COLLAGIO & COLLINS
[2015] FamCA 263
•16 April 2015
FAMILY COURT OF AUSTRALIA
| COLLAGIO & COLLINS | [2015] FamCA 263 |
FAMILY LAW – BINDING FINANCIAL AGREEMENT – where agreement under s 90UC of the Family Law Act 1975 – where de facto husband seeks declaration that agreement is a binding financial agreement under s 90UJ of Part VIIIAB of the Family Law Act 1975 – where de facto wife seeks an order that the agreement is not an agreement to which s 90UC applies or is not binding by reason of s 90UJ of the Act – where the agreement is an agreement to which s 90UC applies – where the agreement is a binding financial agreement under s 90UJ of the Act – where the de facto wife seeks to have the agreement set aside under s 90UM of the Act – where duress, undue influence and unconscionable conduct alleged by the de facto wife – where de facto wife has onus of showing “special relationship or disadvantage” (Louth v Diprose (1992) 175 CLR 621) – where evidence insufficient to demonstrate same in context of relationship and negotiations leading to agreement and where both parties had independent legal advice – where application to set aside binding financial agreement agreement dismissed.
| Family Law Act 1975 (Cth) ss 90MHA, 90MJ, 90SA, 90UC, 90UJ, 90UM, 90UN |
| Barton v Armstrong [1980] AC 614 at 635 |
| APPLICANT: | Ms Collagio |
| RESPONDENT: | Mr Collins |
| FILE NUMBER: | PAC | 449 | of | 2014 |
| DATE DELIVERED: | 16 April 2015 |
| PLACE DELIVERED: | Suburb H |
| PLACE HEARD: | Suburb H |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 27 November 2014 and 26 and 27 February 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Campton SC |
| SOLICITOR FOR THE APPLICANT: | Matthews Folbigg Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr Greenaway on 27 November 2014 Mr Othen on 26 and 27 February 2015 |
| SOLICITOR FOR THE RESPONDENT: | Karen Haga & Associates |
Orders
That the financial agreement dated the 7 June 2013 entered into by the parties is a binding financial agreement pursuant to VIIIAB of the Family Law Act 1975.
That any application for costs be by way of application in a case filed within 28 days from this date.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Collagio & Collins has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SUBURB H |
FILE NUMBER: PAC 449 of 2014
| Ms Collagio |
Applicant
And
| Mr Collins |
Respondent
REASONS FOR JUDGMENT
The de facto husband seeks a declaration that the that the financial agreement entered into between himself and his de facto wife dated 7 June 2013 be declared binding on the parties under section 90UJ of the Family Law Act 1975 (Cth) (“the Act”).
The de facto wife seeks a declaration that the financial agreement entered into between herself and her de facto husband dated 7 June 2013 is not binding under section 90UJ of the Family Law Act 1975 (Cth) (“the Act”) and in the alternative the financial agreement be set aside by reason of the provisions of section 90UM of the Act.
Context
The de facto husband is presently 44 years of age and the de facto wife is presently 43 years of age.
In November 2002 the de facto husband purchased the B Pty Ltd for $66,000. Funding for the purchase was by way of an interest only loan. Initially the practice was conducted by the de facto husband as a sole trader but subsequently the practice has been conducted through a trust with the trustee being Collins Pty Ltd.
Throughout the cohabitation the practice was the de facto husband’s primary source of income together with some other supplementary income known to the de facto wife.
During cohabitation the de facto wife worked as a chartered accountant in large to medium size firms responsible for business services and business advice. She acknowledged that she was not unfamiliar with trusts and other business arrangements.
The de facto wife has two children of her previous marriage, C born in 1996 and D born in 1999.
The de facto husband has two children from his previous marriage, E born in 2000 and F born in 2004. The de facto husband’s former wife passed away in 2007.
Following the death of his wife, the de facto husband received certain funds by way of superannuation and life insurance. The de facto husband discharged the mortgage secured against his Suburb G property and as at 2 October 2008 had funds at bank totalling $169,145.
The de facto husband returned to work in early 2008 in his business. The de facto wife was in employment five days per week 9:30am to 2:30pm in Suburb H.
The parties commenced cohabitation in early 2008 in the de facto wife’s home at Suburb I. Subsequently, in October 2008 the de facto husband sold his home at Suburb G.
At cohabitation the wife had:
a)Her Suburb I home subject to mortgage;
b)Car subject to lease;
c)Contents and personalty;
d)Savings of about $2,000;
e)AMP Superannuation of about $50,000.
The husband had:
a)His home at Suburb G unencumbered but security for the practice loan of $66,000;
b)Money at bank of about $170,000;
c)Contents and personalty;
d)Car subject to lease;
e)Boat;
f)Shares of about $10,000;
g)His physiotherapy practice operated through a trust with his company Collins Pty Ltd as trustee;
h)Superannuation of about $30,000.
The parties thereafter purchased a home together at Suburb J in December 2008 for $1,399,786. The de facto husband contributed about $623,000 to the purchase of the Suburb J property and the de facto wife contributed about $300,000, although the property was purchased by them as joint tenants. The mortgage was about $450,000.
As a consequence of the disparity in working hours, both the de facto wife and de facto husband provided care and assistance for the four children in their household subject to work obligations.
In 2010 the de facto husband sought to purchase the strata premises from which he conducted his business. The purchase price was $425,000 part funded by an interest only mortgage loan of $277,000. The premises were purchased by the parties’ self-managed superannuation fund (“SMSF”), the trustee being K Pty Ltd with both parties being directors. The balance of the purchase price was funded by cash then available in the SMSF. The husband’s business pays rent into the fund that services the mortgage.
The de facto husband says that he raised his concerns with the de facto wife over not having a financial agreement in 2009 and 2010. During this period the de facto husband reminded the de facto wife of his accountant’s advice to put in place a financial agreement. The de facto wife resisted the idea. The de facto husband asserts that in 2011 the de facto wife signalled her consent to the parties entering into a financial agreement. On 15 September 2011 the de facto husband first consulted a solicitor, although he did not proceed.
However, the de facto wife asserts that the issue of an agreement did not arise until very early in 2013 where, in circumstances of what was described by her as “a souring relationship” and tension in the relationship, the de facto husband sought an agreement that if there was a sale of the Suburb J home, funds were to be divided in the proportions contributed. The de facto wife says that she expressed surprise at the issue being raised so far into the relationship.
On 2 February 2013 the de facto husband emailed the de facto wife the calculations he had done for her perusal before he saw his solicitor.
The de facto husband subsequently consulted his solicitor, Ms L, in relation to a financial agreement. A draft of that agreement was forwarded to the de facto husband by his solicitor in late February 2013. The de facto husband provided further instructions to his solicitor in early March 2013 and a revised financial agreement was provided to the de facto husband by his solicitor on 5 March 2013.
The de facto husband provided a copy of the amended draft agreement to the de facto wife who disagreed with some terms of the agreement. The de facto wife proposed amended terms to the agreement that contemplated that the Suburb J property could ultimately be subdivided.
The de facto wife sent it to her solicitor and then saw her solicitor on 27 March 2013 and instructed him to negotiate “a more generous arrangement”, telling the de facto husband her solicitor would contact his before Easter.
By this time the relationship between the parties was as the de facto wife puts it “almost non-existent” and they were communicating by email.
On 28 March 2013 the de facto husband’s solicitor informed him that she was anticipating some amendments to the proposed agreement. The de facto wife consulted her solicitor on 10 April 2013 but thereafter there were some difficulties in contacting the de facto wife’s solicitor.
In April 2013 the de facto husband says he said to her: “once we have the binding financial agreement signed we can put it behind us and continue working on our relationship as we have done for years. We just need to both have certainty going forward for both of us.” The de facto wife puts it a bit differently with the de facto husband saying to her: “once the agreement has been signed everything will return to normal”. Yet it is common ground that the relationship remained strained.
On 25 April 2013 the de facto husband emailed his solicitor referring to the de facto wife’s alleged suggestion that it be a separation agreement. The de facto wife denied any such suggestion. In his oral evidence, the de facto husband conceded that the email in his affidavit was not a complete copy of the email to his solicitor. The omitted portion of the email confirmed that it was his view that the relationship was to end, expressing concern that if it was a separation agreement the de facto wife might seek more by way of settlement. The de facto husband denied the amended email was an attempt to mislead the court.
Notwithstanding the negotiations as to the agreement continued. The de facto wife after some delay was able to contact her solicitor, Mr M, and a letter dated 3 May 2013 was forwarded to the de facto husband’s solicitors requesting amendments to the proposed financial agreement. The de facto husband provided further instructions to his solicitor by email dated 7 May 2013 and a letter dated 24 May 2013 was forwarded by the de facto husband’s solicitors to the de facto wife’s solicitors requesting further amendments to the financial agreement.
The de facto wife also makes reference to the “significant issue” of superannuation contributions made in the 2013 financial year. The de facto wife sought appropriate amendment to the draft agreement. These amendments, it appears, related in part to superannuation as at 30 June 2012 and to the parties’ superannuation where the de facto husband in 2013 had drawn against the mortgage secured over the Suburb J property to make contributions for his benefit to the self-managed super fund. Such contributions and others after 30 June 2012 are treated as equal under the final terms of the agreement.
The de facto husband provided further instructions to his solicitor on 2 June 2013.
In the period May 2013 to 7 June 2013 the de facto wife complains that the de facto husband paid some of his practice income to a separate account and such funds were not brought to account in the relationship. The de facto husband explained that such funds were deposited to a long standing account with such funds applied when required for expenses of the practice.
On 7 June 2013 the financial agreement was signed by the de facto wife in the presence of her solicitor. Both parties it appears spent a total of about $8,000 on legal fees in relation to the financial agreement. At the time of the agreement the de facto wife acknowledged that there were no outstanding requests for information by her and no outstanding issues as to the terms of the agreement.
Yet the de facto wife contended at trial, although it appears somewhat ingenuously, that the agreement was signed by her in the belief that the relationship would continue.
The parties separated under the one roof in early July 2013 and the de facto wife and her two children moved out of the Suburb J home on 9 August 2013 to her parents’ home. After separation it is common ground that the relationship between the parties deteriorated markedly with the de facto husband seeking to implement the agreement and the de facto wife threatening to seek to set it aside.
After separation the Suburb J property was sold for $1,646,000. Net proceeds of sale after payment to each of the parties of $70,000 were $1,090,314. Interest has accrued on that sum to date. The de facto husband from his preliminary distribution deposited $66,000 on term deposit to secure the ongoing practice loan.
The Financial Agreement – The Issues
The agreement between the parties is dated 7 June 2013.
The financial agreement is expressed to be pursuant to section 90UC of Part VIIIAB of the Family Law Act 1975 that makes provision for financial agreements during the continuance of a de facto relationship.
Such an agreement may make provision for how all or any of the property and financial resources of the parties are to be dealt with (s 90UC(2)) and may contain incidental or ancillary provisions (s 90UC(3)).
The requirements for the agreement to be binding on the parties are set out in section 90UJ. If satisfied then prima facie the agreement ousts the jurisdiction of the court to deal with the matters properly within its provisions (s 90SA).
In the event that some specified requirements of section 90UJ(1) are not complied with the court may nevertheless declare the agreement binding if it would be unjust and inequitable not to do so (s 90UJ(1A)).
Such an agreement may be set aside if the court is satisfied as to any of the matters set out in section 90UM with the principles of law and equity having application (s 90UN).
The de facto wife contends that the agreement is not binding on the parties. She contends:
a)That the agreement does not contemplate the ousting or substitution of the jurisdiction of the court to make property adjustment orders in that:
i)There is no operative clause or term expressing such intention save for a reference in the Recitals to the agreement that is not an operative provision;
ii)That the agreement contemplates an application to the court for a superannuation splitting order if certain circumstances arise;
b)That the certificates of independent advice attached to the agreement do not comply with the requirements of s 90UJ(1)(b) of the Act being advice “on the rights of that party” but instead refer to the “rights of the parties”;
c)That if the agreement is otherwise binding the agreement is void or voidable for misrepresentation, duress, undue influence and unconscionability and should be set aside pursuant to s 90UM of the Act.
The Wife’s Contentions;
No operative clause:
The agreement is headed “Part VIIIAB FINANCIAL AGREEMENT UNDER SECTION 90UC OF THE FAMILY LAW ACT 1975”. The agreement contains the following recitals
K. In order to arrange their property affairs the parties have agreed to enter into this agreement under the provisions of section 90 UC of the Family Law Act 1975 to deal with the division of their property, financial resources, liabilities and their maintenance in the event of the breakdown of their relationship.
L. This agreement is intended to deal with the whole of the property and financial resources of the parties now and in the future and their maintenance in the event of the breakdown of their de facto relationship without resort to litigation.
M. The parties intend the terms of this agreement to be given effect by any court having jurisdiction to determine financial matters (property and maintenance) in issue between [Mr Collins] and [Ms Collagio] pursuant to the Family Law Act 1975.
N. Pursuant to section 90UJ of the Act, this agreement will cease to have any force or effect in the event that the parties marry.
The effect of recitals has been settled and they represent admissions of fact by the parties to an agreement (Hoult & Hoult [2013] FamCAFC 109; 50 Fam LR 260, Wallace & Stelzer and Anor [2013] FamCAFC 199). Those admissions of fact colour the substance of the agreement.
It is clear that the subjective and common intention of the parties was that the agreement be an agreement for the purposes of Part VIIIAB of the Act. It is not contended otherwise by the wife.
There is no statutory provision requiring an “ouster” provision as contended for by the wife. The “ouster” is effected by the provisions of Part VIIIAB of the Act itself and only operates to the extent contemplated by the parties in the agreement (s 90UC(2)).
This challenge fails.
The splitting provisions:
In the event of a separation the agreement contemplates that there will be a splitting of the parties’ self-managed superannuation fund in that the de facto wife be entitled to $86,667 and the de facto husband to $103,333 as at 30 June 2012 irrespective of the statutory member balances in the balance sheet as at that date. The agreement further provides that any increase in the total superannuation fund over and above $190,000, being the total of the two previous amounts, is to be split equally between the parties.
The agreement further provides that in the event of a superannuation splitting arrangement following separation the de facto wife would resign as a trustee of the corporate trustee of the fund simultaneously with the rolling out of her entitlement as provided for.
The impugned provision of the agreement is in the following terms:
It is acknowledged by [Mr Collins] and [Ms Collagio] that the superannuation fund has a loan for the premises secured against the physiotherapy practice and it is noted that [Mr Collins] may not be able to borrow sufficient money in order to release the balance required to be rolled over to [Ms Collagio] in accordance with paragraph (f). If that is the case then [Ms Collagio] agrees that [Mr Collins] will arrange for such amount of the payment as referred to in clause (f) to be rolled out from the superannuation fund by way of superannuation splitting order (if any) and will adjust with [Ms Collagio] outside of the superannuation assets the amount to be paid to [Ms Collagio] pursuant to clause (f) and [Ms Collagio] will sign and authorise a superannuation splitting order to [Mr Collins] of what amount is needed in superannuation by [Mr Collins] in order to retain the premises owned by the superannuation fund.
The provisions of the agreement that relate to superannuation comprise a superannuation agreement under section 90MHA of the Act and may be included in an agreement pursuant to section 90UC of the Act (s 90MHA(1)). The effect of a superannuation agreement is implemented by section 90MJ of the Act and in this matter both parties are directors of the corporate trustee of the fund and procedural fairness considerations, if any, as to the trustee is not present.
Notwithstanding the inelegant language in the impugned provision on a close reading the provision does not require any application to the court for its effect. The provision simply contemplates several scenarios in the context of which there may be varying arrangements in relation to the self-managed superannuation fund split between the parties depending on the circumstances at the relevant time. The intention of the parties is clear and unequivocal. The agreement takes effect under s 90MJ(1)(c) as it provides for a “method by which the base amount can be calculated”.
This challenge fails.
The terms of the independent advice certificates:
These certificates attached to the agreement are certificates required by section 90UJ(1)(b) of the Act.
The de facto wife’s challenge is that the certificates are required to attest that “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.”
The subject certificates relevantly assert by the respective solicitors:
I provided my client with independent legal advice prior to entering into this agreement as to the following matters;
(a)the effect of this agreement on the rights of the parties, and
(b)the advantages and disadvantages at the time that the advice was provided to my client of making this agreement.
Each certificate attests that the solicitor was independently instructed by the party on whose behalf the certificate was provided, acknowledges that the advice provided was to “my client” and that the advice as to the advantages and disadvantages of making the agreement was provided to “my client”.
The reference to “the parties” as contended by counsel for the de facto husband reflected that the advice provided by each solicitor included the requisite advice to their own client but also advice as to the effect of the agreement on the other party. Thus demonstrating a perhaps more expansive level of advice provided over and above the particular advice required to the individual client.
Section 90UJ itself provides a remedy where there has not been strict compliance with the provisions of section 90UJ(1): (Hoult & Hoult supra).
The other challenges to the agreement by the wife having fallen away in all of the circumstances as discussed above it would be unjust and inequitable if the agreement were not binding on the parties to the agreement.
As a consequence there should be a declaration pursuant to s 90UJ(1B) that the agreement is a financial agreement for the purposes of Part VIIIAB of the Act.
Unconscionability, duress and undue influence:
However that being the case, the de facto wife mounts a further challenge to the Part VIIIAB agreement under the provisions of section 90UM of the Act as referred to above in that the agreement is void, voidable or unenforceable (s 90UM(1)(e)).
The provision imports common law and equitable principles as to factors vitiating the agreement including duress, undue influence and unconscionability.
Duress at common law avoided contracts where fear was induced so as to deprive a party of free will and can extend to pressure beyond what the law is prepared to countenance as legitimate to the extent that the party’s consent was not a voluntary act (Barton v Armstrong [1980] AC 614 at 635, Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45-6).
The evidence of the de facto wife is not indicative of duress in the entering into of the agreement by her.
Otherwise equity affords a remedy where there is unconscionability, undue influence or fraud. The de facto wife contends that there was undue influence and/or unconscionability in circumstances leading up to the agreement sufficient to vitiate the agreement.
It is well established that the de facto husband is not presumed to exercise under influence over his de facto wife (Yerkey v Jones (1939) 63 CLR 649 at 675). However in that decision Dixon J said that although there was no presumption of undue influence, the marital relation had never been divested completely of three “equitable presumptions of an invalidating tendency”. These his Honour detailed as follows:
In the first place, there is a doctrine, which may now perhaps be regarded as a rule of evidence, that, if a voluntary disposition in favour of the husband is impeached, the burden of establishing that it was not improperly or run fairly procure would may be placed upon him by proof of circumstances raising any doubt or suspicion. In the second place, the position of strangers who deal through the husband with the wife in a transaction operating to the husband’s advantage may, by that fact alone, be affected by any equity which as between the wife and the husband might arise from his conduct. In the third place, it still is or may be a condition of the validity of a voluntary dealing by the wife for the advantage of her husband that she really obtained an adequate understanding of the actual nature and consequences of the transaction.
In Commercial Bank Of Australia Ltd v Amadio and Anor (1983) 151 CLR 447 Deane J stated:
The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see O'Rorke v Bolingbroke (1877) 2 App Cas 814 at 822). The jurisdiction is long established as extending generally to circumstances in which
(i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them, and
(ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or “unconscientious” that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it.
Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: “the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract” (see per Lord Hatherley, O'Rorke v Bolingbroke, supra, at 823; Fry v Lane (1888) 40 ChD 312 at 322; Blomley v F (1956) 99 CLR 362 at 428–9).
In Louth v Diprose (1992) 175 CLR 621 Brennan J said:
The jurisdiction of equity to set aside gifts procured by unconscionable conduct ordinarily arises from the concatenation of three factors: a relationship between the parties which, to the knowledge of the donee, places the donor at a special disadvantage vis-à-vis the donee; the donee's unconscientious exploitation of the donor's disadvantage; and the consequent overbearing of the will of the donor whereby the donor is unable to make a worthwhile judgment as to what is in his or her best interest. A similar jurisdiction exists to set aside gifts procured by undue influence. In Commercial Bank of Australia Ltd. v Amadio, Mason J. distinguished unconscionable conduct from undue influence in these terms:
In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.
Deane J. identified the difference in the nature of the two jurisdictions:
Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party ... Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.
Although the two jurisdictions are distinct, they both depend upon the effect of influence (presumed or actual) improperly brought to bear by one party to a relationship on the mind of the other whereby the other disposes of his property. Gifts obtained by unconscionable conduct and gifts obtained by undue influence are set aside by equity on substantially the same basis. In White and Tudor's Leading Case in Equity, the notes to Huguenin v Baseley treat the principle applied in cases of unconscionable conduct as an extension of the principle applied in cases of undue influence:
The principle upon which equity will give relief as against the persons standing in [the categories of confidential] relations to the donor, will be extended and applied to all the variety of relations in which dominion may be exercised by one person over another.
The ground for setting aside a gift obtained by unconscientious exploitation of a donor's special disadvantage, as explained in Amadio, can be compared with the ground for setting aside a gift obtained by undue influence, as explained by Dixon J. in Johnson v Buttress:
The basis of the equitable jurisdiction to set aside an alienation of property on the ground of undue influence is the prevention of an unconscientious use of any special capacity or opportunity that may exist or arise of affecting the alienor's will or freedom of judgment in reference to such a matter. The source of power to practise such a domination may be found in no antecedent relation but in a particular situation, or in the deliberate contrivance of the party. If this be so, facts must be proved showing that the transaction was the outcome of such an actual influence over the mind of the alienor that it cannot be considered his free act. But the parties may antecedently stand in a relation that gives to one an authority or influence over the other from the abuse of which it is proper that he should be protected. (Emphasis added.)
The similarity between the two jurisdictions gives to cases arising in the exercise of one jurisdiction an analogous character in considering cases involving the same points in the other jurisdiction.
The relationship
There are some categories of confidential relationships from which a presumption of undue influence arises when a substantial gift is made by one party to the relationship to the other — relationships such as solicitor and client, physician and patient, parent and child, guardian and ward, superior and member of a religious community. Public policy creates a presumption of undue influence in cases where the relationship falls into one of the recognized categories. Those categories do not exhaust the cases in which it may be held that it is contrary to conscience for a donee to retain a gift. In cases where the relationship is not one of confidentiality, a gift may be impeached where the evidence shows that in fact it was procured by unconscionable conduct. Where a gift is impeached on the ground that it was obtained by unconscionable conduct consisting in an unconscionable exploitation of an antecedent relationship, the relationship is one in which one party stands in a position of special disadvantage vis-à-vis the other. Such relationships are infinitely various, the common feature being that the donor is, to the knowledge of the donee, in a position of special disadvantage vis-à-vis the donee: that is to say, in matters in which their interests do not coincide, the donor's capacity to make a decision as to his or her own best interest is peculiarly susceptible to control or influence by the donee. As Mason J. said in Amadio:
I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party. (emphasis added)
The de facto wife contends that she was seeking to preserve the relationship in entering into the agreement, yet she was an active and informed participant in the negotiations leading up to the agreement.
She further contends that she was at a “special disadvantage” in dealing with the de facto husband in that he at all relevant times knew he intended to terminate the relationship and unconscionably took advantage of the de facto wife’s desire to preserve the faltering relationship by entering into the agreement. Yet she instructed a solicitor and negotiated a final agreement in respect to which she received independent advice. Her contention is ingenuous at best.
It was not contended on behalf of the de facto wife that a “special relationship” arises simply as a consequence of the parties being in a de facto relationship.
It was contended on behalf of the de facto wife that a special relationship exists between parties to a de facto relationship such that “the presumption of undue influence arises in relation to the entering of the agreement”.
This contention takes the de facto wife’s case out of any suggestion of a relationship from which there can be a presumption of undue influence to a circumstance where she contends that the de facto husband came to occupy or assume a position of ascendancy, power or domination over her and that she had taken a position of dependence or subjection, (see Whereat v Duff (1973) 1 ALR 363, Parkes [2014] FCCA 102).
If that is her contention, she has the onus of proof to demonstrate same.
The de facto wife makes no complaint as to the agreement itself and no complaint as to outstanding disclosure by the de facto husband at the time of the agreement. The de facto wife was a Chartered Accountant of many years’ experience particularly in advising businesses and dealing with business structures.
The process in place between the parties, on the de facto wife’s evidence, leading up to the signing of the agreement was about six months. During most of that time both parties were represented. The de facto wife makes neither complaint about her representation nor any complaint about the advice she may or may not have been given by her solicitor.
The de facto wife makes no complaint that the agreement in its terms is unfair or inappropriate. Indeed she negotiated particular amendments as a consequence of circumstances, particularly as to superannuation, which she became aware of during the negotiation process.
On her part she acknowledges that the relationship between herself and the de facto husband was souring as early as February 2013. The significant deterioration of the parties’ relationship prior to the signing of the agreement and immediately thereafter does not support her contention that she was overborne by her wish for the relationship to continue.
She offers no evidence that would show that the de facto husband was in any way in a position of power, ascendancy or domination over her, nor any evidence to suggest that she had taken a position of dependence or subjection.
To the contrary and notwithstanding the turmoil in their relationship, she was an informed and active participant in the negotiation process that led to the ultimate financial agreement between the parties. She was fully aware that she was entering into an agreement that provided the basis for ultimate financial division between herself and her partner whether the de facto relationship, as hoped for by her, endured into the foreseeable future or ended abruptly.
There is no evidence such as would support any contention as to unconscionability arising from undue influence or any other circumstance.
The de facto wife’s challenge to the agreement on this basis must fail.
There will be a declaration that the financial agreement is a binding financial agreement pursuant to Part VIIIAB of the Act.
I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 16 April 2015.
Associate:
Date: 16 April 2015
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