Balzia & Covich
[2009] FamCA 1357
•27 August 2009
FAMILY COURT OF AUSTRALIA
| BALZIA & COVICH | [2009] FamCA 1357 |
| FAMILY LAW – FINANCIAL AGREEMENT – whether deed is a financial agreement – whether financial agreement is binding – onus on party relying on Binding Financial Agreement to oust jurisdiction of court to establish document is a BFA – Black & Black – strict compliance with section 90G requirements needed FAMILY LAW – FINANCIAL AGREEMENT – deed purporting to be BFA executed after parties married – solicitors’ certificates certify advice given pursuant to s.90B ‘Financial agreements before marriage’ – rectification of solicitors’ certificates to refer to s.90C ‘Financial agreements after marriage’ impermissible – different advice required in relation to BFAs for parties contemplating marriage and parties already married |
| Family Law Act 1975 (Cth) |
| Black & Black (2008) FLC 93-357 Issa v Berisha (1981) 1 NSWLR 261 Masterton Homes Pty Limited v Palm Assets Pty Limited and Ors [2008] NSWSC 274 |
| APPLICANT: | Ms Balzia |
| RESPONDENT: | Mr Covich |
| FILE NUMBER: | PAC | 4797 | of | 2008 |
| DATE DELIVERED: | 27 August 2009 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Collier J |
| HEARING DATE: | 27 August 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Stewart |
| SOLICITOR FOR THE APPLICANT: | Tony Vella Solicitor |
| COUNSEL FOR THE RESPONDENT: | Mr Kearney |
| SOLICITOR FOR THE RESPONDENT: | Kazi Portolesi Lawyers |
Orders
Found that the undated document entitled Financial Statement under s 90B of the Family Law Act (as amended) is not a valid financial agreement and is of no force and effect
That the parties attend a conciliation conference with Deputy Registrar Tran at 2.15pm on Friday, 11 September 2009.
That all parties’ costs of today be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Balzia & Covich is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4797 of 2008
| MS BALZIA |
Applicant
And
| MR COVICH |
Respondent
REASONS FOR JUDGMENT
Introduction and background
This matter concerns the status and effect of an agreement entered into between Ms Balzia, who I will refer to as the wife, and Mr Covich, the husband. Unfortunately the agreement, which is by way of deed, bears no date upon its face. The deed is expressed on its face to be a financial agreement made pursuant to the provisions of section 90B of the Family Law Act 1975 (Cth) (“the Act”). I do not propose to set out the entire section, but it is common ground and the Act is abundantly clear that an agreement made pursuant to section 90B is an agreement made in contemplation of the parties’ marriage. The deed in its recitals purports to be made on the basis that the parties intend to marry within two months, and in any event the deed is to be of no effect if they do not marry within six months.
The fact is that the parties were married on 19 November 2006. The agreement, and this seems to be common ground, was executed by the wife on 20 November 2006 and the husband on 29 November 2006. The only date of execution of any document or counter-part that I can ascertain on the face of any document appears on the original, which is before me as an exhibit. That document shows one of the solicitors’ certificates, and one only, bearing the date 20 November 2006.
The wife’s case is that the agreement is not a financial agreement, and if it is, it is not a binding financial agreement. Thus the wife asserts the agreement, whatever its status, does not operate so as to prevent her seeking relief under sections 72 and/or 79 of the Act.
The husband asserts, subject if necessary to rectification, the agreement is both a financial agreement and a binding financial agreement so as to oust the jurisdiction of the court to make orders for either spousal maintenance or settlement of property.
The parties’ applications
The wife commenced these proceedings on 8 October 2008 in the Federal Magistrates Court. The matter subsequently came before this court by way of transfer. On 23 December 2008 the wife filed in this court an amended initiating application seeking briefly, a declaration that the agreement was null and void and of no force or effect, and in the alternative, that it should be set aside, and that it was of no force and effect.
Further orders were sought that within 28 days certain things were to be done by way of alteration of property interests.
In addition there were a body of interim orders sought on that occasion which I need not make direct reference to here. The husband, as I understand it, filed an amended response on 25 February 2009, in which he sought that the wife’s application be dismissed, that the financial agreement be rectified by inserting section 90C in lieu of section 90B, where appearing in the financial agreement and the annexures thereto, and so far as was required, an order that the financial agreement be enforced as if it were an order of the court. He also sought a significant body of interim orders that I do not believe it is necessary I should set out here. Further I was provided with a minute of the order sought by the husband in his practice-direction document.
The parties’ affidavits
There was significant affidavit material filed in the matter. The wife, for her part, swore and filed affidavits, being;
· her affidavit of 24 December 2008;
· her affidavit of 5 January 2009; and
· an affidavit of Ms B of 2 February 2090.
In addition, in his practice direction Mr Stewart alerted me to the fact that he was relying on annexure A to the affidavit of the wife earlier sworn on 8 October 2008. During the course of the proceedings before me significant objections were taken to the affidavit material on behalf of the wife.
The husband, for his part relied upon;
· his affidavit of 11 November 2008;
· a further affidavit of 20 February 2009; and
· an affidavit of Mr Heath Adams which was sworn on 21 May 2009.
Again objections were taken to the affidavit material.
There were a body of court orders, most of them procedural, which I will not set out in detail here. However I made orders in the matter on its transfer from the Federal Magistrates Court. Thereafter orders were made by Le Poer Trench J (who was to hear the matter) as to the issues to be determined, and those were orders, as I apprehend it, of 22 April 2009. There were some orders made also by deputy registrars, which do not, I believe, concern the major issue here.
The hearing before me
Each of the parties gave evidence. The wife’s evidence, and she was cross-examined at length, was that she had been taken by the husband to see Mr Thomas Adams. The wife at all times endeavoured to assert that Mr Adams, that is Mr Thomas Adams, was mainly her husband’s solicitor. She did give evidence however, that when she went on what she describes as the first occasion, that her husband was told by Mr Adams to go away. She says that she saw Mr Adams only twice. She remained unshaken in this regard. She says that prior to seeing Mr Adams on the second occasion, which is clearly 20 November 2006, she was given a yellow envelope by her husband.
It seems to be asserted by the husband that the wife then made some contact with Mr Thomas Adams. The wife’s evidence, which she adhered to under firm cross-examination, was that she had been contacted by Mr Thomas Adams’ office and requested to go and see them on 20 November, which was a Monday and the day after the parties were married. She says that on that occasion in the office of Mr Thomas Adams she signed the document. She says that Mr Thomas Adams also signed something on the document, or some part of the document, that she observed.
Her evidence about the number of attendances she had upon with Mr Thomas Adams is at odds with the material produced on subpoena by Mr Adams, which became exhibit “E” before me. Without going into unnecessary detail, those notes indicate that there were three occasions when the wife was with Mr Adams. There was apparently some discussion whilst she was with Mr Adams on the second occasion, concerning an amount of money that she was to be paid during the parties’ marriage. That has been referred to at various times as a wage or an allowance.
In any event, the file notes would seem to indicate that it was agreed that a provision for such an amount could be inserted into the agreement. That was done.
Mr Thomas Adams was not called and some mention has been made of that by each of the counsel. It is asserted that in the absence of, or because of the absence of Mr Thomas Adams, I should make a finding that his evidence, if he appeared, would not have assisted the wife. However, I am satisfied that on the notes (Exhibit E) that there were, indeed, three occasions on which the wife visited Mr Adams. I am satisfied that on the last occasion, that is, 20 November, the document that is the subject of the dispute before me was executed by the wife. Of course, it was executed as a financial agreement purporting to be pursuant to section 90B of the Act, that is, an agreement entered into in contemplation of marriage. That was no longer the situation, the parties having married the previous day.
I accept that the husband was then able on 29 November to sign either that document or a counterpart of it in front of Mr Heath Adams. There is, of course, the difficulty that I cannot resolve as to how the two quite different forms of document that became respectively exhibits “B” and “D” before me came into existence. Clearly, one of those documents is wrong. Clearly, it is a situation where the document that shows that Mr Heath Adams executed anything for or on behalf of the wife is incorrect.
Mr Heath Adams gave evidence before me. He satisfied me that he had neither met nor given any advice to the wife. That then appears to be the situation that the parties find themselves in following 29 November when the husband clearly executed an original or counterpart of the document.
Brief history
The very brief background to the matter is as follows:
· The wife was born in Europe in 1957.
· The husband was born also in Europe in 1958.
· I accept that the parties met in Europe in around December 2003 and sometime thereafter they commenced cohabitation.
· Clearly, they were married on 19 November 2006.
· Clearly, on 20 November 2006 they wife executed a document.
· On 29 November 2006 the husband executed a document.
· In or about July or August 2008 the parties separated.
· The proceedings thereafter, as I have said, were commenced in the Federal Magistrates Court by the wife on 8 October 2008.
The law to be applied
It is put to me that what I must determine firstly is, is this agreement a financial agreement. Next, if there are any difficulties with the agreement can it be cured by rectification, and if it can be cured is it then a binding financial agreement which would operate so as to oust the jurisdiction of the court. The question of onus was raised before me. There was some disagreement between counsel as to whether an overall onus should be found to exist, and if so upon whom it fell. Alternatively, it was put that there was a requirement to look at each issue step by step. To my mind I must resolve the issue in this way: the husband seeks the protection of the agreement, and if he obtains that protection, he has a protection that is quite contrary to public policy because it ousts the jurisdiction of a court. It is a particular and special kind of agreement which gives him protection, so long as it stands, for the future, against proceedings under Part VIII of the Act. Accordingly, I am satisfied that an onus lies upon the husband to uphold the agreement.
The wife says, and this is her case as I apprehend it, that the requirements of the various sections are of real importance and must be taken very seriously. It has been pointed out to me, and I accept that the wording of sections 90B and 90C is significantly different as to requirements to that which is set out in section 90G. Section 90G sets out that a financial agreement is binding on the parties (therefore a binding financial agreement) if and only if certain things apply. Those are words that have been dealt with by their Honours of the Full Court in Black & Black[1]. Their Honours have indicated that compliance in a strict sense is required with section 90G.
[1] (2008) FLC 93-357
However, both sections 90B and 90C are absent of the words “if and only if”. Section 90B(1) is in the following terms:
Section 90B(1) Financial agreements before marriage
If:
(a) people who are contemplating entering into a marriage with each other make a written agreement with respect to any of the matters mentioned in sub-section (2); and
(aa) at the time of the making of the agreement, the people are not the spouse parties to any other binding agreement (whether made under this section or section 90C or 90D) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement.
As I say, to the point of boredom, the words “if and only if” do not appear. However, that sub-section is, to my mind, a clear-cut requirement that the agreement is expressed to be and is one intended to be entered into contemplation of marriage. Clearly, in the document each of the parties executed in counterpart relates to sub-section 90B.
There can be no doubt that the agreement ought to have been made pursuant to sub-section 90C(1) which says:
Section90C(1) Financial agreements during marriage
If:
(a) the parties to a marriage make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa) at the time of the making of the agreement, the parties to the marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90D) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement.
Clearly, on the date of execution by the wife, the parties were married.
Mr Kearney, for the husband, says that it is not of great significance, that because of the absence of words, or words similar to, “if or only if”, that this is not a matter that would defeat the purpose of the deed. Further, and perhaps with great respect, more significantly, he asserts that that error can be cured by rectification to substitute section 90C for section 90B where appearing in that agreement. I was taken with great care, to the various authorities as to rectification.
Mr Stewart, in his carefully detailed outline of case document, and a subsequent document, took me to what he indicated were the latest authorities, referring to Issa v Berisha[2], and particularly referring to Masterton Homes Pty Limited v Palm Assets Pty Limited and Ors[3]. I gleaned from those cases that what effectively is required before rectification can take place, is that it is necessary to show the parties were in complete agreement on the terms of their contract but by error, wrote them down wrongly.
[2] (1981) 1 NSWLR 261
[3] [2008] NSWSC 274
It is put to me by the husband’s counsel in his outline of argument, that this is a matter appropriate for rectification, so that the section under the Act which the agreement should have been made is reflected on the face of the document. Mr Kearney, in his very carefully drawn and helpful outline, takes me to section 90KA dealing with the issues of validity, enforceability and so on.
It seems to me that the issue is a little more complex than I had at first thought. If I were to grant rectification of the agreement, that would mean that in the agreement itself, where reference was made at present to section 90B, the document would, as rectified, refer to section 90C. My concern is am I able to rectify the certificates? The certificates themselves are required by sub-sections (b) and (c) of section 90G(1) of the Act. They are certificates given by a solicitor which indicate, in this case, both solicitors purport to have given certain advice pursuant to certain specific sections of the Act.
They do not detail what advice they have given, nor, of course, are they required to do so. What each of the certificates sets out is that they were given pursuant to a particular section. That is what each solicitor asserts occurred. I am of the view that having examined the documents I am not able to rectify the certificates by changing the reference to the section within the certificates.
Thus, to my mind, if I were to allow rectification of the deed itself, then the dichotomy would arise that the deed related to section 90C, but the certificates, because of the view that I have expressed that I cannot rectify them, remain expressing and nominating section 90B as the section of the Act to which the advice given as referred to in the certificate was directed.
It seems to me that this is of particular significance. I am of the view that sections 90B and 90C do not involve the same concept. I am satisfied that to properly advise their clients, the solicitors giving the advice and completing the certificates would need to approach the agreement to be made under one such section differently from the approach to be taken and the advice to be given (which is the subject of the certificate), if the agreement is to be made under a different section. I do not know what the advice given was. It seems to me, however, fundamental that the Act draws a distinction between the two sections. Accordingly, I am of the view that it would be essential to require anyone giving proper advice, to give that advice in respect of the document being executed, and the situation that would be created by the execution of that document, and thus to make particular and accurate reference to the section under which the document was created and to have effect.
The certificates speak of being annexures to the section 90B agreement. The certificates goes on to say:
I provided to my client –
and the certificate is in the same terms for both solicitors –
independent advice prior to entering into the deed, as to the following matters. The effect of this deed on the rights of the parties, and the advantages and disadvantages at the time the advice was provided to my client of making the deed.
I am not completely satisfied that either of the parties fully understood, nor cared, that there was a distinction between sections 90B and 90C of the Act. To my mind, that, in fact, imposes a greater rather than a lesser responsibility on the solicitors advising these people to ensure that that which should have been followed, and if necessary, corrected, was indeed, done.
To my mind, as I have said, to substitute one sub-section for the other would enable the reference to section 90C to be substituted for the reference to section 90B so far as the document itself is concerned. To make such a change is, to my mind, no mere formality. Further and again, what cannot be rectified in my view, are the certificates given by the solicitors in the terms in which they presently stand, thus allowing that rectification would have the agreement referring to section 90C and the certificates referring to 90B. I am not satisfied that this is an appropriate case for rectification of the deed in those circumstances.
If I am wrong, and rectification should properly be granted, then that would leave still the dichotomy between the two aspects of the document, or, rather, the document and the certificates to which I have referred. But, in any event, at that stage it would be necessary for me to turn to the provisions of section 90G of the Act. Section 90G(1) is in the following terms:
Section 90G(1) When financial agreements are binding
A financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b) the agreement contains, in relation to each spouse party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i) the effect of the agreement on the rights of that party;
(ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement; and
(c) the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
(d) the agreement has not been terminated and has not been set aside by a court; and
(e) after the agreement is signed, the original agreement is given to one of the spouse parties and a copy is given to each of the other parties.
Accordingly I am satisfied, having regard to the decision of the Full Court in Black,[4] that what is required is strict compliance. The agreement is signed by all parties. That does not excite any alarm under this section. The agreement contains, in relation to each party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure, independent legal advice from a legal practitioner. That appears, on the face of the certificate, to have been done.
[4] Supra
What must be included, and the certificate makes reference to these, are the effect of the agreement on the rights of the party. In the certificate it refers to parties, but to my mind if that advice is given in respect of both parties it must cover the rights of the party in respect of whom the certificate is being given. Next, the advantages and disadvantages at the time the advice was provided to the party of making the agreement. This is where, to my mind, the real difficulties arise in respect of the certificate, and the agreement if rectified. Clearly, the advice is to be given at the time the agreement is signed.
If I were to accept that rectification can be carried out to the deed, then there exists an agreement referring to section 90C. However, for the reasons I have given, the certificates refer to section 90B. To my mind the 90B certificates can only clearly be understood and interpreted to mean that advice was given at the time the agreement was entered into that was incorrect. What it does not indicate, and cannot indicate on the face of the rectified document on one hand, and the certificate on the other, is that either party had explained to them what were the advantages and disadvantages of entering into the agreement now that they were married, rather than at a time they were contemplating marriage.
I cannot be satisfied as to the fact that either party was advised as to specific matters that might arise as a result of them being married, and no longer simply in a relationship, and contemplating marriage. So far as I am concerned, it would need be properly demonstrated that the certificate satisfied any reasonably minded observer that the parties had been advised of their rights, having regard to their status as married persons. Clearly the Act draws a distinction or difference between pre-marriage, post-marriage, and post-divorce agreements. I am satisfied that because that distinction is drawn by the Act itself the nature of the advice to be given in respect of each such situation must reflect the actuality of the situation at the time the advice is given.
To my mind, therefore, the difference between the advice certified to have been given and the factual situation in existence at the time the agreement, by way of deed, was signed by each of the parties means that I cannot be satisfied that the advice given, as evidenced by the solicitors’ certificates, meets the requirement that the legal practitioner for each of the parties had explained the advantages and disadvantages at the time that the advice was provided to either party entering into the agreement.
A further issue, and perhaps not of as great a significance, but, nonetheless, something that concerns me, relates to the provision of an original or copy of the agreement to each party, pursuant to sub-section (e) of section 90G. The wife’s evidence, as I understand it, is that she received a copy of the document on 20 November, when she signed the agreement at Mr Thomas Adams’ office, and did not receive any further document until 2007.
I am unable to be satisfied what it was that she received in 2007. However, I am satisfied that the requirement is such that the copy, or original, is to be provided, if not forthwith, then upon execution by the second of the signing parties, at least within a period that is proximate to that last execution. This was not done. If reliance is placed on the wife’s own evidence that she received a document on 20 November 2006, then clearly that could not have been an original or copy executed by both parties. The sub-section refers to “after the agreement is signed”, and can clearly, in my view, only mean signed by both parties.
For these reasons I am not satisfied that the agreement entered into between the parties in an undated deed is a binding financial agreement. I make orders as set out hereinabove.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier.
Associate:
Date: 7 December 2009
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