Duncan and Duncan
[2014] FCCA 2729
•22 December 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DUNCAN & DUNCAN | [2014] FCCA 2729 |
| Catchwords: FAMILY LAW – Property – financial agreement – wife’s enforcement application – husband seeks to set aside agreement – whether there was an agreement – whether financial agreement should be set aside – whether impracticable or incapable of being performed. |
| Legislation: Family Law Act 1975 (Cth), ss.4, 90B, 90C, 90D, 90G 90K & 90KA |
| Senior & Anderson (2011) FLC 93-470 Ruane & Bachmann-Ruan & Anor [2009] FamCA 1101 Saintclaire & Saintclaire [2013] FamCA 491 Hay & Hay [2014] FCCA 775 Sanger & Sanger [2011] FamCA 210 Twigg & Twigg (1994) FLC 92-456 Hughes & Hughes [2012] FamCA 198 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Electricity Generation Corporation (trading as Verve Energy) v Woodside Energy Ltd [2014] HCA 7 Meehan & Jones (1982) 149 CLR 571 Upper Hunter County District Council v Australian Chilling and Freezing Co (1968) 118 CLR 429 La Rocca & La Rocca (1991) FLC 92-22 In the marriage of Rhode (1984) 10 FamLR 56; FLC 92-592 Hoult & Hoult [2011] FamCA 1023 |
| Applicant: | MS DUNCAN |
| Respondent: | MR DUNCAN |
| File Number: | MLC 10227 of 2012 |
| Judgment of: | Judge O’Sullivan |
| Hearing dates: | 13 & 14 October 2014 |
| Date of Last Submission: | 14 October 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 22 December 2014 |
REPRESENTATION
| Counsel for the Applicant: | Ms M. Smallwood |
| Solicitors for the Applicant: | Pearsons Lawyers Pty Ltd |
| The Respondent: | By his solicitor Mr S. Rubera |
| Solicitors for the Respondent: | Sebastian Rubera & Associates |
ORDERS
The hearing of the wife’s application for enforcement of the binding financial agreement dated 18 November 2009 be adjourned to Friday, 20 February 2015.
IT IS NOTED that publication of this judgment under the pseudonym Duncan & Duncan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT AT MELBOURNE |
MLC 10227 of 2012
| MS DUNCAN |
Applicant
And
| MR DUNCAN |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Duncan (“the wife”) and Mr Duncan (“the husband”) separated in 2009. The parties entered into an agreement dated 18 November 2009 which provided for the division of property between them. This agreement purported to be a financial agreement under s.90C of the Family Law Act 1975 (“the Act”) (“the Agreement”). The wife seeks to enforce the Agreement. The husband seeks the dismissal of that application and argues inter alia that the Agreement is unenforceable or alternatively that it should be set aside.
These proceedings were commenced in 2012 when the wife faced demands from a financial institution for a property (which she was entitled to under the Agreement) to be sold because of a debt under a (omitted) Bank. At the heart of the dispute between the parties is whether the husband was responsible for the (omitted) Bank under the Agreement.
The wife commenced the proceedings in 2012. After a number of interlocutory hearings, where interim orders were made by consent including orders providing for the sale of various property, payment of monies to a third party (following her involvement in the proceedings), the appointment of a litigation guardian for the husband and a number of adjournment applications, the matter came to trial on 13 October 2014.
Background
Before turning to the history of these proceedings, the orders sought by each of the parties, the material on which they relied and the terms of the Agreement, it is convenient to set out the following background.[1]
[1] Drawn from the Statement of Agreed Facts (“S.O.A.F”) filed on 31 July 2014 and the parties affidavit material. Statements of fact in these reasons are findings of fact.
The husband is aged 46 years, having been born on (omitted) 1968. The husband was a self-employed (occupation omitted). The husband now receives income from a (omitted) Income Protection Policy in the sum of $1,153.00 per week received as a result of a brain tumour. The husband can no longer work. The wife is aged 43 years, having been born on (omitted) 1971 and is employed.
The parties were married on (omitted) 1997 and separated on a final basis on 16 August 2009. There are two children of the marriage, who live with the wife, namely X born on (omitted) 1998 (aged 16 years) and Y born on (omitted) 2000 (aged 14 years).
The parties became owners of Property A (“the former matrimonial home”) in 1996. The husband registered a business, (business omitted) in 2001. In 2004 the parties opened a home loan account with the (omitted) Bank. The former matrimonial home was used as security.
In around 2005 the (omitted) Bank was opened. The former matrimonial home was used as security. The (omitted) Bank was used to fund the purchase of a property in The Property H in the husband’s name in 2007. Subsequently the husband offered that property as security for a loan to Ms R and there was a mortgage to the (omitted) Bank.
There were then between 2008 and September 2009 various property transactions involving property in Property K, Property W and Property F in the State of Victoria as well as dealings between the husband and Ms R regarding the (business omitted) business.
After signing an agreement regarding child support in October and on 18 November 2009, the parties signed the Agreement. The parties obtained independent legal advice prior to signing the Agreement pursuant to the requirements of s.90G(1) of the Act.
After the Agreement was signed:
a)on 7 February 2010 the parties executed a transfer of land and the wife was registered as the sole proprietor of the former matrimonial home.
b)on 9 June 2010 the wife transferred her interest in the Property K property to the husband.
c)on 9 November 2010 the husband obtained an interest in the property at Property W.
d)on 6 April 2011 the Property K property was sold.
e)the husband made payments under the (omitted) Bank and between 1 June 2011 and 17 October 2011, the sum of $114,154.48 was withdrawn from the (omitted) Bank by the husband.
f)on 12 December 2012 the husband received the sum of $147,842.52 from (omitted) Pty Ltd.
After the proceedings were commenced there were a number of orders providing for properties to be sold and the payment of monies to various entities. The (omitted) Bank has now been closed.
Since separation the husband has re-partnered. The husband has been living with his defacto partner, Ms B for over 4 years. The wife remains living with the children in the former matrimonial home.
Procedural history
On 12 December 2012 the wife filed an application seeking enforcement of the Agreement. The wife’s application was given a first Court date of 19 February 2013. On the first Court date the husband, who had been served, had not filed a response and there was uncertainty about his capacity to provide instructions. However on application made on his behalf the matter was adjourned to 15 March 2013.
The husband subsequently filed a response on 19 February 2013 and the matter returned to Court on 15 March 2013. There were interim orders made by consent, (including for the sale of property the husband had an interest in) leave to file an amended application and response (because of issues raised by the husband) and the matter was fixed for trial on 17 October 2013.
In August 2013 the husband filed an amended response and the wife filed an application in a case. On 5 August 2013 there were further interim orders made by consent (including a restraint on the husband dealing with certain property or financial accounts) and the matter remained listed for trial in October 2013.
In early October 2013 the husband filed an application in a case and the wife filed a response to this. The husband also filed another amended response. On 17 October 2013 (and in order to deal with issues raised by the parties just prior to the trial) there were interim orders made by consent (including orders joining, dealing with and then discharging another party). The matter returned to Court the following day, there were further interim orders made by consent (including further orders restraining the husband from dealing with certain property) and the trial was adjourned to 13 March 2014.
In early January 2014 that date was vacated by consent and the matter was relisted to 13 May 2014.
The husband subsequently filed another amended response in February 2014. On 13 May 2014 the husband made another adjournment application (which was granted) and there were interim orders with the trial adjourned to 21 August 2014.
There was subsequently filed an application for the appointment of a litigation guardian for the husband (which was not opposed). Following the Court making such an order in early August 2014 the parties subsequently agreed to the trial being re-listed to 13 October 2014 and an order to that effect was made on 20 August 2014.
At the trial the wife was represented by Ms Smallwood of Counsel and the husband by Mr Rubera, his solicitor. Mr Rubera was the solicitor who signed the certificate annexed to the Agreement certifying the husband had been advised independently of the wife before signing the Agreement about inter alia the effect of the Agreement on his rights under the Act and otherwise at law and in equity.
Material relied on
The Court was told by Counsel for the wife that her client relied on:
·Further amended application filed 19 May 2014;
·Affidavit of the wife filed 20 September 2013;
·Statement of Agreed Acts filed 31 July 2014;
·Outline of Case filed 11 October 2013; and
·Subpoenaed material produced by Mr J at (omitted).
The wife also relied upon exhibits A2, A3 and A4 which were tendered in Court.
The Court was told by the husband’s solicitor his client relied on:
·The husband’s trial affidavit filed 30 October 2013 at paragraphs 4(l), 4(m), 4(r), 4(s), 4(u), 4(ii) and 4(jj);
·Affidavit of Mr Sebastian Rubera filed 8 October 2013 at paragraph 14;
·The husband’s affidavit filed 19 February 2014 at paragraphs 8 to 27 inclusive.
·Updated financial statement of the husband filed 19 February 2014;
·Affidavits of Dr M filed 21 February 2014;
·Affidavit of Dr M filed 30 May 2014;
·Affidavit of Dr M filed 2 June 2014;
·Amended case information filed 21 February 2014;
·
Further amended response to initiating application filed
14 October 2014;
·Statement of Agreed Facts filed 31 July 2014; and
·Submissions filed by the husband on 6 October 2014.
The husband also relied on exhibits R2, R3, R4 and R5 which were tendered in Court.
Given the detail agreed on in this case and the matters canvassed in the husband’s written submissions, Counsel for the wife put her client’s case by reference to the matters raised in the husband’s written submissions.
Neither party required any of the deponents of the affidavits referred to above for cross examination and the trial proceeded by way of oral submissions. The wife did not seek to enforce the Agreement at the trial and both parties accepted that in the event the Agreement was found to be binding and not otherwise set aside the wife’s enforcement application should then be listed for hearing.
Orders sought by wife
In the further amended initiating application filed 19 May 2014 on which she relied, the wife sought the following orders:
“Final orders sought
1.That the Husband be and is hereby restrained by injunction from removing, disposing or otherwise dealing with (or authorising or instructing any other person to do any such act on his behalf) any assets of whatsoever nature and from encumbering or further encumbering any assets of whatsoever nature until such time that he fully complies with all previous and current Orders in these, and any further ancillary, proceedings and confirmation of said compliance has been provided to the Wife’s solicitors, Pearsons Lawyers Pty Ltd.
2That pursuant to section 90KA of the Family Law Act 1975 paragraph 1(f) of the Financial Agreement dated
18 November 2009 be enforced which states that:
‘the Husband shall be solely responsible to pay the sum of $89,000 in respect of the mortgage secured by Property A (“the mortgage”) at the rate of the repayment of principal and interest as is applied from time to time by the (omitted) Bank until such time as the mortgage has been reduced down to the sum of $70,000 whereupon the mortgage payment shall become the sole responsibility of the Wife and the Wife will indemnify the Husband in respect of the said balance of $70000.’
3.That within 30 days of the making of these Orders:
(a)the Husband withdraw 100% of his superannuation from his (omitted) Superannuation Fund # and pay the entire amount to the Wife in cash or, in the alternative, the Husband roll 100% of his superannuation from his (omitted) Superannuation Fund # into the Wife’s superannuation by way of superannuation split and the usual procedural fairness be afforded to the Fund;
(b)The Husband discharge and re-finance the (omitted) Bank mortgage dealing number (omitted) secured against Property H and Property A into his sole name;(c)The Husband reduce to $70,000 the mortgage with the (omitted) Bank secured against Property A which will remain the responsibility of the wife registered in the name of the Wife pursuant to paragraph 1(f) of the Binding Financial Agreement; and
(d)That the Husband do all such acts and things and sign all such documents as may be required to transfer to the Wife at the expense of the Wife all of his right, title and interest in the following properties:
(i) Property R (“the Property R property”); and
(ii) Property W (“the Property W property”).
4.That the Husband reimburse the Wife such sum as has been paid by her since August 2012 towards the mortgage at Property A and the (omitted) Bank as a result of the Husband’s failure to do so (Husband ceased payments in May 2012).
5.In the event that the Husband does not comply with paragraph 1 herein, the properties located at Property W, (“the Property W property”), Property F (“the Property F property”), Property H (“the Property H property”) or as many of the properties as is required to be sold to satisfy paragraph 2 of the Final Orders sought, and such sale occur forthwith (“the sales”) and the proceeds of sale shall be applied as follows:(a)Firstly, to pay all costs, commissions and expenses of the sales;(b)Secondly to discharge the mortgages and any other encumbrance affecting the Property W, Property F and the Property H properties;(c)Thirdly, to reduce the mortgage on the Property A property to $70,000;(d)To pay out the (omitted) Bank secured against the Property H property and the Property A property;(e)To reimburse the Wife the amount paid by her towards the mortgage and the (omitted) Bank since August 2012; and(f)Fourthly, the balance to the Husband.6.That within 7 days of the making of these Orders the Husband do all necessary acts and things and sign all necessary documents to transfer to the Wife at the expense of the Wife all of his right title and interest in the Toyota Landcruiser motor vehicle, registration number (omitted).
7.Any further or other Orders as deemed necessary by this Honourable Court.
8.That the Husband pay the Wife’s costs arising from and associated with this Application.
9.In the alternative, that in the event that the Husband’s application be set aside the Binding Financial Agreement is granted that there be such property division between the parties as the Court deems just and equitable.
Interim orders sought
1.That pursuant to Section 90KA of the Family Law Act 1975 paragraph 1(f) of the Financial Agreement dated 18 November 2009 be enforced which states that:‘the Husband shall be solely responsible to pay the sum of $89,000 in respect of the mortgage secured by Property A, Property A (“the mortgage”) at the rate of the repayment of principal and interest as is applied from time to time by the (omitted) Bank until such time as the mortgage has been reduced down to the sum of $70,000 whereupon the mortgage payment shall become the sole responsibility of the Wife and the Wife will indemnify the Husband in respect of the said balance of $70,000.’2. That within 30 days the Husband:(a)discharge and re-finance the (omitted) Bank mortgage dealing number (omitted) secured against Property H and Property A into his sole name; and(b)reduce to $70,000 the mortgage with the (omitted) Bank secured against Property A, which will remain the responsibility of the Wife registered in the name of the Wife pursuant to paragraph 1(f) of the Binding financial Agreement.3.That the Husband reimburse the Wife such sum as has been paid by her since August 2012 towards the mortgage at Property A as a result of the Husband’s failure to do so (Husband ceased payments in May 2012).4.In the event that the Husband does not comply with paragraph 1 herein, the properties located at Property W, (“the Property W property”), Property F (“the Property F property”), Property H, (“the Property H property”) or as many of the properties as is required to b sold to satisfy paragraph 2 of the Final Orders sought, and such sale occur forthwith (“the sales”) and the proceeds of the sales shall be applied as follows:(a)Firstly, to pay all costs, commissions and expenses of the sales;(b)Secondly to discharge the mortgages and any other encumbrance affecting the Property W, Property F and the Property H properties;(c)Thirdly, to reduce the mortgage on the Property A property to $70,000;(d)To pay out the (omitted) Bank secured against the Property H property and the Property A property;(e)To reimburse the Wife the amount paid by her towards the mortgage and the (omitted) Bank since August 2012; and(f)Fourthly, the balance to the Husband.5.Any further or other Orders as deemed necessary by this Honourable Court.6.That the Husband pay to the Wife costs arising from and associated with this Application.”
Orders sought by the husband
The husband had at various times in resisting the wife’s enforcement application sought inter alia parenting orders and orders with respect to a child support agreement, all of which had fallen away as issues between the parties by the time of the trial.
In the further amended response to the initiating application signed
25 August 2014 and filed without objection on 13 October 2014, on which he relied, the husband sought the following orders:
“CHILDREN1.That the Respondent Husband communicate and spend time with the children of the marriage, X born (omitted) 1998 (“X”) and Y born (omitted) 2000 (“Z”) as follows;(a)In week one, Monday night from 3.30pm to 8.30pm, Tuesday from 3.30pm to 8.30pm and Wednesday from 3.30pm to 8.30pm, the children are collected from school and delivered to the Applicant Wife’s premises at 8.30pm the same evening, at Property A. Further, from 1.00pm Saturday until the commencement of school the following Monday.(b)In week two, the children spend time with me, Tuesday from 3.30pm to 8.30pm and Wednesday from 3.30pm to 8.30pm.(c)Such other times as mutually agreed between the parties.2.That the children live with the Applicant Wife.PROPERTY
1.That the Applicant Wife’s Application for Final Orders filed 12th December 2012 and Amended Initiating Application filed 31st January, 2014 be dismissed with costs.
2.That the Financial Agreement dated 18th November 2009 between MR DUNCAN and MS DUNCAN drawn pursuant to Section 90C of the Family Law Act 1975 (“the act”) (“the Financial Agreement”) be set aside pursuant to Section 90K(1)(b) of the Act.Particulars:(a)That paragraph 1 (f) of the Financial Agreement is void, voidable or unenforceable.(b)That paragraph 1 (h) of the Financial Agreement is void, voidable or unenforceable.(c)That paragraph 1 (i) of the Financial Agreement is void, voidable or unenforceable.(d)That paragraph 1 (j) of the Financial Agreement is void, voidable or unenforceable.(e)That paragraph 2 of the Financial Agreement is void, voidable or unenforceable.3.That the Financial Agreement dated 18th November 2009 between MR DUNCAN and MS DUNCAN drawn pursuant to Section 90C of the act be set aside pursuant to Section 90K(1)(c) of the Act.Particulars:(a)That circumstances have arisen since the Agreement was made, that it is impracticable for paragraph 1 (f) of the Financial Agreement to be carried out.Particulars:(b)That circumstances have arisen since the Agreement was made, that it is impracticable for paragraph 1 (h), 1(i), 1(j), and 2(c) (“the related paragraphs”) of the Financial Agreement to be carried out.4.That the Executory Financial Agreement between MR DUNCAN and MS DUNCAN drawn pursuant to Section 90C of the Family Law Act 1975 (“the Act”) (“the Financial Agreement”)
of the actbe set aside pursuant to Section 90KA of the Act.Particulars:(a)That paragraph 1(f), and the related paragraphs of the Financial Agreement being paragraphs 1(h), 1(i), 1(j) and 2(c) (“the related paragraphs”) is and are uncertain in that paragraph 1(f) and the related paragraphs of the Financial Agreement is/are;
(i) Insufficiently definite;
(ii) Makes no provision for timeframe within which the Respondent is required to comply with the terms contained therein;
(iii) Incapable of practicable meaning;
(iv) Indefinite and/or not capable of being made definite without further agreement of the parties to the Financial Agreement;
(v) That the Applicant’s and the Respondent’s reliance upon paragraph 1(f) and the related paragraphs of the Financial Agreement and the Applicant’s and the Respondent’s conduct with respect to paragraph 1(f), and the related paragraphs of the Financial Agreement does not clarify the uncertainty of paragraph 1(f) and/or the related paragraphs.
(vi) Severance of paragraph 1(f) and the related paragraphs of the Financial Agreement does not clarify the uncertainty created by virtue of the inclusion of paragraph 1(f) and the related paragraphs of the Financial Agreement.
(b)That performance of paragraph 1(f) and the related paragraphs of the Financial Agreement
is/are impracticablehave been frustrated in that circumstances have arisen since the execution of the Financial Agreement which were not specifically provided for in the Financial Agreement.which renders performance of paragraph 1(f) and the related paragraphs of the Financial Agreement by the Respondent Husband impracticable.Particulars:
(i) The Respondent Husband’s medical condition which has arisen subsequent to execution of the Financial Agreement is such that the Respondent Husband is incapable of obtaining gainful employment to generate sufficient funds and/or to generate the quantum of funds which would have been in reasonable contemplation at the time of executing the Financial Agreement and further the Respondent Husband’s is unable by virtue of the Respondent Husband’s degenerative medical condition to generate the quantum of funds in contemplation at the time of execution of the Financial Agreement.
(ii) The Financial Agreement makes no provision for the needs of the Respondent Husband resulting from the Respondent Husband’s medical condition which has arisen since the date of execution of the Agreement.(c)That paragraph 1(f) and the related paragraphs of the Financial Agreement be set aside on the ground that paragraph 1(f) and the related paragraphs of the Financial Agreement is/are incapable of being performed by virtue of the equitable doctrine of frustration in that paragraph 1(f) and the related paragraphs of the Financial Agreement make/s no provision for unemployment or incapacity of one, either, or both of the parties (“the occurrence of subsequent events”).Particulars:(i) The Financial Agreement makes no specific provision for unemployment or incapacity (“the subsequent events”) of one or both of the parties and does not provide for unemployment and incapacity as a reasonably foreseeable event.(ii) More specifically without limiting the generality of paragraph 4(c) herein, as the Financial Agreement makes no specific provision for unemployment of the Respondent and/or incapacity of the Respondent and unemployment and/or incapacity were not specifically provided for and not in contemplation at the time the Financial Agreement was drawn and subsequently executed. The occurrence of the subsequent events frustrates the performance of the Financial Agreement by the Respondent Husband.5.That pursuant to paragraph 90K(3) of the Act, The Applicant Wife refund within 60 days from the date of the making of these Orders, (“the date”), to the Respondent Husband a sum equivalent to 45% of the repayments of instalments made by the Respondent Husband from the date of execution of the Financial Agreement being the 18th day of November 2009 (“the date of execution of the Financial Agreement”) in relation toremain solely liable for repayments due tothe (omitted) home loan, account number (omitted) (“the (omitted) home loan”) encumbering title to the property situate and known as Property A, in the State of Victoria., from the 18th day of November 2009 (“the date of execution of the Financial Agreement”) and notwithstanding, the Applicant Wife retain whatever amounts have been paid by the Respondent Husband since the date of execution of the Financial Agreement.6.
That pursuant to paragraph 90K(3) of the Act,The Applicant Wife remain solely liable for repayments due to the (omitted) Bank, account number(omitted)(“the (omitted) Bank”) from thedate of draw down of the funds, namely 21st June, 2008 (“the draw down date”).18th day of November 2009 (“the date of execution of the Financial Agreement”) and refund within 60 days from the date of the making of these Orders (“the date”), to the Respondent Husband the following sums paid by the Respondent Husband to the Applicant Wife, namely;(a)the proceeds of sale and the expenses associated with the sale of the property situate and known as Property H, Victoria (“The Property H”) paid pursuant to paragraphs 1 and 5 of Orders made on 15th March, 2013.
(b)the sum of $36,000.00 paid to the Applicant Wife by the secondnamed Respondent pursuant to Orders made on 17th October, 2013;
(c)the sum of $15,000.00 paid to the Applicant Wife by the secondnamed Respondent pursuant to Orders made on 17th October 2013;
7.That pursuant to paragraph 90K(3) of the Act any repayments made by the Respondent Husband to the (omitted) Bank from the draw down date be adjusted against withdrawals made by the Respondent Husband from the (omitted) Bank from the draw down date and the balance, if any, be refunded to the Respondent Husband.8.That pursuant to paragraph 90K(3) of the Act the Applicant Wife and the Respondent Husband retain all items of property in their respective possession as at the date of these Orders.9.That pursuant to paragraph 90K(3) of the Act, such other and further Orders in relation to the division of matrimonial property of the parties, that this Honourable Court deems appropriate pursuant to the provisions of Section 79(4) of the Act.
10.That pursuant to Rule 6.03 of the Family Court Rules 2004, MS R of Property E in the State of Victoria, (“the second named Respondent”) be added as a party to these proceedings.11.That the second named Respondent and her employees, servants and agents both be and are hereby restrained by injunction pursuant to Section 114 of the Family Law Act (1975) (“the Act”) from disposing of, transferring, selling or otherwise encumbering the property situate and known as Property H, in the State of Victoria (“the Property H property”).12.That within 30 days from the date of the making of these Orders, the second named Respondent do all such acts and things and sign all necessary documents to discharge any loan encumbering title to the Property H property so that the Property H property has clear and unencumbered title.13.That pursuant to Section 80G (c) of the Child Support (Assessment) Act 1989 (Cth) (“Assessment Act”) the Child Support Agreement dated 15th day of October 2009 (“the limited Child Support Agreement”) be terminated/set aside.14.That pursuant to Section 135 (b) of the Assessment Act the limited Child Support Agreement be set aside on the basis that there has been a significant change of circumstances since the date of execution of the limited Child Support Agreement.15.That pursuant to Section 135 (d) of the Assessment Act the limited Child Support Agreement be set aside on the basis that there exist exceptional circumstances which have arisen after the agreement is made.16.That in the event that the limited Child Support Agreement is deemed to be a Binding Child Support Agreement, that the Binding Child Support Agreement be set aside pursuant to the following provisions;(a)Failure to comply with Section 90G (b) of the Family Law Act.(b)Failure to comply with Section 90G (c) of the Family Law Act.(c)Failure to comply with Section 90G (ca) of the Family Law Act.(d)Pursuant to Section 90K (1) (c) of the Family Law Act.17.Such other and further Orders as this Honourable Court Deems appropriate.
(d)That the matrimonial property of the parties be divided between the parties, pursuant to Section 79(4) of the Family Law Act (1975) (Cth) (“the Act”) in such proportions as this Honourable Court deems just and equitable.(e)That the Respondent Husband be otherwise excused from compliance with Rule 4.01 of the Family Law Rules until discovery, inspection of documents and valuations have taken place.(f)That the Wife provide a Withdrawal of Caveat with respect to the properties situate and known as;(a) Property A, Victoria; and(b) Property F, Victoria.(g)Such other and further Orders as this Honourable Court Deems appropriate.(Amended 25th August, 2014)”
Position of the parties
The husband’s position was that in relation to the Agreement, there was no agreement and/or there was an “executory” agreement which should be set aside because inter alia it was insufficiently definite, incapable of practicable meaning or failed to provide for a frustrating event.[2]
[2] see para 86 of husband’s written submissions
The wife’s case was simple. The wife maintains there was a contract in the form of the Agreement. The Agreement was a financial agreement for the purposes of s.90C of the Act. The wife said the husband and the wife each received independent legal advice of the effect upon their rights in signing the Agreement and the advantages and disadvantages in signing the Agreement before doing so.
The wife submitted this is attested to by the certificates of independent legal advice annexed to the Agreement. As such, the Agreement is valid as it complies with ss.90C & 90G of the Act relating to financial agreements.
The husband does not dispute that the Agreement complies with s.90G of the Act.
In the written submissions (signed by the same solicitor (Mr Rubera) who gave the section 90G(1) certificate annexed to the Agreement) the husband’s position was inter alia:
“9.The issue for determination is whether the Financial Agreement either in its entirety or as to a number of its operative terms, should be set aside or not enforced on the basis that:
(a)the parties have acted under a misapprehension in relation to facts which form the basis of their Agreement so that there is no consensus ad idem (no agreement has been reached between the parties) and/or.
(b)the language used in relation to paragraph 1(f) of the Financial Agreement is so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any clear and unequivocal contractual intention in relation to the subject matter of paragraph 1(f) of the Financial Agreement.”
The husband (whilst acknowledging in his written submissions there had been (what was described in those submissions as) “part performance”) maintained there was “no consensus ad idem” and the “executory financial agreement” was inter alia:
·insufficiently definite; and
·made no provision for a timeframe to comply for him with its terms; and
·incapable of practicable meaning; and
·failed to provide for a frustrating event such as the husband’s illness.[3]
[3] see para 86 of husband’s written submissions
The husband maintained that the Agreement should “either be set aside or not enforced.”
The Agreement
The Agreement which was Annexure C to the wife’s affidavit filed on 20 September 2013, annexure ‘I.I’ to the husband’s affidavit filed 3 October 2013 and annexure ‘I.I’ to the husband’s affidavit filed 14 February 2014 was before the Court at trial.
The Agreement provided:
“SECTION 90C FINANCIAL AGREEMENT
THIS AGREEMENT is made on the 18th day of November, 2009,
BETWEEN
MR DUNCAN of Property S, in the said State, (occupation omitted) (“the husband”)
MS DUNCAN of Property A, in the said State, (occupation omitted) (“the wife”)
RECITALS
A.This is an Agreement made pursuant to section 90C of the Family Law Act.
B.At the time of the making of this Agreement there is not in existence a Binding Agreement previously made by the husband and wife, pursuant to sections 90B, 90C or 90D, of the Family Law Act 1975 (“the said Act”).
C.The parties married on (omitted) 1997 at (omitted).
D.The parties finally separated on 16 August 2009.
E.The parties are not yet Divorced.
F.The husband was born on (omitted) 1968 and is 41 years of age. The husband is in good health.
G.The wife was born (omitted) 1971 and is 38 years of age.
The wife is in good health.
H.There are two children of the marriage under the age of 18, namely X born (omitted) 1998, aged 11 years and Y born (omitted) 2000, aged 9 years. Both children are healthy and well. Both children attend (omitted) Primary School where X is in grade 5, and Y is in grade 3. Both children are progressing well.
I.The children live with the wife and will continue to do so.
J.The husband will pay child support for X and Y . The husband’s obligations towards the support of X and Y will be incorporated into a Child Support Agreement.
K.The principle assets of the parties are as follows:
1. Property A, estimated value $610,000.00
Less mortgage to the (omitted) Bank $158,525.00
Equity $451,475.00
2. Investment property Property K,
estimated value $340,000.00
Less mortgage to the (omitted) Bank $298,389.00
Equity $41,711.00
3. 100 Acre farm at Property H
estimated value $290,604.00
Less first mortgage to the (omitted) bank
$195,604.00
Equity $95,000.00
4. Furnishings and chattels, estimated value $20,000.00
5. (omitted) Suzuki Vitara motor vehicle,
estimated value $7,000.00
6. (omitted) Toyota Land Cruiser $12,000.00
7. 50% share in an Aluminium boat,
estimated value $3,000.00
8. 50% interest in business known as “(business omitted)” $100,000.00
9. Business known as “(omitted business)”,
estimated value $25,000.00
Total $1,118,575.00
L.In addition, Mr Duncan. has a 50% interest in a properties (sic) in the (omitted) area, together with a third (1/3) interest in other properties in the (omitted) area. The husbands interest in these properties is estimated to be $100,000.00.
M. Apart from the mortgages, the parties joint debts include:
1. A joint (omitted) Bank card, balance $6,000.00
2. Ms Duncan's (omitted) Visa Debt $4,000.00
3. Mr Duncan's (omitted) bank Visa Debit $5,000.00
Total $15,000.00
N.Neither party held any assets of significance as at the date of the marriage.
O.The husband and the wife do not have any other significant relevant assets, liabilities or financial resources. The parties have reached agreement as to the terms of final property settlement as contained in this Financial Agreement.
The parties intend by this Financial Agreement to finalise all rights that have or may have against each other in relation to both property and spousal maintenance.
P.Before the husband signed this Financial Agreement he was provided, as certified in the annexure to this Agreement, with independent legal advice from a Legal Practitioner as to the following:
(a)The effect of this Agreement on his rights to apply for an Order under the provisions of the Family Law Act 1975 and otherwise at law and in equity.
(b)The advantages and disadvantages at the time the advice was provided to him when making the Agreement.
Q.Before the wife signed this Financial Agreement she was provided, as certified in the annexure to this Agreement, with independent legal advice from a Legal Practitioner as to the following:
(a)The effect of this Agreement on her rights to apply for an Order under the provisions of the Family Law Act 1975 and otherwise at law and in equity.
(b)The advantages and disadvantages at the time the advice was provided to her when making the Agreement.
R.The husband has continued the nature and effect of this Agreement and the obligations and risks involved in signing it and after such consideration the husband wishes to enter into this Agreement.
S.The wife has considered the nature and effect of this Agreement and the obligations and risks involved in signing it and after such consideration the wife wishes to enter into this Agreement.
T.The husband and wife have each been advised and are aware that this Agreement can only be terminated:
(a)If a Court makes an Order that this Agreement is terminated.
(b)If the husband and wife enter into another written Agreement that terminates this Agreement.
U.It is intended in this Financial Agreement to deal with any rights the husband and wife may have for spousal maintenance either now or in the future arising out their marriage or any further claims in relation to the property of the other party.
V.The husband and wife intend with the terms of this Agreement to replace all preceding oral and written agreements in respect of spousal maintenance or property division.
W.The husband works full time, and the wife works part time, neither receive or are entitled to the receipt of an Income Tested Pension, Allowance or Benefit.
X.The husband is satisfied with the disclosure made to him by the wife of her financial circumstances.
Y.The wife is satisfied with the disclosure made to her by the husband of his financial circumstances.
IT IS AGREED
1.Effect to this Agreement
(a)Recitals of this Agreement are incorporated in and form part of the Agreement.
(b)This Agreement binds the husband and wife in relation to property and spousal maintenance.
(c)This Agreement is made pursuant to section 90C of the Family Law Act.
(d)The rights which otherwise arise under Part VII of the Family Law Act do not apply.
(e)Within thirty (3) days of the date of the signing this Agreement (“the date”), the husband will transfer to the wife all his right title and interest in the following:
(i) The property at Property A (known as “the real property”) subject to the mortgage to the (omitted) Bank.
(ii) The contents of the Property A property.
(iii) The (omitted) Suzuki Vitara motor vehicle in the wife’s possession.
(iv) The business known as (omitted business).
(v) The wife’s superannuation entitlement.
(f)The husband will be solely responsible to pay the sum of EIGHTY NINE THOUSAND DOLLARS ($89,000.00) in respect of the mortgage secured by the real property at the rate of the repayment of principal and interest as is applied from time to time by the (omitted) Bank until such time as the mortgage gas been reduced down to the sum of SEVENTY THOUSAND DOLLARS ($70,000.00) whereupon the mortgage payment shall become the sole responsibility of the wife and the wife will indemnify the husband in respect of the said balance of SEVENTY THOUSAND DOLLARS ($70,000.00).
(g)The wife will be responsible to pay all rates, taxes, charges and other outgoings relates to the real property.
(h)In the event that the wife wishes to sell the real property prior to the mortgage being reduced to the said sum of SEVENTY THOUSAND DOLLARS ($70,000.00) and to purchase a replacement property, the wife will secure a fresh mortgage over the replacement property with the husband being responsible to pay what remains of the sum of EIGHTY NINE THOUSAND DOLLARS ($89,000.00) left to pay.
(i)In the event of the wife not requiring a mortgage in connection with the purchase of a replacement property, then the husband shall pay the remaining balance of the sum of EIGHTY NINE THOUSAND DOLLARS ($89,000.00) directly to the wife.
(j)The husband shall have the option to pay any portion of the time of EIGHTY NINE THOUSAND DOLLARS ($89,000.00) directly to the Bank. He shall also have the option to make a lump sum payment in full and financial of his mortgage obligations pursuant to this Agreement.
(k)That contemporaneously with the transfer referred to in paragraph 1(e) of the real property, the wife will:
(i)Transfer to the husband all her right title and interest in the property at Property K subject to the mortgage to the (omitted) Bank which shall become the husband’s sole responsibility.
(ii) The farm at Property H.
(iii) The real estate in which the husband has an interest.
(iv) The (omitted) Toyota Landcruiser motor vehicle.
(v) The business known as “(business omitted)”.
(vi) The share in the aluminium runabout.
(vii) The husband’s superannuation entitlement.
(l)The husband shall be solely responsible for the mortgages encumbering the properties which are to be transferred to him together with the joint (omitted) Mastercard and the husband’s (omitted) Visa Card.
(m)Except as otherwise provided for in this Agreement the husband and wife are entitled to be the sole legal and beneficial owner of all items of property in their possession, or control of each of them respectively, including but not limited to:
(i) Money.
(ii) Insurances.
(iii) Equity.
(iv) Furnishings and chattels.
(v) Personal effects.
(n)Except as otherwise relied upon in this Agreement, the husband and wife be solely liable for and indemnify the other against any liabilities encumbering any item of property to which that party is entitled pursuant to this Agreement.
(o)Any joint tenancy of the parties in any real or personal property is expressly severed.
2.In the event that the husband fails to meet the payments required by clauses 1(f), (h), (i) of this Agreement then the husband signs all documents and do all things necessary to transfer to the wife the real property referred to in paragraph 1(k), (i), (ii) and (iii) of this Agreement to be held on trust for sale, the real property be forthwith sold together pout of Court, and upon completion of the sale of the proceeds of sale be applied:
(a)Firstly to pay all costs, commissions and expenses of the sale.
(b)Secondly to discharge the mortgage or any other encumbrance affecting the real property.
(c)Thirdly up to $70,000.00 of the mortgage secured by the property at Property A together with interest thereon.
(d) Fourthly the balance to the husband.
3.That the husband do all acts and sign all documents necessary to provide the wife with a charge to be secured by Caveat over the real properties referred to in paragraph (k)(i), (ii) and (iii).
4.This Agreement to which section 90E of the Family Law Act applies:
(a)One percent ($1%) (sic) of the value of the property to be owned by the wife pursuant to the Financial Agreement is for the maintenance of the wife and
(b)One percent (1%) of the value of the property retained by the husband pursuant to this Agreement is maintenance for the husband.
(c)The rights of the husband and wife pursuant to the Family Law Act 1975 to claim spousal maintenance against each other or both now and in the future are at an end.
(d)The husband waive and relinquish for all time any right or entitlement they (sic) may have to seek maintenance pursuant to the provisions of the Family Law Act 1975 or any Act of like nature appealing or amending the same.
(e)The parties agree to respectively sign and execute any further documents or do any further acts which may be reasonably required for the purposes of giving effect of those provisions of this Agreement.
(f)The parties agree to forever abandon all claims they may have under PART VIII of the Family Law Act.
(g)In the event of the husband’s death, this Agreement shall be binding on the legal representatives of the husband’s deceased estate.
(h)In the event of the wife’s death this Agreement shall be binding on the legal representatives of the wife’s deceased estate.
(i)If any provisions of this Agreement become unenforceable or invalidated by any current or future legislation:
(i) the enforceable or invalid provisions shall be deemed to be severable.
(ii) the balance of the provisions of the Agreement shall remain in full force and effect.”
Attached to the Agreement were the requisite certificates to the effect that the wife and the husband had received the necessary advice before signing the Agreement. The certificate in relation to the husband was signed by his solicitor (the same solicitor who represented him in these proceedings). There was also annexed to the Agreement the necessary separation declaration.
Relevant law
Part VIIIA of the Act provides that parties may enter into financial agreements and provides for different types of financial agreements.
A financial agreement is defined in section 4 of the Act as follows:
“financial agreement means an agreement that is a financial agreement under section 90B, 90C or 90D, but does not include an ante-nuptial or post-nuptial settlement to which section 85A applies.”
The parties in these proceedings entered into a Part VIIIA financial agreement relying on section 90C of the Act. Section 90C provides as follows:
“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, the parties to the marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90D) 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. The parties to the marriage may make the financial agreement with one or more other people.
(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 the spouse parties 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 the spouse parties:
(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 also contain:
(a)matters incidental or ancillary to those mentioned in subsection (2); and
(b)other matters.
(4)A financial agreement (the new agreement) made as mentioned in subsection (1) may terminate a previous financial agreement (however made) if all of the parties to the previous agreement are parties to the new agreement.”
If the Agreement satisfies the definition of “financial agreement” then section 90G becomes relevant. Section 90G of the Act provides:
“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.”
Section 90KA of the Act deals with the validity, enforceability and effect of financial agreements and provides:
“The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a)subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b)has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c)in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.
Section 90K of the Act sets out the circumstances in which the Court may set aside a financial agreement as follows:
“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)a 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
(ab)a party (the agreement party) to the agreement entered into the agreement:
(i) for the purpose, or for purposes that included the purpose, of defrauding another person who is a party to a de facto relationship with a spouse party; or
(ii) for the purpose, or for purposes that included the purpose, of defeating the interests of that other person in relation to any possible or pending application for an order under section 90SM, or a declaration under section 90SL, in relation to the de facto relationship; or
(iii) with reckless disregard of those interests of that other person; 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)a parenting order provides that:
(i) the child is to live with the person; or
(ii) the person has parental responsibility for the child.
(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.”
The decision in the Full Court of Family Court in Senior & Anderson (2011) FLC 93-470 (Senior & Anderson) provides guidance as to the manner in which the dispute between the husband and wife over the Agreement should be approached.
In Senior & Anderson it was said:
“THE LEGISLATIVE FRAMEWORK
83.I consider that it is essential in this appeal to set out the relevant sections of the Act as follows.
84.The provisions with respect to financial agreements are found in Part VIIIA of the Act.
85.Section 71A provides:
(1)[Matters in financial agreements] This Part does not apply to:
(a)financial matters to which a financial agreement that is binding on the parties to the agreement applies; or
(b)financial resources to which a financial agreement that is binding on the parties to the agreement applies.
...
86.Thus, importantly, the court’s power to make an order for property settlement pursuant to s 79 of the Act is removed in respect of “financial matters” to which a “financial agreement” applies if that “financial agreement” is binding. The expressions “financial matters” and “financial agreement” are defined in s 4 of the Act as follows:
Financial agreement means an agreement that is a financial agreement under section 90B, 90C or 90D, but does not include an ante-nuptial or post-nuptial settlement to which section 85A applies.
Financial matters means:
(a)in relation to the parties to a marriage – matters with respect to:
(i) the maintenance of one of the parties; or
(ii) the property of those parties or of either of them; or
(iii) the maintenance of children of the marriage; or
...
87.Section 90D of the Act provides for financial agreements where the parties are divorced. Relevantly, the section provides:
(1)[“Financial agreement”] 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, the parties to the former marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90C) 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. The parties to the former marriage may make the financial agreement with one or more other people.
(2)[Specified matters] 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 the spouse parties had or acquired during the former marriage is to be dealt with;
(b)the maintenance of either of the spouse parties.
(3)[Incidental or ancillary matters] A financial agreement made as mentioned in subsection (1) may also contain:
(a)matters incidental or ancillary to those mentioned in subsection (2); and
(b)other matters
88.Despite its wide circulation as a term of convenience, the expression “binding financial agreement” is not defined in the Act. Rather, as can be seen, the Act refers to and defines a particular form of agreement called a “financial agreement”. Further, as s 4 makes plain, a “financial agreement” has two essential components. It must first be “an agreement”, and it must also be an agreement that is made “under section 90B, 90C or 90D.”
89.“Agreement” is also not defined and thus carries its ordinary and natural meaning. Accordingly, just as with any agreement, principles of law and equity will apply so as to vitiate the agreement if the relevant circumstances are made out. So it is, in my view, with an agreement that purports on its face, to be a “financial agreement”. That interpretation is reinforced by s 90KA, noting that this section refers to “financial agreements” as distinct from “agreements”.
90.Section 90G as now in force provides:
(1)[Requirements for binding agreement] 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.
(e) (Repealed by No 122 of 2009, Sch 5 Pt 1 item 4.)
(1A) [Binding nature of financial agreement] 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. (a) the agreement is signed by all parties; and
(1B)[Declaration that financial agreement binding] 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.
91.Schedule 5, Part 1 items 8 and 8A of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 contains the relevant transitional provisions with respect to the amendments to s 90G. Those transitional provisions in effect provide for the amending legislation to have retrospective effect. However, save and except to say that the Act, and particularly s 90G applies to the agreement in this case, I do not propose to detail the transitional provisions. In my view they are not relevant to the determination of this appeal. There is no ground of appeal directed to this issue, and there was no submission by the wife that his Honour erred in his treatment of this aspect of the legislation.
92.Section 90K details the circumstances in which the court may set aside a financial agreement or termination agreement.
93.Section 90KA deals with the “validity, enforceability and effect of financial agreements and termination agreements” and provides:
The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a)subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b)has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c)in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.”
In Senior & Anderson, Strickland J then went on to deal with the relevant sections of the Act as follows:
“94.The Act in effect draws a distinction between agreements which are financial agreements (s 4, s 90B, s 90C, s 90D) and those financial agreements which are binding (s 90G). Financial agreements can, like any other agreement, govern the actions of the parties to them and bind the parties to obligations, but do not oust the jurisdiction of the court. Parties to an agreement that satisfies the definition of “financial agreement” are bound by its terms (or not bound as the case may be), just as they would be bound (or not bound) by any other agreement (s 90KA) (see generally Australian Securities and Investment Corporation and Rich & Anor[2003] FamCA 1114; (2003) FLC 93-171).
95.Section 90G is irrelevant to the contractual rights and remedies of the parties to an agreement that satisfies the definition of “financial agreement”. That section only becomes relevant when the issue is whether an agreement that satisfies the definition of “financial agreement” is effective for a specific statutory purpose, namely to operate as a bar to claims by either party pursuant to Part VIII of the Act (s 71A). It will be so, if and only if, it is “binding” within the meaning of s 90G.
96.If an agreement, including an agreement that satisfies the definition of “financial agreement” under the Act, fails to effectively bar Part VIII claims (because of its failure to comply with the requirements of s 90G and, as a result, is not “binding” within the meaning of that section) the financial agreement can nevertheless have an affect. However, an agreement’s failure to be “binding” in the s 90G sense renders its use in Part VIII proceedings to be very limited; specifically it does not operate as a bar to orders made under that Part (see e.g. Woodland and Todd [2005] FamCA 161; (2005) FLC 93-217 at paragraphs 37 – 39).”
Husband’s written submissions
The husband relied on written submissions filed 6 October 2014. At the trial the parties agreed given none of the witnesses were required for cross examination, that it was convenient for the matter to otherwise proceed on submissions by reference to the issues raised in the husband’s written submissions.
In order to understand what follows and to make clear that the varied arguments made by the husband have been considered, it is convenient to set out in detail those submission:
“9.The issue for determination is whether the Financial Agreement either in its entirety or as to a number of its operative terms, should be set aside or not enforced on the basis that;
(a)the parties have acted under a misapprehension in relation to facts which form the basis of their Agreement so that there is no consensus ad idem (no agreement has been reached between the parties) and/or.
(b)the language used in relation to paragraph 1(f) of the Financial Agreement is so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any clear and unequivocal contractual intention in relation to the subject matter of paragraph 1(f) of the Financial Agreement.
10.Paragraph 1(f) of the Financial Agreement is the only part of the Financial Agreement that continues to have any operation. Paragraph 1(f) creates a continuing obligation on the parties which continues subsequent to the date of execution of the Financial Agreement, namely subsequent to 18th November, 2009.
11.Paragraphs 1(i), 1(j) and 2(c) of the Financial Agreement are related to paragraph 1(f) of the Financial Agreement (“the related paragraphs”).
12.Paragraph 1(f) of the Financial Agreement remains executory (“Executory Financial Agreement”), namely an Agreement which has not yet been fully performed, that is to say not yet fully executed. The Executory Financial Agreement creates an obligation to make payments by way of instalments pursuant to the (omitted) home loan, account number (omitted) (“the (omitted) home loan”) encumbering title to the property situate and known as Property A, in the State of Victoria (“the former matrimonial home”).
13.The obligation to make payments by way of instalments pursuant to the (omitted) home loan is a continuing obligation on both parties to the Executory Financial Agreement. The Executory Financial Agreement at paragraph 1(f) does not specify an end date and does not specify in any detail, the respective parties continuing obligations in relation to payment of instalments pursuant to the (omitted) home loan.
14.There remains following the date of execution of the Executory Financial Agreement, a liability with respect re-payments of instalments due to (omitted) Bank account number (omitted) (“the (omitted) Bank”).
15.It is now common ground that the (omitted) Bank is secured against the former matrimonial home which was transferred to the Applicant Wife pursuant to paragraph 1(e) of the Executory Financial Agreement.
16.The Executory Financial Agreement at paragraph 1(f) does not specify in any detail or at all, the parties respective obligations to make re-payments by way of instalments pursuant to the (omitted) Bank.
17.Paragraph 1(f) of the Executory Financial Agreement is a fundamental term of the Agreement.
18.The Executory Financial Agreement provides for a distribution of property between the parties.
19.Paragraph 1(e) of the Executory Financial Agreement provides that within thirty (30) days from 18th November 2009, the Husband transfer to the Wife the Husband’s interest in the following;
(i)The property at Property A (known as “the real property”) subject to the mortgage to the (omitted) Bank.
(ii)The contents of the Property A property.
(iii)The (omitted) Suzuki Vitara motor vehicle in the wife’s possession.
(iv)The business known as (omitted business).
(v)The Wife’s superannuation entitlement.
20.Paragraph 1(k) of the Executory Financial Agreement provides that contemporaneously with the transfer referred to in paragraph 1(e) of the real property, the wife will:-
(i)Transfer to the husband all her right title and interest in the property at Property K (sic) Street, Property K subject to the mortgage to the (omitted) Bank which shall become the husband’s sole responsibility.
(ii)The farm at Property H.
(iii)The real estate in which the husband has an interest.
(iv)The (omitted) Toyota Landcruiser motor vehicle
(v)The business known as “(business omitted)”
(vi)The share in the aluminium runabout
(vii)The husband’s superannuation entitlement.
21.Paragraph 1(l) of the Executory Financial Agreement provides that the husband shall be solely responsible for the mortgages encumbering the properties which are to be transferred to him together with the joint (omitted) Mastercard and the husband’s (omitted) Visa Card.
22.It is common ground that there has been part performance of the Executory Financial Agreement as follows:
(a)Parties execute Transfer of Land dated 7th February, 2010 and the Wife is registered as the sole proprietor of Property A, on 9th June, 2010.
(b)Transfer of Land by endorsement – Ms Duncan to Mr Duncan resulting proprietorship – (sole proprietor – Mr Duncan) – property Property K, Victoria (“Property K property”).
(c)The Property K property sold for the sum of $453,000.00 on 6th April 2011.
(d)Pursuant to an agreement between Mr Duncan and Ms Duncan compelling the Husband to deposit the balance of settlement monies from sale of Property K property to be deposited into (omitted) Bank account number – (omitted) ((omitted) Bank encumbering title to Property A). $35,027.50 and $84,492.34 were deposited into the (omitted) Bank - account number (omitted) from the balance of settlement monies on 27th May, 2011 (a total of $119,519.84)
(e)Husband withdraws from 1st June 2011 to 17th October, 2011 various sums totalling $114,154.48 from the (omitted) Bank being a partial refund of monies paid from the proceeds of sale of Property K.
(f)The Husband has made re-payments with respect to the (omitted) Bank home loan in accordance with particulars contained in “Schedule 1” attached to these Submissions.
23.Subsequent to execution of the Executory Financial Agreement, the following has occurred;
(a)15th March 2013 Orders are made by Federal Circuit Court (then Federal Magistrates Court) for the sale of the property at Property H (“Property H”) and the net proceeds after discharge of costs of sale, commissions, encumbrances and the (omitted) Bank be held in Trust in an interest bearing account on behalf of the Husband and Wife by the Solicitors for the Applicant Wife. (Paragraphs 1 and 5 of the Orders).
(b)5th August 2013 orders made by the Federal Circuit Court that the proceeds of sale of the Property F property, be paid in reduction of the (omitted) Bank mortgage loan secured against Property A . The sum of $7,172.40 was retained by the Applicant Wife on 24th September, 2013.
(c)That on or about 25th October, 2013 and 7th November, 2013, the totality of the proceeds of sale of the Property H property ($206,021.22) was received and retained by the Applicant Wife.
(d)Pursuant to Orders made on 17th October 2013 by the Federal Circuit Court, joining Ms R, the Respondent Husband’s former business partner, as the Secondnamed Respondent, to these proceedings, the Second Respondent is ordered to pay to the Applicant Wife the sum of $15,000.00 on or before 7th November, 2013 in full satisfaction of any monies owing to the Respondent Husband by the Second Respondent for the purchase of the Respondent Husband’s share in the business styled “(business omitted)”.
24.Recital K. 1 of the Executory Financial Agreement provides that in relation to the former matrimonial home, the (omitted) Bank home loan had a debit balance in the sum of $158,525.00 at the date of the execution of the Executory Financial Agreement (being 18th day of November, 2009).
25.It is submitted that the Husband believes that he remained liable for repayments in relation to $89,000.00 (as the Husband’s proportion of the liability which stood in the sum of $158,525.00), an amount approximately 56% of the totality of the capital indebtedness, namely 56% of re-payments due in relation to the (omitted) Bank home loan.
26.The Respondent Husband submits it is the Respondent Husband’s understanding that paragraph 1(f) of the Executory Financial Agreement requires the Applicant Wife to remain liable for re-payments of the (omitted) Bank home loan in relation to a component of $70,000.00 of the capital indebtedness (as the Wife’s proportion of the total liability which stood in the sum of $158,525.00 at the time of signing the Executory Financial Agreement). The Respondent Husband understands that the Applicant Wife is responsible for re-payments of the instalments due in relation to the (omitted) Bank home loan representing 44% of the totality of the monthly re-payments.
27.It is common ground that the Applicant Wife has not made any contribution to the (omitted) Bank home loan from the date of execution of the Executory Financial Agreement, 18th November, 2009 until March 2012.
28.That paragraph 1(f) of the Executory Financial Agreement provides no timeframe in which to make payments. The paragraph does not specify the actual quantum of the instalment repayments that the Husband is required to make and does not specify how long (a time frame for repayment) the Husband is required to make the instalment repayments to reduce the capital amount of the home loan and that paragraph 1(f), is fundamentally flawed insofar as it does not have a date by which the mortgage is to be reduced to $70,000 and makes no clear provision in relation to each parties contribution to payment of monthly instalments.
29.That paragraph 1(l) of the Executory Financial Agreement provides as follows;
“The husband shall be solely responsible for the mortgages encumbering the properties which are to be transferred to him together with the joint (omitted) Bank card and the husband’s (omitted) Visa Card”.
30.Paragraph 1(l) is the only reference in the Executory Financial Agreement in relation to liability for mortgages encumbering properties which are to be transferred to the Respondent Husband.
31.Pursuant to paragraph 1 (k) (ii), the property described in the Executory Financial Agreement as “The farm at Property H” (“the Property H property”), was retained by the Husband.
32.Recital K (3) of the Executory Financial Agreement, the Property H property is listed with an estimated value of $290,000.00 less first mortgage to the (omitted) Bank in the sum of $195,604.00.
33.That an Affidavit of Sebastian Rubera was sworn 7th October 2013 and filed 8th October 2013 (“the 7th October 2013 Rubera Affidavit”) in support of an Application in a Case filed 8th October 2013 on behalf of the Husband seeking a stay of paragraphs 1 and 5 of Orders made 15th March, 2013 and Orders pursuant to section 114 (1) (e) of the Family Law Act.
34.Paragraph 13 of the 7th October 2013 Rubera Affidavit provides as follows;
“13.That in addition to the issue of non-acceptance of the offer by the Husband. There has also arisen a further issue in relation to the mortgage to the (omitted) Bank encumbering title to the Property H property, which had been assumed by the Respondent Wife in the principle proceeding to the cross collaterally secured against the property situate and known as Property A, in the State of Victoria, being the former matrimonial home and Orders were made on 15th March, 2013 that the Husband was the sole registered proprietor of the Property H property without being aware that the Husband had provided a guarantee to a third party borrower using the title to the Property H property as security. The Deed of Guarantee was discovered by the Husband in late September, 2013.”
35.Paragraph 14 of the 7th October 2013 Rubera Affidavit exhibits correspondence dated 30th September 2013, directed to the Applicant Wife’s Legal Practitioners, Pearsons Lawyers of (omitted), Property A, in the State of Victoria (“the Wife’s legal practitioners”) and marked with the letter “SR1.8” and after omitting formal and irrelevant parts, the correspondence provides as follows;
“It is clear from the documentation enclosed with this correspondence which has only just been located and just received by our Mr. Rubera that the loan encumbering title to the Property H property is not a collateral mortgage collateral to the mortgage encumbering title to the former matrimonial home being Property A.
Accordingly, as the property at Property H is offered as security for a loan to a third party, it is a requirement that as the party is not a party to the marriage, that Ms R must now be joined as a party to the proceedings.
We note that the parties operated under an erroneous fundamental error in that it is now clear that the loan encumbering title to the Property H property in fact is not our client’s loan, (as was assumed by your client) it is a loan clearly relating to a third party who is not a party to the marriage and in the circumstances Orders need to be made as a matter of urgency to address this issue which includes an injunction with respect to the sale of the property at Property H.
It is clear that the Financial Agreement, the subject of these proceedings, does not provide for repayments to be made by our client with respect to the (omitted) Bank. The (omitted) Bank encumbers title to the former matrimonial home being Property A.
Our client pursuant to the Financial Agreement is only responsible for loans which relate to properties which have been transferred to our client, save and except, the provision with respect to repayment of the mortgage loan, (not the (omitted) Bank) encumbering title to the former matrimonial home which itself is unclear and the subject of submissions with respect to seeking to set aside the Financial Agreement.
Accordingly, on one view it could be argued that all payments made by our client with respect to the (omitted) Bank were made in error and ought to be refunded to our client or at least credited towards our client’s liability with respect to the mortgage of the home loan encumbering title to the property at Property A, which is the only loan referred to in the Financial Agreement.”
36.17th October 2013 Orders joining MS R as the second Respondent to these proceedings were necessitated as it became apparent after the Applicant Wife filed her Initiating Application on 12th December 2012 and after the Applicant Wife swore her first Affidavit on 5th December 2012 and in particular paragraphs 16 and 17 thereof, which provide as follows;
“16.There is one mortgage registered on the title to my property at Property A with the (omitted) Bank, being the home loan. There is also a (omitted) Bank (sic) taken out by Mr Duncan. for the purchase of the Property H property, and this is also secured against my Property A property.”
“17.I remained registered on the (omitted) Bank which is cross-collaterally secured against the Property H property and the Property A property, even though it does not appear on the Title. Therefore, along with the home loan mortgage secured against the Property A property.”
that the Property H property was not encumbered either collaterally or at all by a first mortgage to the (omitted) Bank in the sum of $195,604.00. The mortgage secured against the Property H property was initially in the sum of $100,200.00. The Husband acted as guarantor for a loan to MS R (“the (omitted) Bank Ms R loan”), the Husband’s former business partner in the (business omitted) styled “(business omitted)” (joined as Second Respondent in these proceedings).
37.The 17th October, 2013 Orders provide for a discharge of mortgage to the (omitted) Bank for which the Property H property was offered as security by the Husband to the Husband’s former business partner, Ms R. The mortgage loan to the (omitted) Bank was not the Husband’s loan but the loan related to Ms R. The 17th October, 2013 Orders at paragraph 3 provide as follows;
“3.That the Secondnamed Respondent pay the sum of $36,000 or such sum owing by her pursuant to the loan secured against the Property H (“Property H”) property to the wife Ms Duncan on or before 07 November 2013.”
38.That as at the 16th day of October, 2013, the closing balance for the (omitted) Bank secured against the property at Property A (“the Wife’s property”), stood in the sum of $210,715.51 (see Exhibit “1.1.6” to Affidavit of Husband filed 19th February, 2014).
39.That pursuant to paragraph 3 of the 17th October 2013 Orders, Ms R (“Secondnamed Respondent”) was to pay the sum of $36,000.00 or such sum owing by her pursuant to the loan secured against the Property H property to the Applicant Wife on or before 7th November, 2013. Accordingly, from the proceeds of sale, the sum of $169,741.05 together with the sum of $36,280.17, a total of $206,021.22, was applied in reduction of the (omitted) Bank.
40.That the former matrimonial home situate and known as Property A, in the State of Victoria, is encumbered by two loans, the first being the (omitted) bank home loan which is the subject of paragraph 1(f), 1(h), 1(i) and 1(j) of the Executory Financial Agreement and the second being the (omitted) Bank. The Executory Financial Agreement makes no provision in relation to the parties’ liability for re-payments of instalments due with respect to the (omitted) Bank.
41.The Executory Financial Agreement makes no provision and makes no mention of the (omitted) Bank which has now been substantially reduced from the sum of $210,715.51 by applying the sum of $206,021.22 from the proceeds of sale of the Property H property by virtue of the Husband being required to sell the Property H property pursuant to Orders made in these proceedings on 15th day of March, 2013 (“the March 2013 Orders”) and apply the totality of the proceeds in repayment of the (omitted) Bank in circumstances where it is not clear nor established that the Husband was in any way liable with respect to the (omitted) Bank loan encumbering title to the former matrimonial home.
42.Paragraph 1 (l) of The Executory Financial Agreement provides that the Husband is only responsible for loans which encumber real property transferred to the Husband.
43.Paragraphs 1(f), 1(h), 1(i) and 1(j) of the Executory Financial Agreement only mention the (omitted) bank home loan which at the time of signing the Agreement stood in the sum of $158,525.00.
44.The Executory Financial Agreement makes no provision for any liability attaching to the Husband in relation to the (omitted) Bank encumbering title to the former matrimonial home which property was retained by the Applicant Wife.
45.The Respondent Husband subsequent to the date of execution of the Executory Financial Agreement, remains liable as “guarantor” for the (omitted) Bank Ms R loan secured against the Property H property. The Property H property was retained by the Husband pursuant to paragraph 1(k) of the Executory Financial Agreement and the (omitted) Bank was not secured against the Property H property. The Husband remained liable as guarantor for the (omitted) Bank Ms R loan encumbering title to the Property H property. At no material time was the (omitted) Bank secured against the Property H property and at all material times, the (omitted) Bank was secured against the former matrimonial home which was transferred to the Wife pursuant to paragraph 1 (e) of the Executory Financial Agreement.
46.It is submitted that there is no consensus ad idem, no agreement has been reached between the parties either written or that can be inferred from the parties conduct in relation to the Husband’s liability with respect to the (omitted) Bank.
47.It is submitted in circumstances where there is no consensus ad idem, (no agreement has been reached between the parties either written or that can be inferred from the parties conduct), in relation to the Husband’s liability with respect to the (omitted) Bank, that there needs to be an adjustment in favour of the Husband for the payment made by the Husband towards repayment of the (omitted) Bank from the proceeds of sale of the Property H property and further any losses that the Husband has incurred as a result of being required to sell the Property H property in circumstances where there has not been any adjudication at the time that Husband was ordered to contribute the totality of the proceeds of sale towards reduction of the (omitted) Bank as to whether the Executory Financial Agreement is enforceable against the Husband.
48.That a fundamental error has been made in that the Applicant Wife has assumed incorrectly that the Property H property was security for the (omitted) Bank and the Applicant Wife’s belief has been particularised and deposed to in the Applicant Wife’s Affidavit sworn 5th December, 2012.
49.The true position of liability encumbering title to the Property H property was not known to either party until on or about September, 2013, almost four (4) years after the Executory Financial Agreement was signed, namely 18th November 2009.
50.On the basis of Applicant Wife’s belief, it is submitted that in relation to the issue of liability for the (omitted) Bank, there is no consensus ad idem (no agreement has been reached between the parties) in what ought clearly have been a fundamental term of the Executory Financial Agreement which has not been agreed to and not been provided for and not in contemplation at the time of executing the Executory Financial Agreement.
51.That pursuant to paragraph 4 of the 17th October 2013 Orders, the Secondnamed Respondent, Ms R was required to pay the sum of $15,000.00 to the Applicant Wife on or before 7th November, 2013 in full and final satisfaction of any monies owing for the (omitted business) which was purchased from the Respondent Husband by Ms R.
52.In the event that the Financial Agreement is not set aside, it is common ground between the parties that;
(a)the parties have obtained independent legal advice prior to the signing of the Financial Agreement pursuant to the requirements of Section 90G(1) and it is common ground that the Financial Agreement complies with the relevant formal provisions of the Family Law Act 1975 (Cth) (“the Act”), in particular Section 90G(1) of the Act, and
(b)it is common ground that the parties agree that the statutory requirements of Pt VIIIA or Div 4 of Pt VIIIAB are met and accordingly, the jurisdiction of the Court under Pt VIIIA or Div 2 of Pt VIIIAB to deal with property and/or spousal maintenance issues is ousted.
53.The Executory Financial Agreement provides a default provision at paragraph 2 for the event that the Husband fails to meet the payments required by paragraphs 1(f), 1(h) and 1(i) that Husband transfer property to the Wife referred to at paragraph 1(k), (i), (ii) and (iii) and applied as per paragraph 2(a), (b), (c) and (d).
54.Paragraph 2 of the Executory Financial Agreement is the only default provision in the Executory Financial Agreement and provides for the occurrence of a breach of paragraphs 1(f), 1(h) and 1(i) of the Executory Financial Agreement by the Husband.
55.Paragraph 2 of the Executory Financial Agreement only foreshadows a breach of the Husband’s liability for payment of instalments due in relation to the (omitted) bank home loan and not in any way provides for or makes reference to the Husband failing to make re-payments in relation to the (omitted) Bank. The (omitted) Bank was not in contemplation at the time the Executory Financial Agreement was drawn and when provisions were included in the Executory Financial Agreement in relation to breach of the Husband’s obligations.
56.The Executory Financial Agreement in providing a default clause at paragraph 2 in relation to the Respondent Husband’s obligations pursuant to paragraphs 1(f), 1(h), and 1(i) applies the default clause to items of property in which the Husband had an interest at the time of execution of the Executory Financial Agreement (18th November, 2009) which are particularised as follows; defined as:
(i)paragraph 1(k)(i) - the property at Property K subject to the mortgage to the (omitted) bank which shall become the Husband’s responsibility;
(ii)paragraph 1(k) (ii) - the Farm at Property H, the Property H property;
(iii)paragraph 1(k) (iii) - real estate in which the Husband has an interest. (The Husband’s interest in property is referred to at Recital (L) and estimated at $100,000.00 (makes no reference to property acquired following execution of the Financial Agreement;
57.Pursuant to paragraph 2 of the Executory Financial Agreement the Wife is not entitled to seek a transfer of ownership of:
(i)the Husband’s vehicle;
(ii)the Husband’s interest in Property W, Property A (purchased after execution is admitted by both parties);
(iii)the Husband’s superannuation entitlement;
(iv)the Husband’s interest in (omitted business);
(v)the Husband’s interest in any insurance payout relating to the Husband’s medical condition.
…
81.It is submitted that in the context of an Executory Financial Agreement, where there arises a continuing obligation, the parties ought to have addressed the circumstances such as unemployment or illness of a party (“the subsequent events”) which ought to have been provided for in the Executory Financial Agreement.
82It is submitted that the Executory Financial Agreement is silent in relation to the subsequent events and subsequent events were not in contemplation at the time of executing the Executory Financial Agreement, accordingly the Executory Financial Agreement is silent and fails to make provision for a material circumstances, namely the occurrence of the subsequent events.
83.There is no agreement reached between the parties in circumstances where it is common ground that the Respondent Husband’s medical condition has arisen subsequent to the execution of the Executory Financial Agreement in relation to what the parties have agreed in circumstances of the occurrence of subsequent events.
84.It is submitted that the Husband’s medical condition is such that the Respondent Husband is incapable of obtaining gainful employment to generate sufficient funds and to/or to generate the quantum of funds which would have been in reasonable contemplation at the time of executing the Executory Financial Agreement and further the Respondent Husband is unable by virtue of the Respondent Husband’s degenerative and medical condition to generate a quantum of funds in contemplation at the time of execution of the Executory Financial Agreement which would have been required to facilitate the Husband making re-payments of instalments due and payable pursuant to the (omitted) bank home loan.
85.The Executory Financial Agreement fails to provide for a frustrating event such as the illness of one of the parties.
86.That the Executory Financial Agreement be set aside pursuant to Section 90KA of the Act, on the basis that.
(a)That paragraph 1(f), and the related paragraphs of the Financial Agreement is and are uncertain in that paragraph 1(f) and the related paragraphs of the Financial Agreement is/are;
(i) Insufficiently definite;
(ii) Makes no provision for timeframe within which the Respondent is required to comply with the terms contained therein;
(iii) Incapable of practicable meaning;
(iv) Indefinite and/or not capable of being made definite without further agreement of the parties to the Financial Agreement;
(v) That the Applicant’s and the Respondent’s reliance upon paragraph 1(f) and the related paragraphs of the Financial Agreement and the Applicant’s and the Respondent’s conduct with respect to paragraph 1(f), and the related paragraphs of the Financial Agreement does not clarify the uncertainty of paragraph 1(f) and/or the related paragraphs.
(vi) Severance of paragraph 1(f) and the related paragraphs of the Financial Agreement does not clarify the uncertainty created by virtue of the inclusion of paragraph 1(f) and the related paragraphs of the Financial Agreement.
(vii) No clear provision is made with respect to each of the parties liability with respect to the (omitted) Bank.
(viii) The Executory Financial Agreement fails to provide for a frustrating event such as the illness of one of the parties.
87.On the basis of the foregoing, it is submitted that there is no consensus ad idem (no agreement has been reached between the parties.”
Oral submissions at trial
In submissions before the Court, Counsel for the wife contended that the husband’s “whole argument” that there was no agreement (or contract), rested on the ground that the liability under and the (omitted) Bank (by name) was not mentioned in the Agreement. Counsel for the wife whilst conceding the Agreement was “poorly drawn” submitted the husband’s argument could not survive the simple scrutiny of the terms of the Agreement itself. Counsel for the wife pointed to the amounts the Agreement provided that the husband was responsible for (and noted these) included the exact amount owing under the (omitted) Bank at the time the Agreement was signed.
Counsel for the wife rejected the husband’s submissions that the Agreement was ambiguous, insufficiently definite or incapable of practicable meaning. Counsel for the wife submitted the Agreement was not ambiguous in such a way as to strike at the heart of its meaning, nor was it so ambiguous that the parties’ intent could not be discerned. Moreover it was submitted the husband’s own behaviour belied the truth of any such argument.
Counsel for the wife submitted the husband’s arguments regarding a common mistake could not withstand scrutiny and beggared belief in the face of the undisputed fact of his payments to the (omitted) Bank from September 2009 to July 2012.
Moreover Counsel for the wife submitted that where it was agreed after the Agreement was signed, the husband continued to draw down on the (omitted) Bank, it could not be argued that the intention of the parties, (that the husband was responsible for the (omitted) Bank) was not certain. Counsel for the wife submitted there was no doubt where “the debt [was] to fall” under the Agreement.
Counsel for the wife submitted there was no uncertainty associated with the Agreement or who would be responsible for the mortgages and on what basis. Moreover Counsel for the wife rejected the suggestion the Agreement was uncertain on the basis it had no end point by pointing to the default provisions.
Counsel for the wife submitted that the husband’s argument that there was no concluded agreement (contract) because the (omitted) Bank was not mentioned, should be viewed against the husband’s subsequent conduct (where he used it) and that it was only in late 2012 that he claimed it was the wife’s sole responsibility.
Counsel for the wife submitted the Agreement was not ambiguous and the husband’s arguments could not survive scrutiny of the parties’ conduct, the context at the time of the signing of the Agreement or the text of the Agreement itself.
Finally, Counsel for the wife rejected the husband’s claim the Agreement was frustrated and submitted the husband’s claims in that regard were “nowhere near it” and pointed to inter alia the enforcement provisions of the Agreement in a submission that urged the Court to reject the husband’s arguments.
The husband relied on his written submissions. In submissions before the Court, the husband through his solicitor addressed those submissions seriatim. The husband’s solicitor claimed the Agreement was “executory” and/or there was no agreement because of a common mistake. The husband’s solicitor contended that this was the case as inter alia the Agreement made “no provision for” or didn’t expressly refer to the (omitted) Bank.
It was also submitted that as the Agreement didn’t refer to the “totality of liability” for the securities over or attached to the various properties the parties proceeded upon a common mistake. The husband’s solicitor submitted that by virtue of this, the parties had not “come to terms” regarding the particulars they agreed to and/or their alleged failure to do so gave rise to uncertainty such that there was no contract.
In submissions before the Court the husband through his solicitor also claimed the Agreement was impracticable or frustrated because it either assumed a level of income which his client now did not have or because of his illness or because it did not have an end date.
Counsel for the wife in reply took issue with the submissions made on behalf of the husband. It was contended the submissions made on behalf of the husband, ignored not only the terms of the Agreement itself, the content of exhibit R4 on which the husband himself relied but also the husband’s subsequent performance (and payments on the (omitted) Bank) for over 2 years after the Agreement was signed.
Counsel for the wife contended the husband’s submissions effectively sought to elevate form over substance and to opportunistically take issue with a “misdescription” that flew in the face of his own behaviour (and presumed understanding) after the Agreement was signed.
Consideration
In considering the positions of each of the parties all of the evidence, exhibits and submissions upon which they relied have been taken into account.
In Ruane & Bachmann-Ruan & Anor [2009] FamCA 1101 Cronin J said:
“THE PROVISIONS OF PART VIIIA.
27.A financial agreement is defined by the Act to mean an agreement specifically referred to in s 90B, s 90C or s 90D.
28.One of the three sections is applicable depending upon the time of the relationship at which the agreement was executed.
29.One purpose for entering into a financial agreement is to conclude financial arrangements without recourse to the various provisions of Part VIII of the Act. Another purpose is as a financial planning tool to ensure that in the event of a breakdown of a relationship, resort cannot be had to the provisions of Part VIII. This latter purpose is a direct endeavour to exclude the jurisdiction of a court exercising the powers in Part VIII. (See s 71A of the Act).
30.It is not to the point that the financial agreement purports to oust the jurisdiction of the Court but rather that the compliance with the requirements of the Act gives rise to the ouster of the jurisdiction.
31.If there is a dispute about whether the jurisdiction is excluded, the Court is obliged to carefully scrutinise what the parties have done. The exclusion is determined by the fulfilment of the statutory requirements.
32.Strict compliance with the statutory requirements is necessary. (See Black and Black [2008] FamCAFC 7; (2008) FLC 93-357).
33.The statutory requirements for such an agreement where the parties are still married are set out in s 90C. To be a financial agreement for that purpose requires three things:
(a)there must be a written agreement with respect to any (but not necessarily all) of the following:
i. how in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the parties at the time when the agreement is made, or at a later time and during the marriage, is to be dealt with;
ii. the maintenance of either of them:
·During the marriage; or
·After divorce; or
·Both during the marriage and after divorce.
(b)the parties cannot be parties to any other “binding agreement” with respect to the matters in (a) above; and
(c)the agreement must be expressed to be made under
s 90C.34.Section 90C permits such an agreement to be with other persons than just the person’s spouse and may contain matters other than just those referred to in (a) above.
35.There is also a requirement that the financial agreement only becomes operative if one of the parties signs a separation declaration (s 90DA)....”
In Saintclaire & Saintclaire [2013] FamCA 491 Ryan J set out the following questions that should be answered in a case such as this were:
·is there a financial agreement?
·if that question is answered in the affirmative, should that agreement be set aside?
·if the answer is negative and the financial agreement should not be set aside, is the financial agreement binding?
This approach was followed by Judge Baker in Hay & Hay [2014] FCCA 775 where Her Honour said:
“105.Following this approach, I will consider whether there is a financial agreement which is valid, enforceable and effective, having regard to the principles of law and equity. If it is, I will consider whether the financial agreement should be set aside. Then I will consider whether the financial agreement is binding on the parties in that it complies with s.90G of the Act.”
I respectfully adopt the approach set out in the above mentioned decisions in considering the issues raised by the parties to which I will now turn.
Was there an agreement & is it a financial agreement?
In Sanger & Sanger [2011] FamCA 210, the Full Court of the Family Court considered that the law of contract was relevant for the interpretation of financial agreements and said:
“63.…The principles governing the interpretation of contracts are not in doubt and do not require extensive restatement for present purposes.
64.The learned author of J W Carter, Carter on Contract (Lexis Nexis Australia, online, at October 2011) provides a convenient summary of the principles applicable to the construction of contracts:
The function of courts is to give effect to the bargain and not to deny its efficacy by a restrictive technical analysis. This finds its expression in a number of ways. These include the following.
First, in order to determine the meaning or legal effect of a particular term, the whole contract must be construed. This applies both to express and implied terms and requires implied terms to be taken into account when construing express terms.
Second, a commonsense approach is taken to the interpretation of commercial documents.
Third, a presumption is applied that the parties did not intend the terms of their contract to operate in an unreasonable way.
Fourth, rules have been developed to govern the forensic material which can be received to assist in the construction process.
Fifth, albeit somewhat belatedly, the role of context (surrounding circumstances) in determining meaning is acknowledged in the concept of the ‘factual matrix’.
Sixth, account is taken of the fact that there is more to contract law than linguistic meaning: more often than not, the ultimate concern is with the legal effect of a contract term.
Seventh, the general approach is to apply the same construction rules no matter what the form or nature of the clause or contract, so that the relevant principles do not depend on whether the contract is for the sale of goods or the provision of services and so on. (original emphasis) (footnotes omitted)
65.In Ryledar Pty Ltd t/as Volume Plus and Anor v Euphoric Pty Limited[2007] NSWCA 65; (2007) 69 NSWLR 603 at para 106 Tobias JA referred with approval to the following paragraphs of Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society[1997] UKHL 28; [1998] 1 All ER 98:
(1) “Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
...
(4)The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd[1997] UKHL 19; [1997] AC 749.
(5)The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Neviera SA v Salen Rederierna AB[1985] AC 191, 201:
‘... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.’.”
The Recitals contained in the Agreement set out the background, noted the husband’s obligations regarding child support would be incorporated into a child support agreement (which was done) and then identified the assets and liabilities of the parties.
The Recitals noted the parties intended by the Agreement to finalise all rights they had or may have had against each other in relation to inter alia property. It was noted the parties had each received the requisite advice before signing the Agreement. It was also noted in light of the above they each wanted to enter into the Agreement. The Agreement went onto provide the manner in which those assets would be divided and who would be responsible (and on what terms) for the liabilities.
The Agreement provided that within 30 days of signing the husband would transfer to the wife the property identified therein.
The Agreement also provided the husband would be solely responsible for an amount in respect of the mortgage secured against the former matrimonial home, at the rate of repayment until such time as the mortgage has been reduced to a specified sum, whereupon the mortgage payment would become the wife’s responsibility.
The Agreement also provided that contemporaneously with the transfer of the former matrimonial home, the wife would transfer to the husband certain identified property including her interest in the Property H property and the terms on which the husband would be responsible for that including that he would be responsible for the mortgage associated with the Property H property.
The Agreement provided detailed default provisions in event of non-compliance including for transfer and/or sale of property in the event of such default/s.
There was no dispute that the (omitted) Bank was not mentioned in the Agreement (by name). However Counsel for the wife submitted (and the husband’s solicitor did not take issue with this) the exact amount of liability under the (omitted) Bank was referred to in the Agreement on the husband’s side of the ledger along with the property he retained under the Agreement.
In Sanger & Sanger [2011] FamCA 210 the Full Court emphasised the importance of using the natural meaning of the words in construing the contract. Adopting this approach, the word “mortgage” if it were given its ordinary meaning as an interest in property as security for the repayment of money borrowed would include the (omitted) Bank.
The Full Court of the Family Court consistent with the main objectives of contract law said in Twigg & Twigg (1994) FLC 92-456 at p.80,716:
“Courts will endeavour to avoid a construction which leads to invalidity; especially if the contract has in the meantime been acted upon…These cases demonstrate a tendency to uphold contracts despite a lack of clarity in the words employed by the parties.”
Also in the family law context and more recently, albeit when reviewing the authorities relating to the interpretation of consent orders, in Hughes & Hughes [2012] FamCA 198 MacMillan J said she could not:
“in order to interpret the order, look to the subjective intention of the parties when that order was made. However, if the order is ambiguous…, when construing what is meant by that order, [the Court could] look to admissible evidence of surrounding circumstances.” (emphasis added)
More generally it is said that the Court can look at the objective facts within which the contract came into existence, and to the parties presumed intention in this setting (see: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 and Electricity Generation Corporation (trading as Verve Energy) v Woodside Energy Ltd [2014] HCA 7 at [35]).
The husband tendered a number of exhibits, including exhibit R4 which was a letter from McBain Lawyers (the wife’s (former) solicitors, who prepared the Agreement) addressed to the (omitted) Bank dated 26 February 2010 which stated:
“ Re: Ms Duncan & Mr Duncan
Complete Home Loan no. (omitted)
Property –Property A,
CT Volume (omitted) Folio
Property –Property K,
CT Volume (omitted) Folio (omitted)
We act for Ms Duncan in relation to this matter. Enclosed herewith are Transfers of Land related to the two above named properties.
Both properties are subject to a mortgage from your bank…
You should note that Mr Duncan is to remain responsible for making the payments in relation to the mortgages on both of the properties…”(emphasis added)
The wife relied on a letter from the (omitted) Bank dated 8 March 2013 which was tendered in Court and marked exhibit A2. That letter provided:
“…In response to your letter dated 5th of March 2013 from your Solicitor at Pearsons Barristers and Solicitors, we advise the following:
1.Home Loan (omitted) & (omitted) Bank (omitted) in the names of Ms Duncan and Mr Duncan, are both secured by a registered mortgage with the (omitted) Bank, over residential property at Property A.
2.In the event of the home loan repayments not being met, and/or the (omitted) Bank going over its agreed limit, the Bank will refer to its collections process. The Bank has an agreed collection process, which varies in every situation, but may end in foreclosure or realisation should either the Home Loan or the (omitted) Bank not be conducted within our Terms and Conditions as stated in our Credit Card Contract.
3.As the property at Property H, is in the sole name of Mr Duncan, under privacy legislation we are unable to advise any information regarding this property.
Yours sincerely”
Counsel for the wife submitted the Court should be satisfied there was an agreement (contract) from the context at the time of the Agreement. A good gauge of the parties’ intention at the relevant time is found in the very correspondence the husband relied on.
Importantly the following events illustrated the context at the time of the Agreement was made and what the parties understood. In this regard the (omitted) Bank was utilised to purchase the Property H property (which the husband retained) but was secured against the former matrimonial home (which the wife retained). However by reference to inter alia exhibits A2 & R4 it was clear the parties agreed the husband was responsible for the mortgages, and that could only be taken to include responsibility for the (omitted) Bank too.
When regard was had to the parties’ intention their behaviour was important too. In this regard it is not disputed the husband paid the instalments on the (omitted) Bank for over 2 years after the Agreement was signed and withdrew monies from an account which he only (as was said on behalf of the wife in submissions) subsequently “feigned” responsibility for.
The husband argued there was no agreement as the Agreement was uncertain because inter alia it did not provide for the responsibility for the (omitted) Bank. Were it necessary to do so the wife submitted the relevant recitals of the Agreement could be rectified. I agree. In order for that to be done it would be necessary for the Court to be satisfied the parties were in complete agreement but by error wrote them down wrongly. For the reasons set out below I don’t believe that is necessary.
Some of the language used in the husband’s submissions was apt to lead to confusion and did not aid the husband’s argument/s. For example the use of the phase “executory” was unfortunate particularly where the husband admitted he had made payments under and used the (omitted) Bank for over 2 years after the Agreement was signed.
In the husband’s affidavit material, it appears great importance was placed on correspondence received from the wife’s new solicitors (prior to the commencement of these proceedings) wherein it was claimed that the Agreement was uncertain.[4] This correspondence was called in aid of the husband’s argument there was no agreement as his evidence was that the (omitted) Bank was not mentioned in the Agreement.[5]
[4][5] see para 4(m)of the husband’s affidavit filed 3 October 2013
In my view the emphasis placed on the correspondence referred to in the preceding paragraph by the husband and his solicitor was misplaced. The wife’s case and her position before the Court has been set out earlier. The wife was not required for cross examination and as such I am not persuaded, given all of the evidence, that that correspondence is significant to the determination of the parties’ dispute before the Court.
The reality is that the Agreement was signed by both parties. It was not until 2013 that the husband sought to challenge the Agreement. In my view construed objectively the husband must be taken to be bound by what he signed. Importantly his action at the time and subsequently was such that he exhibited to all and in particularly to the wife that he agreed to the terms of, and to be bound by the Agreement and inter alia to be responsible for the (omitted) Bank.
The argument that the Agreement was uncertain would require the Court to be satisfied that it was unable to attribute to the language of the parties, a clear and precise meaning such that it would enable it to identify the scope of the respective rights and obligations under the contract (the Agreement).[6] In Halsbury’s Laws of Australia[7] it was said the language of the parties in the contract (the Agreement) should be interpreted broadly and fairly. They say:
“If the language employed is so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention the agreement will not be enforceable. However, so long as it is not utterly impossible to place a reasonable meaning on the language used and to discern the parties’ intention, the agreement will be enforced.[8]”
[6] Meehan & Jones (1982) 149 CLR 571
[7] Halsbury’s Laws of Australia, Lexis Nexis
[8] Ibid at para 110-475
Moreover if there was any ambiguity in the meaning of the Agreement that would not necessarily derail the Agreement but rather require the Court to determine what the unclear statement means. [9] The Agreement dealt with the value of the parties’ properties and the debt referrable to it. The Agreement provided with certainty for how the responsibility for the mortgage/s was to be handled. The Agreement doesn’t refer to loan account numbers but rather the mortgage/s which given the above, included the figures referrable to the (omitted) Bank on the husband’s side. The parties’ intention (by reference to the figures in the Agreement itself) made clear the debt (referrable to the (omitted) Bank) was accounted for as one referrable to the property the husband was to take (and as the exact figure of the debt in the (omitted) Bank at that time.
[9] Upper Hunter County District Council v Australian Chilling and Freezing Co (1968) 118 CLR 429 at 436-7
The husband also argued there was no agreement or contract due to a “misapprehension in relation to facts”. Notwithstanding the husband’s claims I am not satisfied that both parties made the same mistake as to something so fundamental to the Agreement as responsibility for the (omitted) Bank such as to render the contract (the Agreement) voidable. Nor am I satisfied that the parties were at cross purposes on that issue such as to give rise to mutual mistake nor was one party mistaken and the other knew or ought to have known.
The Agreement set out the terms of the offer, the basis on which the parties agreed and provided for the obligations of the parties into the future. On the evidence before the Court the basic requirements for a contract are present. There was certainty as to the parties’ clear offer and acceptance, consideration, common intention to create a legal relationship. I am satisfied notwithstanding the husband’s submissions there was a common understanding as to the nature of the agreement and sufficient clarity and certainty of terms and meaning particularly given the undisputed evidence of the performance of the Agreement including the husband’s payments under the (omitted) Bank up and until July 2012.
In those circumstances and particularly where the husband didn’t dispute he made payments on the (omitted) Bank and drew down on same it could not be maintained there was any mistake and by reference to the whole of the Agreement there was no doubt where the debt was to fall.
The Agreement was not uncertain in the sense that the Court is unable to attribute to the language of the parties a clear and precise meaning necessary to identify the scope of the respective rights and obligations. On the evidence before the Court there was no mutual mistake of fact or uncertainty as to who was responsible for what or whether the mortgages’ included the (omitted) Bank.
In summary in this case there were two parties to the Agreement which contained the terms of a clear offer which was subsequently accepted for the consideration contained therein. There was a contract (the Agreement) and notwithstanding the husband’s submissions, I am satisfied the parties were ad idem as to the agreement they were entering. The Agreement was expressly made under s.90C of the Act and dealt with the matters in s.90C(2) and was a financial agreement.
Should the Agreement be set aside?
Section 90K(1) of the Act sets out sets out the circumstances in which the Court may set aside a financial agreement. There was no claim of misrepresentation, misleading and deceptive conduct, duress, unconscionable conduct or undue influence. The husband relied on the s90K(1)(b) and (c) of the Act.
I have already dealt with the husband’s arguments about inter alia the lack of certainty, lack of intention to enter legal relations and mistake. For the reasons set out above, I am not satisfied the Agreement should be set aside on the grounds that it is void, voidable or unenforceable.
The husband also argued the Agreement should be set aside as it was impracticable and/or was incapable of being performed. “Impracticable” is defined according the Australian Concise Oxford Dictionary[10] as “impossible in practice.”
[10] The Australian Concise Oxford Dictionary, 3rd edition, Oxford University Press Australia 1997
The Court was not taken to any case law which supported the proposition that a change in personal circumstances (e.g. such as a deterioration in the husband’s health) of either of the parties may result in the circumstances to be considered impracticable as to the carrying out of the Agreement or part of the Agreement. [11]
[11] The husband’s submissions referred to cases under s.79A of the Act.
One of the authorities referred to by the husband was La Rocca & La Rocca (1991) FLC 92-22 where Kay J was asked to make a determination as to whether a change in the husband’s circumstances had led to a situation where orders previously made by Wilczek J had become impractical to be carried out. That application was brought pursuant to s.79A(1)(b), which is in almost exactly the same terms as s.90K(1)(c), save that it relates to court orders made under s.79 rather than to a financial agreement made under the Act.
Kay J was not prepared to set aside orders under s.79(1)(b). His Honour at [718] said:
“In In the Marriage of Rhode (1984) 10 Fam LR 56; FLC 91-592 Gee J examined the meaning of the word “impracticable” and concluded that it was something different from impossible and said at FAM LR 64; FLC 79,768:
(a)It is not enough that circumstances have arisen since the order was made which make it unjust for the order or part of the order to be carried out; the onus is upon the applicant to establish to the reasonable satisfaction of the court, that in the circumstances that have arisen it is impracticable for the order or part of the order to be carried out.
(b)The word “impracticable” means gleaning a definition from the Shorter Oxford Dictionary, “not practicable”, “that cannot be carried out or done”, “practically impossible”; “unmanageable”; “intractable”.”
Counsel for the wife pointed to the husband’s financial statement on which he relied when responding to the submissions made on his behalf that the Agreement was impracticable or incapable of being performed because of his health and claimed loss of income. Counsel for the wife submitted that there was nothing to suggest the husband was worse off financially and the claims made were matters for an enforcement hearing.
In Sanger & Sanger [2011] FamCA 210 the Full Court analysed the term impracticable and observed:
“…there is a material distinction between an agreement which is unable to be put into practice and is thus impracticable and an agreement which, although producing a potentially different outcome to that for which a party hoped is able to be implemented or put into practice.”[12]
[12] Sanger & Sanger [2011] FamCA FC 210 at [82]
In every case before the Court where orders in relation to property are made, the values of such may change, go up or down, businesses may grow or fail and the vicissitudes of life may affect the health of one of the parties. Such a situation leads to a problem with enforcement of orders. However it is not an appropriate basis for having the orders set aside and fresh orders made at the behest of the party who has suffered the health problems. So by logical extension, it should be in relation to financial agreements under the Act and the Agreement in this case.
Whilst any agreement might result in a party receiving less than he or she expected, it does not follow that the terms of the Agreement were thereby impracticable or unable to be put into practice. The Agreement is not “impracticable” in the sense that it is impossible in practice.
I am not satisfied that the husband has been able to demonstrate that any provision of the Agreement could not be put into practice.
Moreover whilst the sad circumstances that have befallen the husband since the Agreement were not foreseeable, I am not satisfied it would be unconscionable to refuse to set aside the Agreement on this ground. I find that there are a number of discretionary circumstances which tell against the Agreement being set aside on that basis and these include the husband’s own behaviour and dealings with the (omitted) Bank and the inequity to the wife that would arise.
Is the Agreement binding?
It is necessary to consider whether the Agreement which is otherwise valid, as a financial agreement is binding upon the parties. It is now not in dispute between the parties that the requirements of section 90G were satisfied in this case.[13]
[13] The husband abandoned arguments under s90G and through his solicitor expressly disclaimed any such argument.
In Hoult & Hoult [2011] FamCA 1023 Murphy J said at para [63]:
“…The legislature has decided that the essence of the regime created by Part VIIIA of the Act is that parties who are independently advised and receive appropriate advice should, in the absence of fraud, unconscionability or other vitiating factors, be perfectly free to bind themselves to an entirely unjust and inequitable agreement…In short, if the relevant pre-requisites are met, and there is an absence of vitiating factors, the parties are perfectly free to make a “bad bargain”.”
In this case it is not controversial that:
·the husband and wife were parties to a marriage;
·they made a written agreement;
·the written agreement was with respect to how, in the event of the breakdown of their marriage, all or any of the property or financial resources of either or both of them at the time when the agreement was made, or at a later time and during the marriage, was to be dealt with;
·neither the husband nor the wife were parties to any other binding agreement with respect to any of the relevant matters;
·the Agreement was expressed to have been made pursuant to section 90C of the Act;
·both parties before signing the Agreement received legal advice, independent of the other party about the effect on their rights, the advantages and disadvantages of the Agreement and subsequently signed the Agreement freely, voluntarily and without pressure from the other party;
·annexed to the Agreement are certificates under s.90G(1) from legal practitioners for each of the parties in relation to the above matters;
·there was a separation declaration annexed to the Agreement; and
·the Agreement has not been terminated or set aside.
I am satisfied, by reason of the matters set out in the previous paragraph that the Agreement entered into between and executed by the parties was a financial agreement for the purposes of the Act and is binding.
Conclusion
For the reasons set out above the husband’s claims that the Agreement was “executory” or “void ab initio”, that it should be set aside and/or was not binding are not made out. The wife’s enforcement application will be adjourned to 20 February 2015.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of Judge O’Sullivan
Date: 22 December 2014
see para 8 of husband’s affidavit filed 19 February 2014 and para 4(1) of husband’s affidavit filed
3 October 2014
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