Gregory and Gregory

[2014] FCCA 106

FEDERAL CIRCUIT COURT OF AUSTRALIA

GREGORY & GREGORY [2014] FCCA 106

Catchwords:
FAMILY LAW – Binding Financial Agreement – whether the Agreement should be set aside – whether it was impracticable for the Agreement to be carried out – consideration of the term “impracticable”.

Legislation:

Family Law Act 1975, ss.90K and 79(8)

Bankruptcy Act 1966, s.116

Sanger & Sanger (2011) FamCAFC 210

Applicant: MR GREGORY

Respondent: MS GREGORY

File Number: MLC 7022 of 2010

Judgment of: Judge Baumann

Hearing dates: 22 and 23 October 2012, 23 November 2012

Date of Last Submission: 5 August 2013

Delivered at: Brisbane

Delivered on: 24 January 2014

REPRESENTATION

Counsel for the Applicant: Mr Shoebridge

Solicitors for the Applicant: Murdoch Lawyers

Counsel for the Respondent: Mr Galloway

Solicitors for the Respondent: Stewart Family Law

ORDERS

1. The Binding Financial Agreement dated 30 June 2003, be set aside.

2. This matter be adjourned to 9:30am on 20 February 2014  in the Federal Circuit Court of Australia at Brisbane.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

MLC 7022 of 2010

MR GREGORY

Applicant

And

MS GREGORY

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 19 October 2012, the Applicant Husband Mr Gregory, particularised the relief he was seeking in a rather complex dispute initiated by him against the Respondent Wife by Application filed on 17 November 2010.

2. The Husband sought an order as follows:

   “

   1.That the Wife be declared to hold on trust for the benefit of the Husband the sum of $?, being funds that are the property of the Husband pursuant to the Binding Financial Agreement entered into between the parties on 30 June 2003. Particulars are as follows:

   a.The Binding Financial Agreement defines the Husband’s Separate Property;

   b.The definition of Separate Property includes (but is not limited to) income and other funds received subsequent to the date of the Binding Financial Agreement;

   c.The Husband asserts that during the marriage, on various dates, the Wife withdrew funds from the Husband’s bank accounts, and thereby has taken the Husband’s property and retained it for her own benefit; and,

   d.The Husband is unable to quantify with precision the precise amount of his Separate Property that the Wife has taken.

   2.In the alternative:

   a.That the Binding Financial Agreement entered into between the parties on June 2003 be set aside pursuant to:

   i.S.90K(2) of the Family Law Act 1975 (Cth) (“the Act”); or, alternatively,

   ii.S.90K(c) of the Act.

   b.And in lieu, thereof:

   i.The Wife pay to the Husband the sum of $? Within thirty (30) days of the date of these Orders; and, failing which the Wife’s real property be sold, and the Husband be paid the funds referred to; and,

   ii.That the Husband and Wife otherwise retain for their sole use and possession such assets, and chattels as are in the possession of each of them respectively as at the date of these Orders.

   3.That the Wife pay the Husband’s costs of and incidental to these proceedings.”

3. The Respondent Wife opposes the orders and seeks that the Husband’s Application be dismissed with costs. She seeks some consequential orders, some of which related to the removal of a Caveat so as to allow the Wife to borrow funds against real property in Victoria, occupied by her and registered in her own name. To some extent those consequential orders earlier sought have changed as a result of an Order made, on an interim basis after the taking of evidence, on 23 October 2012, namely:

   “THE COURT ORDERS ON AN INTERIM BASIS THAT:

   4. The Wife be restrained and injunction issues restraining the Wife from assigning, transferring, encumbering or further encumbering save as provided by this Order her legal and or equitable interest in the property known as Property S, in the State of Victoria.

   5. The Wife shall be permitted to borrow by way of registered first mortgage security on terms satisfactory to the Wife a sum not exceeding $50,000.

   6.The Wife shall produce to the Husband evidence of approval of such a loan accompanied by a request that the Husband do all such things as may be necessary to perfect registration of the first mortgage with priority to any claim of the Husband.

   7.If it is possible under Victorian legislation and law for the mortgage proposes by the Wife to be secured with priority by the Husband as the caveator then the husband shall sign all such documents to permit and consent to the registration of the said mortgage with priority such documents to be prepared by and at the request of the Wife.

   8. If it is not possible under Victorian legislation or law for the said security to have priority without the withdrawal of the said caveat then the Husband shall withdraw the caveat so as to permit the security to be registered as permitted by this Order.

   9.Any costs associated with the registration or perfection of the mortgage shall be borne by the wife at the first instance and any costs associated with the withdrawal of the caveat, and at the Husband’s option if desired, the registration of a new caveat shall be borne by the Husband at the first instance.

   10.Leave is granted to the parties to make submissions as to whether the costs of these transactions should be borne other than by the persons nominated by this order.

   11.Liberty is granted to the parties to apply.”

4. Written and oral submissions were made on 23 November 2012. The matter was listed by the Court of its own motion on 5 August 2013 after the Court had been informed that the Husband (who at the time of the hearing had been diagnosed with an inoperable tumour) had died on 30 April 2013. The purpose of the listing was to give the parties an opportunity to indicate whether any written submissions were to be made, as a consequence of the Husband’s death. The Court was informed no further submissions were to be made by either party.

5. Although, for different reasons, the Husband’s primary position as well as that of the Wife is that the alleged Binding Financial Agreement (“BFA”) dated 30 June 2003 should not be set aside (with the Husband, in such circumstances, asserting the agreement should be enforced by way of a declaration that the Wife holds funds for him on Trust), after a careful consideration of the facts and ultimate findings in this case, the Court has formed a view that the Husband’s alternate relief should be considered first. It was common ground at the hearing that if the BFA was set aside, thereby enlivening the Court’s jurisdiction under Part VIII of the Act, then further evidence or at least further submissions, would be necessary. That position is only strengthened by the said demise of the Husband.

6. Accordingly, after setting out a brief contextual history, the Court proposes to set out the essential terms of the BFA and then examine the credit of the parties before considering the evidence offered to the Court. Arising from that evidence, the Court’s findings will be applied to the statutory framework and other legal principles relevantly identified by the considered submissions of Counsel for the Husband, Mr Shoebridge, and Counsel for the Wife, Mr Galloway. It is appropriate, at this  juncture, to express to the parties (and the Husband’s family) the Court’s regret in the delay in publishing these Reasons.

7. I do not wish to offend the Husband’s family by referring to him in these Reasons in a way which implies he is still living, but prefer to do so rather than refer to him as “the deceased”.

Brief chronology

1. The Husband was born in 1952 and was almost 60 years old at the hearing, whilst the Wife was born in 1963 and was 49 years old at that time.

2. Both parties had been previously married and had adult children from those relationships. After commencing a relationship during 2001, the parties married on (omitted) 2002. The Husband was declared bankrupt on his own petition on 30 May 2003 and was discharged from bankruptcy by effluxion of time on 30 May 2006. A copy of the Husband’s Statement of Affairs is Exhibit 3. The Husband's (omitted) Superannuation is disclosed at Item 27 of the Statement of Affairs. After the marriage and bankruptcy, the parties entered into a financial agreement dated 30 June 2003 (see annexure “1” of the Husband’s Affidavit filed 1 June 2011). I deal more fully with the financial agreement below.

3. In the period leading up to separation, which occurred on 1 September 2008, the relationship was clearly deteriorating. Whilst both parties assert that they were a victim of domestic violence at the hands and behaviour of the other party (allegations, which are examined briefly later), the Husband’s Counsel did not cavil with the Wife’s Counsel’s description of the later period of the relationship as “turbulent”.

4. The Court has been asked to examine, and make findings, about a number of financial transactions as well as a document described as an “Acknowledgement” dated 1 February 2008, a photocopy of which is marked “Exhibit 2”. The original document, if still in existence, has not been produced to the Court and the Husband complains that such document is in the custody or control of the Wife’s former Victorian solicitor. Some of these “transactions” do touch relevantly on the findings I am required to make and are dealt with below.

5. The procedural history in this Court reveals that initially Federal Magistrate Jarrett (as he then was) made some consent orders and directions on 4 March 2011 (including an injunction restraining the Wife from “dealing in any way with her solely owned property situated at Property S in the State of Victoria).

6. Eventually it was listed for hearing by Federal Magistrate Purdon-Sully (as she then was) for 2 days commencing 30 August 2012; however, on that day Her Honour was confronted with an oral application to adjourn the trial. For reasons not published on 30 August 2012, Her Honour made the following order:

   “THE COURT ORDERS:

   1.That Mr Frank Toscano be appointed as Litigation Guardian for the Wife.

   2. That on or before 4.00pm on 31 August 2012 Mr Toscano file and serve an Affidavit of consent pursuant to rule 11.11(2) of the Federal Magistrates Court Rules 2001.

   3. That the Wife file and serve any further material on or before 12.00pm on 4 September 2012.

   4.That the issue of costs be reserved.

   5.That it is certified that it was reasonable to brief Counsel to appear on behalf of the Applicant in the proceedings.

   6.That the final hearing of this matter be adjourned to 5 September 2012 in the Federal Magistrates Court of Australia at Brisbane.”

7. Although at paragraphs 78 to 90 of the Husband’s written submissions Counsel asserts certain facts and submissions made at the time, I am unable to comment (in the absence of published reasons) on the basis for the order above. Suffice is to say, it appears that the Wife’s oldest son X must have consented to being so appointed although no written consent or Affidavit was filed. Her Honour adjourned the trial to the following week to be heard by a visiting judicial officer. On 5 September 2012, the Court was told, it seems, that the appointed Litigation Guardian (the son) was no longer prepared to act as Litigation Guardian and the solicitors on the record for the Wife withdrew. The matter was listed again to commence a hearing on 22 and 23 September 2012 but a further change in who would be the Litigation Guardian for the Wife became necessary, resulting in further Orders by Federal Magistrate Purdon-Sully (as she then was) listing the trial for hearing on 22 October 2012, for 2 days.

8. Her Honour was unable to hear the matter at that time, and the Application was assigned to me for hearing. On 19 October 2012, I caused the matter to be listed to deal with:

   a.The Wife’s Application to give evidence by video, which was granted; and,

   b.The Wife’s complaint that the Husband had not properly “pleaded” the relief he was seeking. This was resolved by the production of Exhibit 1, handed up on 19 October 2012, which further clarified that, in the alternate relief the Husband no longer presses for the BFA to be set aside on the grounds of duress or a material change of circumstances (s.90K(d)).

Credit

1. I am conscious that in this case the Wife was cross-examined by video with her attendance at the Court in Melbourne. To be fair to the Husband, as I recall some of the submissions made when opposing the Application by the Wife to give evidence by video, he contended that assessment of credit of the Wife would be more difficult if I allowed her Application.

2. At times the Wife was vague and emotional even allowing for the medical evidence from her consultant psychiatrist Dr W that she “still continues to suffer from symptoms of post-traumatic stress disorder and these symptoms can be exacerbated when she thinks of her ex-husband” and further that, although capable of being cross-examined for these property proceedings, “the stress of litigation (including the expenses involved) have directly led to her adjustment disorder and intensified her major depressive disorder and the post-traumatic stress disorder.”

3. However, her sworn evidence at paragraph 64 of her Affidavit, where she claims that she transferred $30,000 from her (omitted) Bank Account into the (omitted) Account was a complete fabrication. The Wife further swore about the source of those funds (eg. Inheritance, child support, carer’s payment) and when confronted with the clear documents that the funds had come from the Husband’s Superannuation she merely said she must have been mistaken. I found her response unconvincing. There were other examples where she was exposed as having a very poor recollection at best, or as is suggested in the Husband’s submissions, a tendency to give inadequate or even false evidence.

4. The effective cross-examination by Mr Shoebridge of the Wife pertaining to the issues of:

   a.The existence and use of the “black tin” under the bed;

   b.The safety deposit box at the (omitted) Bank; and,

   c.The use of large cash withdrawals where her often bland response (for sums of $25,000 and $20,000 on 10 September 2008 and 21 May 2010) of “I can’t recall what I used the money for”

   all contribute to throw, in my view, some doubts on the veracity of the Wife’s evidence.

5. This is not to suggest, however, that none of her evidence was believable. Some was, for example, the Wife gave evidence that an assault upon her on 1 September 2008 by the Husband did occur. The Police Records and the plea of guilty by the Husband to one criminal assault charge satisfy me an incident occurred. The Husband’s evidence that he was somehow persuaded by the local Magistrate to plead guilty so that the matter was finished that day, lacks credibility.

6. However a view of the police records reveals many reported incidents where allegations of domestic violence were made and where, at different times, each of the parties are recorded as the aggressor. This includes the incident complained of by the Husband on 9 May 2005 where the Husband was hospitalised, he alleges, as a result of assaults upon him by the Wife. The Court was provided with a Intervention Order made against the Wife following this incident.

7. It is not necessary, to enable the Court to decide the current issue, to further examine at this time the numerous allegations of violence. Neither party sought to offer corroborating evidence. I am not able to definitively find one party was more aggressive than the other, although I am of the view that the Wife was increasingly domineering – even controlling of the Husband – as his health deteriorated as he alleged is, on balance, likely to have been the case.

8. Mr Galloway on behalf of the Wife, points to the somewhat incredulous evidence of the Husband surrounding his claim for a release of some superannuation, (which it is accepted was received by a cheque in his name solely of $137,421.20), and where he says he was not aware for even some 4 years that the funds had been received. I am far from certain that I have all the evidence about this transaction, although on balance, I do find that the Wife, without the knowledge or consent of the Husband, obtained the cheque, paid it into a joint account, and then disbursed it as she saw fit.

9. It is suggested, as against the Husband, that the Husband was fully aware of the use of his income and other payments received and that, in part, transactions were designed to avoid detection by bodies such as his Trustee in Bankruptcy, Australian Taxation Office, or WorkCover. I am not, on the evidence produced and examined to date, able to accept that any of these entities were necessarily entitled by law to be informed of some of the payments or whether (if they were so entitled), any offence by the Husband was likely.

10. It is a suggestion made without established foundation. This is not to be construed as a finding that no disclosure of some of these transactions was required to those authorities. Simply that has not been a focus of these proceedings. Suffice is to say that, in circumstances where, for the reasons that follow, the Court proposes to set aside the BFA and thus enliven its jurisdiction under Part VIII of the Family Law Act 1975 (Cth), any legitimate creditors of the Estate (if they exist) may have rights to exercise.

11. Within the context of this discussion, the creation and effect of the “Acknowledgement” should be mentioned. The original document has not been produced – although it is said by the Wife that it remains in the possession of the Wife’s former solicitor, Mr Horvat. It is asserted by the Wife that Mr Horvat is exercising a Solicitor’s lien over the file and the document because of unpaid legal expenses of $15,000. It has, as a result, not been produced by the Wife despite repeated requests for its production by the Husband. The former solicitor’s file is not immune to an order of this Court (by subpoena or otherwise), requiring its production. No subpoena was issued – by either party. I am not aware, during the pre-hearing directions events, that the Court was otherwise invited to make any orders for its production. I note that Mr Horvat was on the record for the Wife for most of this litigation.

12. Each of the parties accuse the other of failing to produce Mr Buller, a solicitor who had previously acted for the Husband, who is alleged to have witnessed the parties signatures to the “Acknowledgement” and who “re-certified” a photocopy of the “Acknowledgement”. In circumstances where the Husband says he did not sign the document and that the photocopy is a fabrication, the Court is left in a totally unsatisfactory position to make any absolute finding about whether the “Acknowledgement” is genuine and was signed by both parties. In any event, I do accept that a document does exist now and that the preparation of the document was initiated by the Wife. The Husband said, under cross-examination, that the first time he saw the document was when it was attached to the Wife’s Affidavit filed 2 March 2011 – some 3 years after the document is said to have been signed.

13. The photocopy of the Acknowledgement (marked Exhibit 2), provides as follows:

    “ACKNOWLEDGEMENT

    We MR GREGORY and MS GREGORY both of Property S, and who were married on the (omitted) 2002 hereby acknowledge that we have money invested in a Term Deposit with (omitted) Bank which has been opened in the name of MS GREGORY. We further acknowledge that all money withdrawn from the account to date by MS GREGORY has been spent on behalf of us both by mutual agreement.

    Dated the 1^st day of February 2008.”

1. As a result of issues raised above, I do not for this discrete issue, attach any significant weight to the document. It is, in my view, incapable of acting as some form of an estoppel against the Husband from arguing, as he does, that there were monies that come into the possession or control of his Wife during their relationship that she used without his knowledge or consent.

2. Before moving to a consideration of the BFA and the relief sought, I record that what lies at the essence of this dispute is the allegation of the Husband that the Wife had access to and utilised actual funds estimated at $570,291 (which included superannuation proceeds of $137,421) from the Husband. He concedes on his estimates that the Wife used $197,786 “to meet legitimate household expenses” (see para. 14 of the Husband’s Affidavit filed 6 August 2012) and on this basis says that the Wife “owes” him $372,505 made up by:

   a.$137,421 being the total of the superannuation proceeds; and,

   b.$235,084 being the difference between the funds that were transferred from the Husband’s accounts to the joint account, less monies he says (or concedes) were paid on joint household expenses.  

3. Eventually the Wife says that all the funds she used were for the joint benefit of the parties and were used with the Husband’s knowledge, consent, approval or direction and that they have all been used, and that, as his Financial Statement filed 30 August 2012 reveals, her only income is the disability pension and apart from her property at Property S (which she had at the commencement of the relationship) she has no real assets or cash remaining.

4. I find on the whole of the evidence that I cannot be satisfied that every transaction undertaken by the Wife when accessing funds or monies payable initially to the Husband (and then passing through generally a joint account) was made with the Husband’s express or implied knowledge, consent or approval. Furthermore, as contended for by Counsel for the Wife in the section of his submissions titled “Quantum”, there is a degree of uncertainty and speculation about the figures adopted by the Husband and the Court, although accepting he was able to give an opinion about what he believed probable living expenses were, the calculation of the difference between all income and probable expenditure is in the Court’s view speculative. Of course, few marital relationships are so maintained that a virtual accounting of every daily expense is recorded.

5. I say, however, that one of the significant concerns the Court holds about the relief primarily contended for by the Husband is the quantification of any claim. That, as will be now explored, has lead the Court on the evidence to first consider the alternate relief sought by the Husband – namely to set aside the BFA. To begin that process of analysis, the Court shall set out some of the most relevant provisions in the BFA.

The Binding Financial Agreement

1. The parties did not press for any finding that the BFA did not satisfy the necessary legislative requirements in all respects. As already noted, although the Affidavit material of the Husband alleges behaviour of the Wife at the time (or preceding) the execution of the agreement, that evidence was not relied upon as a basis for either setting aside the agreement or asserting that its formation was under the duress of the Wife.

2. The agreement is a simple document, which is explained in part by the fact that at the time of the agreement:

   a.The Wife owned a home and some other minor assets; and,

   b.The Husband was bankrupt and had no assets (see schedule B).

3. However, it is not in dispute that, although not included in Schedule B, the Husband had an interest in a (omitted) Superannuation Fund which the Wife was aware of, and which does not vest in the Husband’s Trustee in Bankruptcy as a result of s.116(2)(d) of the Bankruptcy Act 1966 (Cth). (See also clause 8.1 of the BFA).

4. Relevantly, the purpose of the agreement is stated to be that:

   “2.    Both parties want to keep all of their current and future separate property free from any claim of the other except as expressly set out in this Agreement.”

5. Furthermore, it was the expressed intention of the parties that:

   “6.    Each of the parties have their separate property. In anticipation of their marriage which has now occurred they want to provide that each shall retain full and complete control and right of their separate property and the increase in their values without interference or claim by the other party.”

6. Under the Heading of “Plans”, which I construe as referring to the post agreement period, the parties agreed that:

   “3.    It is the desire and intention of the parties to retain sole ownership and control of their own individual assets and financial resources that they now own or may later acquire as though (sic) they were not married and free from any claim of the other party arising out of their cohabitation or marital relationship under any law of any State or Country.”

7. It is clear that Schedule B did not set out the Superannuation Benefit hold by the Husband at that time. Although non vested superannuation would not, in my view, constitute an available asset for the purposes of the agreement, it would be properly categorised as a “financial resource”. Unlike the Wife’s acknowledgement at clause 4 that Schedule A “fully and accurately discloses her assets liabilities resource and income”, the Husband gave no such acknowledgement.

8. The term “separate property” was defined at (a further) clause 1, as follows:

   “1.    The term “Separate Property” shall mean:

   1.1    All property whether real or personal tangible or intangible at the date of their marriage;

   1.2    All property later acquired by each party by gift, devise, bequest or inheritance and all property acquired in exchange for such property;

   1.3    All income or other gains derived from separate property of each party whether by sale, exchange, investment disposition or attributable to enhancement or appreciation of the property due in whole or part to market conditions or to the services skills or efforts of either party.”

   and the only separate property identified, by either party was “Ms Gregory’s separate property” including her home at Property S (Clause 2). The Agreement then states at Clause 3 that:

   “Both parties specifically reject the concept of unintentional charge of separate property by marital property. All property acquired by either party after their marriage shall be separate property unless the owner in writing either transfer the property to joint tenancy or designates it as marital property.”

9. In my view, the real intention of the parties at the time the agreement was entered into was that:

   a.The Wife’s property at Property S would be protected “as separate property” of the Wife from claims by the Husband; and,

   b.The Husband’s superannuation entitlement with (omitted) Superannuation Fund would be protected “as separate property” of the Husband from claims by the Wife that was all he had at that time.

10. On the evidence I would not agree that income from the Husband’s Work Cover claim or from his DFRDB entitlement (often referred to as the military pension) would fall within the definition of “separate property” for the purposes of the agreement. Any such income, unlike the (omitted) Superannuation , was subject to an assessment of contribution by the Trustee in Bankruptcy (although the Husband says no such contribution was ever claimed).

11. The superannuation benefit fell into a different category of financial resource or “property”.

12. I do not accept the construction of the document contended for by the Wife in her Counsel’s submissions at paragraphs 13(a) and at paras. 12 and 13 (Separate Property) so far as the submission refers to the superannuation entitlement paid.

13. I would not construe the BFA as protecting future income of the Husband from claims by the Wife.

The payment of the Husband’s Superannuation Benefit

1. It is not in dispute that at the time of the execution of the BFA, the Husband (then a bankrupt) held an interest in the (omitted) Superannuation Fund. Exhibit 7 to the Husband’s Affidavit filed 17 November 2010 confirms that as a result of a request made by the Husband, payment totalling $139,925 (gross), which after tax amounted to a net payment of $137,421.20 was authorised on 31 August 2005. It seems he was able to access his benefit before the age of 55 years, as a result of his disability. I am satisfied, as earlier indicated, that this interest fairly falls within the definition of “separate property” of the Husband for the purposes of the BFA.

2. By letter dated 1 September 2007, addressed to the Husband at Property S, a cheque for $137,421.20 was forwarded to the Husband by the Trustee.

3. The Husband says, and I accept this evidence, that “my wife intercepted this final letter and cheque from the superannuation fund, and unbeknown to me at the time, banked the cheque immediately into our joint account and, immediately upon it being cleared, withdrew the monies entirely and placed them beyond ‘my reach…’” (para. 34 of the Affidavit filed 17 November 2010).

4. It cannot be said that the Wife did not know about the allegation which the Husband made upon her – it being contained in the Affidavit supporting the Initiating Application to this Court. However, as the submissions of Counsel for the Husband at paragraph 165 set out, the Wife’s responses were contradictory. I generally agree with that submission.

5. The Husband, in his further Affidavit filed 1 June 2011, at paragraph 15, gives further evidence (including copies of bank records) that demonstrate that after the funds were deposited into a joint (omitted) Bank Account they were disbursed, I accept, at the sole discretion of the Wife, as follows:

   a.Bank cheque payable to Toyota for $12,893.10;

   b.$28,351.47 paid to Wife’s credit card account ending in (omitted);

   c.$96,000 deposited into the Wife's (omitted) Bank account ending in (omitted); and,

   d.Withdrawal of $100 cash.

6. The Wife’s attempts to explain these transactions I regard as weak and unreliable.

7. It is not demonstrated to the Court, on the balance of probabilities, that the Husband was aware, approved, or otherwise consented to these withdrawals. I accept that the Husband’s evidence that he was unaware of the receipt of the cheque (or its use) and only became aware of it 3 years later is difficult to fathom; however, the nature of the relationship, the Wife’s dominance over the Husband at that time, and his poor health, on balance, do provide some foundation for this otherwise difficult to explain time lapse.

8. Furthermore, and for completeness on this point, the fact that the Husband sent a letter to Mazda in March 2007, on behalf of the Wife’s son, does not demonstrate he knew his superannuation funds were partly used to purchase a car from that dealer. The Husband gave a plausible answer when confronted with that allegation in cross-examination.

9. Mr Galloway, for the Wife, contends that the cheque having been deposited to the joint account and then withdrawn “their disposition was voluntary and the Wife acquired co-title” and further that “as the parties were married, any advance of funds by the Husband to the Wife is to be categorised with reference to the presumption of advancement.”

10. In my view, the Wife’s actions, as I find them to be in respect of this cheque and withdrawal of funds thereafter, are such that the presumption of advancement does not apply.

Should the BFA be set aside

1. Having found that the only separate property of the Husband at the time of the BFA had been used by the Wife in the manner set out above, the question arises as to whether, in the exercise of the Court’s discretion, the BFA should be set aside.

2. The Husband contends that “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” (s.90K(1)(c)). The only asset that remains of any significance to the Wife’s legal property at Property S, which I accept is clearly her “separate property” and was in effect under the BFA, to be protected from claims by the Husband. The Wife has no funds to “reimburse” the Husband or his Estate now for the superannuation benefit.

3. The term impracticable is not defined for the purpose of s.90K of the Act; however, the Full Court in Sanger & Sanger (2011) FamCAFC 210, at paragraphs 86 to 96, analyses this term and in particular the Full Court observed, relevantly to this case that:

   “… there is a material distinction between an agreement which is unable to be put in 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.” (At [82]).

4. In my view, the agreement cannot be “put into practice” as a result of the manner in which the Wife accessed the superannuation funds and in the absence of any other available funds.

5. Furthermore, in this case, even if this ground of relief had failed, I would find that declining to set aside the agreement would be unconscionable.

What happens now?

1. The Court, for the reasons given, will order that the binding financial agreement dated 30 June 2003, be set aside, pursuant to s.90K(1)(c) of the Act.

2. It is not in dispute that the Court’s jurisdiction to entertain the proceedings in the usual way for alteration of property interests, is now enlivened.

3. Although Counsel for the Husband (as paragraphs 211 to 221) made submissions as to what would be a just and equitable order should the Court decide to set aside the agreement (as it has), I agree with the submissions for the Wife that the parties should have the opportunity to provide further evidence and submissions.

4. Furthermore, attention to s.79(8) is necessary. As a result, and so as to allow the parties to consider these reasons and even contemplate or discuss some equitable resolution, the Application shall be adjourned for further directions to 9:30am on 20 February 2014, before me.

I certify that the preceding sixty-five 65) paragraphs are a true copy of the reasons for judgment of Judge Baumann

Associate:  T. Slack

Date: 24 January 2014