Furlong & Biscon

Case [2021] FedCFamC1F 184

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Furlong & Biscon [2021] FedCFamC1F 184

File number(s): SYC 5056 of 2020
Judgment of: HARTNETT J
Date of judgment: 11 November 2021
Catchwords: FAMILY LAW – PROPERTY – BINDING FINANCIAL AGREEMENT – Where agreement entered into prior to parties’ marriage – Application of the wife seeking to set aside a Binding Financial Agreement pursuant to section 90K of the Family Law Act 1975 (Cth) – Where the wife alleges the Agreement is void, voidable or unenforceable by reason of uncertainty pursuant to section 90K(1)(b) – Consideration of the terms of the binding financial agreement – Where the Agreement is found to be void, voidable or unenforceable by reason of uncertainty – Application allowed.
Legislation:

Evidence Act 1995 (Cth), s 140

Family Law (Fees) Regulations 2012 (Cth)

Family Law Act 1975 (Cth), ss 79, 90K, 90KA

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)

Cases cited:

Fewster & Drake [2016] FamCAFC 214

Kostres & Kostres [2009] FamCAFC 222

Division:  Division 1 First Instance
Number of paragraphs:  60
Date of hearing:  21-22 June 2021 & 20 August 2021
Place:  Sydney (via video link)
Counsel for the Applicant:  Mr Othen
Solicitor for the Applicant: Matthews Folbigg Pty Ltd
Counsel for the Respondent:  Ms Clifford
Solicitor for the Respondent:  Gayle Meredith & Associates

ORDERS

SYC 5056 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS BISCON
Applicant

AND:

MR FURLONG
Respondent

ORDER MADE BY:

HARTNETT J

DATE OF ORDER:

11 NOVEMBER 2021

THE COURT ORDERS THAT:

1.The Binding Financial Agreement (“BFA”) be set aside as void, voidable or unenforceable by reason of uncertainty pursuant to section 90K(1)(b) of the Family Law Act 1975 (Cth) (“the Act”).

2.The parties and any lawyers on the record shall personally attend a Conciliation Conference with a Registrar at 9.00am on 9 February 2022.

3.The parties and any lawyers on the record shall follow any directions from the Registrar convening the conference in relation to attendance in person, by Microsoft Teams or by telephone.

4.Unless they obtain an exemption of such fee in accordance with the Family Law (Fees) Regulations 2012 (Cth), the Applicant and Respondent must pay the Conciliation Conference fee in equal amounts no less than 14 days prior to the Conference.

5.No later than 4.00 pm on 27 January 2022 each party must:

(a)ensure that all documents required to be exchanged between parties pursuant to Chapter 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) have been exchanged;

(b)ensure that any private expert report that is relevant to the proceedings has been filed;

(c)provide to the court by emailing michelle.thornley@fcfcoa.gov.au and to the other party a single collated bundle of documents comprising:

(i)a Confidential Outline of Case (Dispute Resolution)

(ii)a detailed minute of Orders Sought;

(iii)details of any previous or current family violence orders;

(iv)a copy of any document exchanged between the parties which is directly relevant to an issue remaining in…

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Furlong & Biscon [2021] FedCFamC1F 184
Case
[2021] FedCFamC1F 184
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CaseChat Overview and Summary

The case of Furlong & Biscon involved a dispute between a husband and wife regarding the interpretation and enforceability of a binding financial agreement (BFA) they had entered into. The dispute arose following the parties' separation in October 2018. The case was heard in the Family Court of Australia. The central issue for the court was to determine whether the BFA was void for uncertainty or enforceable, and if not enforceable, whether the wife would suffer hardship if the agreement was not set aside.

The court found that the terms of the BFA were ambiguous and did not clearly express the parties' intentions, leading to uncertainty about the classification of their properties. The court held that since the terms of the BFA were so imprecise that the parties' intent could not be discerned, the agreement was void for uncertainty and thus unenforceable. The court further found that because the BFA was unenforceable, the wife would suffer hardship if the agreement were not set aside. Consequently, the court set aside the BFA in its entirety. As a result, any determination of the parties' property interests would be made under section 79 of the Family Law Act.

The court's reasoning was grounded in the principle that a court cannot give meaning to an agreement whose terms are ambiguous, as stated in Kostres & Kostres. The court concluded that since the BFA was void for uncertainty, it could not be enforced, and thus the wife would suffer hardship if it were not set aside. The court set aside the BFA and directed that the parties' property interests be determined under section 79 of the Family Law Act.

Orders

Orders of the court

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Background

Background to the litigation

Each of the wife and the husband were cross-examined and were credible witnesses.BACKGROUND The husband was born in 1974 and is now aged 47 years. The wife was born in 1989 and is now aged 32 years. The parties commenced their cohabitation in about 2012 in the home of the husband at B Street, Suburb D in the State of New South Wales (“NSW”) (the “Suburb D property”). The wife was at the time completing a four year degree course at university and living at both E Street, F Town NSW (the home of one of her parents) (the “F Town property”) as described in the BFA, and also at the home of her other parent. In reality however, the wife was living for most of the week in the home of the husband from around June 2009, a matter agreed between the parties. The parties met in June 2008, when the wife was aged approximately 19 years and the husband approximately 34 years. The wife was about to start university. The husband was self-employed as a tradesperson, had a child from a previous relationship, X born in 2005 (“X”), and worked for G Pty Ltd (“G Company”), a company established by his father in conjunction with his mother, and in which the husband had a 10 per cent minority shareholding. X formed a part of the parties’ household for periods during the parties’ relationship and cohabitation until the parties’ separation on 5 October 2018. The parties’ cohabitation period was one of approximately six years. Prior to the parties’ commencement of cohabitation, the husband purchased the Suburb D property. He purchased that property on 17 June 2008, in his sole name, and for the sum of $685,000. The property was encumbered by mortgage in a sum unknown to the Australian New Zealand Bank (“ANZ”). Having purchased the Suburb D property, the husband immediately began the task of extensively renovating the property. On 1 September 2010, the husband purchased further property in ownership with his parents. That property was situate at H Street, Suburb J, NSW (the “Suburb J property”). This property was owned by the husband as to 50 per cent as a tenant in common with his parents. The Suburb J property purchased for the sum of $1,220,000 and was encumbered by mortgage to the ANZ bank. The husband’s equity in this property upon purchase was approximately $610,000 minus his share of the mortgage[3] which is unknown. The husband indicated in the BFA that his liability was $610,000 in 2014. [3] The husband’s Case Outline filed 18 June 2021. Post the parties’ commencement of cohabitation in 2012, and in June 2013, the wife obtained permanent part-time employment with the K Company. Her starting salary was approximately $28,000 per annum. The wife continued to work on a part-time basis throughout the relationship save for a period of maternity leave of twelve months duration during which she was not employed. At the time of the hearing of the threshold issue, the wife’s salary was $55,536 per annum in respect of her ongoing part-time work of three days each week.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In my view, the terms of the BFA do not provide clarity as to what was the intention of the parties at the time of entering into the BFA, and are ambiguous. The meaning of words and expressions used in the BFA is not certain. As was said by the Full Court in Kostres & Kostres at paragraph 129 as follows:[24] 129.While, for the purpose of construing the agreement a court should, as in the context of a commercial agreement, apply an objective test of a reasonable bystander to the construction of an agreement, it cannot give meaning to an agreement whose terms are so imprecise or ambiguous the parties’ intent cannot be discerned. This is particularly so when regard is had to provisions of Part VIIIA in the overall context of the Act.[24] [2009] FamCAFC 222. CONCLUSION The wife’s hardship grounds were on the basis that there has been a material change of circumstances relating the care, welfare and development of a child by reason of the birth of the child, and the subsequent care of the child.[25] If the BFA is not set aside, then by reason of the material change in circumstances, the wife will suffer hardship. This ground was pleaded in the alternative and need not be considered here given the application is acceded to. The court has determined that the BFA must be set aside. There is thus no determined quantum of monies that the wife shall receive pursuant to the BFA. That sum would be a fact relevant to the consideration of the wife’s alternate ground. Without it, I have decided the totality of the question of whether the wife would suffer hardship if the BFA was not set aside, cannot be determined. [25] Fewster v Drake [2016] FamCAFC 214. I find that the terms of the BFA are ineffective and cannot be enforced. The BFA in its entirety is void for uncertainty and shall thus be set aside. What flows from that is that any alteration of the parties’ property interests shall be determined under s 79 of the Act.

Ratio Decidendi

Legal Principle Established

Mr C’s valuation of the Suburb O property as at the retrospective date of 5 October 2018 is $2,200,000. That date is the date on which the parties separated on a final basis. The wife departed the property and moved with the child Y to reside in her mother’s home. Y subsequently spent time with each of his parents in an arrangement as then agreed between them. From the time of its purchase during cohabitation, this property had increased in value by approximately $500,000.CONSIDERATION The husband asserted that the BFA is capable of unambiguous interpretation as to its effect, and so is enforceable against the wife. The wife asserted that the BFA is either void for uncertainty or simply unenforceable against the wife.[9] The wife submitted thereafter that if the court determines the BFA is capable of enforcement, and the parties’ entitlement to property under its terms can be clearly understood, then in the alternative the wife seeks the BFA be set aside by reason of hardship pursuant to s 90K(1)(d) of the Act. [9] The wife’s Case Outline filed 18 June 2021. There are three main operating provisions of the BFA of relevance: (a)if the property is “separate property” then it remains the sole property of the person who owns it after separation;[10](b)if the property is “not separate property” then it is divided equally unless the parties do not agree in which case the Act still applies;[11] and (c)“the matrimonial home” is to be treated differently; the increase in value from date of marriage to date of separation is to be divided equally.[12] [10] See cl 5(a) of the BFA.[11] See cl 5(b) of the BFA. [12] See cl 5(c) of the BFA. The wife submitted that the key questions for the court are:[13](a)Which property is “separate property”?(b)Which property is “not separate property”?(c)Which property is “the matrimonial home”? [13] The wife’s Case Outline filed 18 June 2021 paragraph 7. The wife’s case is focused on the question of the interpretation of the BFA, whether it is void for uncertainty or whether it is effectively unenforceable.[14] If contrary to her submissions, the BFA is determined to be valid and enforceable, and the parties bound by its terms, then the wife submits that her circumstances will be impacted by hardship if the BFA is not set aside.[15] [14] Transcript 21 June 2021, p. 10 lines 5-10. [15] Ibid. The BFA does not define “the matrimonial home”. It is agreed that when the parties executed the BFA, and when they subsequently married, they lived at the Suburb D property.[16] The wife submitted that the[17] common understanding of the expression “the matrimonial home” would suggest the Suburb D property was, at the time of the agreement, the matrimonial home. The husband did not take issue with that. However, contrary to such common understanding and even though the parties were living in the Suburb D property at the time they entered into the BFA, it is listed in Annexure A to the BFA, meaning, it is defined as the husband’s “separate property.” [16] The wife’s Case Outline filed 18 June 2021 paragraph 8. [17] Ibid.