Darrow and Malden and Ors

[2017] FamCA 497

FAMILY COURT OF AUSTRALIA

DARROW & MALDEN & ORS [2017] FamCA 497

JURISDICTION – Whether the Court has jurisdiction to hear the property dispute between parties to a de facto relationship that broke down before 2009 – Where the parties signed a Financial Agreement under s 90UD of the Family Law Act 1975 (Cth) – Where the parties did not “opt in” to the family law regime as required by item 86A of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) – Where the commencement of proceedings in the Family Court of Australia or signing of the Financial Agreement were not sufficient to establish that a choice was made to “opt in” – Orders made for the Initiating Application and Response to be dismissed for want of jurisdiction.

Family Law Act 1975 (Cth) s 90UD
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) items 86A, 86A(5)
Family Law Rules 2004 (Cth) rr 10.13, 10.14
Supplementary Explanatory Memorandum to the Family Law Amendment (De Facto Financial Matters and Other Measures) Bill 2008

APPLICANT: Ms Darrow

RESPONDENT: Mr Malden

2^nd RESPONDENT: Australia and New Zealand Banking Group Limited

3^rd RESPONDENTS: Mr Quaid and Mr Vincent

4^th RESPONDENT: B Pty Ltd

5^th RESPONDENT:

D Pty Ltd (ABN …)

(Deregistered)

6^th RESPONDENT: Ms Egan

FILE NUMBER: NCC 1896 of 2015

DATE DELIVERED: 17 July 2017

PLACE DELIVERED: Sydney

PLACE HEARD:	Sydney
JUDGMENT OF:	Rees J

HEARING DATE: 13 July 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Nolan and Mr Bateman

SOLICITOR FOR THE APPLICANT: Legal Minds

THE RESPONDENT: In Person

COUNSEL FOR THE 2^ND RESPONDENT: Mr Docker

SOLICITOR FOR THE 2^ND RESPONDENT: Kemp Strang

SOLICITOR FOR THE 3^RD & 4^TH RESPONDENTS: Wiggins Cheffings Lawyers

COUNSEL FOR THE 5^TH & 6^TH RESPONDENTS: Ms Nolan and Mr Bateman

SOLICITOR FOR THE 5^TH & 6^TH RESPONDENTS: Legal Minds

Orders

IT IS ORDERED

1. That the Amended Initiating Application filed 15 December 2015, and any Response, be dismissed.

2. That all parties have leave to make an oral application for costs of the proceedings.

3. That the application for costs be listed for hearing on 14 August 2017.

IT IS DIRECTED

1. That the applicant file and serve on all parties any written submissions in relation to the jurisdiction of the Court to make orders for costs by 4.00 pm on 20 July 2017.

2. That the respondents file any written submissions and any affidavit material including, in the case of the first respondent, any affidavit in respect of his financial position, by 4.00 pm 27 July 2017.

3. That the applicant file and serve any affidavit evidence and written submissions in response by 4.00 pm on 3 August 2017.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym  Darrow & Malden and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: NCC 1896 of 2015

Ms Darrow

Applicant

And

Mr Malden

Respondent

REASONS FOR JUDGMENT

1. Ms Darrow (“the applicant”) and Mr Malden (“the respondent”) lived in a de facto relationship in New South Wales from 1986 until they finally separated in 1993.

2. The provisions of the Family Law Act 1975 (Cth) (“the Family Law Act”) which gave the Family Court of Australia jurisdiction over financial disputes between de facto parties, specifically confer power in relation to de facto relationships which broke down on a final basis after 1 March 2009.

3. In relation to de facto relationships which had ended before that date, the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (“the Amendment Act”), contains provisions allowing the parties who had been in a de facto relationship to “opt in” to the regime prescribed under the Family Law Act.

LEGISLATIVE PROVISIONS

1. The “opting in” provisions are found at item 86A of the Amendment Act and are set out below:

   86A  Opting into the new regime

   Choosing the new regime

   (1) The parties to a de facto relationship that broke down before commencement may choose for Parts VIIIAB and VIIIB, and subsection 114(2A), of the new Act to apply in relation to the de facto relationship.

   Note 1:    Whether the parties will be able to obtain an order under those provisions of the new Act, or make a Part VIIIAB financial agreement, will depend on whether the tests found in those provisions are satisfied for the de facto relationship.

   Note 2:    Divisions 3 and 4 of this Part, and section 90UE of the new Act, are not affected by a choice under this item. Those Divisions, and that section, relate to de facto relationships that (if they are to break down) will break down after commencement.

   When a choice can be made

   (2)       A choice under subitem (1) can be made if:

   (a)  the choice is unconditional; and

   (b)  subitems (3), (4) and (5) are satisfied for the choice.

   A choice is irrevocable.

   (3)     This subitem is satisfied for the choice if no order (other than an interim order) under a preserved law of a State or Territory has been made by a court in relation to either of the following:

   (a) how all or any of the:

   (i)  property; or

   (ii)  financial resources;

   that either or both of the parties to the de facto relationship had or acquired during the de facto relationship is to be distributed;

   (b)  the maintenance of either of the parties to the de facto relationship.

   (4)     This subitem is satisfied for the choice if:

   (a)  the parties have not made a designated State/Territory financial agreement in relation to their de facto relationship; or

   (b)  if the parties have made such an agreement, that agreement has ceased to have effect without:

   (i)  any property being distributed; or

   (ii)  any maintenance being paid;

   under the agreement.

   (5)     This subitem is satisfied for the choice if:

   (a) the choice is in writing and signed by both of the parties to the de facto relationship; and

   (b)  each of the parties was provided, before the choice was signed by him or her, with:

   (i) independent legal advice from a legal practitioner about the advantages and disadvantages, at the time that the advice was provided, to the party of making the choice; and

   (ii)  a signed statement by the legal practitioner stating that this advice was given to the party.

   (6)     For the purposes of Part VIIIAB of the new Act, a choice can be included in a Part VIIIAB financial agreement for which the parties are the spouse parties.

2. There is no doubt that the de facto relationship broke down before the commencement of the new regime.

3. The intention of the Parliament is set out in the Supplementary Explanatory Memorandum, the relevant paragraphs being reproduced below:

   Amendment 37: Schedule 1, new item 86A, page 82 (after line 17) (opting into the new regime)

   44. Amendment 37 inserts new item 86A into Division 2 of Part 2 of Schedule 1 to the Bill. New subitem 86A(1) sets out a procedure enabling parties to a de facto relationship:

   –in a State that is a referring State on the commencement of Schedule 1, or in a Territory; and

   – whose relationship has broken down before Schedule 1 commences

   to choose that Parts VIIIAB and VIIIB and subsection 114(2A) of the Act, providing for the new property settlement and spouse maintenance regime on the breakdown of a de facto relationship, apply to their relationship.

   45. New subitem 86A(2) will require any choice made by parties to a de facto relationship, that Parts VIIIAB and VIIIB and subsection 114(2A) apply to their relationship, to be unconditional. The subitem will also provide that any choice made will be irrevocable.

   46. Under new subitems 86A(3) and (4), parties to a de facto relationship will only be able choose that the provisions apply to their relationship if they have not finalised property and spouse maintenance issues between them under State or Territory law by either:

   – a final court order dealing with all or any of their property or financial resources or spouse maintenance, or

   – a written financial agreement dealing with any of those matters, other than an agreement that the parties have revoked before any property has been distributed or maintenance paid.

   47. The choice made by the parties to a de facto relationship that Parts VIIIAB and VIIIB and subsection 114(2A) apply to their relationship must, under new subitem 86A(5), be in writing and signed by each party. It must be made only after the party has been provided with independent legal advice from a legal practitioner about the advantages and disadvantages of making the choice. Before signing, each party must also have been provided with a signed statement by the legal practitioner stating that the advice was given to the party.

   48. The choice can be included in any financial agreement that the parties to the relationship might make under Division 4 of Part VIIIAB of the Act (new subitem 86A(6)).

4. After they separated, the applicant and the respondent continued in a business relationship. In December 2011, the applicant and the respondent entered into an agreement which purported to be a Binding Financial Agreement (“the Agreement”) pursuant to the provisions of section 90UD of the Family Law Act. The terms of that Agreement, which divided both their business and real estate assets between them, have been implemented.

5. The matter comes before the Court for hearing of a discrete application as to the effect of the Agreement. Three questions have been posed:

   Question 1

   Whether the requirements of sub-item 86A(5) of Part 2 of Schedule 1 of the Family Law Amendment (De facto Financial Matters & Other Measures) Act 2008 (Cth) are mandatory to give to effect a choice under item 86A(1) of Part 2 of Schedule 1 of the Family Law Amendment (De facto Financial Matters & Other Measures) Act 2008 (Cth)?

   Question 2

   Whether by the Agreement the parties made an effective choice, as contemplated by item 86A(2) of Part 2 of Schedule 1 of the Family Law Amendment (De facto Financial Matters & Other Measures) Act 2008 (Cth) for Parts VIIIAB and VIIIB and subsection 114(2A) of the Family Law Act 1975 (Cth) to apply to their de facto relationship?

   Question 3

   If no effective choice has been made by the parties to opt in to Parts VIIIAB and VIIIB and subsection 114(2A) of the Family Law Act 1975 (Cth) does the court have jurisdiction to determine the application for relief sought in the Amended Initiating Application filed 15 September 2015 and any Response thereto filed on behalf of the first respondent.

6. The matter was listed before me in relation to the three questions only.

THE HEARING

1. The parties to the proceedings are the applicant and the respondent who were the parties to the de facto relationship.

2. The applicant, the respondent and the second to sixth respondents are parties to proceedings in the Supreme Court of New South Wales which relate, broadly, to debts asserted to be owed by the applicant. As such, they have an interest in these proceedings.

3. The applicant was represented by counsel who also appeared for the fifth and sixth respondents.

4. The first respondent, Mr Malden, appeared in person.

5. The second respondent appeared by counsel.

6. The third and fourth respondents appeared by their legal representative.

7. At the commencement of the proceedings, counsel for the applicant tendered written submissions. The applicant conceded, in answers to the questions posed in the consent orders, the following:

   ·Question 1:  Yes, the requirements are mandatory and must be strictly complied with;

   ·Question 2: No, there was no choice made by entering into the Agreement itself; and

   ·Question 3: No, by reason of item 86 of Part 2 of Schedule 1 of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (the Amending Act), Parts VIIIAB and VIIIB and subsection 114(2A) of the Family Law Act 1975 (Cth) (FLA), cannot apply to the Agreement and accordingly there is no “matter” to attract the Court’s jurisdiction under ss 31 and 33 of the FLA.

8. Accordingly, it was conceded by counsel for the applicant that the Initiating Application filed 17 July 2015 must be dismissed.

9. Mr Malden, the first respondent, contended that the Agreement was valid and binding and had effect in accordance with the provisions of the Family Law Act.

10. Counsel for the second respondent and the solicitor for the third and fourth respondents made no submissions in relation to the questions posed and accepted the concession on behalf of the applicant that the application should be dismissed. They each indicated that they wished to be heard in relation to the question of costs.

THE EVIDENCE

1. At the time the applicant signed the Agreement, she was represented by a solicitor, Ms C. Both the applicant and Ms C signed a certificate which is annexed to the Agreement. In the certificate the applicant states that:

   A copy of the Agreement was given to me;

   Before signing the Agreement, I received independent legal advice from [Ms C] about the effect of the Agreement on my rights, and the advantages and disadvantages, at the time that the advice was provided, to me of making the Agreement.

   I have received a signed statement from [Ms C] stating that I have received independent legal advice about the effect of the Agreement on my rights, and the advantages and disadvantages, at the time that the advice was provided, to me of making the Agreement.

   I have received a copy of a signed (sic) by the legal practitioner for [the respondent] stating that before signing the Agreement he received independent legal advice about the effect of the Agreement on his rights, and the advantages and disadvantages, at the time that the advice was provided, to that party of making the Agreement.

2. Also annexed to the Agreement, is a certificate in mirrored terms, signed by the respondent as to the advice he received from his solicitor.

3. Also annexed to the Agreement are two Certificates, one signed by each solicitor, in identical terms, certifying that, before the Agreement was signed he or she gave advice as to “The effect of the Agreement on the rights of my client” and “The advantages and disadvantages, at the time the advice was provided, to the party making the Agreement.”

4. There is no reference in the certificates of advice in relation to the “opting in” provisions. There is no reference in the body of the Agreement to the “opting in” provisions or to any decision by the parties or either of them to “opt in” to the provisions contained in the Family Law Act.

5. The wife deposed that “I was never given any such verbal or written advice from my former solicitor [Ms C], or any other lawyer.”

6. The respondent also swore an affidavit. He deposed, “[The applicant] and I each executed the Agreement.”

7. The respondent deposed that they each attended to the implementation of the Agreement.

8. The respondent does not depose to having received advice about the “opting in” provisions.

9. The respondent did not submit that he had received any such advice.

QUESTION 1

1. It follows from the clear language of item 86A, that for a former de facto couple to “opt in” to the provisions, the following steps must occur:

   ·They must make an informed choice to do so;

   ·The choice must be evidenced in writing signed by both parties;

   ·Before the document evidencing the choice is signed, each of the parties must be provided with independent legal advice by a legal practitioner about the advantages and disadvantages, at the time the advice was provided, to the party making the choice;

   ·Each of the legal representatives must provide a signed statement to the effect that the advice had been given.

2. Nothing in the language of 86A(5) could be interpreted to suggest that compliance with that provision is optional. The terms of the Explanatory Memorandum support the conclusion that compliance with 86A(5) is mandatory.

3. Thus the answer to Question 1 is “Yes”. Compliance is mandatory.

QUESTION 2

1. It is clear that the choice to “opt in” to the provisions can be included in the documents comprising the Binding Financial Agreement. In that case, the requirement that the choice be evidenced in writing and signed by the parties, must be satisfied by the inclusion in those documents of a clause or clauses evidencing the choice and the inclusion of the documents signed by the legal representatives evidencing the provision of the relevant legal advice.

2. I accept the submission of counsel for the applicant that the “choice” cannot be understood to have been made implicitly or assumed by the mere fact that the parties entered into the Agreement.

3. There is no reference in the Agreement to the “opting in” provisions.

4. There is no evidence at all that the parties were, at the relevant time, aware of the “opting in” provisions or that they, or either of them, received any advice as to the advantages or disadvantages of “opting in”.

5. Thus the answer to Question 2 is “No”.

QUESTION 3

1. The jurisdiction in relation to de facto financial matters, conferred by virtue of the amendments to the Family Law Act is confined to those relationships which broke down on a final basis after 1 March 2009, unless the parties have “opted in” in accordance with the provisions of item 86A of the Amendment Act.

2. I accept the submissions of counsel for the applicant which are set out in part below:

   Absent an effective choice pursuant to sub-item 86A(1) of the transitional provisions, item 86 of the transitional provisions precludes the application of Part VIIIAB of the [Family Law Act] to a de facto relationship that broke down before the commencement of the [Amendment Act]. Accordingly, the Agreement cannot be a Part VIIIAB financial agreement and the matter is therefore not a de facto financial cause. Consequently, the Agreement is not capable of being set aside under the [Family Law Act], such that the court has no jurisdiction to adjudicate the relief sought in the Amended Initiating Application or any Response thereto under the [Family Law Act] or otherwise… (Emphasis in original)

3. The answer to Question 3 is: “The Family Court has no jurisdiction to determine the application for relief sought in either the Amended Initiating Application filed 15 September 2015 or any Response filed on behalf of the first respondent”.  

4. Accordingly, the Amended Initiating Application filed 15 September 2015, will be dismissed.

5. All of the parties seek costs. Leave has been granted to all parties to make an oral application for costs of the proceedings, directions have been made for the filing of evidence and written submissions and those applications will be heard on 14 August 2017.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 17 May 2017.

Associate: 

Date:  17/5/2017