the implementation of this binding agreement. The wife's application and the husband's response were otherwise dismissed. The court also provided a mechanism for any party seeking costs to file an application within 28 days of the judgment.

Orders

Orders of the court

SYC 4140 of 2019

BETWEEN:

MS BALODIS

Applicant

AND:

MR BALODIS

Respondent

ORDER MADE BY:

GILL J

DATE OF ORDER:

9 JULY 2021

THE COURT ORDERS THAT:

1. It is declared that the document titled “Section 90C Financial Agreement” executed by the parties on 6 September 2018 before Mr B and annexed to these orders as Annexure A constitutes the s 90C agreement between the parties and is binding upon the parties.

2. The wife shall forthwith obtain the discharge of any extant orders that prevent the implementation of the binding agreement referred to in Order 1 above.

3. The wife’s Further Further Amended Initiating Application filed 1 September 2020 is otherwise dismissed.

4. The husband’s Further Amended Response to Initiating Application filed 28 May 2020 is otherwise dismissed.

5. Any party seeking an order as to costs in this matter is to file and serve an application in a case in accordance with Rule 19.08 within 28 days of the delivery of this judgment.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

The wife also observes that the husband has not complied with the side agreement in respect of the proposed sale of D Street Suburb E. The wife has requested its sale, which has not been agreed to by the husband.FACTUAL BACKGROUND The parties to the proceedings commenced living together on or about mid to late 2003, and subsequently married in 2006 in Sydney. The parties subsequently separated in April 2017, and a Divorce Order was granted by the Family Court in August 2019. After separating, the parties signed a purported binding financial agreement in April 2018 (the first binding financial agreement). They subsequently concluded that the first binding financial agreement was not binding, as they had not received the requisite legal advice. They entered into another purported binding financial agreement (the second binding financial agreement) and an associated side agreement (the side agreement) on 6 September 2018.Circumstances of the execution of the first binding financial agreement Following separation, the parties started negotiation in about April 2018 in relation to the settlement of their property by entry into a binding financial agreement. On 12 July 2018 they each executed a document that they then considered to be a binding financial agreement. It was uncontroversial that subsequent to executing this document they each concluded that it was not in fact binding, by virtue of their failure to obtain the requisite legal advice and certificates of legal advice as to the effect of the agreement.[18] [18] Transcript 3 September 2020, page 69 lines 22–26. At cl 7 of this first agreement the parties dealt with the husband’s ability to lease out the C Street property, and the wife’s rights of occupancy when it was not leased out, along with obligations upon the wife should she do so. Although they had also negotiated a side agreement at this time, such agreement was not executed by them. The parties then recommenced negotiations both as to the terms of a new binding financial agreement and also as to the terms of the side agreement.Circumstances of the execution of the second binding financial agreement and side agreement Ultimately, after the circulation of various drafts, the parties settled on terms of the second binding financial agreement, at a time when they were both in the United Kingdom. They made an appointment with a UK lawyer and executed the second binding financial agreement on 6 September 2018 before him in order that it might be appropriately witnessed. The husband asserted that he took care to ensure that the requisite advice was received prior to the execution of the second binding financial agreement, in order for it to be binding.[19] He accepted that there was nothing that prevented him from including the side agreement in the second binding financial agreement.[19] Ibid page 73 lines 12–14. The second binding financial agreement also contained terms in relation to the occupation of the C Street property by the wife which differed markedly from those contained in the first binding financial agreement. Those terms, at cl 9 provided as follows:9. That whilst ever Mr Balodis continues to own the property at C Street, London (‘the C Street property’) and Ms Balodis is able to continue to travel to London: (a) Mr Balodis shall permit Ms Balodis to occupy the C Street property at times and for periods nominated by Ms Balodis; (b) Mr Balodis shall not permit any paying tenant to occupy the C Street property, pursuant to a lease or any other arrangement; and (c) Ms Balodis shall pay to Mr Balodis the sum of £5,200 per year, such amount to be paid on a pro rata monthly basis, in advance, on or before the first day of each calendar month, in the sum of £433 per month, the first such payment to be made on the first day of the calendar month following the date of this Agreement, to an account nominated by Mr Balodis to Ms Balodis in writing. Both Mr Balodis and Ms Balodis acknowledge this sum to represent a contribution by Ms Balodis to the following expenses of the C Street property: i. Council rates; ii. Water rates; iii. Service fees and ground rent plus electricity; iv. Gas, BT, phone and internet; v. TV Licence; and vi. Building and contents insurance. and Mr Balodis shall otherwise pay all expenses for the C Street property for that year.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

These circumstances do not disclose a relevant special disadvantage on the part of the wife that was exploited by the husband. They are circumstances indicative of discomfort and frustration, but they do not go to the extent of special disadvantage, particularly where the wife has failed to establish that the husband presented in the manner described by her.CONCLUSION The second binding financial agreement is binding upon the parties. The side agreement is not binding upon the parties. A declaration will issue as to the binding effect of the second binding financial agreement. Such a declaration renders further relief, such as injunctive relief as to the occupation of the C Street property, or that the second binding financial agreement be enforceable as if an order of the Court, unnecessary. No particular matter has been advanced demonstrating the necessity for such orders on resolution of the terms of the s 90C agreement. Whilst each of the parties sought injunctive relief in relation to the occupation of the London premises, the second binding financial agreement governs those rights of occupation by each of the parties. The injunctive relief sought by the husband, being that the wife vacate the premises, would trespass upon the rights agreed by them in entering the second binding financial agreement. The second binding financial agreement permits the wife to occupy the London premises without being a paying tenant being permitted upon the premises. It does not prevent the husband from also occupying the premises at the same time. There are extant proceedings between the parties in the United Kingdom in relation to the occupation of the C Street property. The parties appeared to be of one mind that the resolution of these proceedings would also resolve the proceedings in the United Kingdom. Given such representations, the wife should be compelled to obtain the discharge of any orders preventing the implementation of the s 90C agreement.Costs Each party sought that their costs be paid by the other party. They, understandably, did not address this issue in the absence of the determination of the substantive issues between them. Under those circumstances, should a party pursue costs in relation to this matter, that party is to comply with r 19.08 and file such application in a case within 28 days.

Ratio Decidendi

Legal Principle Established

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