Black & Black

Case [2006] FamCA 972

[2006] FamCA 972

IN THE FAMILY COURT

OF AUSTRALIA

AT  LAUNCESTON  No. (P)HBF 1755 of 2004

BLACK  Applicant

BLACK  Respondent

REASONS FOR JUDGMENT DELIVERED BY

THE HONOURABLE JUSTICE BENJAMIN

DATE OF HEARING     :     8 & 9 August 2006.

DATE OF ORDERS                 :     15 September 2006.

DATE OF JUDGMENT     :    15 September 2006.

CATCHWORDS  :    

FAMILY LAW – PROPERTY – Financial agreements – Whether an agreement under Part VIIIA is binding if there was not strict compliance with s 90G or, if binding, whether the agreement should be set aside under s90K. In construction of both the legislation and a Part VIIIA financial agreement should an objective approach be adopted.

APPEARANCES     :     Mr Williams of Counsel (instructed by Mr Cann) appeared on behalf of the applicant

:Mr McViety of Counsel (instructed by McViety & Associates) appeared on behalf of the respondent

Introduction

  1. This is an application by the husband for orders that a financial agreement[1], entered into between himself and the wife dated 3 September 2002 (“the agreement”), be declared void as it does not comply with s90G of the Family Law Act (“the Act”) or if not void, then the husband submits that the agreement ought to be set aside under s 90K of the Act.

    [1] The document is expressed to be an agreement to which the provisions of Part VIIIA (Financial Agreements) of the Act applies.

  2. The husband then seeks consequential orders for adjustment of property under Part VIII of the Act, including an order that the wife holds her interest in a property at X in trust for the husband, or further as an alternative, that the wife transfer her interest in the X property to the husband. If the agreement is void or set aside the husband seeks orders that the property be divided as to 20% to the wife and 80% to the husband. This on the basis of a greater contribution by the husband, combined with a small adjustment in his favour, having regard to the relevant matters in ss. 79(d),(e),(f) & (g) of the Act (“the other factors”) including the matters referred to in s.75(2) of the Act.

  3. The wife responded, seeking orders that the husband’s application be dismissed and that the husband pay the wife’s costs of the proceedings. The wife further submitted, that if the agreement was declared void or set aside, then in any adjustment of property as between the parties, the wife should receive less than 50% of the asset pool as her financial contributions were less than those of the husband, and that there should not be any adjustment to that assessment having regard to the other factors.

The husband’s submissions.

  1. The husband submitted the following:-

    (a)   That agreements in the context of parties to a marriage are to be treated differently to agreements at law generally, as they are well outside normal commercial law.

    (b) That the financial agreement is void or should be set aside because the legislative basis of financial agreements under Part VIIIA…

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Black & Black [2006] FamCA 972
Case
[2006] FamCA 972
Decision Date

CaseChat Overview and Summary

The parties, husband and wife, disputed the validity of a financial agreement made between them. The husband sought to have the agreement declared void, alleging misrepresentation, fraud, and frustration of the agreement by the wife's conduct. The court was required to determine whether the agreement was valid and enforceable, or if it should be set aside.

The court considered several legal issues. Firstly, it examined whether the husband had established misrepresentation or fraud on the part of the wife, which would render the agreement void. Secondly, it assessed the husband's submission that the wife's conduct had frustrated the implementation of the agreement. Finally, the court considered the implications for property division under section 79 of the Family Law Act 1975 (Cth) should the agreement be found to be void or voidable.

The court found that the husband had failed to establish misrepresentation or fraud. It inferred that the husband was aware of the wife's medical evidence and the instructions given to her legal advisors regarding her personal injury claims. The court also found that the wife's personal injury claims were real and not illusory, and that her conduct had not frustrated the agreement. Consequently, the court dismissed the husband's application to have the agreement set aside. The court then proceeded to consider the division of property, noting the parties' initial contributions and subsequent financial contributions, including the wife's compensation payments from her personal injury claims.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In the recitals to the agreement[8] the parties set out their financial circumstances. They agreed that at the commencement of the relationship these were as follows:-[8] The agreement was put in evidence by both parties and whilst the validity of the agreement was in issue, the assertions of fact contained in the recitals were not challenges nor were they put in issue.a) The husband owned real property, V which as at September 2002 had a value of $200,000.00;b) V was subject to a mortgage to the Westpac Bank of about $23,000.00 leaving a net equity of about $177,000.00;c) Each of the parties had furniture of value of about $5,000.00;d) The husband had a Holden sedan with a value of about $13,500.00 as at the date of the agreement;e) The wife had a BMW motor vehicle with a value of about $5,000.00 as at the date of the agreement;f) The wife had a debt to Radio Rentals of approximately $900.00;g) The wife had a debt to the Commonwealth Bank of $2,500.00 for a student loan.h) Neither party had any significant superannuation entitlements.i) The wife had instituted proceedings for personal injuries arising out of a motor vehicle accident[9] (“MVA claim”).[9] Motor vehicle accident March 2001, wife’s affidavit paragraph 6.The Evidence Much of the evidence in relation to these proceedings is evidence of memory of facts deposed as between the husband and the wife. Parties cannot be expected to give evidence completely accurately and there is often a degree of subjectivity with regard to that evidence. The husband is convinced of the merits of his case and his attitude to evidence was self-serving, he was not an impressive witness and I found that he prevaricated from time to time. His evidence seemed to be fashioned by him to meet his case, his answers to some questions were glib. Whilst the wife’s evidence was not without errors, I prefer her version of events to that of the husband and unless his evidence is corroborated or supported by other evidence, I accept her evidence to that of the husband when there is a conflict between their evidence. The wife received a compensation payment of about $13,000. This compensation arose out of an injury the wife suffered at work in approximately January 2000 and which was the subject of a workers compensation claim. The husband said that this compensation was received after the parties married in April 2002. The wife’s evidence was that this money was received before the time the parties married in April 2002 and was applied to the home at V, the parties’ honeymoon, clothing etc. I accept her evidence in that regard and I find that the sum was applied to the benefit of the parties, and was a direct financial contribution by the wife. The husband said that the wife asserted to him that her back injury was worse than his. He gave evidence that she had said to him that she hoped to receive more than $200,000.00 on her claim. The evidence of the wife, in relation to the back injury, was that she did not know how much she would receive in compensation. I prefer the wife’s evidence in this regard.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

That is not correct, as the husband was fully apprised of the wife’s medical evidence, at least up to the assault in May 2002, and I infer he was apprised of her medical circumstances from that time. He also contends that he was not aware of her lawyer’s files. The husband was aware of those files and was aware of the instructions she had given her legal advisors. The husband lived with the wife from November 2001 through to May 2003. He promoted the MVA claim and there was no misrepresentation or fraud as submitted by him. I find no evidence of misrepresentation and/or fraud as alleged by the husband. The husband needed to establish some procedural unfairness such as would relieve him from the contract. He was unable to establish those matters and his claim in that respect must fail.11 That the agreement ought to be declared void on the basis of illusory consideration/promise based upon misrepresentation, presumably by the wife. The husband submits that the promise of him gaining a share of the MVA claim was an illusion as it did not happen at all or until after separation. I find that the claim was real, not illusory. I repeat the findings above and the discussion in respect of the various submissions. There was no illusion in the claim or the settlement. There was no reason why the terms of the agreement could not be put into effect but for the husband’s application to have the agreement set aside or declared void.12 That the agreement is void on the basis that the wife’s conduct has frustrated the implementation of the agreement. The husband submits that the wife’s conduct also frustrated the agreement in that she frustrated its implementation. For the reasons set out above the husband’s submission in this respect is likewise dismissed.The application of s 79 if it were determined that there agreement should be set aside or was otherwise void or voidable. I invited Counsel for the parties to make submissions in relation to how the property ought be dealt with if the agreement was set aside or was void under s 90G. The submissions in that respect are outlined in these reasons. If the jurisdiction of the Court was not ousted by the agreement the approach in this case would need to have involved a number of steps:-a) The identification of the property and its value;b) An evaluation of the parties’ contributions having regard to ss. 79(4)(a)(b) & (c).c) Consideration of any adjustment to that assessment having regard to the relevant matters in ss. 79(d),(e),(f) & (g) (“the other factors”) including the matters referred to in s.75(2).d) A review of the outcome against a just and equitable requirement The identification of the pool of assets is as set out earlier in these reasons and totals some $347,760.00. The initial contributions of the husband, at the time of commencement of cohabitation, were his interest in the home at V, furniture, furnishings and car. The wife’s initial assets, at the time of commencement of cohabitation, were her workers compensation claim, the MVA claim, furniture, furnishings and a car. After cohabitation the wife resolved her workers compensation claim for about $13,000. That sum was used for the parties wedding, the honeymoon and went into the house at V and clothing for the husband. The wife, after separation, contributed the sum of $41,000.00 from her MVA claim. The entitlement to this amount was a factor in the parties purchasing X. The parties moved to Tasmania in or about December 2002 and initially rented accommodation and then move into the home at X.