Brannon & Brannon
[2022] FedCFamC2F 1116
Federal Circuit and Family Court of Australia
(DIVISION 2)
Brannon & Brannon [2022] FedCFamC2F 1116
File number(s): WOC 255 of 2020 Judgment of: JUDGE BOYLE Date of judgment: 23 August 2022 Catchwords: FAMILY LAW – Financial agreement – Wife not given requisite advice – agreement found not to be binding pursuant to s. 90G.
FAMILY LAW – Interim property – litigation funding – partial property order made.
FAMILY LAW – Spouse maintenance – periodic spouse maintenance ordered.
Legislation: Family Law Act1975 (Cth) ss. 75, 79, 90G, 90K Cases cited: Daily & Daily [2020] FamCA 486
Expense Reduction Analysts Group PTY Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303
Hoult & Hoult [2013] FamCAFC 109
Iphostrou & Iphostrou and Ors [2011] FamCA 20
Kaimal & Kaimal [2020] FamCA 971
Klearchos & Klearchos [2015] FamCAFC 217
Logan & Logan [2013] FamCAFC 151
Mann v Carnell (1999) 201 CLR
Shelbourne & Shelbourne [2019] FamCAFC 196
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693
Division: Division 2 Family Law Number of paragraphs: 84 Date of hearing: 26, 27 August; 6 October 2021 Place: Sydney Counsel for the Applicant: Mr Schonell SC Solicitor for the Applicant: Rossi Simicic Lawyers Counsel for the Respondent: Mr Gould Solicitor for the Respondent: Rita Thakur & Associates ORDERS
WOC 255 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:
MS BRANNON
Applicant
AND: MR BRANNON
Respondent
order made by:
JUDGE BOYLE
DATE OF ORDER:
23 August 2022
THE COURT ORDERS THAT:
1.The Binding Financial Agreement dated 30 June 2005 is declared not binding pursuant to section 90G(1)(b) of the Family Law Act 1975.
2.The husband shall pay to the wife by way of litigation funding the sum of $222,627 within 28 days.
3.The husband shall pay to the wife by way of periodic spousal maintenance the sum of $950 each Friday to a bank account nominated by the wife in writing.
4.Within 14 days, the parties shall forward to chambers a minute of orders in relation to the future conduct of the matter including attendance at private mediation or conciliation conference.
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 Brannon & Brannon has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BOYLE
Introduction
The wife seeks to set aside a financial agreement entered into by the parties on 30 June 2005. She also makes application for interim spouse maintenance, and an order for interim financial adjustment.
The husband opposes the application, and relies on the financial agreement.
The particulars on which the wife relies with respect to the financial agreement, firstly, that it is not binding pursuant to the provisions of section 90G(1)(b) of the Family Law Act or, in the alternate, that it be set aside pursuant to section 90K.
The parties met in 2004. They became engaged and commenced cohabitation in 2005. They were married in 2005 and separated on 10 July 2019. They have 2 children aged 14 years and 13 years. The children live in a shared care arrangement by agreement.
At the time the parties commenced their relationship the husband had a 4 year old, and the wife a 5 year old.
The hearing was conducted via Microsoft Teams during the Sydney lockdown.
The Law
Section 90G of the Family Law Act sets out the circumstances in which financial agreements are binding:
(1) Subject to subsection (1A), 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) 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.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.
(1A) A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b) one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c) a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d) the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e) the agreement has not been terminated and has not been set aside by a court.
(1B) For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application) by a spouse party seeking to enforce the agreement.
(1C) To avoid doubt, section 90KA applies in relation to the enforcement application.
(2) A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.
The husband bears the onus of establishing that the financial agreement is binding. When a statement of independent legal advice for the wife exists, it is her obligation to adduce evidence to disprove, or cast doubt, on the conclusion that would otherwise be drawn from the certificate[1].
[1] Hoult & Hoult [2013] FamCAFC 109, [60]-[62].
The wife argues that the solicitor retained by her did not provide her with independent legal advice about the effect of the agreement on her rights, and about the advantages and disadvantages to her of making the agreement. Mr B signed a certificate of provision of independent legal advice on 29 June 2005. The wife argues that the mere signing of the certificate does not demonstrate that the advice was given. Mr B has deceased, and limited documents were produced on by the solicitors who took over that practice.
Documents Relied On
The wife filed a case outline document identifying the documents they relied on:
(a)Amended Initiating Application filed 27 August 2020.
(b)Affidavit of Ms Brannon filed 3 August 2021.
(c)Financial Statement of Wife filed 3 August 2021.
(d)Tender bundle.
The husband filed a case outline document identifying the documents they relied on:
(a)Response filed 17 March 2020.
(b)Affidavit of Husband filed 3 August 2021.
(c)Affidavit of Mr C filed 3 August 2021.
(d)Updated financial statement of Husband filed 3 August 2021.
Issues
The issues for determination are as follows:
(a)Whether the financial agreement entered into by parties on 30 June 2005 is binding pursuant to s90G.
(b)Whether before signing the agreement, the wife was provided with independent legal advice about the effect of the agreement on her rights and about the advantages and disadvantages, at the time that the advice was provided, of making the agreement.
(c)If the agreement is found to be binding, whether it should be set aside pursuant to section 90K.
(d)Whether it is appropriate to make an order for litigation funding in favour of the wife.
(e)Whether it is appropriate to make an order for spousal maintenance in favour of the wife.
Background
In 2005 the parties became engaged, and commenced cohabitation at the husband’s property at D Street, Suburb E. Both parties had a child from a previous relationship.
Both parties were working at cohabitation. The husband completed building an automotive business in Suburb F in 2005, and was operating that business. The wife was employed on a full time basis as a manager earning $100,000.
On 17 June 2005, both parties attended the offices of G Law Firm, and provided instructions for the preparation of their wills. There is a dispute as to whether Mr B saw both parties together on that occasion. The wife contends that he did, which the husband denies. Mr B has subsequently died, and is not available to give evidence.
The records produced from the firm refer to drafting wills, and personal attendance on 28 June 2005 to sign the will. There is also a telephone attendance with the client recorded for that day. I accept that the file is incomplete. It contains no file notes. It comprises what was able to be printed out by the solicitors who took subsequently took over the practice.
An account dated 29 June 2005 refers to perusal of binding financial agreement and personal attendance on the client, letter to the other side, drafting of solicitor’s certificate. The wife’s evidence is that she signed the financial agreement that day, after skimming the document. She argues that the account provided supports her contention that very limited, if any, advice was provided to her. The amount billed was $880 exclusive of GST, for the entirety of Mr B’s involvement in the matter.
There is a letter on the file dated 27 June 2005, addressed to the wife. The letter notes that under the agreement, “You give away any entitlement to claim spousal maintenance”. The solicitor noted that there were to be discussions between the husband and wife as to the possibility of a clause providing spouse maintenance for a limited period of time. The solicitor refers to the automotive business in the husband’s sole name remaining his sole property.
The solicitor noted in the letter: “You have advised that it is the intention of yourself and Mr Brannon to expand this business and that at some point in the future, acquire a branch of the business in the joint names of yourself and Mr Brannon. Under the terms of the existing binding financial agreement, you would receive no financial compensation for any contribution you make to Mr Brannon’s current business and any expansion of that business which is held in his sole name”.[2] The letter notes that the wife will provide further instructions after discussing those issues with the husband. The letter does not contain a detailed advice, instead it suggests amendments to the agreement. The handwritten amendments referred to by counsel for the husband as evidence of negotiation are not that. The wife’s handwriting appears on a handwritten list of the parties’ respective assets[3]. Listing assets for a schedule to the agreement could not support a submission that terms of the agreement were negotiated by the parties respective lawyers.
[2] Page 1354 of the court book.
[3] Husband’s affidavit annexure C1, page 267 of the court book
The wife’s evidence is that she did not receive this letter prior to signing the financial agreement. The letter refers to a “recent attendance at our office”, however the wife was last there 10 days before on 17 June. There is nothing in the letter which sets out the advantages or disadvantages to the wife of making the agreement. The letter predates the wife signing the agreement by two days. The parties had flights booked to Location H in 2005 with the ceremony arranged for the following day.
No file notes are available of any advice given by the solicitor. There is no letter of advice as one would ordinarily recognise it on the solicitor’s file.
The Full Court considered the requirement for legal advice before signing the agreement, and the certificate, in Hoult & Hoult [2013] FamCAFC 109. The Full Court noted the effect of section 90G(1A), which empowers a court to declare that an agreement will be binding even if the section 90G(1) criteria have not been met. Such a declaration can only be made if the Court is satisfied that it would be “unjust and inequitable” if the agreement was not binding.
Waiver of Privilege
During the course of the hearing an application was made for the production of the husband’s solicitor’s file on the basis that he had waived legal professional privilege. Legal professional privilege protects confidential communications and documents between a lawyer and client made for the dominant purpose of the lawyer providing legal advice, or legal service to the client. The privilege is the clients, and the client can waive it. Waiver can occur if the client acts in a manner inconsistent with maintaining the confidentiality.
The High Court in Mann v Carnell (1999) 201 CLR at 13 set out the test for waiver:
What brings about the waiver is the inconsistency, which the courts, where necessary informed by consideration of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.
In Expense Reduction Analysts Group PTY Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 The High Court endorsed that the principles in Mann v Carnell “articulated in relation to waiver at common law, apply with equal force in relations to the statutory question posed by” section 122(2) of the Evidence Act.
In this instance the husband sent a text message to the wife “My solicitor is writing me a letter to show you”. He forwarded to the wife a letter from his then solicitors dated 21 September 2020, on the same day the letter is dated.
The letter is addressed to the husband. It sets out various criticisms of the wife’s case, including “if her case is a good one why is it necessary to retain the services of senior counsel”. The solicitor advises “it would be very sensible for Ms Brannon to try to come to some negotiated outcome with you. It would also be wise for you to seek to negotiate an outcome since, as we discussed, even if you were to be ultimately successful and Ms Brannon fails in each of her Applications, there is still the question of costs that you will inevitable [sic] incur”. The husband is encouraged to have “without prejudice” discussions with wife.
I accept that privilege was waived by the husband with respect to the letter. The husband’s conduct is inconsistent with the maintenance of the confidentiality. He foreshadowed his intention to the wife in a text, and then provided her with the correspondence. I accept he did so to unsettle the wife, in an effort to intimidate her. The disclosure of the letter was knowing, and voluntary.
There was a call in correspondence dated 25 August 2021 for the complete file of the solicitors with respect to the present family law dispute, from its commencement to 25 August 2021. That was modified during submissions to 21 September 2020.
The wife argues that associative waiver should apply requiring the production of the solicitor’s file. The husband did not knowingly and voluntarily waive privilege on the entire file. I find that it is not necessary to have regard to the entirety of the file to understand the content of the letter of 21 September 2020. The letter makes a number of broad statements in favour of the husband’s case. I do not accept that the brief reference to the wife being aware of “your arrangements concerning the Suburb J business site” entitles the wife to have access to the solicitor’s entire file.
Credit
The wife gave her evidence in a careful and straightforward manner. She was prepared to make concessions. I accept that she had a reasonable recollection of events based on her evidence.
There are a number of issues with the husband’s evidence. I accept that global findings with respect to credit are generally unhelpful, and have had regard to the authorities referred to by the respondent’s counsel. Under cross examination, the husband was difficult and evasive when answering questions. He at times refused to engage with the substance of questions, confused issues or simply refused to answer.
The husband says he had a precise and accurate recollection of the events surrounding the signing of the financial agreement, but a very poor memory or understanding of questions surrounding most other relevant matters. For example, he could not accurately state his taxable income throughout the years of the relationship, he could not identify how much it cost him to build the business in 2005, he could not recall details in relation to the financing, the amount he borrowed, the bank from which he obtained a mortgage, or the purchase price of the Suburb J and D Street, Suburb E properties. I do not accept that his inability to answer these matters was simply failing a memory test, as was put by counsel for the husband.
His financial statement sworn 3 August 2021 sets out that there are 5 people residing in his home. This includes the parties’ two children, who live in a shared care arrangement. The husband’s current wife and adult son are employed by him. They earn $300 and $350 per week respectively. In part N of his financial statement he contributes to the costs of the 2 adults in his home in the amount of $172 per week. On an income of $574 per week, he meets household expenses of $1,023 per week. He has no credit card, and none of his expenses are paid by any other person. Notwithstanding his limited income, he owns a Sports Car 1 valued at $450,000, a Motor Vehicle 2 valued at $105,000, a Motor Vehicle 3 valued at $50,000. The cost of motor vehicle insurance is approximately $5,356 per year, or around 20 per cent of his income. I accept the submissions of the applicant that the husband’s financial statement makes no sense, and could not be accurate.
On 20 July 2019 the husband sent text messages to the wife in the lead up to the litigation:
“…I have more money than I know what to do with these days…I want us both to feel financially free, not just me...If I buy you an [Motor Vehicle 4] it will cost me over $100,000. I will put it in your name. I hope it will show you that I am committed to you and that I will do everything I can to make you happy. I can pay for a cleaner to come in once a week…”[4]
This is entirely inconsistent with the husband’s sworn evidence about his financial position.
[4] Wife’s tender bundle, page 65.
The Sports Car 1 was purchased with funds from the sale of K Street, Suburb L in May 2021. The husband’s evidence is that his business suffered significantly over the course of the pandemic. He says he purchased the Sports Car 1 as a form of superannuation. His affidavit referred to him spending $450,000 when in fact he conceded he spent $470,000 in cross examination. His decision to spend $470,000 on superannuation at that point in time made no sense with his evidence of the downturn of his business.
The wife was cross examined about a letter drafted by her, dated April without a year.[5] The husband contends the letter was written by her in April 2005; the wife contends it was written in April 2004.
[5] Husband’s affidavit filed 3 August 2021, Annexure “A”.
The letter sets out to the wife’s desire to be in a committed relationship with the respondent, and married. References such as her desire to have children together provided they are married, arrangements for Christmas, the way they deal with their former partners, make more sense if the letter was written in 2005 not 2004. Their relationship was new in 2004. The suggestion of having a baby in late 2006 does not sit comfortably within that time frame. I accept the husband’s evidence as to the date of the letter, not the wife.
The wife’s suggestion in the letter that she could arrange a wedding in 6 weeks, does not mean that was what she intended doing. The wife contends that in 2005 they advised their families they intended to marry on Location H in 2005. She was not challenged on her evidence that it was the husband’s idea to bring the date forward, and she agreed. I accept that the wife’s brother applied for annual leave in 2005, so he could attend the wedding in 2005. When the wedding date was brought forward to 2005, he could not attend. I accept that she was disappointed by that. She was complying with the husband’s desire to move the date earlier.
The husband’s counsel made submissions that the letter suggests that the wife was able to be assertive with the husband. I accept that it demonstrates she felt unable to talk with him about her desire to know whether he intended to get married, and have children together: “it made me realise how much I feel like I’m walking on egg shells around you and how many things I am bottling up”.[6] I accept that the letter makes clear she very much wished to have children with him, but only if they were married. I accept that the letter supports the wife’s desire to marry and have children, and willingness to compromise to make that happen.
[6] Husband’s affidavit filed 3 August 2021, Annexure ‘A’
Wife’s Legal Advice
The wife’s evidence is that at the time the parties became engaged in early 2005, they discussed entering into a financial agreement so as to “quarantine” the property and assets which they brought into the relationship. Both parties were previously married and divorced. Both parties had one child.
The wife sets out her understanding that the financial agreement was to “draw a line in the sand” between assets that existed at the time of the marriage, and those acquired subsequently. The wife’s evidence is that both parties attended at G Law Firm on 17 June 2005. She was to discuss the financial agreement, and both parties wanted wills prepared. Her evidence with respect to preparation of the wills is supported by the material produced from G Law Firm.
The wife contends that she and the husband together met with Mr B to discuss the financial agreement. The initial draft of the agreement was prepared by L Law Firm on the husband’s behalf. The wife says some, not all, of the terms were read to her in the husband’s presence. Further, she says she did not receive a copy of the draft agreement. She did not read the agreement herself on that day, nor was it provided to her before the meeting.
On 28 June 2005 both parties attended at G Law Firm’s offices for the execution of their wills. The wife’s evidence that she met briefly with Mr B that day. She did so separately from the husband. Mr B told her:
You won't be able to get spousal maintenance. If you stop work to have kids, you're not going to have any claim on the business [Mr Brannon] has now. You won't have any income and will have to be out of the house in three months.
She says Mr B went through the schedules to the agreement to confirm what each of them owned, and assets each would retain. She was not taken through the whole agreement, and she was not given a copy. The wife’s evidence is that she did not receive any advice as to what would happen to any assets subsequently acquired by either of the parties. This consultation went for no more than 10 minutes. The agreement comprised some 18 clauses, subclauses, and recitals.
The wife’s evidence is she subsequently spoke to the husband, and told him the solicitor advised her not to sign the “pre-nup”. She says: “The husband replied, ‘Don’t you trust me?’ I replied, ‘Of course I trust you’. Mr Brannon then said, ‘Then what are you worried about? Don’t ruin our wedding. Don’t be creepy’”. She took that to mean the wedding would not go ahead if she did not sign the agreement. I accept her evidence.
The wedding was imminent. The parties were due to fly to Location H in 2005. The wife believed that the wedding would be cancelled if she did not sign the agreement. She was worried about that as it would be embarrassing, and about the cost of the wedding. Her family had spent money on interstate flights and accommodation. She had purchased a wedding dress and shoes, and outfits for the parties’ children. Flights and accommodation had been arranged.
In 2005, the wife went to the solicitor’s office alone. She was there briefly. She skim read the agreement, and signed it. Her evidence is that was the first time she read the agreement. She was not challenged on this evidence. She was due to fly to Location H two days later. The wedding was the day after that. The wife maintains that she received no advice that the agreement would preclude her from bringing an application to seek a property adjustment under the Family Law Act with respect to assets obtained after the agreement. The only matter she says she was given advice about was that she would not be able to apply for spouse maintenance.
The wife loaned the husband $85,000. She did so by increasing the mortgage on her property. Nowhere in the financial agreement is that referred to, neither as an asset of the wife nor as a debt of the husband. The schedule notes the wife’s mortgage as though $85,000 was not paid to the husband. There is no dispute that loan occurred, nor that it was ultimately repaid. There is no evidence that it was repaid prior to the agreement being signed, other than the husband’s instructions to his solicitor[7]. I accept the wife’s evidence that she believed that if the wedding was cancelled the husband would not repay her the money. There is no reference in the husband’s list of assets to any sum from which that amount could have been re-paid.
[7] Husband’s affidavit annexure ‘D’ page 407 of the court book.
Additionally at the time of entering the agreement the husband held a leasehold on the Suburb J property, and an option to purchase. He directed all correspondence with the solicitors about that property to a post office box. I accept that he did so to keep those matters from the wife. This is a matter that should have been disclosed to the wife prior to her entering the agreement. In 2007 he purchased the Suburb J property for $715,000. He borrowed $325,000, and somehow had access to funds of $390,000 required to complete the purchase, and funds to pay stamp duty. There is no reference to any sum even approaching that in the husband’s assets listed in the agreement.[8]
[8] Exhibit W12.
Four months after the purchase of Suburb J he purchased the D Street, Suburb E property for $700,000. He took a mortgage of $350,000 and paid $350,000 and stamp duty. No explanation was provided during cross examination of how that came about. He said it could possibly have come from the sale of motor vehicles. He could not identify what motor vehicles would have been the source of those funds.
On the evidence available, I am not satisfied that the wife was given advice as to the advantages and disadvantages of entering into the financial agreement. The absence of reference to any of the above matters in the agreement, or letter of advice, supports that conclusion. The mere existence of the certificate is not sufficient. I accept that both parties attended at the solicitors’ office with respect to the wills, and were initially seen together by Mr B with respect to the financial agreement. The wife’s evidence in that regard was compelling.
The other matter relied on with respect to the advice provided to the wife is the requirement that the recitals to the agreement need to be read in conjunction with the certificate of advice. At recital F, the following is recorded:
This agreement relates to all property and financial resources of each of the parties and in relation to spouse maintenance of each of the parties during and after the relationship or marriage.
At J, it sets out:
Each of the parties has received separate legal advice before executing this agreement concerning the following matters, that is to say:
(a) the effect of this agreement upon the rights of each of the parties to apply for orders under the Family Law Act and the Family Provision Act in respect of the property and spousal maintenance and the effect of this agreement upon the rights of each party to make an application in relation to the other party’s estate or notional estate upon the death of the other;
(b) whether or not it is to the advantage, financially or otherwise, of each party to enter into this agreement;
(c) whether or not in the light of these present circumstances that the provisions of this agreement are fair and reasonable.
Recital J does not encompass the disadvantages to the wife and to the husband of entering into the agreement. The certificate and the recitals should be consistent, and I accept, in this case they are not.[9]
[9] Logan & Logan [2013] FamCAFC 151
I accept, as the Full Court did in Hoult, that it is difficult for the husband to provide evidence that the wife has received the prescribed legal advice. As was observed:
The fact that there is difficulty in proving something within the knowledge of only the other party and their solicitor does not mean the legal burden of proof passes to the party who seeks not to be bound by the agreement.
…
The Full Court regarded the provision of the certificate signed by the other party’s solicitor as requiring the other party to adduce evidence which would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate (especially when read with the recital in the agreement to the same effect).[10]
[10] Hoult & Hoult [2013] FamCAFC 109, at [61].
I am satisfied that the wife has adduced evidence which at least throws doubt on the extent of the advice she received. The only letter which could in any way be described as a letter of advice from her solicitor is dated 27 June 2005. That letter does not properly set out the advantages and disadvantages to her in entering the agreement. The letter does not deal with assets purchased by either of the parties, or both of the parties, subsequent to the agreement. It makes no reference to her loan to the husband.
The agreement sets out with respect to spouse maintenance “neither party will make any claim for future maintenance from the other.” It does not conform with the requirements of section 90E, which specifies that a financial agreement relating to spouse or child maintenance is void unless it specifies “the amount provided for, or the value of the portion of the relevant property attributable to, the maintenance of the party”.
The wife describes meeting with the solicitor on 28 June 2005, whilst the husband was signing his will with a different solicitor at the firm. There was no challenge in cross-examination to her evidence that the consultation that day went for no more than 10 minutes, and she saw only the schedules to the agreement. I accept that it would not be possible for advice to be given by a solicitor with respect to the advantages and disadvantages of entering into the financial agreement of 18 clauses and recitals in 10 minutes. The wife is clear that she was not provided with a copy of that document and, did not have the opportunity to subsequently peruse it.
With respect to the letter of 27 June 2005, there is no evidence the letter was sent to the wife. The letter may not have been received by the wife in any event prior to her attendance on 29 June 2005 to sign the document.
The solicitor’s invoice of 5 July 2005 supports an attendance by the wife on her solicitor on 17 June 2005. There is no reference in the invoice to the husband being present, although it is not contested that he was present. The only references to a letter to the client are of 22 June 2005, and 4 July 2005. The invoice does not support that the letter dated 27 June 2005 was sent to the client as drafted that day.
The affidavit of Mr C does not assist in understanding what transpired between the wife and her solicitor. No complaint is made about the conduct of Mr C.
Financial agreements seek to remove the ability for parties to seek orders under the Family Law Act. The provision of legal advice is an important legislative safeguard – “the legal advice must be real and meaningful to satisfy 90G (1) (b)”.[11] It is not a mere technicality. Section 90G(1A) permits a court to find that a financial agreement is binding if it is signed by all parties, although one or more of the requirements of the section are not met, provided a court is satisfied that it would be unjust and inequitable if the agreement were not binding. It is necessary to consider whether it would be unjust and inequitable if the agreement were not binding. In this instance I am not satisfied that it would be unjust and inequitable.
[11] Kaimal & Kaimal [2020] FamCA 971
A finding has been made that independent legal advice about the effect of the agreement was not provided to the wife. As confirmed in Hoult, it is not an inquiry into the content of the advice, but whether it was given. I accept that it was not possible for independent legal advice to have been given in the 10 minutes the wife spent with the solicitor on 28 June 2005. As was observed in Daily & Daily [2020] FamCA 486, paragraph 584, the correctness of the advice may not be relevant, but it may be so cursory or tangential as to be no advice given. I find that the husband has not discharged the burden of establishing that legal advice was given.
Section 90K
The wife sought orders in the alternative that the financial agreement be set aside pursuant to section 90K. Given the findings that I have made that the agreement is not binding pursuant to section 90G, it is not necessary to address this aspect of the application.
Balance Sheet
The draft joint balance sheet was received into evidence[12] and is reproduced below.
[12] Wife's Exhibit 11.
Ownership Description Applicants value Respondents value ASSETS 1. W M Street, Suburb N $ 790,000 $ 1,200,000 2. W Company O ($66,000 stock, car $25,000, less CBA business loan $10,834) $ 80,166 $ 80,166 3. H P Street, Suburb E NSW $ 4,000,000 E$ 1,800,000 4. H Business at Suburb F (land value) $ 1,600,000 E$ 600,000 5. H Business at Suburb J (land value) $ 2,500,000 E$ 978,000 7. H Automotive business $ NK $ NK 8. H Sports Car 1 $ 470,000 E$ 450,000 9. H Motor vehicle 2 $ 134,000 E$ 134,000 11. H Home built race car $ 30,000 E$ 30,000 12. H Motor Vehicle 5 $ 6,000 E$ 6,000 13. H Motor Vehicle 6 $ 50,000 $ NIL 14. H Motor Vehicle 3 $ 110,000 E$ 80,000 15. H Motor Vehicle 7 $ 12,000 $ NIL 16. H Cash held by husband (estimated at) $ 200,000 E$ 1,500 17 W Wife’s crypto currency $ 7,230 $ 31,230 18 W Wife’s cash at bank $ 8,000 $ NK 19. H Husband’s cash at bank $ 7,000 $ NIL 20. J Contents of P Street, Suburb E NSW (in husband’s possession) $ 20,000 E$ 10,000 17. W Furniture and contents $ 2,000 E$ 10,000
Total $ 10,026,396 E$ 5,410,896
ADDBACKS 18. H Proceeds from sale of Sports Car 1– sold 2020 $ 140,920 $ NIL 19. H Proceeds from sale Motor Vehicle 8 $ 48,142 NIL 20. H Proceeds of sale –K Street, Suburb L NSW $ 705,000 NIL 19. H Legal fees paid by Husband $ NK $ 47,000
Total $ 894,062 $ 47,000
LIABILITIES 21. W Loan secured over M Street, Suburb N $ 388,000 $ NK 22. W Virgin money Visa $ 16,427 $ NK 23. W CBA Visa $ 4,661 $ NK
Total $ 404,427 $ 0
SUPERANNUATION Member Name of Fund Type of Interest Applicants value Respondents value 25. W Super Fund Q $ 241,968 $ 241,968 26. $ NIL $
Total $ 241,968 $ 241,968 Litigation Funding
The wife applies for litigation funding in the sum of $222,627. The husband opposes the order and seeks that it be dismissed.
The Full Court has identified the following principles with respect to the manner in which a litigation funding order can be made[13]:
a.The source of power to make a litigation funding order includes s 74 of the Act (by way of interim spouse maintenance), s 79 and s 80 of the Act(1) (by way of interim property division) and s 117 of the Act (by way of interim costs order);[14]
b.Different considerations will apply depending upon which head of power is sought to be engaged;[15]
c.If s 117 of the Act is engaged, then the matters articulated in s 117(2A) are required to be considered,[16] and the Court may make such an order as it considers appropriate, provided there are justifying circumstances.[17] That said, at an interim hearing, findings in relation to all s 117(2A) factors may not be possible; and
d.Notwithstanding the head of power engaged, often the disparity of resources available to the parties to fund the litigation will be identified as demonstrating a desirability to establish a “level playing field”.[18]
[13] Shelbourne & Shelbourne [2019] FamCAFC 196 at 17.
[14] Zschokke & Zschokke (1996) FLC 92-693 (“Zschokke”) at 83,217; Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) at 85,633.
[15] Strahan at 85,633.
[16] Zschokke at 83,217; Strahan at 85,633; Klearchos & Klearchos [2015] FamCAFC 217.
[17] Strahan at 85,633.
[18] Iphostrou & Iphostrou and Ors [2011] FamCA 20.
In my view, it is appropriate that the application be considered as a partial property settlement under section 79. When exercising this power the overarching consideration is that it is in the interests of justice to do so, and it is not necessary to demonstrate compelling circumstances. It is appropriate to make such an order where one party requires funds to assist in meeting the costs of litigation, without which an injustice may be caused. Given the pool available even with the disparity in the figures on the balance sheet, this is the most appropriate course. [19]
[19] Strahan at [132]-[137].
When one considers the balance sheet, there is a significant asset pool in this matter on either party’s case. There are issues considered elsewhere in this judgement, about the husband’s financial disclosure, and his credit. Notwithstanding those issues the asset pool on his case is in excess of $5 million. He presently has in his name:
(a)Property at P Street, Suburb E: $1,800,000;
(b)Business at Suburb F (land value): $600,000;
(c)Business at Suburb J (land value): $978,000;
(d)Sports Car 1 motor vehicle: $450,000;
(e)Motor Vehicle 2: $134,000
(f)Home built race car: $30,000;
(g)Motor Vehicle 3: $80,000.
Total: $4,072,000.
The husband values the wife’s home at $1.2 million; Company O at $80,166; crypto currency holdings at $31,230; and her furniture and contents at $10,000. It is clear that there is a significant disparity in the value of the financial assets held by each party, and the ability to liquidate any of them to fund the litigation.
The wife submits that she is unable to meet her legal fees as and when they fall due. As is dealt with elsewhere in this judgment the wife has expenses in excess of her income. I have in evidence a costs notice from the wife’s solicitors dated 26 August 2022.[20] They estimate the total costs of litigation with respect to property proceedings at between $261,000 and $274,000. Other than selling or further mortgaging the property, there is no source of funds available to the wife from which she could reasonably pay all her legal fees.
[20] Exhibit W2.
The parties had a 15 year relationship with two children. Both parties made significant financial and non-financial contributions to the family. The wife’s application represents between 2% and 5% of the estimated asset pool, as asserted by the wife or the husband respectively. The wife seeks final orders for an approximate division of 50% of the total assets. I find on the basis of the evidence, that an interim distribution as sought by her would not put in jeopardy the legitimate expectations of either party at the final hearing.
The husband has valuable motor vehicles. The Sports Car 1 is worth on his estimate $450,000. Other motor vehicles are valued at some $161,000. He refers to his interest in the Automotive Business as nominal. That business operates the businesses at Suburb F and Suburb J. The husband’s evidence about his income is inconsistent with his ability to meet expenses on behalf of himself, and the five other members of his household. It is inconsistent with the employment of his partner and adult son in the business.
The husband has conducted his financial affairs in an unusual way. He has never had a credit card. The wife was clear about that in her evidence, which is consistent with the husband’s financial statement. He has had access to large amounts of cash. For example in 2015 the wife lent the husband $280,000. The husband repaid her in cash instalments of generally $50,000 over about 18 months. He was able to raise funds to purchase the D Street, Suburb E property, and the Suburb J business in the amount of $740,000 over a period of 4 months. There is no explanation from him as to the source of those funds.
The Court is required to consider providing a level playing field for the parties. The husband has significant assets which are capable of being liquidated, if necessary, to fund the partial property settlement. The wife is not in the same position. I find that it is appropriate to make the order sought.
Spouse Maintenance
A party to a marriage is liable to maintain the other party to the extent they are reasonably able to do so if the other party is unable to adequately support themselves by reason of having the care of a child of the marriage under 18, age or physical or mental incapacity, or other adequate reason.[21] The court must take into account those matters set out in section 75(2).
[21] Section 72(1) Family Law Act 1975
The wife has income from employment of $1,634 per week gross. She does not receive an income from her retail business, which she attributes to issues caused by the pandemic. She received job saver payments of $1,500 per week when those payments were available. She is in rental accommodation of $600 per week, and renting out her home for $425 per week. She pays her mortgage at $618 per week. There was no challenge to her part G expenses of $2,140.
The parties share care of the children on an equal time arrangement. The wife has been assessed to pay child support to the respondent, in the sum of $730 per year which is not being paid. The wife’s unchallenged evidence is that she meets the majority of the children’s expenses, such as the costs of X’s dance
The shortfall between the wife’s income and outgoings with respect to spouse maintenance is slightly less than the $1,132 per week sought by the wife. On her material it is $1,100 per week. She was not challenged with respect to her expenses, save for holidays and cleaning. I accept that $150 per week for holidays is not a necessary expense, and is not claimed in any amount by the husband. I accept that cleaning of $40 per week is a reasonable expense. This reduces the amount to $950.
I have already referred to the difficulties in the husband’s evidence with respect to his finances. Issues with the husband’s credit which are of significance in considering his current financial position. I am satisfied that he has significant financial resources and that he has an income in excess of the $25,000 stated in his financial statement. The documents produced by Sydney Water do not support the husband’s claim of the business going badly over COVID. The same amount of water is being used as has been for a number of years. He has employed his son and partner in the business, which is inconsistent with it going badly.
Conclusion
I have made findings that the agreement cannot be held to be binding within the meaning of section 90G. The wife is entitled to pursue property proceedings in this Court, which will undoubtedly be expensive and lengthy, unless the parties can resolve matters between themselves by consent. For the reasons above it is appropriate that I make the partial property order to enable the wife to fund this litigation.
The way the husband has conducted his financial affairs for many years has made it difficult for the court to obtain a clear picture of his financial position, although I accept that it is stronger than what appears in his sworn documents. The wife has a reasonable need for spouse maintenance and I find it appropriate to make an order that the husband pay her periodic spouse maintenance.
I will make orders in relation to the future conduct of the property matter, and again encourage the parties to consider the commercial realities, and time and stress of pursuing a new round of litigation in this court. There are clear benefits to resolving matters by agreement.
I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Boyle. Associate:
Dated: 23 August 2022
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