Balson & Sandberg
[2023] FedCFamC2F 390
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Balson & Sandberg [2023] FedCFamC2F 390
File number(s): MLC 11313 of 2019 Judgment of: JUDGE HARLAND Date of judgment: 5 April 2023 Catchwords: FAMILY LAW whether or not financial agreement is binding – requirements for signing a financial agreement – material change of circumstances – uncertainty – duress Legislation: Family Law Act 1975 (Cth) ss 44(3), 90G, 90K(1)(d), 90SF, 90UC, 90UC(1)(a), 90UC(2), 90UF(4), s90UJ, s90UJ(1A), 90UM(1), 90UM(1)(e), 90UM(1)(g), 90UM(1)(h)
Law of Property (Miscellaneous Provisions) Act 1989 (UK)
Property Law Act 1958 (Vic), ss 73, 73A
Wills Act 1915 (Vic)
Cases cited: Caton v. Caton (1867) L.R. 2 H.L. 127
Chaffin & Chaffin [2019] FamCA 260
Daily & Daily [2020] FamCAFC 304
Fewster & Drake [2016] FamCAFC 214
Firstpost Homes Ltd v Johnson & Ors [1995] WLR 1567
Frederick & Frederick [2019] FamCAFC 87
Guild v Stasiuk [2020] FamCA 348
Hoult & Hoult [2013] 50 Fam LR 260
In the Marriage of Whitford (1979) FLC 90-612
Leung & Fan [2020] FCCA 764
Milavic & Banks (No. 2) [2016] FamCA 884
Re McCarthy, deceased [1922] VLR 216
Thorne v Kennedy [2017] HCA 49
Division: Division 2 Family Law Number of paragraphs: 115 Date of last submission/s: 21 February 2023 Date of hearing: 20 and 21 February 2023 Place: Melbourne Counsel for the Applicant: Mr DeVries Solicitor for the Applicant: Kaj Sharma Legal Counsel for the Respondent: Mr Puyol Solicitor for the Respondent: Marcou and Associates Pty Ltd ORDERS
MLC 11313 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS BALSON
Applicant
AND: MR SANDBERG
Respondent
order made by:
JUDGE HARLAND
DATE OF ORDER:
5 April 2023
THE COURT ORDERS THAT:
1.The financial agreement dated 2 October 2017 is binding on the parties.
2.The financial agreement dated 2 October 2017 be set aside under section 90UM(1)(g) of the Family Law Act 1975 (Cth)
3.Within 14 days, the Applicant file an Amended Initiating Application setting out with precision the final orders sought.
4.Within 14 days thereafter, the Respondent file a Response to Initiating Application setting out with precision the final orders sought.
5.The parties and any lawyers on the record shall personally attend a Conciliation Conference with a Registrar at 9.00am on 31 May 2023.
6.The parties and any lawyers on the record shall follow any directions from the Registrar convening the conference in relation to attendance in person, by Microsoft Teams or by telephone.
7.Unless they obtain an exemption of such fee in accordance with the Family Law (Fees) Regulations 2012 (Cth), the Applicant must pay the Conciliation Conference fee within no less than 14 days prior to the Conference.
8.Not later than 4.00 pm on 14 days prior to the conference date, each party must:
(a)ensure that all documents required to be exchanged between parties pursuant to Chapter 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) have been exchanged;
(b)ensure that any private expert report that is relevant to the proceedings has been filed;
(c)provide to the Court (by email to [email protected] and to the other party a single collated bundle of documents comprising:
(i)a Confidential Outline of Case (Dispute Resolution)
(ii)a detailed minute of Orders Sought;
(iii)details of any previous or current family violence orders;
(iv)a copy of any document exchanged between the parties which is directly relevant to an issue remaining in dispute (with relevant passages highlighted);
(v)particulars of any financial resource;
(vi)a valuation or market appraisal of any real estate or other asset the value of which is in dispute;
(vii)statements for, and where applicable, valuations of any superannuation interest;
(viii)written confirmation that the trustee of any fund that may be the subject of a splitting order has been afforded procedural fairness.
AND THE COURT NOTES THAT:
A.Prior to the Conciliation Conference, the lawyer for each represented party must provide to his or her client, and to each other party, a notice indicating whether the party is in receipt of legal aid funding and, if not, providing particulars of:
a.the total costs and disbursements incurred by the party in the proceeding to date;
b.an estimate of the anticipated costs expected to be incurred in each remaining stage of the proceeding; and
c.an estimate of the likely duration of the final hearing and the total anticipated costs and disbursements expected to be incurred for the remainder of the proceeding.
B.The Confidential Outline of Case (Dispute Resolution) is a confidential without prejudice document prepared for the purpose of the Conciliation Conference only. It is not to be filed or kept with the Court file after the conclusion of the conference.
C.The matter be referred to the chambers of Judge Harland pending the outcome of the Conciliation Conference for further case management.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Balson & Sandberg has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE HARLAND
These proceedings have been on foot since 8 October 2019. The parties resolved the parenting issues on a final basis on 11 August 2021. The outstanding issues relate to the Court’s jurisdiction with respect to a financial agreement the parties entered into on 2 October 2017 (the “agreement”), the length of the parties’ de facto relationship, and depending on the answers to the first two questions, whether or not there should be any property adjustment. Originally, these threshold issues were listed for trial together with the substantive issues. Both parties are in receipt of funding under the Commonwealth Family Violence and Cross-Examination of Parties Scheme as there is a final intervention order in place that does not expire until 2024.
This matter was listed before me due to the unavailability of another judicial officer. In response to my Chambers compliance check, the parties’ lawyers raised concerns about whether or not the hearing could be contained to its allocated time. I listed the matter before me for compliance mention as it became clear that the most effective way of dealing with this matter was to first determine whether or not the agreement was binding. If the court finds that the agreement is binding, this will end the proceedings unless it is set aside. If, however, the court finds that the agreement is binding but one or more of the grounds for setting it aside are met, or if the Court finds the agreement is not binding, then there will need to be further hearing to determine the length of the de facto relationship and any subsequent property adjustment orders.
There are inconsistencies and gaps in both parties’ material. To avoid confusion, I will refer to the Applicant as Ms Balson and the Respondent as Mr Sandberg. Mr Sandberg’s initial position was that the parties were never in a de facto relationship. The obvious difficulty with this however is that he seeks to have the agreement upheld. Mr Sandberg’s case at trial was that the parties were in a de facto relationship for less than two months covering the time the parties entered into the agreement. This is somewhat convenient as it is necessary for the parties to have been in a de facto relationship for the agreement to be valid. Ms Balson says they were in an on again off again de facto relationship between 2012 and 2019. She does not identify how long the aggregated periods of the relationship were.
MATERIAL RELIED ON
The parties had prepared their trial affidavits and case outlines when the matter was initially listed for trial to determine all of the outstanding issues. The parties agreed that for the purpose of determining the issues with respect to the agreement, neither party relied on the evidence of the supporting witnesses as those affidavits go to the issue of the length and nature of the parties’ relationship. I did not read those affidavits. Ms Balson relied on her trial affidavit filed on 5 January 2023 and Mr Sandberg relied on his trial affidavit filed 19 January 2023. Parts of those affidavits and annexures were not relevant to the dispute with respect to the agreement. Both counsel prepared and relied on their list of authorities and the parties were cross-examined. Documents were also tendered in support.
ISSUES FOR DETERMINATION
Ms Balson seeks a declaration that the agreement is not binding. If she is unsuccessful in that argument she seeks the agreement be set aside. She will then pursue property orders.
Ms Balson raises a number of arguments in support of her application to have the agreement declared as non-binding and set aside:
(1)there are a number of errors and inconsistencies in the agreement, however, she acknowledges that some are minor and if they are the only ones could be rectified;
(2)there are fundamental problems with the agreement including uncertainty as to its terms;
(3)Mr Sandberg’s failure to sign the last two pages of the agreement is fatal as signing those pages would have indicated his adoption of the agreement as a whole; there is no dispute that Mr Sandberg signed the other pages of the agreement;
(4)the terms of the agreement are uncertain and do not address what is to happen to the parties’ property and financial resources of the parties if the relationship breaks down. The agreement is silent about assets and resources acquired during the relationship and therefore the agreement is void for uncertainty; and
(5)Ms Balson asserts that she was not provided with independent legal advice.
Mr Sandberg seeks a declaration that the agreement is binding and that the agreement be upheld. If he is successful it will end the proceedings. As Mr Sandberg is seeking a declaration that the agreement is binding, he bares the onus of proof satisfying the Court that this is so.
Mr Sandberg argues:
(1)whilst there are clearly errors in the agreement and with some poorly drafted clauses, those matters can be rectified in order to save the agreement;
(2)there is no dispute that Mr Sandberg signed the other pages of the agreement and that failing to sign each page of the agreement is not fatal; and
(3)that Ms Balson received independent legal advice. He denies paying for Ms Balson’s legal advice and denies watching her and her lawyer from the balcony of his apartment the day she signed the agreement. Mr Sandberg relies on the certificate of independent legal advice annexed to the agreement.
Ms Balson’s counsel argued that she had entered into the agreement while under duress. Mr Sandberg argues that he was under duress throughout the course of the relationship. With respect to the allegations of duress, the burden of proof lies with the party claiming duress, in this case Ms Balson.
The issues that I must determine are:
(1)Is the agreement an agreement according to the principles of contract?
(2)Is the agreement a financial agreement pursuant to the Act?
(3)If the agreement is a financial agreement, is it binding on the parties?
(4)If the agreement is binding on the parties, can the agreement be set aside?
IS THE AGREEMENT AN AGREEMENT ACCORDING TO THE PRINCIPLES OF CONTRACT?
In considering whether or not the agreement is a contract, it is necessary to consider the principles of common law and equity applying to contracts. The requirements for a valid contract include that there be an offer and acceptance, consideration, common intention, certainty and finality. Neither counsel made submissions with respect to the formation of the contract. The focus was on uncertainty and errors and inconsistencies in the agreement. Despite the errors and poor drafting, which I discuss further below, the common intention of the parties and the subject matter of the agreement is clear. The Court will try and uphold bargains made by the parties. I am satisfied it is an agreement according to the principles of contract.
IS THE AGREEMENT A FINANCIAL AGREEMENT PURSUANT TO THE ACT?
I must determine whether or not the agreement is an agreement that falls within the definitions of s 90UC of the Family Law Act 1975 (Cth) (“the Act”).
Section 90UC(1)of the Act states that:
a. While in a de facto relationship, the parties to the de facto relationship make a written agreement about any of the matters mentioned in subsection (2) in the event of the breakdown of the de facto relationship; and
b. at the time of the making of the agreement, the parties to the de facto relationship are not the spouse parties to any other Part VIIIAB financial agreement that is binding on them with respect to any of those matters; and
c. the agreement is expressed to be made under this section;
the agreement is a Part VIIIAB financial agreement. The parties to the de facto relationship may make the Part VIIIAB financial agreement with one or more other people.
Section 90UC(2) of the Act states that:
The matters referred to in paragraph (1)(a) are the following:
a. how all or any of the:
i.property; or
ii.financial resources;
of either or both of the spouse parties at the time when the agreement is made, or at a later time and during the de facto relationship, is to be distributed;
b. the maintenance of either of the spouse parties.
The agreement talks about the length of the relationship, what assets they had at the beginning of the relationship, the assets they had at the time of signing the agreement, and that each party would keep their own assets.
Recital E states that the parties began co-habiting 5 years earlier (in 2012), but have generally lived separately whilst having periods of being in a relationship.
Ms Balson’s position is that the parties were in an on again off again de facto relationship from 2012 to 2019.
Mr Sandberg was consistent in his view throughout his trial affidavit and while under cross-examination that the parties were never in a genuine de facto relationship. Mr Sandberg insisted while under cross-examination that they were in a de facto relationship for no more than 2 months that covered the period the parties signed the agreement and when the relationship ended. His evidence in this regard does not make sense. The agreement is not described as being in contemplation of entering into a de facto relationship and also ignores Ms Balson’s pregnancy.
The agreement complies with the requirements under s.90UC of the Act. Whilst the length of the parties’ de facto relationship remains in dispute, I am satisfied that the parties entered into the agreement whilst in a de facto relationship. The requirements of s90UC are satisfied.
Separation Declaration
Section 90UF(4) of the Act requires that one of the parties must sign a separation declaration in order for certain provisions in the agreement to come into full force and effect. There is no mention of a separation declaration in either parties’ material. When I raised this with Mr Sandberg’s counsel, he was instructed that he signed one in late 2017 but no longer has a record of the declaration. As there is no time frame for signing a separation declaration the absence of evidence about this is not relevant to the determination of the issues before me.
IF THE AGREEMENT IS A FINANCIAL AGREEMENT, IS THE AGREEMENT BINDING ON THE PARTIES?
I turn now to determine whether or not the agreement is binding on the parties. Section 90UJ of the Act sets out the requirements for an agreement to be binding. I set that section out in full:
1.Subject to subsection (1A), a Part VIIIAB financial agreement (other than an agreement covered by section 90UE) is binding on the parties to the agreement if, and only if:
a. the agreement is signed by all parties; and
b. before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
c. either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
ca. a copy of the statement referred to in paragraph (c) that was provided to a
spouse party is given to the other spouse party or to a legal practitioner for
the other spouse party; and
d. the agreement has not been terminated and has not been set aside by a court.
Factual Errors and inconsistencies in the Agreement
Ms Balson identifies a number of errors and consistencies in the agreement.
The recitals are explicitly incorporated into the agreement. Recital G states that the parties acknowledge they had minimal assets at the commencement of cohabitation. Logically this refers to the reference in recital E to 5 years earlier, being 2012. It does not sit easily with recital G that states the parties agree that that their joint financial position at the commencement of their relationship is as set out in Schedule A. That is inconsistent with the statement as to the parties having minimal assets at the beginning of their relationship.
Recital I contains a further inconsistency as it refers to the parties making financial and non-financial contributions to the assets set out in Schedule A during their relationship. However, Schedule A refers to the assets and liabilities the parties held “at the conclusion of their relationship”. The schedule of assets and liabilities cannot be referring to what the parties had at the end of their relationship given they entered into the agreement during their relationship. Looking at recital G and the terms of the agreement as a whole, it can be implied that the reference should be to the assets they had at the time of entering into the agreement.
Clause 8.1 refers to the parties being entitled to various items “as at the date of these orders”. This error is similar to the error in the certificates, which refer to the wrong pronouns as the error does not create an ambiguity. The reference to orders in clause 8.1 is clearly meant to refer to the agreement not orders.
Errors such as these discussed above could be rectified.
Requirements for the agreement to be signed by the parties
In support of her argument that the requirements for signing the financial agreement have not been satisfied, Ms Balson relies on decisions that deal with particular legislative provisions that do not have any application here. There is a difference between best practice and what is required under the applicable legislation.
Section 90UJ of the Act sets out requirements for an agreement to be binding. Subsection (1)(a) requires “the agreement be signed by all parties”. The section does not provide any further guidance. It does not say that every page must be signed. It does not refer to the parties’ signatures needing to be witnessed.
Is the requirement that both parties sign the agreement satisfied?
Counsel for Ms Balson referred to the requirements when signing a deed and relied on the Property Law Act 1958 (Vic), in particular ss 73 and 73A. He acknowledged that there is a question as to whether state legislation has any application within this Court’s jurisdiction. It was argued that the court could not be satisfied that the whole of the agreement had been adopted by Mr Sandberg, and argued that rectification by a court is possible when the error is obvious and clear.
Counsel relies on the words ‘signed sealed and delivered’ as being clear intention of the author that the agreement was supposed to be a deed. I do not think that can be assumed. More likely, it has been taken from some sort of precedent without consideration. The agreement is not expressed to be a deed and there is no requirement for the agreement to be in the form of a deed. Therefore, there is no utility in looking at the signing requirements of a deed.
Counsel for Ms Balson relied on the matter of Re McCarthy, deceased [1922] VLR 216. This does not assist as that case concerned a will and the particular provisions that do not have to be satisfied under the Wills Act 1915 (Vic).
The dissenting judgment of Mann J at page 235 is of interest where it was concluded that:
There are two entirely different purposes which may be served by requiring that a will shall bear the testator’s signature. One refers to solemnity, the other to proof. One is to insure that a certain amount of attention and deliberation shall be given by the testator to the final adoption of the contents of the document. The other has regard to the authentication of the document by the position of the signature.
This however is being discussed in the context of the particular requirements of the Wills Act 1915 (Vic) which of course does not apply here.
Counsel for Ms Balson referred to the matter of Firstpost Homes Ltd v Johnson & Ors [1995] WLR 1567 and was concerned with the requirements of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (UK). This case dealt with whether or not a letter and a plan could be construed as a single document. The letter contained written terms which was signed by both parties, however only one party signed the accompanying plan. The appellant argued that neither section 2 nor the general law required a person to sign a particular part of the document in order to show an intention to be bound by the whole document. The plan did not indicate a particular place where a party was required to sign. Gibson LJ refers to the House of Lords decision of Caton v. Caton (1867) L.R. 2 H.L. 127. He observed at 1573:
That principle is that, although the signature of a party which is required for the purpose of the Statute of Frauds 1677 need not be placed in any particular part of a written instrument, “It must be inserted in the writing in such a manner as to have the effect of ‘authenticating the instrument,’ or ‘so as to govern the whole agreement’ … or … ‘so as to govern what follows.”
If, for example, one of the middle pages has not been signed, arguably that would not breach the requirements of the Act. The difficulty with respect to Mr Sandberg’s argument is that the page that has not been signed by him is the pages that explicitly require his and his solicitor’s signature. The question that arises is whether his signature on the other pages are sufficient to indicate his intention to authenticate the document and to be bound by its contents. As Mr Sandberg seeks to enforce the agreement, he does not take issue with his failure to sign those particular pages.
The penultimate page includes clause 12, which refers to the parties executing any document necessary to give effect to the terms of the agreement, and clause 13 refers to costs and stamp duty. The second half of that page includes the provisions for Ms Balson’s signature, address, and being witnessed by her solicitor. The witness’ occupation spills over to the top of the next page above the provisions for Mr Sandberg’s address and signature. Mr Sandberg’s lawyer signed and witnessed this page however Mr Sandberg’s signature is missing. Mr Sandberg could have missed this page because of the way it is formatted.
A careful reading of s 90UJ(1A) of the Act clearly excludes the requirement for the agreement to be signed from the matters that can be rectified if the conditions of s90UJ(1A) are satisfied.
If Ms Balson’s signature was missing there may be doubt as to whether she had adopted the whole agreement. However as it is Mr Sandberg’s signature that is missing and he seeks to uphold the agreement I am satisfied that the requirements of s 90UJ(1) of the Act are satisfied.
Was there a lack of independent legal advice?
Ms Balson’s argument that she did not receive independent legal advice can be disposed of quickly.
She also says that at the time of signing the agreement, her lawyer advised that the agreement would not be binding if she had a child. The content of the advice Ms Balson received and whether it was correct or incorrect is not relevant. The issue is whether or not that advice was independent.
Ms Balson gave evidence that in late September 2017 Mr Sandberg told her that he had a friend, Mr C who is a solicitor and was able to draft a financial agreement. Ms Balson says that the parties have socialised with Mr C on occasion and that Mr C had another solicitor friend Mr D. Both parties annex a Certificate of Independent Legal Advice signed by their respective lawyers to the agreement.
The Full Court of the Family Court in Hoult & Hoult [2013] 50 Fam LR 260 deals with respect to the evidentiary onus. As Mr Sandberg seeks to establish that the financial agreement is binding, he has the onus of establishing those matters. However, as the inference drawn from the certificates of independent legal advice is that the requisite advice was given, the wife bares the forensic obligation to “disprove, or at least throw into doubt the inference or conclusion to be drawn from the certificate”.[1]
[1] See Hoult & Hoult [2013] 50 Fam LR 260 at [62].
Mr Sandberg denies being present when Ms Balson met with Mr D and says that he was inside the apartment at the time. He says it was impossible to see the café from his balcony as Ms Balson alleged. I am not satisfied that Mr Sandberg was watching the meeting.
Mr Sandberg also denied paying for Ms Balson’s legal advice. Paying for the other party’s legal advice does not deprive that advice of its independence.
The signed certificate of legal advice is prima facie evidence of its independence. Ms Balson did not subpoena Mr D’s file and did not subpoena him to give evidence. In the absence of this, Ms Balson has failed to displace the inference that she did not receive independent legal advice.
The certificates of independent legal advice comply with s.90UJ of the Act.
I am satisfied that the agreement complies with s 90UJ of the Act. I must now consider the arguments for setting the agreement aside.
IF THE AGREEMENT IS BINDING, SHOULD THE AGREEMENT BE SET ASIDE?
Section 90UM of the Act sets out the various circumstances in which the Court may exercise its discretion to set aside a financial agreement. Section 90UM(1) states that: “A court may make an order setting aside, for the purposes of this Act, a Part VIIIAB financial agreement or a Part VIIIAB termination agreement.” The relevant subsections that Ms Balson relies upon to set aside the agreement are:
(1)Section 90UM(1)(e): the agreement is void, voidable or unenforceable;
(2)Section 90UM (1)(h): in respect of the making of a Part VIIIAB financial agreement a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; and
(3)Section 90UM(1)(g): since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the de facto relationship) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (4)), a party to the agreement will suffer hardship if the court does not set the agreement aside.
I will address each of these in turn.
Section 90UM(1)(e) - Is the agreement void, voidable or unenforceable?
Ms Balson argues the agreement is void due to the uncertainty of its terms. She argues that in addition to the errors and inconsistencies referred to earlier, the agreement is incomplete and uncertain. She says at best it identifies the parties’ assets and liabilities but does not address what happens to those upon the breakdown of the parties’ relationship. The agreement is silent as to what happens to any joint assets acquired during the relationship.
The parties’ affidavits with respect to the circumstances surrounding entering into the agreement lacked detail and context making this task difficult. Mr Sandberg’s counsel relied on Wilson J’s decision of Guild v Stasiuk [2020] FamCA 349 particularly with respect to his discussion about uncertainty in contracts. His Honour also discussed the principles of contract and equity particularly with respect to undue influence and unconscionable conduct.
It is necessary to read the agreement as a whole. It is true that the agreement does not deal with joint assets, but neither party contends that they acquired joint assets during the relationship. Looking at the agreement as a whole it is clear that the intention of the parties was that they would retain their separate assets if their relationship broke down.
Ms Balson draws attention to clause 10.1.2 which states: “The parties enter into this Financial Agreement in full satisfaction for all claims of property settlement and spousal maintenance.”
Ms Balson says this clause is unclear. The clause is severable and with respect to maintenance has no effect due to the provision of s90UI as at the time of entering the agreement Mr Sandberg was in receipt of an income tested pension.
Whilst the agreement is poorly drafted, it is possible to discern the common intention of the parties.
Section 90UM (1)(h) - Can the agreement be set aside due to unconscionable conduct or duress?
Ms Balson argues that she signed the agreement under duress. She argues that in those circumstances it would be unconscionable to allow Mr Sandberg to rely on the agreement. People are entitled to enter into bad bargains. There must be more than the fact the agreement favours Mr Sandberg.
Mr Sandberg says that it was he who was under duress because of Ms Balson’s violence and the toxicity of their relationship and argues that they entered into the agreement at her suggestion.
Mr Sandberg claims that Ms Balson proposed that the parties enter into a financial agreement and relies on an e-mail sent by Ms Balson on 25 June 2017. Mr Sandberg states that it was Ms Balson who suggested to draft an agreement. Ms Balson’s evidence is that it was around this time she discovered she was pregnant and that the parties had separated but were trying to reconcile.
The text of that e-mail is important and is set out in full:
There are other ways around this seeing as your so worried about losing your home. I personally can’t understand that entirely as a partner and a child is just as important however I know it’s important to you.
You could rent your place out? And we could rent a house together and pay halves that way you wouldn’t need to worry about your house or me taking it.
Or you can get something written up by a lawyer that ensures the house goes to your mum and your child and if we don’t work out I don’t take $500,000. You pay child support to assist us and keep your house. I personally don’t care if u leave me nothing as long as I have a roof over my head.
Why would I consider this situation and choose you if all I want is to leave you and take your house I just don’t understand.
My point being there are many options again though we need to discuss them and both be open to want too and to try. A lot of couples I know have had counselling it’s hard work at times being in long term relationships.
I do not accept Mr Sandberg’s characterisation of this e-mail. It is not an invitation to enter into a financial agreement. Rather, Ms Balson addresses the financial concerns held by Mr Sandberg and says there are ways of addressing those concerns, and entering into an agreement was just one of the propositions.
When cross-examined about the nature of their relationship, Mr Sandberg said that he engaged his solicitor to draft the financial agreement ten days after he received the email. This would mean that he instructed his solicitor to draft the agreement in August 2017.
Mr Sandberg was a poor witness. It may have been in part due to his mental health, but at several times during cross-examination he was unresponsive to the questions and was very keen to refer to Ms Balson as being “very violent”. He was unable to recall any detail with respect to the circumstances surrounding entering into the agreement, despite acknowledging that the agreement was important to him and that he was keen to protect his assets. He was unable to specify the number of times he spoke to his solicitor before the agreement was drafted and was unable to say whether or not there was more than one draft of the agreement.
Ms Balson was also unable to say whether the agreement was drafted closer to the date when the parties had signed on 2 October 2017. She was cross-examined about the inconsistencies in her answers with respect to signing the agreement and the circumstances surrounding entering into the agreement for example about the pressure she says Mr Sandberg placed on her. The inconsistencies undermine her argument about being under duress.
It is significant that in Ms Balson’s earlier affidavits she referred to receiving a draft of the agreement in the week commencing 25 September 2017 and refers to arranging to see Mr D based on her work commitments. I reject her counsel’s explanations that attempted to explain the differences in her affidavits being due to a change of solicitors.
The plurality in Thorne v Kennedy discusses duress, undue influence and unconscionability. Duress is a particular type of pressure placed on a person. It does not need to deprive that person of their free will. They also acknowledge that the boundaries between duress and undue influence are blurred.
The High Court considered the issue of duress in Thorne v Kennedy [2017] HCA 49 (“Thorne v Kennedy”) and the plurality observed at paragraph 41 that a trial judge must conduct a close consideration of the facts in order to determine whether or not a claim to relief has been established. At paragraph 60 the plurality states:
In the particular context of pre-nuptial and post-nuptial agreements, some of the factors which may have prominence include the following: (i) whether the agreement was offered on a basis that it was not subject to negotiation; (ii) the emotional circumstances in which the agreement was entered including any explicit or implicit threat to end a marriage or to end an engagement; (iii) whether there was any time for careful reflection; (iv) the nature of the parties' relationship; (v) the relative financial positions of the parties; and (vi) the independent advice that was received and whether there was time to reflect on that advice.
Was the agreement offered on a basis that was subject to negotiation?
Mr Sandberg says that the agreement provided that irrespective of the fact if they were living together at the time, that if the relationship failed, Ms Balson would keep her property and he would keep his free of any claims. Mr Sandberg denies pressuring Ms Balson into signing the agreement and says that she did so of her own volition after receiving independent legal advice.
Ms Balson deposes that Mr Sandberg told her that Mr C had drafted a financial agreement and arranged for a meeting with Mr D at the café below the Suburb E apartment on 2 October 2017.
In this case, the parties evidence as to the facts surrounding entering into the agreement lack specificity and detail. There is no evidence from either party’s solicitor at the time of entering into the agreement. Ms Balson’s evidence with respect to receiving the draft agreement is inconsistent. Neither party called any other witness with respect to the drafting, advising, or signing of the financial agreement.
What were the emotional circumstances in which the agreement was entered into?
Both parties make cross-allegations of being subjected to abuse, with both parties having had Final Intervention Orders against each other.
Ms Balson says that Mr Sandberg pressured her on a daily basis to sign the agreement and that he told her that she could not live with him if she did not sign the agreement. Ms Balson says that Mr Sandberg said he would only pay for her legal advice if it was with a solicitor of his choosing and that as a result she felt pressured and was worried that she'd be evicted and homeless whilst pregnant if she did not sign the agreement. She only included some of this detail in her last affidavit.
Mr Sandberg denied paying for Ms Balson’s lawyer and denied pressuring her into signing the agreement.
Ms Balson was heavily pregnant at the time of entering into the agreement. There is no mention of this in the agreement. The agreement is silent as to the future provision of Ms Balson and their child.
Mr Sandberg’s assertions that he was under duress at the time are nonsensical. He is the one who benefits from the agreement and had significant assets that he was keen to protect. Ms Balson does not receive any financial benefit from the agreement. He was also in a stronger financial position and aware that she was advanced in her pregnancy.
Was there sufficient time to allow careful reflection of the agreement?
In her trial affidavit, Ms Balson says that she was not given a copy of the agreement before meeting with Mr D at the cafe at the bottom of the Suburb E apartment building to sign the agreement on 2 October 2017. However, this is inconsistent with her earlier affidavits where she referred to receiving the agreement in the week commencing 25 September 2017. She says she was unsure as to whether or not she could negotiate with respect to the agreement and says that Mr Sandberg watched her from the balcony during her meeting with Mr D.
Ms Balson says she did not have an opportunity to consider the advice Mr D gave her. Ms Balson says that she signed the agreement on the advice given by Mr D that having a child would be a material change of circumstance and would void the agreement. Given the absence of any evidence from Mr D and the absence of any file notes, I cannot be satisfied that she did not have opportunity to consider the agreement.
What was the nature of the parties’ relationship?
Ms Balson’s position is that the parties were in an on again off again de facto relationship from 2012 to 2019. Mr Sandberg insisted that they were in a de facto relationship for no more than 2 months that covered the period the parties signed the agreement and when the relationship ended. It appears from both parties’ evidence that the relationship was volatile. They make allegations of family violence against each other.
Ms Balson asserts that Mr Sandberg was coercive and controlling and refers to his conduct during these proceedings as supporting these claims including Mr Sandberg twice filing an application shortly before a major court event and her argument that she was under duress as a whole. I do not accept her counsel’s submission that his conduct after the breakdown of the relationship is relevant to whether or not she was under duress at the time of signing the agreement.
What were the parties’ relative financial positions?
Schedule A of the agreement outlines the assets and liabilities held by the parties at the time the parties entered into the agreement. The non-superannuation pool was largely made up of one Suburb E property which is wholly owned by Mr Sandberg. Mr Sandberg stated at trial that the artwork and the ring within Schedule A were incorrectly valued.
According to Schedule A, Mr Sandberg had assets totalling $785,000 and Ms Balson had assets totalling $15,000. The non-superannuation asset pool listed within Schedule A indicate that Mr Sandberg owned $30,000 while Ms Balson owned $65,000. In evidence Mr Sandberg said this was an error as he did not have superannuation.
Ms Balson states that her salary at the time of entering the agreement was $90,000. Mr Sandberg was not employed at the time and remains on the disability support pension.
Did the parties receive independent legal advice?
I have addressed this point above. The certificate signed by Mr D complies with the requirements of s 90UJ of the Act and is prima facie evidence that Ms Balson received independent legal advice. Ms Balson has not adduced evidence to displace this.
Conclusion with respect to duress
I am not satisfied that Ms Balson was under duress when she entered into the agreement. Whilst her email of 25 June 2017 did not amount to her suggesting the parties enter into a financial agreement, it is reflective of her being aware of Mr Sandberg’s concern about protecting his assets and her wishing to give him reassurance that as long as their child was provided for, she wouldn’t seek any of his assets. Whilst there is a gap in the evidence as to what discussions occurred over the next few months and Ms Balson’s evidence about when she first received the agreement, this is inconsistent with respect to when she first received the agreement.
As Mr Sandberg’s complaint of being under duress was only raised by him when cross-examined, I do not need to consider it further other than to note that it is a nonsensical suggestion given the terms of the agreement weighing heavily in favour for him.
In closing submissions Ms Balson’s counsel argued that Mr Sandberg’s behaviour was unconscionable. He was aware that she was pregnant and wanted to live with him. There is the same lack of detail from both parties with respect to detail surrounding entering into the agreement. Given the state of the evidence and the inconsistencies in the evidence, I am not satisfied that Ms Balson was subjected to duress. I am also not satisfied that Mr Sandberg engaged in unconscionable conduct.
SECTION 90UM(1)(G): HAS THERE BEEN A MATERIAL CHANGE OF CIRCUMSTANCES?
I now consider whether the agreement should be set aside due to a material change of circumstances. Section 90UM of the Act deals with the grounds for setting aside a financial agreement. Section 90UM(1)(g) of the Act states that a court may make an order setting aside a financial agreement if, and only if, the court is satisfied that:
Since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the de facto relationship) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (4)), a party to the agreement will suffer hardship if the court does not set the agreement aside.
Ms Balson only needs to establish a material change in the circumstances relative to the care, welfare, and development of a child and that the she will suffer hardship if the agreement is not set aside.
In Fewster & Drake [2016] FamCAFC 214, the Full Court discussed s 90K(1)(d) of the Act and said that the birth of a child could be a material change depending on all of the circumstances of the particular case and that there needs to be a causal link between the material change in the circumstances and hardship. The Full Court also observed that it is important to note that parties are free to enter into agreements that are unfair and referred to Hoult & Hoult in this regard.
In Chaffin & Chaffin [2019] FamCA 260, Judge Foster considered a material change of circumstances and quoted from Fewster & Drake [2016] FamCAFC 214. His Honour found a material change of circumstances was established in the circumstances where the parties have three children and one of the children has special needs. The wife also had sole care of the children since the parties separated and the husband has not spent any time with them, which is outside of the realm of normal expectation for parents exercising their parenting obligations.
In Milavic & Banks (No. 2) [2016] FamCA 884, the wife was pregnant at the time the parties entered into the agreement however the parties did not know that their child would be born with autism. Justice McMillan found that this was a material change of circumstance but was not satisfied that the husband had established hardship. Her Honour observed that the hardship referred to in s 44(3) of the Act is different to the hardship to be considered with respect to financial agreements as the parties intend to contract out of their rights under the Act.
Mr Sandberg relied on Leung & Fan [2020] FCCA 764. In that case, the parties knew the wife was pregnant. The trial judge was not satisfied that the wife had established a material change of circumstances. The facts in that case were quite different as the husband provided her with significant financial support.
The parties were aware that Ms Balson was pregnant at the time the parties entered into the agreement. There is no evidence from either party as to whether or not this was discussed when the agreement was drafted. Neither party gives any evidence as to whether or not there was any amendments to the agreement. However, Ms Balson does say that Mr Sandberg had told her he would provide for their child. This is consistent with the email she sent to Mr Sandberg on 25 June 2017. It is significant that the agreement does not refer to it being made in contemplation of having children and merely states the parties did not have children.
Given the parties knew Ms Balson was pregnant when they entered into the agreement, it was certainly foreseeable that they would have a child. Section 90UM(1)(g) of the Act however does not refer to whether or not it was foreseeable, but refers to a material change in circumstances since the agreement was entered into. As a result of these orders Ms Balson will remain X’s primary carer.
I am satisfied that Ms Balson has established a material change of circumstances. Since entering into the agreement she has given birth to X, who was born in 2018 and is now aged five. Mr Sandberg annexes in his trial affidavit the final parenting consent orders which were made on 11 August 2021. The orders provide for X to live with Ms Balson, and to gradually spend further time with Mr Sandberg as she is older. X currently spends time with Mr Sandberg two nights a fortnight from Wednesday 9am until Thursday 4pm in Week 1 and Friday 9am until Saturday 4pm in Week 2. Time will increase by one further night once X commences grade 2 to each alternate weekend from the conclusion of school on Friday until before school on Monday. X will also initially spend school holiday time with Mr Sandberg for three consecutive nights in the first or second week of inter-term school holidays during her first year at school, and thereafter increasing to the equal school holiday time.
Establishing Hardship
In addition to establishing a change of circumstances, Ms Balson would also need to establish hardship. The hardship is with respect to the material change of circumstances.
When considering the concept of hardship, the Full Court referred to In the Marriage of Whitford (1979) FLC 90-612. Hardship must arise from the change of circumstances, not the agreement.
In Frederick & Frederick [2019] FamCAFC 87, the Full Court considered material change of circumstances and hardship. In order to determine this, it is necessary to compare Ms Balson’s position if the agreement is to be enforced and if the agreement is set aside.
When entering into the agreement, Ms Balson’s assets consisted only of her superannuation which was estimated as $65,000, and a motor vehicle valued at $15,000.
Ms Balson addresses contributions in her affidavit and says she provided financial support from 2013 to 2016 after Mr Sandberg stopped working.
Ms Balson currently does not own any substantial assets save for her superannuation which has grown to $88,424, nominal savings and a motor vehicle valued at approximately $9,000.
Her asset position has not substantially improved. Ms Balson deposes in her trial affidavit that she is currently a Manager for Employer F, earning a gross wage of approximately $39,000. She states that her capacity to return to full time work has been affected due to her being the primary caretaker for X. The parties’ child support assessment was tendered as Exhibit 2 and outlined Ms Balson’s respective income of $63,285 in the 2020-2021 financial year. Ms Balson was unable to explain the difference in her income assessed by Services Australia and what she says her current income is.
At the time of entering the agreement, Mr Sandberg’s assets consisted of one apartment within G Street, Suburb E which was valued at approximately $780,000, a motor vehicle valued at $5,000 as well as some artwork.
Mr Sandberg has real estate with a net value of $1,295,170. Mr Sandberg further owns a motorcycle valued at $11,875. Mr Sandberg says he does not have any superannuation.
Mr Sandberg is in a relationship, which began in 2019, where they now have a child aged two.
Mr Sandberg is in receipt of disability support payments and thus is assessed to pay child support at a modest amount. Mr Sandberg refers to paragraph 72 of his trial affidavit deposing that Ms Balson was unsuccessful in her review of the child support assessment. The parties’ child support assessment marked as Exhibit 2 outlined Ms Balson’s respective income of $63,285 in the 2020-2021 financial year, and the amount of $38.25 that Mr Sandberg is assessed to pay in child support each month.
The hardship is not the inability to bring an application, but the difference in circumstances at the time the parties entered into the agreement and their current circumstances. Whilst the parties are free to enter into financial agreements that are unfair, when considering hardship in the context of a material change of circumstance, it is relevant to consider the terms of the agreement. [2]
[2] See Daily & Daily [2020] FamCAFC 304.
It is not necessary for Ms Balson to adduce valuation evidence, as this is not the final property hearing. When assessing hardship the Court must compare the position of the child or person with caring responsibility if the agreement remains in place and if the agreement is set aside. Necessarily this involves some preliminary assessment of Ms Balson’s property adjustment claim. She does not specify the orders sought in her application. However, in her case outline she indicates that she seeks an overall adjustment of 20%, being 10% for contributions and a further 10% for s90SF(3) factors.
There is no doubt that Mr Sandberg was in a far stronger financial position at the time of entering into the agreement and remains so. Ms Balson had minimum assets apart from superannuation at the time of entering into the agreement. That has not changed. Her income has reduced, although to what extent is unclear. She is working part-time rather than full time given her caring commitments for X. Whilst Mr Sandberg spends regular time with X she is mainly in Ms Balson’s care. The child support Mr Sandberg pays is minimal. Of course, child support is a separate cause of action to a property claim.
Mr Sandberg refers to Ms Balson unsuccessfully seeking a change of assessment with Services Australia due to Mr Sandberg receiving the disability support pension.
Whilst Mr Sandberg’s income may be modest, the child support he pays does not reflect the fact that he has income from his investments as well as his ownership of significant property. These financial circumstances do not easily fit into the usual type of matter where the child support formula readily addresses the parties’ financial circumstances. The issue of child support is separate to whether or not Ms Balson would be entitled to a property agreement.
In all of the circumstances, I am satisfied that that there has been a material change of circumstances and that Ms Balson has established that she will suffer hardship if the agreement is enforced. As Ms Balson has established this ground, I will order the agreement be set aside.
CONCLUSION
I have found that although the agreement is binding, the agreement should be set aside pursuant to s 90UM(1)(g) of the Act. As such, Ms Balson will be able to pursue property adjustment orders.
In this regard, the s 90SF factors with respect to Mr Sandberg’s financial resources and minimal child support appear particularly relevant. In her case outline Ms Balson acknowledges Mr Sandberg’s greater financial contributions. Contributions are very broad and include non-financials contributions such as parenting contributions including post separation. With respect to the s90SF(3) factors, Ms Balson earns a higher income than Mr Sandberg but he has greater assets and resources. Ms Balson has greater caring responsibilities for X and only receives nominal child support. It is well recognised that child support does not compensate for restrictions on a parent’s ability to work because of caring responsibilities. I am satisfied that Ms Balson will be entitled to a property adjustment order.
Mr Sandberg has conceded the existence of the de facto relationship. The length of the relationship remains in dispute and will need to be determined together with what financial orders should be made at a further trial if the matter does not resolve prior. An order under s90RD of the Act can be made when those issues are determined.
The matter will next be listed for a Conciliation Conference before a Registrar. If the matter does not resolve, the matter will need to be listed for trial.
I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Harland. Associate:
Dated: 5 May 2023
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