Guild & Stasiuk
[2020] FamCA 348
•14 May 2020
FAMILY COURT OF AUSTRALIA
| GUILD & STASIUK | [2020] FamCA 348 |
| FAMILY LAW – BINDING FINANCIAL AGREEMENT – interlocutory trial held about validity of agreement – wife contending that agreement was invalid by reason of defects in the wording of the agreement and by reason of the husband failing to disclose the entirety of his financial circumstances. AGREEMENT VOID FOR UNCERTAINTY – extensive review of authorities – held, clause 3 void for uncertainty. UNDUE INFLUENCE – historical development of equitable doctrine – essential ingredients of doctrine – what constitutes – on the facts applicant’s will to enter into the agreement overborne by respondent such that her execution of the agreement was not the exercise of her own free will – agreement set aside for undue influence. UNCONSCIONABLE CONDUCT – historical development of equitable doctrine – relationship with equitable doctrine of undue influence – whether applicant stood in a position of special disadvantage vis-à-vis the respondent in this transaction – held, yes – extensive review of authorities – agreement set aside for unconscionable conduct. FRUSTRATION OF CONTRACTS – common law doctrine – extensive review of authorities. ESTOPPEL – equitable estoppel – estoppel by convention – review of authorities. SECTION 90K(1)(d) OF THE FAMILY LAW ACT – elements of statutory grounds – application of Frederick v Frederick – ground established. RELIEF – agreement voidable or void – agreement set aside – proceeding to go forward as a property alteration case under s 79 of the Family Law Act. IMPLIED TERMS – Mackay v Dick and Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd – implied term that each party to the agreement will do what is required to give the other party to the agreement the benefit of the agreement. SECTION 90K(1)(c) OF THE FAMILY LAW ACT – meaning of “impracticable” – whether equivalent to the common law doctrine of frustration – authorities examined in detail. |
| Australian Securities and Investments Commission Act 2001 (Cth), s 12CB Companies Act 1948 (UK) 11 & 12 Geo. 6 c. 38 Contracts Review Act 1980 (NSW) Convention on the Civil Aspects of International Child Abduction, opened for signature 25 October 1980, 1343 UNTS 97 (entered into force 1 December 1983) Corporations Act 2001 (Cth), s 50AA Family Law Act 1975 (Cth), ss 44(4), 79, 79A, 90B, 90G, 90K(1) Family Law Amendment (De Facto Financial Matters and other Measures) Act 2008 (Cth) Family Law Amendment Act 2000 (Cth), sch 2 Family Law Amendment Act 2003 (Cth), sch 5 Family Law Rules 2004 (Cth), ch 13 Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) Limitation of Actions Act 1936 (SA), s 48 Motor Car Act 1958 (Vic) Retail Leases Act 1994 (NSW), s 62B Trade Practices Act 1974 (Cth), ss 51AA, 51AC, 52A, 52AA, 52AB |
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| R. I. Barrett & R. L. Coppel, Securities Industry and Stock Exchange (1993) Company and Securities Law Journal 259 J. H. Wigmore, Wigmore on Evidence, vol. IA (Tillers ed, 1983) Joshua D. Wilson, Good Faith and Fair Dealing: Why Won’t The High Court Grasp The Nettle? (2003) 22(3) The Arbitrator & Mediator 67 |
| APPLICANT: | Ms Guild |
| RESPONDENT: | Mr Stasiuk |
| FILE NUMBER: | MLC | 13949 | of | 2018 |
| DATE DELIVERED: | 14 May 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | The Honourable Justice Wilson |
| HEARING DATES: | 10, 11 October 2019 & 9 January 2020 |
| DATE OF FINAL WRITTEN SUBMISSIONS: | 27 March 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr P. D. Sweeney |
| SOLICITOR FOR THE APPLICANT: | Lander & Rogers |
| COUNSEL FOR THE RESPONDENT: | Dr R. Ingleby |
| SOLICITOR FOR THE RESPONDENT: | Berger Kordos Lawyers |
Orders
The agreement styled “prenuptial agreement” made between the applicant and the respondent on 27 June 2008 (also dated on its frontis page 26 June 2008) is set aside.
I dismiss the respondent’s application for orders under ss 90B and 90KA of the Family Law Act.
I direct that at or before midday on 28 May 2020 the solicitors for the respondent provide an email to my associates informing me whether the respondent wishes any further litigation in this proceeding to be conducted before another judge of this court.
If no such email is provided by the date specified or if the respondent consents to this proceeding remaining as a proceeding pending in my docket, then the further hearing of this proceeding is adjourned to 10am on 1 June 2020 for directions.
If the respondent objects to my hearing of this proceeding further, then this proceeding is referred to the docketed registrar for ongoing case management.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Guild & Stasiuk has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 13949 of 2018
| Ms Guild |
Applicant
And
| Mr Stasiuk |
Respondent
REASONS FOR JUDGMENT
Introduction
On 26 or 27 June 2008 the applicant and respondent, in anticipation of marriage, entered into what they called a “pre-nuptial agreement”.[1] The applicant now wishes to set that agreement aside.
[1] For ease of reference, in these reasons I have referred to that prenuptial agreement simply as “the agreement”.
The applicant contended that the agreement should be set aside on various grounds under s 90K(1) of the Family Law Act. She also argued that the agreement was void for uncertainty at common law and that it in equity was entered into in circumstances of unconscionability and undue influence. On her behalf, Mr P. Daniel Sweeney of counsel submitted that based on the value of the assets forming the property of the marriage between the applicant and the respondent, if the agreement is upheld, the wife’s entitlement is limited to six or seven percent of that value. Mr Sweeney relied on the relatively recent pronouncements upon the relevant portion of s 90K(1)(d) in Frederick v Frederick.[2]
[2] (2019) 60 Fam LR 1.
On behalf of the respondent Dr Richard Ingleby of counsel submitted that the agreement was valid, subsisting and enforceable and in relation to s 90K(1)(d), no relevant change in circumstances relating to the children had occurred. Dr Ingleby submitted that the wife’s application should be dismissed.
The parties agreed that this trial was limited to the determination of the validity of the agreement.
Synopsis
For the reasons that follow, in my judgment the agreement must be set aside. I make an order to that effect.
The appearance on 30 May 2019
The trial of this proceeding was listed for 30 May 2019. On that day Mr Dickson, One of Her Majesty’s Counsel appeared for the applicant, Dr Ingleby appeared for the respondent and Mr Salamanca, with leave, appeared for the Legal Practitioners’ Liability Committee with a view to protecting the interests of Mr H, the solicitor who provided the independent advice to the applicant. Prior to that day, the proceeding had been fixed for two days pursuant to the order made by the Honourable Justice Cronin on 22 March 2019. Relevantly, paragraph 4 of his Honour’s orders was as follows –
4.All applications are adjourned and fixed for the determination of the threshold issue relating to the validity of the document called “Prenuptial Agreement” dated 7 June 2008 before the Honourable Justice Wilson at 10.00am on 30 May 2019 subject to any part heard case as a two day case.
The hearing on 30 May 2019 did not proceed beyond an adjournment application. As it happened, a day or so earlier the Full Court handed down its decision in Frederick v Frederick. Mr Dickson QC submitted that the decision in that case called for the adduction of valuation evidence by his client. Dr Ingleby opposed the adjournment application. I ruled on the issue granting the adjournment,[3] Mr Salamanca having indicated he did not wish to be heard on that point, although Mr Salamanca asked for his client’s costs to be reserved. That provoked debate. In the upshot the question of costs evaporated because on the new trial date, Mr Andrew Kirkham One of Her Majesty’s Counsel, then appearing for Mr H, did not press costs. Mr Kirkham QC put the position in the following terms –
[3]Guild & Stasiuk (No 2) [2019] FamCA 359.
HIS HONOUR: I see. Is there any particular order that you need?
MR KIRKHAM: I don’t believe there would be, sir. It’s just a question of
HIS HONOUR: Costs.
MR KIRKHAM: No. We’re not seeking costs in the circumstances.
HIS HONOUR: Okay.
MR KIRKHAM: But the long and short of it is that it was suggested by Mr Sweeney in one of his attempts to set aside the binding financial agreement that Mr H had not provided the wife with sufficient information or advice under section 90G(1).
HIS HONOUR: Right.
MR KIRKHAM: Mr H asserted that he did. The certificate said that he did and the wife signed an acknowledgement saying she accepted that. She, however, now says that her certificate is wrong and she wasn’t given the advice that was required under that particular section. Unfortunately, once this was raised the husband’s solicitors foreshadowed an application being made subsequent to these proceedings in the event they lost out on the BFA on the basis of that particular allegation that was being raised by Mr Sweeney. Mr Sweeney now accepts that Mr H did give the appropriate advice. There is no part of his case that involves a criticism of Mr H in that regard, and in the circumstances it’s axiomatic that Mr H would face no subsequent proceedings by either side in the event that that application is withdrawn and the matter not proceeded with, in which case I would simply ask that Mr H be excused from further attendance under the subpoena. He is outside, your Honour.
HIS HONOUR: Thank you. Thank you very much for that careful explanation, Mr Kirkham.
That only left issues between the applicant and respondent.
Dr Ingleby submitted in his opening on 10 October 2019 that the applicant had amended her claims in this case a number of times. That was true. In the initiating application by which this proceeding was commenced, no challenge to the 26 June 2008 agreement was made. Instead, by the respondent’s amended response filed 26 April 2019 the respondent sought a declaration that the 26 June 2008 agreement was binding. The precise orders sought were as follows –
1.A declaration that the Financial Agreement dated 27 June 2008 between the Applicant Wife and the Respondent Husband (Financial Agreement) is a financial agreement pursuant to section 90B of the Family Law Act 1975 (Cth) (the Act) and is binding on the Husband and the Wife.
2.Pursuant to section 90KA of the Act, the Financial Agreement be enforced as if it were an order of the Court including but not limited to the Wife forthwith vacating the property situate at and known as B Street, Suburb J in the State of Victoria in accordance with clause 2.7 of the Financial Agreement.
On 5 April 2019 the applicant filed a further amended initiating application, helpfully[4] recording her claims in relation to the financial agreement made 26 June 2008. It is utile to record that annexure, despite its length, as follows –
[4] The annexure was drafted as if it were a pleading to be used in a court governed by pleadings, a matter I found very useful. I encourage such steps wherever possible in other property litigation in this court.
Annexure B
FURTHER ORDERS SOUGHT BY THE WIFE
(only to the extent that the same are relevant and necessary)
1.An agreement was a entered into between the husband and the wife that purported to be a Binding Financial Agreement pursuant to s90B of the Family Law Act (“the Agreement”) and which purported to determine the financial interests of the parties in the event of their relationship breakdown. The wife does not rely on that Agreement but to the extent that it has any relevance she maintains that it is not “binding” on the parties due to, inter alia:
(i)The Agreement at clause 3 does not purport to deal with property defined as “Mr Stasiuk’s assets” which comprise the real estate, companies and Trusts identified in the Annexure “A”. It seeks only to deal with “K Street” and the Husband’s “other assets” which “will remain separate throughout the marriage”. To the extent the Agreement does not deal with the property belonging “to the parties or either of them” the jurisdiction under s79 of the Family Law Act is enlivened.
(ii)Further the Agreement is not “binding” in that in Clause 3 of the Agreement
a.the assets and liabilities of companies and Trusts are not described in the Annexure “A” to the Agreement (unless the real property in Annexure “A” is intended to, in some undefined manner relate to those companies and trusts, a matter that is not clear from the Agreement); and
b.the companies and Trusts “with which he is associated” are not disclosed and are not identified therein.
(iii)To the extent it is asserted by the husband that clause 3 is intended to deal with all of the property howsoever held by the Husband being K Street, Mr Stasiuk’s assets and “Mr Stasiuk’s other assets” it is vague and is thus unenforceable.
(iv)the Agreement is not enforceable as it was obtained by non-disclosure of a material matter or is otherwise void, voidable or unenforceable.
(v)The independent legal advice required to be provided to the wife pursuant to section 90G (b) of the Family Law Act was not provided to the wife before she signed the Agreement;
Particulars
The Agreement
(a)Does not purport to be anything other than a “Prenuptial Agreement”. It is not intended to be a “Binding Financial Agreement” under s90B of then Family Law Act.(b)has no Recitals setting out the financial circumstances of the parties or the matters relied on to reach the Agreement.
(c)identifies the legal interests purportedly held by the Husband (but not companies and trusts with which he is associated) at the time of the Agreement when he held no such interest. The wife asserts that not all of the alleged interests in real property are properly recorded. The Husband prior to the Agreement specifically denied her disclosure of those interests. She has since ascertained, for instance, that the real property asserted to be held by him at B Street, Suburb J is identified as being a real property in which the Husband held equity of $1 million. This was not a legal interest with a value of $4 million as asserted but was simply a beneficial interest equating to no more than $300,000 (being the deposit paid at the date of the Agreement). Valuations identified in the Agreement (and the Annexures thereto) are generally overstated and the level of liabilities was misrepresented.
(d)discloses no details of the income or earning capacity of the parties and which the husband refused to disclose to her prior to entering the Agreement;
(e)makes no disclosure of the total wealth available to the Husband through the “companies and trusts with which he is associated”, again a matter the Husband refused to disclose to the Wife prior to entering into the Agreement.
(f)makes no disclosure of any documents of “the companies and trusts with which he is associated” or the office holding or beneficial interest he held therein.
Further particulars under this heading will be provided after the completion of discovery.
(vi) The Agreement is otherwise void voidable or unenforceable.
Particulars
The Agreement was made in circumstances where the wife was subject to unconscionable behavior and/or the undue influence from the Husband. The Husband was aware that the wife desperately wished to marry on the date set in September 2008 and this was communicated to the Husband. The Agreement was signed, at the insistence of the Husband, only approximately 9 weeks before marriage and in circumstances where the Husband threatened that he would withdraw from the marriage if the wife did not sign the Agreement or if she delayed signing in order to obtain any valuations of the listed properties or to seek discovery from him. This would have been the second time that the arrangements for marriage were delayed causing further upset and embarrassment to the Wife and inconvenience to guests invited to the marriage.
Further particulars under this heading will be provided after the completion of discovery.
(vii)The Agreement is otherwise unconscionable and is thus void voidable or unenforceable.
Particulars
The Agreement
(a)does not purport to be anything other than a “Prenuptial Agreement”. It is not intended to be a “Binding Financial Agreement”.(b)has no Recitals setting out the financial circumstances of the parties;
(c)made no provision for, and did not recognize any contribution of any type made by the wife in the period from cohabitation to marriage;
(d)discloses no details of the income or earning capacity of the Husband, a particular he refused to disclose;
(e)made no disclosure of the wealth available to the Husband through the “companies and trusts with which he is associated”.
(f)makes no disclosure of any documents of “the companies and trusts with which he is associated” or the office holding or beneficial interest he held therein.
Further particulars under this heading will be provided after the completion of discovery.
(viii) The Agreement is otherwise vague and is unenforceable.
Particulars
The Agreement
(a) does not purport to be anything other than a “Prenuptial Agreement”. It is not intended to be a “Binding Financial Agreement”.(b)at Clauses 5.2 of the Agreement is unintelligible and not capable of reasonable interpretation;
(c)at Clause 7 is vague as to what “a claim for property” is or is intended to mean.
(d)fails to identify methods and mechanism for any valuations required to be undertaken are not identified.
(e)The definition of “permanent separation” is not contained within the agreement.
Further particulars under this heading will be provided after the completion of discovery.
(ix)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.
Particulars
It was the intention of the parties that the parties would retain ownership of the real property at M Street Suburb N (Suburb N) or would adjust the value of Suburb N in the event of their relationship breakdown. Suburb N was sold within months of marriage and is no longer held by the parties or either of them. Further, even if capable of valuation of Suburb N then the valuer, the method and the date of any such valuation is not evident on the face of the Agreement.
Further particulars under this heading will be provided after the completion of discovery.
(x)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 the wife will suffer hardship if the court does not set the Agreement aside.
Particulars
The Agreement makes no provision:
(i) for the birth of children of the marriage in circumstances of this relationship where the parties are or have been in a relevant relationship for 10 years from the date of marriage;
(ii)for the inability of the wife to engage in appropriate full time gainful employment due to her need to care for the children of the marriage.
(xi)The Agreement, in any event, makes no provision for spousal maintenance under s90E of the Family Law Act.
(xii)The Agreement is not binding on the parties due to the wife not receiving independent legal advice from a legal practitioner about the effect of the agreement on her rights and about the advantages and disadvantages, at the time the advice was provided, to her of making the Agreement.
Significantly for the purposes of s 90K(1) of the Family Law Act, in the orders sought by the applicant no allegation of fraud was made for the purposes of s 90K(1)(a), (aa) or (ab). Instead, on several factual grounds the applicant asserted that the agreement was –
a)“not binding”;
b)“vague and thus unenforceable”;
c)“obtained by non-disclosure”;
d)“otherwise void, voidable or unenforceable”;
e)“unconscionable and thus void, voidable or unenforceable”;
f)“vague and unenforceable”;
g)“since the agreement was made, it is impracticable for the agreement…to be carried out”;
h)“since the making of the agreement, a material change in circumstances has occurred”; and
i)“no provision for spousal maintenance” was made.
By her further amended initiating application filed 5 April 2019 the applicant amended annexure B. She –
a)deleted all references to the previous plea that the agreement did not purport to be anything other than a “prenuptial agreement” and that it was not intended to be a binding financial agreement under s 90B of the Family Law Act;
b)introduced the contention that the independent legal advice required to be provided to the wife by s 90G(b)[5] was not provided to the wife before she signed the agreement; and
c)asserted that the agreement was not binding on her by reason of her having not received independent advice that incorporated the requirements of s 90G(1)(b) of the Family Law Act.
[5] This was an error and I have read that pleading as a reference to s 90G(1)(b) of the Family Law Act.
Relevant factual setting
Mr Sweeney opened the trial of the issues ordered by Cronin J to be tried before me by saying that very little agreement existed in this case. That was to wholly play down the position. The duration of cohabitation, its commencement date and its cessation date were disputed. The applicant said the following in her affidavit made 3 December 2018 –
Mr Stasiuk and I commenced cohabitation in 2004 before marrying on … 2008. We had a period of separation between October 2016 to December 2016 at which time we reconciled. We separated for a period again in March 2017 however reconciled in January 2018. We separated on a final basis on or about 20 May 2018.
Conversely, the respondent said the following –
Ms Guild and I commenced cohabitation in November 2006 and were engaged in January 2007. We married on … September 2008. After a number of trial separations, we separated on a final basis on 10 March 2017.
They agreed about the details of their children, namely –
a)X, born … 2009; and
b)Y, born … 2013.
Each has lived with the applicant since separation.
The applicant has a daughter, Ms Z, from a previous relationship. Ms Z is an adult. She was born on … 1999. The respondent said Ms Z was seven years old when the applicant and respondent commenced cohabitation. He said he treated Ms Z as his own daughter as she has no relationship with her biological father.
It was common ground that the applicant and the respondent married on … September 2008.
Since separation, the applicant has resided at the former matrimonial home at B Street, Suburb J with X, Y and Ms Z.
The respondent propounded the validity of the agreement made 26 June 2008 and he sought orders enforcing clause 2.7 of the agreement pursuant to which he says the applicant must vacate the former matrimonial home.
The lead-up to the parties’ entry into the agreement made 26 June 2008 was told differently by the applicant and by the respondent. So far as the respondent’s version of events was concerned, he deposed to relevant information in his affidavit made 12 March 2019.[6] In essence, he said –
a)he is the registered proprietor of the land at B Street, Suburb J;
b)when the relationship between the applicant and respondent became serious in November 2006 or thereabouts, the two began having discussions about entering into an agreement;
c)those discussions were open and relaxed;
d)each owned real property prior to commencing their relationship;
e)by the time discussions about entering into an agreement were underway, the respondent owned a number of parcels of real property, either directly or indirectly through corporate or trust entities;
f)the applicant owned two properties prior to her relationship with the respondent which she wanted to protect for Ms Z in the event of separation; and
g)given that the applicant and the respondent were older when they got together and both had assets in their own names, they agreed that the entry into an agreement was the right thing to do “to create certainty for our future”.
[6] That affidavit became exhibit R4 in this proceeding.
The version of events given by the applicant about the entry into the agreement was different to the version given by the respondent. In her affidavit made 5 April 2019 the applicant affirmed the following –
a)she and the respondent started their relationship in 2002, they lived together in a de facto relationship from 2004 and they were engaged to marry in 2006;
b)initially they planned to marry in March 2008 but those plans were cancelled once the venue was changed in order to accommodate an increase in the number of guests from the respondent’s family;
c)the respondent insisted that the two sign an agreement prior to their marriage and in 2007 or thereabouts the respondent told the applicant that they would not marry in the absence of a prenuptial agreement;
d)the applicant was reluctant to sign such an agreement and they had many heated discussions about the agreement; and
e)she said the respondent told her he would not marry her if she did not sign an agreement on his terms.
In view of the equitable claims made in this case, especially those pertaining to unconscionable conduct and undue influence, the law requires a judge in my shoes trying a case such as this to engage in a very close examination of the circumstances surrounding the entry into and execution of the impugned transaction or instrument, relevantly here, the agreement.
So far as the involvement of the independent legal representative was concerned, the applicant narrated matters in some little detail. While lengthy, the following is a recital of various paragraphs in the applicant’s affidavit made 5 April 2019,[7] with errors in the original included –
11.I do not recall precisely when I was given a copy of the Agreement that was prepared by Mr Stasiuk’s lawyers, but I believe Mr Stasiuk handed me a copy of the terms in early 2008. Mr Stasiuk was increasingly becoming impatient with me as I had not made immediate arrangements to meet with a lawyer. I recall that when I was provided with a copy of the Agreement, Mr Stasiuk told me that I had to a find a lawyer, that it could be anyone and that if they tried to talk me out of it, that I had to tell them that it was exactly what I wanted and I was happy to sign it.
12.I engaged the services of Mr H then of F Lawyers in or about June 2008. I recall that I met with Mr H on 27 June 2008. Mr H provided me with a letter also of that date which was the day that I signed the Agreement. Exhibited and marked with the letters [A]-1 is a true copy of the letter I received from Mr H dated 27 June 2008. That letter confirms the verbal advice that Mr H gave to me when we met. The letter covers all of the matters discussed, and upon which he gave me advice.
13.I now know that under section 90G of the Family Law Act, for a Financial Agreement to be binding on the parties to an Agreement, the Agreement among other things is to be signed by all parties and that before signing the Agreement, each party is to be provided with independent legal advice from a lawyer about the effect of the Agreement on the rights of the party and about the advantages and disadvantages at the time the advice was provided to that party of making the Agreement.
14.The letter does not provide advice as to the advantages or disadvantages to me at the time of my entering into the Agreement as to the effect of it on my rights and. I not receive advice from Mr H about the advantages or disadvantages of the Agreement.
15.I appreciate now that I signed the Agreement acknowledging that I had received advice about those matters. I did not receive such advice.
16.At or about the time of my signing the Agreement, a letter was presented to me, addressed to Mr Stasiuk’s lawyers from his accountant, G Pty Ltd which purports to set out the assets owned by Mr Stasiuk. I was not given the opportunity to investigate or make inquiries about the content of that letter.
[7] That affidavit was marked as exhibit C in the trial.
Mr H, the solicitor who gave independent legal advice to the applicant, did not give evidence in the case. Having regard to the fact that the applicant put in issue s 90G(1) of the Family Law Act, the circumstances immediately preceding the entry into the agreement were important in this case.
The applicant was correct in stating that the agreement bore the date 26 June 2008 on its frontis page whereas elsewhere in hand the agreement bore the date 27 June 2008. She said she signed the agreement on 27 June 2008. The date of its execution was not a fact in issue in this litigation. There is no shortcut to recording the agreement in its entirety so immediately below I have incorporated the precise terms of the agreement –
DATED 26th June 2008
PARTIES
Mr Stasiuk of K Stree6t, Suburb L (hereinafter called “Mr Stasiuk”)
And
Ms Guild of K Street, Suburb L (hereinafter called “Ms Guild”).
PRENUPTIAL AGREEMENT
THIS AGREEMENT is made the 27th day of June 2008.
PARTIES
This Agreement is entered into BETWEEN MR STASIUK of K Street, Suburb L (hereinafter called “Mr Stasiuk”) and Ms GUILD of K Street, Suburb L (hereinafter called “Ms Guild”).
1. PURPOSE OF THIS AGREEMENT
Mr Stasiuk and Ms Guild have agreed to be married. Both of them are entering into the marriage with love for each other and with hope for the future. In the hope of leading to marital tranquillity in their life together and to avoid or reduce any disputes between them in the future about the ownership, use and descent of property and to avoid unpleasantness and dispute should, despite their best intentions, the marriage in any circumstances not work out, they wish to set down in writing before their marriage what they are agreeing to as to how their financial relationship with each other following the marriage should be regulated. The Agreement is made pursuant to section 90B of the Family Law Act1975.
2.PROPERTY SITUATED AT K Street, Suburb L
(“K Street”)
2.1O Pty Ltd purchased K Street.
2.2Mr Stasiuk is the sole Director and Shareholder of O Pty Ltd and is able to make decisions on behalf of such company.
2.3Ms Guild acknowledges that she has made no contribution to the acquisition of K Street.
2.4Mr Stasiuk and Ms Guild have been living in K Street since November 2006.
2.5Ms Guild does not desire now or, ever, to make a claim to K Street or any other substitute residence in which the parties may reside.
2.6Mr Stasiuk will cause to be continued K Street to be provided as the home for their married future together and will cause to be paid from O Pty Ltd or any other company or trust of which he is associated or in his own name will pay any mortgage instalments, municipal and water rates and insurance and will maintain K Street or any substitute residence in a proper condition suitable for the accommodation of the parties.
2.7Notwithstanding the provisions of this clause or otherwise in accordance with this Agreement, in the event of the permanent separation or divorce of the parties, Ms Guild shall be entitled to reside in K Street or any substitute residence in which the parties are residing for a period of six months from the date of separation of the parties or, in the event that the parties have children of which both are the natural parents, then such period shall be for a period of twelve months. During such period Ms Guild shall not be obliged to contribute towards the maintenance or the cost of outgoings of K Street or the substitute residence.
3.MR STASIUK’S OTHER ASSETS
Attached to this Agreement and described as Annexure “A” is a list of assets and liabilities of Mr Stasiuk and companies and trusts with which he is associated (“Mr Stasiuk’s assets”). Mr Stasiuk and Ms Guild agree that Mr Stasiuk’s other assets will remain separate throughout the marriage. Ms Guild agrees that she will not make any claim whatsoever in respect to those assets.
4.MS GUILD’S ASSETS
Ms Guild has assets as set out on Annexure “B” to this Agreement. Mr Stasiuk and Ms Guild agree that Ms Guild’s assets will remain separate throughout the marriage. Mr Stasiuk agrees that he will make no claim whatsoever in respect to those assets.
5.ASSETS ACQUIRED DURING MARRIAGE
5.1Mr Stasiuk and Ms Guild agree that in the event of the breakdown of the marriage then any assets or property acquired by them during the marriage shall be divided proportionately in accordance with the contribution of each of them to the acquisition or improvement of such asset or property.
5.2In the event that Ms Guild has been responsible for improving/renovating any property then the value of such non-financial contribution shall be deemed to be 20% of any increase in value of such property (after deduction of any financial contributions) value to be determined by re-valuation immediately upon completion of renovation.
5.3For the purposes of this clause, any interest, outgoings or payments of a non-capital nature shall not be included as a contribution.
6.SUPPORT OF THE HOUSEHOLD
Both of the parties agree that they shall contribute to the food, power, personal needs, entertainment and other expenses of the parties as they may agree from time to time, with the exception of the outgoings, maintenance and repair of the home in which they reside from time to time, which shall be paid by Mr Stasiuk in accordance with clause 2 of this Agreement.
7.NEITHER PARTY TO CLAIM PROPERTY
The parties agree that in consideration of the terms of this Agreement that in the event of them separating or divorcing, that neither shall make a claim in respect for property pursuant to the provisions of the Family Law Act 1975.
8.PROVISION FOR Ms UPON SEPARATION OR DIVORCE
In the event of the permanent separation or divorce (“the event”) the following provisions shall be made for Ms Guild.
8.1If the event occurs within five years from the date of marriage, then Ms Guild shall be entitled to twenty-five (25) per cent of the market value of the property situated and known as M Street, Suburb N (“the Suburb N property”) which the parties acknowledge as being presently worth $600,000.00.
8.2If the event occurs after five years and before ten years from the date of marriage then Ms Guild shall be entitled to fifty (50) per cent of the market value of the Suburb N property.
8.3If the event occurs after ten years from the date of marriage Ms Guild shall be entitled to the Suburb N property on an unencumbered basis or the value of same which ever Mr Stasiuk may determine.
8.4lf the event occurs after fifteen years from the date of marriage in addition to the provision as set out above, Ms Guild shall receive $250,000.00 as indexed in accordance with the Consumer Price Index from the date of the marriage until the date of the event.
8.5Additionally, in regard to the provision for Ms Guild as set out above, if the parties have a child or children of which both of them are the parents, then the percentages as set out in paragraphs numbered 8.1 and 8.2 shall be increased by 7.5% of the value of the Suburb N property for each of such children and the lump sum referred to in paragraph number 8.4 shall be increased by a similar percentage figure.
9.AMENDMENTS
The parties agree that this Agreement may be varied at any time prior to the event provided it is in writing, signed the parties and the provisions for the time being of Family Law Act 1975 are complied with.
10.NO CLAIM FOR MAINTENANCE
Ms Guild agrees that in the event of the event occurring, that she will make no claim for maintenance for herself and will accept the provisions of this Agreement in full and final settlement of any claim for maintenance that she might otherwise have had. The parties agree that the provisions of this Agreement do not apply to the maintenance of any children that the parties may have and in the event that there are children they agree that they will endeavour to use their best endeavours to come to an amicable agreement in regard to the future maintenance of such children.
11.SEPARATE LEGAL ADVICE
Mr Stasiuk and Ms Guild hereto acknowledge and confirm that they have had independent legal advice from a legal practitioner before this Agreement has been signed by him or her.
12.FAMILY LAW ACT
Mr Stasiuk and Ms Guild hereby acknowledge the following:-
They are contemplating entering into a marriage with each other and are making a written agreement with respect to the matters referred to in Section 90B of Family Law Act 1975.
At the time of making this Agreement no other Agreement is in force between the parties with respect to any of the matters set out in this Agreement.
This Agreement is a Financial Agreement and is made pursuant to Section 90B of Family Law Act 1975 and refers to financial matters in relation to the parties with respect to the maintenance of one of the parties and the property of both of the parties.
13.BINDING OF THE ESTATE
This Agreement is intended to be binding upon the heirs, executors and/or trustees of Mr Stasiuk’s and Ms Guild’s estates.
ANNEXURE “A” – LIST OF ASSETS AND LIABILITIES OF MR STASIUK
PROPERTY LIST
ValueLiability
Melbourne properties
P Street, Suburb Q $2,300,000.00 $1,460,000.00
S Street, Suburb R $1,100,000.00 $680,000.00
T Street, Suburb U $1,100,000.00 $560,000.00
5 V Street, Suburb W $1,100,000.00 $416,000.00
K Street, Suburb L $2,000,000.00 $1,320,000.00
M Street, Suburb N $600,000.00 $334,000.00
BB Street, Suburb N $675,000.00 $340,000.00
10 V Street, Suburb W $1,400,000.00 $900,000.00
(50% share)
AA Street, Suburb TT $1,400,000.00 $800,000.00
B Street, Suburb J $4,000,000.00 $3,000,000.00
Brisbane properties
50 CC Street, Suburb DD, $1,500,000.00 $800,000.00
O Street, Suburb DD $1,000,000.00 $660,000.00
EE Street, Suburb DD $1,000,000.00 $616,000.00
30 CC Street, Suburb DD, $1,050,000.00 $640,000.00
FF Street, Suburb DD $1,050.000.00 $664,000.00
GG Street, Suburb DD $900,000.00 $600,000.00
(50% shares)
HH Street, Suburb DD $900,000.00 $607,000.00
(50% share)
JJ Street, Suburb KK $1,200,000.00 $708,000.00
(50% shares)
LL Street, Suburb MM $850,000.00 $484,000.00
NN Street, Suburb OO $820,000.00 $544,000.00
ANNEXURE “B” – LIST OF ASSETS AND LIABILITIES OF Ms
ValueLiability
PP Street, Suburb QQ $550,000 $280,000
SS Street, Suburb R $320,000 $180,000
ANNEXURE C – SOLICITOR’S CERTIFICATE (MR STASIUK)
CERTIFICATE OF INDEPENDENT ADVICE PURSUANT TO SECTION G FAMILY LAW ACT 1975
The Legal Practitioner whose details are set out below hereby certifies that he has supplied MR STASIUK with independent legal advice as to the following matters:-
(1) the effect of the Agreement on the rights of Mr Stasiuk;
(2)the advantages and disadvantages to Mr Stasiuk at the time that the advice was provided;
(3)this certificate is signed by the Legal Practitioner as set out below and refers to the Agreement as annexed hereto.
Particulars of Legal Practitioner:
MR RR of …, Melbourne 3000 – A natural person who is an Australian Legal Practitioner within the meaning of the Legal Profession Act 2004.
DATED this 27 day of June 2008
Mr Stasiuk hereby acknowledges having received the advice as set out above prior to signing the annexed Agreement.
Mr Stasiuk
Dated: 27 day of June 2008
ANNEXURE D – SOLICITOR’S CERTIFICATE (Ms GUILD)
CERTIFICATE OF INDEPENDENT ADVICE PURSUANT TO SECTION G FAMILY LAW ACT 1975
The Legal Practitioner whose details are set out below hereby certifies that he/she has supplied Ms GUILD with independent legal advice as to the following matters:-
(4) the effect of the Agreement on the rights of Ms Guild;
(5)the advantages and disadvantages to Ms Guild at the time that the advice was provided;
(6)this certificate is signed by the Legal Practitioner as set out below and refers to the Agreement as annexed hereto.
Particulars of Legal Practitioner:
MR H –
A natural person who is a current practitioner within the meaning of the Legal Profession Act 2004 …, Melbourne 3000
DATED this 27th day of June 2008
Ms Guild hereby acknowledges having received the advice as set out above prior to signing the annexed Agreement.
Ms Guild
Dated: 27 day of June 2008
It was readily apparent that when an examination was undertaken of the items listed in annexure A, the assets recorded as being owned by the respondent and entities with which he was associated were very substantial indeed. The total value of those properties was $25,945,000 of which the total liabilities was $16,133,000 leaving a net figure of $9,812,000. Conversely, the total value of the applicant’s two properties was $870,000 on which she owed $460,000 leaving her net property holdings of $410,000.
The agreement was expressed in clause 1 to have been made pursuant to s 90B of the Family Law Act.
Clause 2 was a mix of recitals as well as personal covenants. Clause 2.1 was a recital of (what I assume was intended to be a reference to the registered proprietor of) K Street Suburb L, namely O Pty Ltd, it having purchased that parcel of real property. Clause 2.2 recited that the respondent was a director of O Pty Ltd. Clause 2.3 was an acknowledgment that the applicant did not assist in the acquisition of K Street. Clause 2.4 recited how the applicant and respondent had lived at K Street since 2006. Then, clause 2.5 recorded a relinquishment by the applicant of any claim she may have had in relation to Street. Clause 2.6 represented a personal obligation by the respondent to procure K Street to be “the home for their married future together” by ensuring all mortgage amounts, rates and utilities outgoings would be met by O Pty Ltd or such other company or trust with which the respondent was associated.
Clause 2.7 provided for the applicant’s residency and its duration if the applicant and respondent separated or divorced. The duration was 12 months if they had children and six months if not.
Pursuant to clauses 3 and 4, each agreed that the assets of each listed in annexures A and B would remain separate throughout the marriage and each agreed to make no claim on the other with respect to those assets. Other relevant clauses have been addressed below.
With that cursory examination of the agreement, it is necessary to go to the bases on which the applicant sought to impugn the agreement. The document marked as annexure B to the further amended initiating application is the starting point in my examination of the agreement when measured against the provisions of Part VIIIA of the Family Law Act.
Before undertaking that examination, it is relevant to know which iteration of s 90G was relevant to this case.
The legislative history of Part VIIIA
Dr Ingleby advanced a sophisticated argument about the statutory evolution of s 90K(1)(d) and of s 90K generally. In advancing those propositions he contended that the provisions in operation as at June 2008 when the parties entered into the agreement were very different to those that applied as at the date of the trial of this proceeding. Dr Ingleby invited me to apply the provisions in operation when the agreement was made, not those in operation when this proceeding was tried.
It is necessary to trace the history of the provisions of the Family Law Act insofar as those provisions relate to financial agreements.
The concept of a financial agreement being binding on parties was introduced to the Family Law Act as s 90G. That section has changed three times by legislative amendment, that is to say since its introduction in the year 2000, in 2003, in 2008 and in 2009.
The inaugural iteration of s 90G was introduced by Schedule 2 to the Family Law Amendment Act 2000, being Act no. 143 of 2000. It commenced operation on 27 December 2000.[8] It was in the following terms –
[8] That Act received Royal Assent on 29 November 2000.
90G When financial agreements are binding
(1)A financial agreement is binding on the parties to the agreement if, and only if:
(a)the agreement is signed by both parties; and
(b)the agreement contains, in relation to each party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i)the effect of the agreement on the rights of that party;
(ii)whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement;
(iii)whether or not, at that time, it was prudent for that party to make the agreement;
(iv)whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable; and
(c)the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
(d)the agreement has not been terminated and has not been set aside by a court; and
(e)after the agreement is signed, the original agreement is given to one of the parties and a copy is given to the other.
(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.
Certain key criteria were introduced by the opening line of s 90G(1) and in particular the words of emphasis “if, and only if”. The first of those criteria embedded in s 90G(1)(a) was the requirement that the agreement be in writing and signed by both parties.[9] Each following criteria was connected by the conjunction “and” indicating that all criteria needed to be satisfied.
[9] A moot, but presently irrelevant point, may have arisen about the validity of such an agreement if executed on behalf of one party by an attorney under a valid power of attorney.
Subsection 90G(1)(b) introduced the requirement for the agreement to contain a statement to a particular effect. The actual words of the statute were “a statement to the effect that”. Dr Ingleby submitted that those words just quoted were of significance. In his opening he submitted as follows –
DR INGLEBY: So the legal issue which is raised by the first of Mr Sweeney’s ways home is whether the content of clause 11 meets the statutory requirement in 90G(1)(b) and what that will depend on is, if your Honour goes to the text of the subsection, how broadly your Honour construes the words “to the effect that”. The statement “to the effect that”. Now, if your Honour agrees with me that clause 11 meets the “to the effect that” requirement, that’s the end of that particular way home. If your Honour disagrees with me and finds favour with my learned friend’s argument, I then have to take you through the tortuous route of the remedial provisions and, in particular, the decisions of Hoult and Parker.
At this juncture, it is appropriate to record my preferred approach to the task of statutory construction. I have written about this issue several times but the point warrants repeating[10] –
Ultimately, it is the primacy of the words used in the legislation itself that determines the proper construction of the legislation. Since the decision of the High Court of Australia in Project Blue Sky Inc v Australian Broadcasting Authority (“Project Blue Sky”),[11] Australian law has held that the primary object of statutory construction is to construe the relevant provisions so that it is consistent with the language and purpose of all of the provisions of the statute.[12] That much is consistent with the observations of Barwick CJ in Taylor v Public Service Board (NSW).[13] According to Lord Scarman’s speech in the House of Lords in Southwest Water Authority v Rumble’s[14] as well as the observations of Wilson and Mason JJ in Cooper Brooks (Wollongong) Pty Ltd v Commissioner of Taxation,[15] the meaning of a particular legislative provision must be determined by reference to the language of the instrument viewed as a whole. The context, the general purpose and policy of the provision of a piece of legislation as well as its consistency and fairness are surer guides to meaning than is the topic with which the legislation is constructed.[16] As was held in Toronto Suburban Railway Co v Toronto Corporation,[17] Minister for Lands (NSW) v Jeremias[18] and K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd,[19] the process of construction must always begin with an examination of the context of the provision that is being construed.
High Court authority of very long standing has prescribed that a court construing a statutory provision must strive to give meaning to every word of the relevant provision. So much was held in TheCommonwealth v Baume[20] as well as in Chu Kheng Lim v Minister for Immigration.[21] No sentence, clause or word is superfluous, void or insignificant if by any other construction they may all be made useful and pertinent.[22]
In Project Blue Sky the majority pointed out that the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended those words to have.[23] Ordinarily, that meaning will correspond with the grammatical meaning of the relevant provision.
More recently, in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue,[24] the majority (Hayne, Heydon, Crennan and Kiefel JJ) held that the task of statutory construction must begin with a consideration of the text itself and that historical considerations and extrinsic material cannot be relied upon to displace the clear meaning of the text.[25] Other decisions of the High Court reflect similar reasoning such as Yanner v Eaton,[26] Yarmirr v Northern Territory,[27] Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue,[28] Stevens v Kabushiki Kaisha Sony Computer Entertainment,[29] Carr v Western Australia,[30] Director of Public Prosecutions for Victoria v Le[31] and Northern Territory v Collins.[32]
In many respects, modern Australian jurisprudence on the subject of statutory interpretation has placed former High Court Justice, the Honourable Justice Kenneth M Hayne at the vanguard. His extra-judicial writing on point is illuminating: The Honourable Justice Kenneth Hayne AC, Statutes, Intentions and Courts: What Place Does The Notion of Intention (Legislative or Parliamentary) Have in Statutory Construction?[33]
[10]Commissioner of State Revenue v Kimiora (2016) 309 FLR 277.
[11] (1998) 194 CLR 355.
[12] (1998) 194 CLR 355 (at [69]).
[13] (1976) 137 CLR 208.
[14] [1985] AC 609.
[15] (1981) 147 CLR 297.
[16] (1998) 194 CLR 355 (at [69]).
[17] [1915] AC 590, 597.
[18] (1917) 23 CLR 322
[19] (1985) 157 CLR 309.
[20] (1905) 2 CLR 405, 414 and 419.
[21] (1992) 176 CLR 1, 12.
[22]R v Berchet [1794] ER 1806.
[23] (1998) 194 CLR 355 (at [78]).
[24] (2009) 239 CLR 27.
[25] (2009) 239 CLR 27 (at [47]).
[26] (1999) 201 CLR 351, 366 (at [17]).
[27] (2001) 208 CLR 1, 38–39 (at [13]–[14]).
[28] (2001) 207 CLR 72.
[29] (2005) 224 CLR 193.
[30] (2007) 232 CLR 138.
[31] (2007) 232 CLR 562.
[32] (2008) 235 CLR 619.
[33] (2014) 13(2) Oxford Commonwealth Law Journal 271.
The words “to the effect that” mean “in substance”, in my view. In common parlance, the phrase refers to the general and not to the specific of a particular thing. For example, in reference to words spoken by a person, it is the common experience of this and courts throughout the common law world to proceed, not with a verbatim version, but with the substance of the conversation, attributing to a speaker words “to the effect that” certain words were in fact spoken.
The phrase “to the effect that” has been the subject of judicial pronouncement in a handful of cases. One of the earliest was the decision of Lord Campbell CJ in R v The Mayor and Assessors of the Borough of Harwich.[34] There the Chief Justice held that “to the like effect” meant that the relevant information prescribed by legislation was given, although not in the precise form stipulated. That was to be contrasted with the words of legislation that stipulated that a particular document was to be “in the form” prescribed which required the form to be strictly and literally followed, as was held in Henry v Armitage.[35] In Rainey v Lipphardt,[36] Townley J took a similar approach to the approach adopted by Lord Campbell CJ. In Wesson v Jennings[37] Menhennitt J of the Supreme Court of Victoria was concerned with a stipulation in the Motor Car Act which required a certificate to be “in or to the effect” of a form in Schedule 7A. Relying on the reasons for judgment of Isaacs and Gavan Duffy JJ in Crowley v Templeton,[38] Menhennitt J embraced the interpretation of “to the effect of” in the following terms –
Slavish adherence to the forms is not demanded. Technical and immaterial departures from them do not deprive the dealing of efficacy. Substantial compliance is sufficient.
[34] [1853] 118 ER 569.
[35] (1883) 12 QBD 257.
[36] (1960) 54 QJPR 115.
[37] [1971] VR 83.
[38] (1914) 17 CLR 457.
Sir Gregory Gowans was of a similar view in Houston v Harwood.[39]
[39] [1975] VR 698.
In accordance with that line of authority, especially the High Court’s decision in Crowley v Templeton, I take the view that “to the effect” indicates that substantial compliance with, not slavish adherence to, the matter stipulated is sufficient.
Returning to s 90G(1)(b) the agreement needed to contain a statement to the effect (or, in substance) that the party to whom the statement related had been provided with independent legal advice. Subsection 90G(1)(b) imposed a temporal limitation, namely before the agreement was signed. In other words the subsection mandated that the agreement was to contain a statement in relation to each party to the agreement that before the agreement was signed, independent legal advice had been obtained by each signatory to the agreement. That legal advice had to be given by a legal practitioner. A written certified record of the provision of that legal advice needed to be annexed to the agreement.
So far as the content of that legal advice was concerned, the four subparagraphs with roman numerals in s 90G(1)(b) designated those matters. They were –
(i)the effect of the agreement on the rights of that party;
(ii)whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement;
(iii)whether or not, at that time, it was prudent for that party to make the agreement; and
(iv)whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
Section 90G(1)(c) stipulated that the certification by the legal practitioner annexed to the statement stated that the legal advice was actually provided.
Additionally, under s 90G(1)(d) the agreement was binding if and only if it had not been terminated and had not been set aside by a court.
Additionally, pursuant to s 90G(1)(e), the agreement was binding if and only if after the agreement was signed the original of the agreement was given to one of the parties and a copy was given to the other.
Those strict prescriptions were intricate, evincing an intention by Parliament to permit financial agreements under s 90G of the Family Law Act to bind the parties if and only if the strict formalities prescribed by the section were met.
Section 90G of the Family Law Act was amended in 2003 by Schedule 5 to the Family Law Amendment Act 2003.[40] By that amendment, s 90G was amended by the replacement of subsections 90G(1)(b)(ii), (iii) and (iv) with a new subsection (ii). Section 90G(1)(a) was untouched. Section 90G(1)(b) was identical in the words leading to the subparagraphs in roman numerals. Section 90G(1)(b)(i) was unchanged. The new provision under s 90G(1)(b)(ii) was as follows –
(ii)the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement.
[40] The relevant provisions commenced operation on 14 January 2004, having received Royal Assent on 17 December 2003.
Subparagraphs 90G(1)(c) and (e) were not amended.
The burden on the legal practitioner in the certification process was substantially more onerous under the 2000 legislation. It was less under the 2003 amendment.
In this case the 2003 amendments were the operative provisions of s 90G when the agreement was made in June 2008. The amendments made in 2008 only became operative in relation to s 90G on 21 November 2008.[41] That was after the date of the agreement in this case.
[41] Being the day on which the Family Law Amendment (De Facto Financial Matters and other Measures) Act 2008 received Royal Assent.
There seemed to be little doubt that the 26 June 2008 agreement was a “financial agreement” within the contemplation of s 90B of the Family Law Act, then in operation as at 26 June 2008. In this case, in view of the fact that the 2008 amendments to s 90G only commenced in late November 2008 and the agreement in this case was made in June 2008, the operative version of s 90B was the 2003 version. It provided as follows –
(1) If:
(a)people who are contemplating entering into a marriage with each other 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, no other agreement (whether made under this section or section 90C or 90D) is in force between the parties 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.
(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 them at the time when the agreement is made, or at a later time and before the dissolution of the marriage, is to be dealt with;
(b)the maintenance of either of them:
(i)during the marriage; or
(ii)after the dissolution of the marriage; or
(iii)both during, and after the dissolution of, the marriage.
(3)A financial agreement made as mentioned in subsection (1) may contain matters incidental or ancillary to those mentioned in subsection (2).
(4)A financial agreement made as mentioned in subsection (1) may terminate a previous financial agreement made as mentioned in that subsection between the same parties.
In its totality, s 90G of the Act as at 2003 and therefore 26 June 2008 was as follows –
90G When financial agreements are binding
(1)A financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by both parties; and
(b)the agreement contains, in relation to each party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i) the effect of the agreement on the rights of that party;
(ii)the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement; and
(c) the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
(d)the agreement has not been terminated and has not been set aside by a court; and
(e)after the agreement is signed, the original agreement is given to one of the parties and a copy is given to the other.
(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.
The 2008 amendments to s 90G(1)(b) effected by the Family Law Amendment (De Facto Financial Matters and other Measures) Act 2008 were modest. They introduced the expression “spouse party” and “spouse parties” but otherwise preserved the wording of s 90G(1)(b).
As mentioned already, the 2008 amendments commenced operation on 21 November 2008.
Section 90G was amended yet again and a new s 90G(1A) was introduced by Schedule 5 to the Federal Justice System Amendment (Efficiency Measures) Act (No 1), being Act no. 122 of 2009. The whole of s 90G(1)(b) and (c) were repealed and it was replaced by new subsections (b), (c) and (ca). The current iteration of s 90G(1)(b) – (ca) is as follows –
(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
The amendments to s 90G(1)(b) made by schedule 5 of Act 122 of 2009 became operative on 4 January 2010.
While not debated in earnest, a point emerged about the iteration of s 90G that applied in the circumstances of this case. The agreement was dated 26 June 2008. By then the inaugural 2000 version of s 90G had been replaced by the 2003 version. The less strict 2008 amendments did not become operative until 21 November 2008, after the date of the agreement. On a proper construction of s 90G(1), the provisions addressed events immediately prior to and at the date of execution of the agreement. The section also contained a reference to the provision of a document to all parties after execution. In the original 2000 version of s 90G, the entire agreement had to be provided. In later versions, only the statement from the independent legal practitioner had to be provided.
As a matter of statutory construction, ordinarily legislation relating to the requirements of a contract yet to be made operates prospectively, in futuro. In this case, during June 2008 when the parties were negotiating over the agreement, they needed to concern themselves with the iteration of s 90B and s 90G of the Family Law Act then in operation. That was the 2003 version. The 2008 amendment came into operation in November 2008, after the date on which the agreement in this case was made.
In the passages below I have addressed the question whether the agreement is void for uncertainty.
Before going further in relation to issues concerning s 90G, it is useful to record the debate with Dr Ingleby in relation to the significance of the parties having signed the agreement. According to the observations of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[42] a party is presumptively bound to an agreement by the affixing of his or her signature to that agreement (vitiating circumstances aside). In Alphapharm the High Court embraced the learning of last century in L’Estrange v F Graucob Ltd.[43] At common law, at least, that is the position.
[42] (2004) 219 CLR 165.
[43] [1934] 2 KB 394.
The expression “material change in circumstances” in s 90K(1)(d) has received surprisingly little attention. The interpretation given to the phrase in Pascot & Pascot[376] was denounced in Fewster v Drake. In Pascot & Pascot the phrase was held to mean “substantial, significant and relevant”. In Fewster v Drake it was held that no benefit existed for substituting other words for the words used in the statute itself. In Fewster v Drake the court followed the interpretation given by the High Court to the word “material” when used in reference to s 48 of South Australia’s Limitation of Actions Act. In Sola Optical Australia Pty Ltd v Mills[377] the High Court held that “material” meant “of such significance as to be likely to influence the determination of the cause”. It is ironic that the court in Fewster v Drake expressed its unwillingness to do as was done in Pascot because that was merely to substitute other words for the words of the legislation, when by adopting the interpretation in Sola Optical the court was thereby applying wording of other legislation. That was because in Fewster v Drake the court did what cases such as Ogden Industries Pty Ltd v Lucas,[378] McNamara (McGrath) v Consumer, Trader and Tenancy Tribunal,[379] Marshall v Director-General, Department of Transport[380] and Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority[381] say ought not be done as a matter of statutory interpretation, namely apply words used in different legislation.
[376] [2011] FamCA 945.
[377] (1987) 163 CLR 628.
[378] [1970] AC 113.
[379] (2005) 221 CLR 646.
[380] (2001) 205 CLR 603.
[381] (2008) 233 CLR 259.
Two useful quotations emerge from those authorities in the immediately preceding paragraph. The first was from Ogden Industries Pty Ltd v Lucas where Lord Upjohn said the following –
It is quite clear that judicial statements as to the construction and intention of an Act must never be allowed to supplant or supersede its proper construction and courts must beware of falling into error of treating the law to be that laid down by the judge in construing the Act rather than found in the words of the Act itself.
The second emerged from the plurality’s reasons of McHugh, Gummow and Heydon JJ in McNamara (McGrath) v Consumer, Trader and Tenancy Tribunal. There, the plurality held as follows –
It would be an error to treat what was said in construing one statute as necessarily controlling the construction of another, the judicial task in statutory construction differs from that in distilling the common law from past decisions.
The consideration of that point given by the learned author of Statutory Interpretation in Australia[382] at paragraph 1.10 is particularly useful.
[382] Emeritus Professor D. C. Pearce, Statutory Interpretation in Australia (Lexis Nexis Butterworths, 9th ed, 2009).
The reference in s 90K(1)(d) to “since the making of the agreement, a material change in circumstances has occurred” necessarily provokes a consideration of the “circumstances relating to the case, welfare and development” of the child on a temporal level between the making of the agreement and the date of the court’s assessment of those circumstances. It is wrong to examine those circumstances by reference to the provisions of the agreement itself.
The date of the making of the agreement is relevant only insofar as it fastens at a temporal level a point in time against which the word “since” may be reckoned.
The circumstances of the applicant and the respondent that existed as at the date of the making of the agreement must be catalogued. In relation to the applicant –
a)she owned a property in Suburb QQ the net value of which she attributed as being $270,000;
b)she owned an apartment in Suburb R the net value of which she attributed as being $140,000;
c)she had a child of a previous relationship;
d)she and the respondent did not have children together; and
e)she was engaged to the respondent.
Many relevant items of information pertaining to the applicant’s circumstances immediately prior to her entry into the agreement were difficult to ascertain. Among them were details of her employment and her income. Further, her attribution of the value of her properties was not proper valuation evidence and was merely her statement of their worth. Ordinarily, that state of affairs would render her assessment of value inadmissible for contravening principles of the law relating to expert evidence in such cases as Dasreef Pty Ltd v Hawchar[383] and Makita (Australia) Pty Ltd v Sprowles.[384] The learned trial judge in Frederick v Frederick regarded the husband’s evidence in that case about property values as being little more than conjecture. On appeal, the court held that the trial judge erred in treating the husband’s lay evidence about property values as conjecture. The court explained such an approach on the basis that the application was not a final hearing of a property case so the applicant was not required to call all the evidence that would be called on a final hearing such as formal valuations.
[383] (2011) 243 CLR 588.
[384] (2001) 52 NSWLR 705.
In this case no formal valuation evidence was called. It was not required, according to Frederick v Frederick. On the applicant’s version of the evidence –
a)she had a daughter from a previous relationship; and
b)she owned real property the aggregate net value of which was $410,000.
That seemed to be her circumstances immediately prior to 26 June 2008.
Since the making of the agreement a material change occurred relating to the care, welfare and development of the two children of the marriage. In no particular order the change included –
a)the children live with the applicant as the primary carer;
b)she has been primarily responsible for the care, welfare and development of the children and will continue so to be; and
c)the two properties owned by the applicant have since been sold.
The real properties she owned at the making of the agreement have ceased to be owned by her. Compared to the position that obtained immediately prior to the making of the agreement, circumstances had in fact materially changed in relation to the care, welfare and development of the children. That was for the simple reason that the applicant, having sold her two properties, was thereafter unable to call on the financial security conferred by her having the benefit of the net value of those two parcels of real estate.
But in addition, applying the rationale of Fewster v Drake (especially at paragraph 62) a child’s birth is a material change for the purposes of s 90K(1)(d). The mere fact that the agreement recorded the parties’ contemplation of children was by no means determinative. Here, the applicant currently has the overwhelming care of the children – physically, emotionally and financially. That was not the situation when the agreement was executed. I do not accept the contention advanced by the respondent in paragraph 25 of written submissions made on his behalf. There, those submissions were as follows –
25.This Agreement specifically contemplated children and increased the Applicant’s entitlement in that precise circumstance. It is clearly implicit in the Agreement that the Wife would be responsible for the children and there is no change of circumstance constituted by the extent to which she is responsible for the children.
Far from it being “clearly implicit” in the agreement that the applicant would be responsible for the children, the terms of the agreement do not determine the relevant circumstances pertinent to s 90K(1)(d) nor do they determine whether a material change in those circumstances has occurred.
It had occurred to me that one particular argument existed about a material change of circumstance. The argument was not run on behalf of the respondent, however. It was that since the making of the agreement the two properties previously owned by the applicant were sold after which the applicant developed business interests in CD Pty Ltd which could be used as collateral security against future borrowings to meet expenses associated with the care, welfare and development of the children with the consequence that any change in circumstances, if material at all, did not create hardship within the contemplation of s 90K(1)(d). No such argument was run, however. It must not be forgotten that the CD Pty Ltd business failed. That left the circumstances subsequent to the agreement such that –
a)the applicant has primary care for the children;
b)she will, by virtue of her role as primary carer have, overwhelmingly, the physical, emotional and financial responsibility for them;
c)she once had two properties that no longer exist in her name;
d)the business, CD Pty Ltd, failed;
e)since separation, members of the applicant’s family have purchased groceries for the applicant and certain of the children’s extracurricular activities have stopped.[385]
[385] Paragraphs 18 and 19 of exhibit A, which was not challenged in the applicant’s cross examination.
Those matters go to the care, welfare and development of the children. They also are evidence of a material change in circumstances relating to the care, welfare and development of the children as a result of which change, the children will suffer hardship. In addition, the respondent has indicated that he requires the applicant and the children to vacate the former matrimonial home. The applicant called her present circumstances dire. There is considerable force in that appellation. It must not be forgotten that according to Frederick v Frederick[386] obvious examples of hardship include, generally speaking, the loss of opportunity to earn income due to the care of the child, difficulties with the provision of housing and loss of educational opportunities.
[386] (2019) 60 Fam LR 1 (at [52]).
The comparative exercise in which a judge such as me must engage of which Fewster v Drake as well as Frederick v Frederick speak is essential. That exercise involves the court comparing the position of the child or of the person with caring responsibility if the agreement stands with the position of the child or of the person with caring responsibility if the agreement is set aside. Only by undertaking that comparative exercise can a court place itself in a position to determine whether hardship will result if the agreement is not set aside. On behalf of the applicant, her solicitors’ written submissions[387] were to the effect that the applicant would receive $780,000 under the agreement. In those submissions the applicant’s solicitors address the status of the amount described by the respondent as a “fake debt”. On behalf of the applicant it was argued that the respondent’s concession not to enforce that debt of $548,000 represented a material change in circumstances since the making of the agreement. The applicant’s solicitors submitted that the indemnity given by the respondent[388] in relation to all liability purportedly owed by her to WW Holding Trust could very well be ignored by the respondent and that any such indemnity was cold comfort to her in any event having regard to the respondent’s previous statements that he would “slaughter (her) family”[389] and that “you (meaning the applicant) will regret this”.[390]
[387] Paragraph 101.
[388] Exhibit 1.
[389] Paragraph 45(b)(i) of exhibit A being the applicant’s affidavit made 3 December 2018.
[390] Paragraph 43(b)(ii) of exhibit A.
Dr Ingleby submitted that the applicant’s written submissions placed undue emphasis on a “catastrophised” interpretation of the agreement. So far as the sum of $548,000 was concerned, the respondent’s written submissions said –
35.On the balance of probabilities, given the state of the evidence before the Court there is no reasonable prospect of the Applicant ever being exposed to this debt.
…
38.Further, rather than the evidence in relation to this non-debt supporting any findings adverse to the Husband, the Applicant’s submissions are thunderously silent as to the state of the evidence relating to the Applicant’s involvement in the circumstances giving rise to the non-debt.
I do not agree that the evidence of “this non-debt” (highly inelegant language) did not support findings adverse to the respondent. As the passages above reveal, the respondent’s participation in the fictitious entries in the WW Holding Trust accounts was particularly odious and indicated a knowing participation in a false representation to anyone viewing those accounts that the debt was owed and it was properly characterised as an asset in the hands of the trust. I take the view that the respondent’s evidence about the sum of $548,000 revealed the respondent to be untrustworthy in his evidence.
It must be kept in mind that according to the decision in Hoult v Hoult[391] the onus of demonstrating that the agreement is binding falls upon the party propounding it, relevantly here, the respondent.
[391] (2013) 50 Fam LR 260.
It seemed to me that a factor indicating hardship lay in the phenomenon that the Suburb N property was sold prior to marriage. That rendered many aspects of clause 8 in the agreement inapplicable. Whatever may have been the applicant’s entitlements under the agreement following “permanent separation or divorce”, and irrespective of whether “the event” as defined occurred within five, 10 or 15 years of the date of marriage, her entitlement was calculated by reference to the Suburb N property. The ownership of it ceased to be in the respondent’s hands. Plus, a substantial risk exists that the landlord of the basement and ground floor at 10 XX Street Melbourne (the landlord being GH Pty Ltd) will enforce the guarantee given by the applicant in its favour in respect of the due and punctual payment of all sums due under the lease and payable by CD Pty Ltd.
Conversely if the agreement is set aside, there is no doubt that the applicant’s claim under s 79 is likely to be very considerable indeed.
In my view, s 90K(1)(b) has been demonstrated. I set the agreement aside on that ground.
Estoppel
As one of her omnibus contentions and one introduced into this case by her written submissions as something of a last word or a side wind, the applicant advanced a curious argument about estoppel. The solicitors for the applicant put forward the contention that the respondent was “estopped by his conduct from relying on the terms of the agreement”. Rather than propounding the contention by reference to the locus classicus authority on point in Waltons Stores (Interstate) Ltd v Maher[392] about which I wrote in Karjala & Gallard,[393] the applicant’s solicitors relied on the High Court’s decision in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd[394] to advance an argument about estoppel by convention. They submitted that an estoppel by convention arose where five elements were present, namely –
a)the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;
b)the defendant has adopted the same assumption;
c)both parties have conducted their relationship on the basis of that mutual assumption;
d) each party knows or intends that the other will act on that basis; and
e) departure from the assumption will cause detriment to one of them.
[392] (1988) 164 CLR 387.
[393] [2020] FamCA 110.
[394] (1986) 160 CLR 226, 244.
They argued that the doctrine was supported by an abundance of authority all New South Wales in origin. Among them were Sze Tu v Lowe,[395] Noon v Bondi Beach Astra Retirement Village Pty Ltd,[396] Franklins Pty Ltd v Metcash Trading Ltd[397] and Ryledar Pty Ltd v Euphoric Pty Ltd.[398]
[395] (2014) 89 NSWLR 317.
[396] [2010] NSWCA 202.
[397] (2009) 76 NSWLR 603.
[398] (2007) 69 NSWLR 603.
In the facts of this case the applicant’s solicitors expressed the common assumption on which the doctrine is premised in two sentences. They were as follows –
The common assumption adopted by the husband and the wife was that the Agreement was no longer binding such that the assets and liabilities of both parties were no longer treated as separate (the Common Assumption). This is evinced by the conduct of the parties almost immediately after their marriage in September 2008 and, in particular, the treatment by the parties of the various properties, companies and trusts.
At a factual level, the applicant’s solicitors supported their overall thesis on estoppel by convention in reliance upon several matters. Relevantly paraphrased, they were as follows –
a)the applicant and respondent did not keep their assets separate;
b)they operated and controlled the Guild Stasiuk Trust through CD Pty Ltd;
c)upon certain properties being sold the proceeds of their sale was paid to CD Pty Ltd upon which the applicant became a director of and shareholder in CD Pty Ltd;
d)the respondent was encouraging in and supportive of the applicant’s development of her commercial expertise;
e)the respondent provided capital to the Guild Stasiuk Trust through WW Holding Trust;
f)the respondent controlled the finances of the applicant and the respondent; and
g)the respondent orchestrated inter-trust related loans.
Those matters, so the applicant’s solicitors contended, amounted to the parties “abandoning” (their word) the agreement and “proceeding on the basis that the agreement was no longer binding”. Elsewhere in those written submissions the applicant’s representatives argued that by selling the Suburb N property, clause 8 was rendered inoperable with the legal consequence that the respondent evinced an intention to be no longer bound by the agreement.
That last proposition seemed akin to an argument that the respondent repudiated the agreement.
Taking those major issues in combination, the applicant was variously advancing contentions that –
a)an estoppel by convention arose;
b)the agreement had been “abandoned”; and
c)the respondent repudiated the agreement.
Before embarking on the legal analysis of those propositions it is important to identify that very little, if any, challenge was put to the respondent when he was cross examined to support any of those propositions. For example, he was not cross examined to the effect that he had led the applicant to believe that he had put the agreement to one side and would not insist on its due and punctual performance. He was not cross examined to the effect that he had “walked away” from the agreement and had abandoned its terms. He was not cross examined along lines conventionally undertaken when the cross examiner demonstrates repudiatory conduct.
So far as repudiation was concerned, the focus is on the conduct or attitude of the putative contract breaker. The High Court has passed upon the issue on very many occasions. Those cases include Carr v JA Berriman Pty Ltd,[399] Shevill v Builders Licensing Board,[400] Progressive Mailing House Pty Ltd v Tabali Pty Ltd,[401] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd,[402] Foran v Wight[403] and Commonwealth of Australia v Amann Aviation Pty Ltd.[404] Sometimes the test is expressed as being that a contract is repudiated when a party evinces an intention to be bound “if and when it suits”, resolved objectively as was held in DTR Nominees Pty Ltd v Mona Homes Pty Ltd.[405]
[399] (1953) 89 CLR 327, 351.
[400] (1982) 149 CLR 620.
[401] (1985) 157 CLR 17.
[402] (1989) 166 CLR 623.
[403] (1989) 168 CLR 385.
[404] (1991) 174 CLR 64.
[405] (1978) 138 CLR 423.
Resolved objectively, on the facts of this case, it could not be said that the evidence supported the conclusion that the respondent evinced an intention to be bound by the agreement if and when it suited him. There simply was no evidence of that.
So far as the alleged abandonment argument was concerned, that amounted to the repudiation contention, by another name. I was not persuaded the argument was made out.
That left the estoppel by contention argument. Whether estoppel by convention was applicable here or whether estoppel in terms of Waltons Stores v Maher was more appropriate seemed to me to be beside the point because the evidence did not support the contention. The point received next to no attention during the trial. The applicant’s opening did not raise the point. During the running of the trial the proposition was not remotely hinted at. In any event, a significant issue was the effect of any such estoppel, had one been established. The precise nature and effect of an estoppel (at least of the sort of which Brennan J spoke) was considered very recently by Macaulay J of the Supreme Court of Victoria in Stewart v White.[406] There, his Honour held as follows –
[406] [2020] VSC 116.
67.In Waltons Stores (Interstate) Limited v Maher[407] Brennan J formulated the elements of equitable estoppel in this way –
[407] (1988) 164 CLR 387.
In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.[408]
[408] Ibid 428-429.
68.Earlier, his Honour explained that the equity created by estoppel is different from an enforceable promise supported by consideration, even though the equity may sometimes ‘wear the appearance of contract’.[409] His Honour said (emphasis added):
[409] Ibid 424.
The unconscionable conduct which it is the object of equity to prevent is the failure of a party, who has induced the adoption of the assumption or expectation and who knew or intended that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion. The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon.[410]
[410] Ibid 423.
69.Despite that appearance, his Honour explained the differences, in particular the differences in the measure of the contractual obligation and that of the equity created by estoppel, being only that which is necessary to prevent the detriment (emphasis added) –
But there are differences between a contract and an equity created by estoppel. A contractual obligation is created by the agreement of the parties; an equity created by estoppel may be imposed irrespective of any agreement by the party bound. A contractual obligation must be supported by consideration; an equity created by estoppel need not be supported by what is, strictly speaking, consideration. The measure of a contractual obligation depends on the terms of the contract and the circumstances to which it applies; the measure of an equity created by estoppel varies according to what is necessary to prevent detriment resulting from unconscionable conduct.[411]
70.After further discussion, his Honour distinguished the object of the principle of equitable estoppel from the remedy for the adverse consequence of reliance on a promise. Referring to equitable estoppel and the detriment occasioned by the conduct of the party against whom the equity is raised, his Honour explained (emphasis added) –
Then the object of the principle can be seen to be the avoidance of that detriment and the satisfaction of the equity calls for the enforcement of a promise only as a means of avoiding the detriment and only to the extent necessary to achieve that object. So regarded, equitable estoppel does not elevate non-contractual promises to the level of contractual promises and the doctrine of consideration is not blown away by a side-wind. Equitable estoppel complements the tortious remedies of damages for negligent mis-statement or fraud and enhances the remedies available to a party who acts or abstains from acting in reliance on what another induces him to believe.[412]
71.The importance of these passages to this case is to highlight that an equity created by an estoppel against denying the existence of a contract does not result in bringing the contract back into existence. Rather, it equips the court with the means of fashioning a remedy to avoid the detriment occasioned by the reliance on the assumption that has been unconscionably induced. The measure or extent of the remedy is only that which is necessary to prevent the detriment resulting from the unconscionable conduct. That detriment is not remedied by automatically granting the relief which the enforcement of the contractual promise would otherwise have delivered. Whilst doing so might, in proven circumstances, be the appropriate remedy, that would only be because that remedy equates to the minimum required, in all the circumstances, to prevent the detriment actually suffered by the reliance and to do equity.[413]
[411] Ibid 425.
[412] Ibid 427.
[413] The Commonwealth v Verwayen (1990) 170 CLR 394, 411 (Mason CJ), 428-9 (Brennan J); Giumelli v Giumelli (1999) 196 CLR 101, 120-5; Cosmopolitan Hotel v Crown Melbourne Ltd (2014) 45 VR 771, [201] (Whelan JA), [206] (Santamaria JA).
In short, I do not accept that an estoppel arose in the manner for which the applicant contended. Nor do I accept that the agreement was “abandoned” or repudiated.
Conclusions
By application of the lengthy legal and factual analysis canvassed above certain conclusions may now be expressed. They are limited to the threshold question, namely, whether the agreement dated 26 June 2008 should be set aside under one or more of the provisions of s 90K(1) of the Family Law Act.
Formal requirements applicable to the agreement in this case
The agreement in issue in this case needed to comply with the version of s 90G of the Family Law Act in operation when the agreement was created. That version was the 2003 version. It required the independent solicitor to certify that he or she had given particular advice.
Even in its 2003 iteration, s 90G required an agreement to contain provisions “to the effect” of the words of the section. For reasons set out above, that meant that there was no need for a slavish reproduction of the wording of the section. The substance of the matters set out in the section had to appear in the agreement. I respectfully agree in that regard with the observations of Cronin J in Ruane & Bachmann-Ruane[414] and with his Honour’s construction in paragraph 48 of the decision in Black v Black. The formalities of s 90G(1)(b) as applicable in June 2008 were observed in this case.
[414] [2009] FamCA 1101.
The agreement is void, voidable or unenforceable
Pursuant to s 90K(1)(b) I have power to set aside the agreement if satisfied that the agreement is void, voidable or unenforceable. While the subsection provides for the legal conclusion of the application of certain principles of law and equity, in order to arrive at the conclusion that the relevant agreement is any one of being void, voidable or unenforceable, principles of the common law and doctrines of equity are to be considered, as I have done using as a framework the document identified as annexure B to the further amended initiating application.
In my view by reason of the undue influence exerted by the respondent upon the applicant immediately prior to the applicant’s execution of the agreement, the agreement is unenforceable.
By reason of the agreement having been entered into by the applicant as a result of the respondent’s unconscionable conduct, the agreement is unenforceable.
Aspects of the agreement – that is to say those clauses mentioned above – are void for uncertainty.
By reason of the agreement being void, voidable or otherwise unenforceable, in my view the agreement should be set aside. I make orders setting aside the agreement made 26 June 2008.
It is impracticable to carry out the agreement
In my view it is for the reasons advanced above. Section 90K(1)(c) was satisfied.
A material change in circumstances
For the purposes of s 90K(1)(d) I am of the view that since the making of the agreement a material change in circumstances has occurred within the contemplation of s 90K(1)(d). That is to say, being circumstances relating to the care, welfare and development of the children of the marriage and, as a result of the change, the children or the applicant being the person with caring responsibilities for the children will suffer hardship if the agreement is not set aside.
I make an order setting aside the agreement in reliance upon s 90K(1)(d).
Orders sought by the respondent
In his response filed on 26 April 2019 the respondent made an application for orders in terms of s 90B of the Family Law Act for a declaration that the 27 June 2008 financial agreement (also dated on its frontis page 26 June 2008) is binding as well as s 90KA for the enforcement of that agreement.
I refuse to make an order under s 90B and s 90KA and I dismiss the respondent’s application insofar as it relates to the declaration and enforcement of the purported financial agreement.
In essence, it is competent for a court to order that a financial agreement should not be set aside where it would be unjust and inequitable to make an order setting the agreement aside. As has been canvassed above, I have taken the view that the agreement was entered into in circumstances of unconscionability and the agreement was made by undue influence. In reaching conclusions about those equitable doctrines I have taken the view that as a matter of equity, especially matters of moral obloquy, the agreement cannot stand. It is unjust and inequitable to enforce the agreement, and not the reverse.
For the reasons above the agreement must be set aside with the consequence that the respondent’s application for orders under ss 90B and 90KA are not warranted. I dismiss the respondent’s application in his amended response to the applicant’s initiating application filed 26 April 2019.
General ongoing aspects
The upshot of my decision is to set aside the agreement, thereby allowing this case to move to a property alteration application under s 79 of the Family Law Act.
It is conceivable that the respondent will appeal against the order setting aside the agreement made 26 June 2008. Time will tell whether that comes to pass.
Ordinarily, in a case such as this where the parties have expended so much time, effort and money on an interlocutory application (Frederick v Frederick[415]), it is normally most efficient for the same judge to retain the case when the case converts to a property alteration case. I say “normally” because the judge who has heard the contested interlocutory application is well-versed in the issues in the case, especially where as here, the substratum of fact in relation to the respondent’s corporate structure is complicated. By the same judge who heard the interlocutory dispute retaining the case for trial, the very sharp learning curve presented in a case such as this flattens.
[415] (2019) 60 Fam LR 1 (at [42].
That said, in this case I have made some fairly harsh credit findings against the respondent. If I were to go on to hear the trial of the property application it would be unsurprising for the respondent to contend that a fair-minded observer might take the view that I might not bring an objective mind to bear in the determination of that property case. A large number of authorities bear upon the issue including Johnson v Johnson,[416] Ebner v Official Trustee in Bankruptcy,[417] Michael Wilson & Partners Ltd v Nicholls[418] and Isbester v Knox City Council.[419]
[416] (2000) 201 CLR 488.
[417] (2000) 205 CLR 337.
[418] (2011) 244 CLR 427.
[419] (2015) 255 CLR 135.
In those circumstances I will let the respondent and his legal advisors absorb these reasons then provide me with their response within 14 days on the question whether the respondent wishes another judge to hear and determine the property alteration case.
Order and direction
The formal orders I make are as follows –
(1)The agreement styled “prenuptial agreement” made between the applicant and the respondent on 27 June 2008 (also dated on its frontis page 26 June 2008) is set aside.
(2)I dismiss the respondent’s application for orders under ss 90B and 90KA of the Family Law Act.
(3)I direct that at or before midday on 28 May 2020 the solicitors for the respondent provide an email to my associates informing me whether the respondent wishes any further litigation in this proceeding to be conducted before another judge of this court.
(4)If no such email is provided by the date specified or if the respondent consents to this proceeding remaining as a proceeding pending in my docket, then the further hearing of this proceeding is adjourned to 10am on 1 June 2020 for directions.
(5)If the respondent objects to my hearing of this proceeding further, then this proceeding is referred to the docketed registrar for ongoing case management.
I certify that the preceding five-hundred (500) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 14 May 2020.
Associate:
Date: 14 May 2020
The Honourable Dyson Heydon AC QC, Heydon on Contract – The General Part (Thomson Reuters, 2020)
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