ELDER & ELDER

[2015] FCCA 2902

FEDERAL CIRCUIT COURT OF AUSTRALIA

ELDER & ELDER [2015] FCCA 2902

Catchwords:
FAMILY LAW – Summary dismissal – application refused.

Legislation:

Federal Circuit Court of Australia Act1999

Family Law Act 1975

Federal Circuit Court Rules 2001

Bigg v Suzi (1998) FLC 92
Codelfa Construction Pty Ltd v State Railway Authority of New South Wales (1982) 149 CLR 337
Lindon v Commonwealth (No.2) [1996] HCA 14
Kostres & Kostres [2009] FamCAFC 222

Applicant: MR ELDER

Respondent: MS ELDER

File Number: MLC 4096 of 2015

Judgment of: Judge McGuire

Hearing date: 22 October 2015

Date of Last Submission: 22 October 2015

Delivered at: Melbourne

Delivered on: 20 November 2015

REPRESENTATION

Counsel for the Applicant: Ms Marshall

Solicitors for the Applicant: Anthonys Solicitors

Counsel for the Respondent: Mr Strum

Solicitors for the Respondent: Mills Oakley Lawyers

ORDERS

1. The respondent’s application for summary dismissal be dismissed.

2. The application to set aside the binding financial agreement be listed for hearing as a discrete event and with an estimated hearing time of half a day on 19 February 2016.

3. The parties make, file and serve any further affidavits on which they intend to rely not later than twenty-one (21) days prior to the hearing.

4. Any issues of costs of and incidental to the summary dismissal hearing be reserved to the next hearing date.

IT IS NOTED that publication of this judgment under the pseudonym Elder & Elder is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 4096 of 2015

MR ELDER

Applicant

And

MS ELDER

Respondent

REASONS FOR JUDGMENT

1. The substantive issue here involves property matters between the parties.  However, at an interlocutory and more discrete stage, I am asked to deal with the status of a pre-nuptial agreement entered into by the parties and dated (omitted) 2005.  In respect of that application the husband is the applicant.  He was initially self-represented and his initiating application filed 8 May 2015 seeks orders as follows:

   Final orders sought

   (1) That the pre-nuptial agreement dated (omitted) 2005 be set aside;

   (2) That the matrimonial assets be distributed between the parties to effect a 55/45 per cent distribution in favour of the wife.

   (3) Interim or procedural orders sought:

   No interim orders sought.

2. The husband then obtained legal representation. 

3. This application was listed for a first return and directions on 16 June 2015.  The husband was there represented by Ms Marshall of Counsel and apparently by way of direct brief.  The following orders were made on that day:

   (1) The matter be adjourned for final hearing on 21 October 2015 at 10.00 am at Melbourne (with an estimated hearing time of one day).

   (2) The applicant file and serve all affidavits upon which he seeks to rely not later than 4.00 pm 28 days prior to the final hearing.

   (3) The respondent file and serve all affidavits upon which she seeks to rely not later than 4.00 pm 14 days prior to the final hearing.

   (4) That the applicant pay the setting down fee not later than seven days prior to the hearing. 

   (5) All issues of costs of and incident to this day be reserved to the trial Judge.

4. On 15 October 2015 an amended initiating application was filed seeking final orders as follows:

   (1) Whether or not the Pre Nuptial Agreement dated (omitted) 2005 is binding under s90G;

   (2) The Pre Nuptial Agreement dated (omitted) 2005 be set aside under s90K(1)(a), (b), (c), € (sic) of the Family Law Act;

   (3) The Pre Nuptial Agreement dated (omitted) 2005 be set aside under s90KA of the Family Law Act:

   (a) Misrepresentation;

   (b) Unequal bargaining power; Duress, Undue Influence and unconscionability; and

   (c) Uncertainty and Incompleteness.

   (4) If the agreement is set aside or found not binding, then allow the Applicant to make an Application under s79 for property orders.

5. The applicant did not seek interim orders.

6. The husband relies on two affidavits sworn 8 May and 15 October 2015.  He deposes that the wife asked him to sign a pre-nuptial agreement some six weeks prior to their wedding on (omitted) 2005.  He says that he was presented with the agreement on or about (omitted) 2005 and that it was dated and executed by the wife on (omitted) 2005.  He says that a representation was made to him that the wife’s savings together with his wages would be available as support of the family during the relationship. 

7. The husband deposes that he saw a solicitor, received advice, and executed the agreement on 12 May 2005. 

8. The husband says that, contrary to her representation, the wife did not contribute her savings to the general family finances but purchased a property, together with her sister, in Property C.  He says that essentially the wife retained her income from that property.  He says that his income solely provided for the household expenses and support. 

9. The parties married on (omitted) 2005.  They finally separated on 11 May 2013 and were divorced on 26 June 2014.  There are two children of the parties namely, X born (omitted) 2006 (aged nine years) and Y born (omitted) 2007 (aged eight years).

10. The wife argues that the husband’s amended application be summarily dismissed in that it has no reasonable prospects of success.  She relies on her affidavit sworn 7 October 2015. 

11. At [7] of her Affidavit the wife asserts that on (omitted) 2015 she and the husband entered into a binding financial agreement pursuant to section 90B of the Family Law Act 1975 (Cth) (“the Act”). The wife’s understanding of that document is set out at [18] of her affidavit where she deposes:

    The BFA provides that in the event of the breakdown of our marriage, neither of us would have any entitlements to the assets and resources of the other, whether at the date of the BFA or at a later time, or any accretion thereto, or any income therefrom, except to the extent of any direct financial contribution to the acquisition or redemption of the same.

The pre-nuptial agreement

1. The document is short in its content and the recitals in their entirety are:

   A. Ms Elder was born on (omitted) 1965.

   Mr Elder was born on (omitted) 1968.

   B. The parties intend to marry on (omitted) 2005 and this agreement is conditional on the marriage taking place on that date or thereabouts.

   C. The parties intend their marriage to be permanent but nevertheless wish to define their financial rights and responsibilities should the marriage break down.

   D. This agreement is made pursuant to Section 90B of the Family Law Act 1975.

   E. Ms Elder is the owner of the assets and resources set out in the first Schedule.

   F.Mr Elder is the owner of the assets and resources set out in the second Schedule.

   G.The parties desire so far as it is possible to contract out of the provisions of part VIII of the Family Law Act if the marriage breaks down irretrievably to enter into a financial agreement under Section 90B of the Family Law Amendment Act 2000 providing how:

   In the event of the breakdown of the marriage, their property and financial resources at the date of this agreement, or at a late (sic) time, and before the dissolution of the marriage, is to be dealt with and/or the maintenance of either of them during their marriage and/or after the dissolution of the marriage is to be dealt with.

   H.There is no other agreement in force under Section 90B, 90C or 90D.

   I.Prior to each party signing the Agreement, they receive (sic) separate independent legal advice from a Legal Practitioner as to:

   (i) The effect of the Agreement on that party’s rights;

   (ii) Whether or not at the time of the advice was provided (sic) it was to the advantage, financial or otherwise, for that party to make the Agreement; 

   (iii) Whether or not at the time, it was prudent for the party to make the Agreement;

   (iv) Advice was provided as to alternate remedies available and comparative likely consequences; 

   (v) Advice was given as to whether in the light of all the circumstances, known, the binding financial agreement was fair and reasonable.

2. The operative part of the agreement comprises the following in full:

   1. Mr Elder has no entitlement to Ms Elder’s assets and resources or any accretion to them or any income from them, except to the extent that he has directly financially contributed to the acquisition or redemption of same.

   2. Ms Elder agrees that she has made no financial contribution towards the assets and resources of Mr Elder.

   3.Ms Elder has no entitlement to Mr Elder’s assets, resources or any accretion to them or any income from them, except to the extent that she has directly financially contributed to the acquisition or redemption of the same.

3. The first schedule to the agreement lists the assets of the wife as:

   1.Property at Property L, unencumbered.

   2.One motor vehicle.

   3. Bank deposits and investments $250,000.

4. The second schedule lists the only asset of the husband as:

   1.(business omitted)  and associated assets and liabilities.

5. The document contains signed certificates of independent legal advice in respect of each of the parties dated respectively 2 and 12 May 2005. 

The Issues:

1. The discrete and only issue for my determination at this time is whether the husband’s application be summarily dismissed. 

Relevant Law – Summary Dismissal:

1. Section 17A of the Federal Circuit Court of Australia Act1999 (as amended) provides under the heading “Summary Judgment”:

   (1)  The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:

   (a)The first party is prosecuting the proceeding or that part of the proceeding; and

   (b)The Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

   (2)  The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of the proceeding if:

   (a)The first party is defending the proceeding or that part of the proceeding; and

   (b)The Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

   (3)  For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

   (a)     Hopeless; or

   (b)     Bound to fail;

   For it to have no reasonable prospect of success.

   (4)  This section does not limit any powers that the Federal Circuit Court of Australia has apart from this section.

2. Similarly, the Federal Circuit Rules 2001 (as amended) at Rule 13.10 provide under “Disposal by Summary Dismissal”:

   The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:

   (a)  The party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or

   (b)  The proceeding or claim for relief is frivolous or vexatious; or

   (c) The proceeding or claim for relief is an abuse of the process of the Court.

3. It seems, therefore, that the “test” or threshold for summary dismissal is lesser in this Court than pursuant to the common law authorities which prefer a test of “doomed to fail”.  Nevertheless, I am content that the guiding principles from authorities such as Lindon v Commonwealth (No.2)[1] and Bigg v Suzi[2] remain relevant and valid.  Such principles include:

   (a)The power for summary dismissal is a discretionary one.

   (b)It is a serious matter to deprive a party of access to the Courts and as such a relief by way of summary dismissal is “rarely and sparingly provided”;

   (c)A weak case or one unlikely to succeed is not the test and not sufficient to warrant summary dismissal;

   (d)If there is a serious legal question to be determined then ordinarily it should be determined at trial;

   (e)If, notwithstanding defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form then a Court will ordinarily allow a party to “reframe its pleading”;

   [1] [1996] HCA 14

   [2] (1998) FLC 92 at [799]

4. As Kirby J in Lindon (supra) stated:

   The guiding principle is, as stated in O26,r18(2), doing what is just.  If it clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.

Consideration:

1. In respect of order 1 of the orders sought on the amended initiating application, and despite the odd wording of that paragraph, it is clear that subsections (a), (b), (c) and (ca) of s.90G of the Act were satisfied. It follows that the applicant at [2] seeks that the pre-nuptial agreement be set aside under s.90K(1)(a), (b), (c) of the Act. As with any application, the applicant’s affidavit provides the evidence prima facie in support.

2. S.90K(1)(a) provides that a financial agreement may be set aside if the Court is satisfied that the agreement was obtained by fraud, including non-disclosure of a material matter. A close reading of both of the husband’s affidavits disclosed no allegation or reference to any alleged fraud. I can discern no assertion of non-disclosure of a material matter. Counsel for the husband did not address this subsection in her submissions. In isolation, therefore, I am satisfied that the applicant has no reasonable prospect of successfully arguing that the financial agreement be set aside pursuant to s.90K(1)(a) of the Act.

3. S.90K(1)(b) provides that a financial agreement may be set aside if the Court is satisfied that the agreement is void, voidable or unenforceable. Relevantly, the Full Court in Kostres & Kostres[3] observed, in respect of the setting aside of a financial agreement pursuant to s.90K or dealing with validity, enforcement or effect (s.90KA), the following:

   [127]  We are of the view, that while common law principles of construction undoubtedly apply and can be used to avoid uncertainty, the terms of the agreement must accurately reflect the intention of the parties at the time of the making of the agreement, and be unambiguous.  In other words, the meaning to be given to expressions used in the agreement must be clear and their meaning certain.  We note in this regard the discussion of Mason and Brennan JJ in Calverley v Green of the meaning to be attributed to the word “acquire”.  Any term which a reasonable person would imply should be uncontroversial.  These requirements are particularly important when the financial agreement is one made, as in this case, in the contemplation of marriage and deals with unidentified property or financial resources which may be acquired or contributed to by parties in the future and subsequently divided between them, or retained by one party, in the event their marriage breaks down irretrievably.

   [128] We accept that in determining whether the agreement is valid, enforceable or effective, the general law relating to contracts, as well as principles of equity are to be applied.  That must be done to give effect to the parties’ intention at the time of making the agreement, and in the context of this statute.  The legislature has been careful to include strict requirements if a financial agreement is to be binding, including the requirement of independent legal advice.  In those circumstances it is clear the legislature envisaged, because of the nature of these agreements and the removal of the Court’s supervisory role, that parties would receive legal advice for the necessity of their intentions to be accurately and clearly reflected in the actual terms of the agreement.

   [3] [2009] FamCAFC 222 at [127-128]

4. The husband’s argument focuses on this subsection.  His Counsel says that issues of uncertainty around construction of the operative clauses arise and are arguable.  The husband also says in his affidavit that representations were made to him prior to the executing of the pre-nuptial agreement to the effect that the wife’s capital would be available for family support during the course of the marriage.  Interestingly, the husband says at [12] of his later affidavit that he informed his solicitor of this representation.  Not surprisingly, Counsel for the wife argues that, as a consequence, the absence of the inclusion of the alleged representation in the agreement detracts from, rather than supports, the strength of the husband’s argument. 

5. In his later affidavit at [22-23] the husband deposes to the wife and her sister purchasing a rental property at Property C and failing to inform him of the purchase.  The relevance of this evidence in the context of the wording of the operative clauses of the financial agreement is not immediately apparent to me. 

6. Alternatively, the submissions on behalf of the husband suggest that there may have been of a misunderstanding or mistake as to the ramifications of the operative clauses of the financial agreement.  Nevertheless, a close reading of his affidavit does not suggest any assertion of “common mistake”.  As such, any alleged misunderstanding or mistake on his part must be seen against the requirement of him receiving independent legal advice as certified in the agreement. 

7. Thirdly, the husband relies on section 90K(1)(c) which provides that an agreement be set aside in circumstances that have arisen since the agreement was made whereby it is impracticable for the agreement or a part of the agreement to be carried out. The husband’s affidavit material does not address this subsection either directly or indirectly.  No submissions were made by his Counsel in respect of this subsection.  Consequently, any reliance upon this subsection has no reasonable prospects of success. 

8. The husband at paragraph 3 of his orders sought in the amended initiating application turns to a reliance on s.90KA of the Act. That section refers to the validity, enforceability and effect of financial agreements as follows:

   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 the 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 of 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 specified part of the agreement, be enforced as if it were an order of the court. 

9. The husband’s amended initiating application then particularises three headings as follows: 

   a)Misrepresentation.

   b)Unequal Bargaining Power:  Duress, Undue Influence and Unconscionability. 

   c)Uncertainty and Incompleteness. 

1. At its highest, the husband purports to argue that he executed the financial agreement contemporaneously with a representation of the wife as to the availability of her funds for common use during the marriage.  The husband, of course, may confront difficulties with such an argument by reason of the Parole Evidence Rule which Mason J in Codelfa Construction Pty Ltd v State Railway Authority of New South Wales[4] describes as: 

   The broad purpose of the Parole Evidence Rule is to exclude extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations to subtract from, add to, vary or contradict the language of a written instrument (Goss & Lord Nugent (1833) 110 ER 713 at p 716).

   [4] (1982) 149 CLR 337

2. Further, and whilst evidence of surrounding circumstances is admissible to resolve any ambiguity, such evidence is not admissible to raise an ambiguity.  Nevertheless, an exception to the Parole Evidence Rule exists where there is fraud, mistake or misrepresentation or perhaps “non est factum” in that the agreement might not reflect the common intention of the parties. 

3. I pause here to note that on the evidence in the husband’s affidavits there is no reasonable prospect of a successful argument in respect of her duress, undue influence or unconscionability.  Further, the evidence does not address any claims of ‘uncertainty or incompleteness’ in the operative terms of the financial agreement. 

Conclusion

1. I am mindful that the application before me is one for summary dismissal and that I am guided by the principles elicited from a long course of authorities and as set out above.  It seems to me, and being cognisant of the submission of Counsel for the wife that the husband’s application simply represents a “fruit salad” of claims, at its highest, the husband’s evidence is directed towards an alleged representation by the wife which may argue towards an inducement to execute the agreement and/or constitute an exception to the Parole Evidence Rule. 

2. I am also mindful that the test arising from the Federal Circuit Court of Australia Act and Rules is a less onerous one than “doomed to fail”.  Nevertheless, it remains, in my view, that there is a clear distinction between a “weak case” and one which “has no reasonable prospect of success.” 

3. Given the matters above, I cannot conclude that the applicant has raised no prima facie argument which has no reasonable prospect of success. He should be permitted to mount that argument. As such, the application for summary dismissal is refused. 

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date:  20 November 2015