Chalker and Laine
[2011] FMCAfam 506
•26 May 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHALKER & LAINE | [2011] FMCAfam 506 |
| FAMILY LAW – Property – application out of time – financial agreement – non-compliance with the requirements for such agreements – amending legislation – retrospective operation. |
| Family Law Act 1975, ss.44, 79, 90K, 90RC, 90RD, 90RG Acts Interpretation Act 1901, ss.15AA,15AB |
| Black & Black (2008) FLC 93-357 Senior & Anderson [2010] FamCA 601 Kostres & Kostres [2009] FamCAFC 222 Weir & Weir (1992) FLC 92-287 K & K (2002) FamCA 1150 |
| Applicant: | MR CHALKER |
| Respondent: | MS LAINE |
| File Number: | BRC 3578 of 2010 |
| Judgment of: | Coates FM |
| Hearing date: | 16 September 2010 |
| Date of Last Submission: | 16 September 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 26 May 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Cameron |
| Solicitors for the Applicant: | McMillan Legal |
| Counsel for the Respondent: | Mr C Forrest |
| Solicitors for the Respondent: | Brisbane Family Law Centre |
ORDERS
That pursuant to section 90(G)(1B) of the Family Law Act 1975, the financial agreement executed by the applicant and respondent on 5 December 2005 is binding on the parties.
The application by Mr Chalker is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Chalker & Laine is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 3578 of 2010
| MR CHALKER |
Applicant
And
| MS LAINE |
Respondent
REASONS FOR JUDGMENT
ORDERS SOUGHT
The husband sought leave to commence proceedings out of time for property settlement.
He also sought an order restraining the wife from dealing with land at Property C, Queensland, the former marital home, but such was not required because he had obtained a caveat over the property until this proceeding is finalised.
If successful, the husband seeks 60 percent of the property pool by way of orders altering the property interests.
The wife seeks that the application be dismissed.
The parties provided their schedule of assets and there may be a pool of about $727,000, most of which is in the wife’s possession, which had increased by an estimated $300,000 since 2003 when the husband purchased two properties which are relevant and which I refer to during this judgment.
The application, among the usual considerations for an application of this type, considers the question of whether a financial agreement is to be classified as a binding agreement under the Family Law Act 1975 (“the Act”). If it is and covers all of the marital property, it will end the husband’s application.
RELEVANT FACTS
The wife is aged 52.
The husband is aged 50.
The husband purchased a flat in Sydney in 1983.
The parties met in 1984.
They began cohabitating in 1985.
They married in 1987.
They purchased land at Property C in Brisbane in 1989 and built the marital home.
Two children were born, [name omitted] [in] 1992, 18 at the time of hearing, and [name omitted] [in] 1995, 15 at the time of hearing but now 16.
The parties separated but lived under one roof, probably in February 2000.
The husband moved, probably in about March 2003.
The children remained with the mother but saw the father regularly.
The husband purchased Property T, for $62,000, on 22 July 2003.
He also purchased Property B, for $56,000, on 30 April 2003.
The parties financed these purchases with mortgages against the marital home.
The parties divorced on 12 April 2005.
The parties executed a purported binding financial agreement on
5 December 2005, details of which I will give below but one in which the husband kept his properties and the wife kept the marital home.
The husband sold Property T, for $110,000 in May 2006.
He sold Property B, for $155,000 in September 2007.
He repaid the borrowings to the marital home.
The marital home is estimated to be now worth an estimated $685,000.
At some stage the wife formed a relationship with a Mr L and due to alleged disagreements, the children moved from the mother’s residence to the father’s residence in March 2008. It was said that the children moved because Mr L was the instigator of an altercation with the son, but that is irrelevant to the issues under consideration.
The wife married Mr L on [in] 2008.
There is evidence from the wife that she intermixed her monies with that of Mr L in expenditure on the Property C property.
The husband lodged the caveat on the Property C property on 18 January 2010.
The husband filed his application on 19 April 2010.
THE CASES
The husband’s case is that the agreement is not binding and so I should consider his claimed hardship in relation to the application for leave to proceed out of time.
Because a recent case has highlighted the need to examine the intention of the parties and the clarity of the agreement at the time it was executed, I should state that the husband did not present a case in the alternative that even if the agreement was binding, it did not cover all of the property and ought to be set aside or held invalid on that ground.
The wife is seeking to rely on the financial agreement as a binding agreement and one which covers all of the marital property, that is, she is seeking to enforce the agreement.
THE LAW WITH REGARD TO FINANCIAL AGREEMENTS
As at 5 December 2005, the relevant law in relation to financial agreements in the Act stated:
“s.90D Financial agreements after divorce order is made
(1) If:
(a) after a divorce order is made in relation to a marriage (whether it has taken effect or not), the parties to the former 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, no other agreement (whether made under this section or section 90B or 90C) is in force between the parties 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.
(2) The matters referred to in paragraph (1)(a) are the following:
(a) how all or any of the property or financial resources that either or both of them had or acquired during the former marriage is to be dealt with;
(b) the maintenance of either of them.
(3) A financial agreement made as mentioned in subsection (1) may contain matters incidental or ancillary to those mentioned in subsection (2).
(4) A financial agreement made as mentioned in subsection (1) may terminate a previous financial agreement made as mentioned in that subsection, or a financial agreement made as mentioned in subsection 90B(1) or 90C(1), between the same parties.”
Section 90C stated:
“s.90C Financial agreements during marriage
(1) 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, no other agreement (whether made under this section or section 90B or 90D) is in force between the parties 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.
(2) The matters referred to in paragraph (1)(a) are the following:
(a) how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of them at the time when the agreement is made, or at a later time and during the marriage, is to be dealt with;
(b) the maintenance of either of them:
(i) during the marriage; or
(ii) after divorce; or
(iii) both during the marriage and after divorce.
(2A) For the avoidance of doubt, a financial agreement under this section may be made before or after the marriage has broken down.
(3) A financial agreement made as mentioned in subsection (1) may contain matters incidental or ancillary to those mentioned in subsection (2).
(4) A financial agreement made as mentioned in subsection (1) may terminate a previous financial agreement made as mentioned in that subsection, or a financial agreement made as mentioned in subsection 90B(1), between the same parties.”
Section 90G stated:
“s.90G When financial agreements are binding
(1) A financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by both parties; and
(b) 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 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 parties and a copy is given to the other.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.
(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.
Section 90K stated:
“s.90K Circumstances in which court may set aside a financial agreement or termination agreement
(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
(a) the agreement was obtained by fraud (including non-disclosure of a material matter); or
(aa) either party to the agreement entered into the agreement:
(i) for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party; or
(ii) with reckless disregard of the interests of a creditor or creditors of the party; or
(b) the agreement is void, voidable or unenforceable; or
(c) in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out; or
(d) 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 marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or
(e) in respect of the making of a financial agreement—a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or
(f) a payment flag is operating under Part VIIIB on a superannuation interest covered by the agreement and there is no reasonable likelihood that the operation of the flag will be terminated by a flag lifting agreement under that Part; or
(g) the agreement covers at least one superannuation interest that is an unsplittable interest for the purposes of Part VIIIB.
(1A) For the purposes of paragraph (1)(aa), creditor, in relation to a party to the agreement, includes a person who could reasonably have been foreseen by the party as being reasonably likely to become a creditor of the party.
(2) For the purposes of paragraph (1)(d), a person has caring responsibility for a child if:
(a) the person is a parent of the child with whom the child lives; or
(b) the person has a residence order in relation to the child; or
(c) the person has a specific issues order in relation to the child under which the person is responsible for the child’s long-term or day-to-day care, welfare and development.
(3) A court may, on an application by a person who was a party to the financial agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.
(4) An order under subsection (1) or (3) may, after the death of a party to the proceedings in which the order was made, be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(5) If a party to proceedings under this section dies before the proceedings are completed:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings; and
(b) if the court is of the opinion:
(i) that it would have exercised its powers under this section if the deceased party had not died; and
(ii) that it is still appropriate to exercise those powers;
the court may make any order that it could have made under subsection (1) or (3); and
(c) an order under paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(6) The court must not make an order under this section if the order would:
(a) result in the acquisition of property from a person otherwise than on just terms; and
(b) be invalid because of paragraph 51(xxxi) of the Constitution.
For this purpose, acquisition of property and just terms have the same meanings as in paragraph 51(xxxi) of the Constitution.”
The husband’s case is that agreement does not comply with the requirements of the Act and is invalid.
It is abundantly clear that there was non-compliance with the Act in that the agreement the parties signed shows on its face that the husband did not obtain legal advice or obtain a certificate from a lawyer pursuant to s.90G(1)(b) and (c).
Both parties supplied copies of the agreement, so there has been compliance with s.90G(1)(e) that “after the agreement is signed, the original agreement is given to one of the parties and a copy is given to the other”, otherwise each would not be aware of the other’s position.
Knowledge of the other party’s position has relevance to amendments to the Act (made after execution of the agreement) following the Full Court of the Family Court’s decision in Black & Black (2008) FLC 93-357, where strict compliance with the financial agreement provisions was insisted upon.
The amendments in the Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009, which commenced on 4 January 2010, altered the position adopted in Black & Black, according to the Second Reading speech, to one where an informed decision about such agreement may suffice.
It was said in that speech:
“Importantly, the bill responds to the decision of the full court of the Family Court of Australia in the matter of Black & Black.
In that case, the court found that a binding financial agreement (commonly known as a pre-nuptial agreement) made under the Family Law Act 1975 was invalid because it did not strictly comply with certain technical requirements set out in the Family Law Act.
The amendments are being made because the government is concerned about the possible consequences of that decision on the validity of existing binding financial agreements which may contain technical errors.
The bill amends the Family Law Act to ensure that people who have made an informed decision to enter into one of these agreements cannot later avoid or get out of the agreement on a mere technicality, resulting in court battles that the agreement was designed to prevent. These amendments will restore confidence and certainty in the bind nature and enforceability of financial and termination agreements under the Family Law Act”.
The new sections state:
“s.90G When 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.”
As can be seen, changes have been made to s.90(G)(1) but I am satisfied that it has similar meaning to the old section, but subject to the new s.90(G)(1A), which allows for a decision that an agreement is binding as long as the parties have signed the agreement and, under ss.(1A)(c), the 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). This allows for a binding agreement where the parties have knowledge of the other party’s position, so as to make an informed decision.
The wording also suggests that prima facie such agreements are binding.
This provision allows for examination of substance over form in the making of the agreement.
However, my first enquiry is whether the provision is retrospective in the sense that it applies to agreements made before the amendments became operative. There is nothing in the wording of the Act to state that it has retrospective operation.
Section 15AA and 15AB of the Acts Interpretation Act 1901 allows for the use of extrinsic materials to interpret the meaning of an Act and that is one reason for quoting part of the Second Reading speech when the bill was introduced to Parliament.
The Attorney-General referred to concerns that (some) existing agreements may be invalid because they did not strictly comply with the Acts requirements.
In Senior & Anderson [2010] FamCA 601, Young J at paragraphs 81 to 84 examined relevant statements in the Second Reading and the explanatory memoranda and held that the amendments operated retrospectively to agreements made on or after 27 December 2000.
I agree with his reasoning.
This particular agreement, executed on 5 December 2005, is within the relevant retrospective time.
Even if the wording suggests that prima facie such decisions are binding, a post-amendment decision, Kostres & Kostres [2009] FamCAFC 222, at paragraph 164, indicated that justice and equity considerations developed over a long period in property cases were to be safeguarded.
The Full Court was also concerned because the intention of the parties to cover all property in the agreement then before it was not easily discernable.
In addressing the amendments to the financial agreement provisions, the Court stated: “One of the effects of the amending Act is to provide additional protection for parties who enter into financial and termination agreements by enabling a court to declare, in enforcement proceedings, that an agreement is binding despite a failure to meet the procedural requirements relating to the making of the agreement if the court is satisfied that it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstances from the time the agreement was made). This makes it even more essential that the substantive clauses of such agreements are drafted with precision to ensure effectiveness, especially as they may be dealing with future acquired property or other interests in property”.
Considering the amendments, especially s.90(G)(1A)(c), what must be apparent in the husband’s case is that the intention of the parties is not clear from the agreement or that he did not make an informed decision, because in either case such could not result in a just or equitable situation.
What must be apparent in the wife’s case is that it would be unjust and inequitable if it was held the agreement was not binding.
The enquiry now focuses on the agreement which both parties supplied and the intention to be gleaned from it because at face value it does not comply with the new s.90(G)(1) in that the husband has left blank all references to legal advice and did not supply the required legal certificates.
The relevant clauses of recital stated:
a)The parties have now reached agreement as to the distribution of the matrimonial assets and liabilities and desire to enter into the Agreement pursuant to Section 90C of the family law (sic) Act.
b)Both parties have been invited to obtain independent legal advice as to the terms and effects of this agreement.
c)The property and financial resources of each of the parties is set out in the Annexure A hereto.
d)It is the intention of the parties to end the financial relationship between them once and for all.
e)Mr Chalker and Ms Laine have each fully disclosed and discussed with the other the nature and extent of his or her interests in all property (whether real or personal), including their interests in related entities.
f)Mr Chalker and Ms Laine understand the affects of this agreement upon their rights and claims to each others financial matters and each further understands that this Agreement will operate in complete bar and discharge to any further application by either so (sic) them against the other in relation to a property settlement or spousal maintenance pursuant to the provisions of the Family Law Act.
It is interesting to read that both parties were invited to obtain legal advice. An invitation as such was not an option when they signed the agreement but the new and operative amendments would appear to enable such an offer without nullifying the agreement and which, in my view, authorise such an invitation even if retrospectively. In any case, even if the parties did not understand all that needed to be done, the clear invitation to obtain legal advice is present in the agreement they signed.
Under a heading Operative Provisions, a distribution of property occurred whereby the wife took the interests and debt of the Property C property and the husband took the interests and debt in the Property B and Property T properties.
The agreement also covered other property and chattels, bank accounts, insurance and superannuation holdings of the parties, but the main argument here is in relation to the Property C property.
As well, the operative clauses also stated the parties were precluded from further proceedings in relation to property, covering what was called the “extingencies” of life, including loss of employment, illness, disability and remarriage.
Although language was not an issue I was addressed on, it is one I need to address.
While I could not find the word “extingencies” in The Oxford English Dictionary, Vol V, in any legal dictionary or other dictionary, I gather the agreement’s author either meant to use the word exsurgencies, from the verb exsurge, meaning arising or emerging, or exigencies, a noun meaning urgent or pressing.
In that context either word would or may have a meaning in relation to its use in the agreement in the sense that the parties have considered that unknown events may arise in their lives, even quickly, some of which may be beneficial and some not beneficial.
If the word “extingency” does not exist, that does not mean that it should be held to be invalid or not binding because of uncertainty. More likely than not the author meant exsurgencies or exigencies and literal error occurred during dictation and typing.
Comprehension of the English language is so pliable that words unknown to a speaker or listener or author or reader can be used in a speech or a sentence and still the total meaning of a sentence is apparent to the listener or reader.
In context here, all of the words, even if extingency is not a word, in this part of the agreement refer to possible windfalls or disasters which could befall each of the parties and that such unknown events have been considered and the parties have still, on an informed basis, come to an agreement. That is a plain meaning of the paragraph.
I would not hold the intention of the parties as being undiscoverable because of the insertion of “extingencies” into the document. Again I will state that while not arising during submissions I need to address the issue because I have considered it. While not asked to do anything about this, I could severe the clause under the severability power in the agreement and still the intention of the parties would be clear- to end their financial relationship and finalise their property. On that basis I will just leave it where it is.
In my view, on the evidence here, three questions arise, being:
a)Would the application of the doctrine of informed decision-making apply to the agreement in light of the husband purposely leaving blank clause 9 and not attaching a usually required certificate?
b)Can the husband rely on a wilful decision not to obtain the certificate and legal advice? or
c)Can the wife rely on her knowledge that the husband did not obtain such certificate and advice, as she had the required knowledge that the husband had not obtained legal advice?
These specific questions can be reduced to the issue identified in Kostres, what was the intention of the parties? But I think they need to be stated because I am to examine whether there would be unjustness or an inequitable situation and that is assisted by specifically stating the issues which arise.
The wording of the agreement is in plain language. It is clear and unambiguous. Upon execution, the parties position was stated, their listed property was distributed according to the agreement and the agreement had the foresight to alert the parties to possible future issues surrounding loss of employment, illness, disability and remarriage.
The intention of the parties is clear on the wording – to settle their financial relationship and thus their property interests - and there does not have to be extension of nuances of meaning to extract anything other than the plain words on the pages.
One part also states that the parties have disclosed everything. In fact, it is the applicant husband who did not disclose a superannuation holding to the wife at the time of the agreement.
Disclosure is a paramount requirement in property proceedings under the Act, because decisions cannot be made on an informed basis otherwise – see Weir & Weir (1992) FLC 92-287 and K & K (2002) FamCA 1150.
But the wife is not asking for the agreement to be set aside on that ground although the act of not disclosing at the time was not a just or equitable act by the husband in relation to the wife’s position.
By inference the wife is stating that the agreement intended and did cover all of the property and there was no property it did not cover. I agree with that position. If the husband is stating that the agreement did not cover some superannuation he retained and so it did not cover all of the property, it would not be just or equitable to allow him to rely on his own his non-disclosure.
I am very concerned about the husband’s position of not obtaining legal advice and the required legal certification and allowing the wife to make decisions over five years in relation to the property she took.
He said he was depressed, but there is no corroborating evidence or evidence presented in such a way that I could rely on such a condition as affecting his judgment.
That is because:
a)He was able to sign the agreement without complaint;
b)He was able to act on the agreement later and sell his real estate holdings as his property and not as property in which the wife held an interest, and
c)He does not produce evidence of how a depressed state of mind affected him.
After selling his property, he repaid the debt to the wife which arose through the loans he took against the mortgage of the marital home, so he did not treat the debt as a joint debt.
As this was some years after the agreement was signed, I fail to see the relevance of the suffering of depression either at the time the agreement was signed or now.
The evidence of the claimed depression does not equate to incapacity to make decisions.
That the husband went about making financial decision in relation to the property he took allowed the wife to settle and make financial decisions on the property she took. The position is that he stood by allowing this situation to develop and occur.
On that basis, I conclude that he purposely left blank the legal sections of the agreement and such was a personal decision, but one which was made on an informed basis.
Time is of importance in my view and must play a role in this matter.
Even though at the time the agreement was signed the parties had a financial dependence on each other, the husband earlier having used the house the wife was to take to obtain house loans, as time went by this financial connection evaporated and finally ceased.
There is nothing to suggest why the wife should not have considered the agreement as a binding agreement, in that:
a)There was no complaint;
b)The wording of the agreement was clear, and
c)It covered all of the property.
Both parties made financial decisions in relation to that state of affairs represented by the agreement. There does not seem to be a case where the husband could rely on s.90K.
To say that the court should embark on what must be a complicated financial dissection of the distribution of the parties assets now and make a decision would be unjust and inequitable to the wife.
Part of the husband’s case seems to be that he took the children after the son and the wife’s then partner and now husband had a falling out. That may be the case and it may have provided a legal avenue under s.90(G)(d), but the new section specifically states that unjustness and inequitability be determined disregarding any changes in circumstances from the time the agreement was made;
This means a return to the circumstances at the time of the agreement and the Kostres position of determining the intention of the parties.
There are a number of considerations surrounding what an informed decision is, including that:
a)The agreement is comprehensible and there is no challenge to the grammar or language used, and
b)The parties could and did take into account their circumstances and evidence of the husband’s depression is not such that I would consider he lacked understanding of the proposed settlement.
An informed decision in terms that I am to consider whether it would be unjust and inequitable to set the agreement aside does not import any special situation into the requirements, it merely means there is evidence that that the parties understood what they were doing, that is, they made their decision from an informed perspective.
While intention may be ascertained by inference, the agreement is so clear, the parties’ situation is so clear that I cannot see how the decision was not made on an informed basis, despite not receiving legal advice. On the state of the evidence I find that it would be unjust and inequitable to hold the agreement was not binding.
Such a decision ends the husband’s case for leave out of time to bring proceedings under s.44 of the Act.
But if I am wrong in relation to the issue of the binding financial agreement, I am not satisfied that he has a case.
That he received perhaps 25 percent of the property- although he says less - under the agreement is not a consideration in relation to whether the agreement is binding or not, but such a figure is relevant to the decisions which have to be made under a s.79 property settlement.
Section 44(3) and s.44(3A) of the Family Law Act 1975 (the Act) prevents an application being filed for an alteration of property without leave after twelve months of the divorce date.
The operative provision under consideration is s.44(4) which states requirements for leave to proceed out of time:
“The court shall not grant leave … unless it is satisfied:
(a) that hardship would be caused to a party to the relevant marriage or a child if leave were not granted; or
(b) …”
The relevant elements required to be satisfied or shown are:
a)That hardship;
b)Would be caused to a party;
c)Or a child.
In determining these issues, various issues have been examined including delay in bringing proceedings.
The husband’s case is:
a)That he was depressed when he signed the financial agreement;
b)That the wife’s solicitor prepared the agreement;
c)That he thought he had no choice;
d)That he did not realise he was entitled to a larger alteration of property interests;
e)That there was a material change in the arrangements when the children came to live with him.
I have commented on the depression. He could sign the agreement, he could go about selling investments and there is no evidence to suggest why depression would otherwise be considered a determining factor in this case.
That the wife’s solicitor prepared the agreement is irrelevant. Someone had to prepare the agreement. If there is a suggestion that it favours her, then such is the reason why, at the time, legal advice was required.
That he had no choice but to sign the agreement does not appeal as an explanation. The simple question to be asked is why did he even bother signing if he had no choice as the wife could sign and the property division effected? The premise is not logical. The husband did not present as lacking capacity to make decisions and after the agreement he sold his two houses, so he had knowledge that there were some legal requirements to be met with regard to property ownership.
He actually gives no evidence of why a court would accept that he thought he had no choice but to agree.
He knew from the agreement what property he could take and he took that property, only complaining much later that he thought he had no choice.
He now says he did not know that he was entitled to a larger share of the property. Under the agreement he was entitled to what he bargained for although he may be entitled to a larger proportion of the property under a s.79 order.
But because of the transactions of the husband in selling his houses and because the wife states her new husband has contributed both financially and non-financially to the house she took, determining the issue of justice and equity becomes complex in determining levels of contribution surrounding property acquisition and later property maintenance and preservation.
If I can reduce just one aspect to simple terms, putting aside what the financial details of a just and equitable decision would be, why would it be just and equitable to allow the husband to sell property he took under the agreement while allowing the wife to maintain and improve the house she took under the agreement and then demand a determination under s.79?
Why would it be just and equitable for the husband to do this when he seems to have made very little profit on his investments when the wife and her partner have been able to make post-separation improvements to her financial position?
While I have posed questions, they are in the rhetorical sense but I cannot see evidence of why a case should now go ahead and result in a decision which could be seen as just and equitable for both parties. The wife would not benefit and in the circumstances, it would not be just and equitable for the husband to profit from her post separation contributions. The former position cannot be retrieved. Nor would it be just and equitable for her to suffer detriment because he has sold and apparently spent monies from the houses he took.
The husband states he will suffer hardship by not being in a position to buy a house.
That is so, but the Act contemplates that type of hardship being apparent within 12 months of the divorce being finalised, allowing leave to be granted after that period in a proper case.
If the husband kept his houses or had made large profits on his two houses, would he be in court seeking leave to proceed? Again, a rhetorical question, but one where the answer would be that he could not plead the hardship he pleads now, that he could not purchase a house. His acts in selling his investments then, in my view, have caused his situation of hardship, not the agreement he came to six years ago with the wife.
In my view, any current hardship must have some nexus to the previous relationship but all I can conclude is that he took property, he sold investments and he did not make a great deal of money. If he insisted on a different agreement or taken the matter to court, then circumstances may have been different, but that is not certain anyway.
Finally he states he took the children.
The children were with the wife after physical separation and it may have been a just and equitable situation where he took his two mortgaged houses leaving her and the children in the third mortgaged house, even if it was worth more.
But I do not understand the evidence of hardship in relation to the children now being with the husband. He has paid for them but the wife has paid child support. They are at an age where one is an adult and the other nearly an adult.
A house would be in the husband’s name and as young adults the children will make their own way in the world. This is not an issue I would hold as one of hardship in relation to them.
While it is difficult to try to determine what a just and equitable alteration of property interests would be, in this case I think it would be almost impossible considering the positions of each party and their treatment of the property taken and used under the agreement.
Because of that I have formed the view that the applicant has little prospect of success and that hardship cannot be alleviated.
Because I find the agreement to be binding I will make such a declaration and I will dismiss the applicant’s case.
Finally, this agreement was expressed to be made under s.90C, an agreement made during a marriage, when it should have been under s.90D, an agreement made after a divorce.
Nothing turns on a clerical mistake in that such an agreement could not cover what the parties intended and such was held in Senior & Anderson.
I should also mention that circumstances beyond my control prevented my finalising of the matter before this.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of Coates FM
Date: 26 May 2011
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