Hagan and Cann - [2011] FMCAfam 1507

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HAGAN & CANN

[2011] FMCAfam 1507

FAMILY LAW – Property – binding financial agreement – failure to obtain independent legal advice.

Family Law Act 1975, ss.79, 90G

Parker & Parker (2010) 43 Fam LR 548
Ruane & Bachman-Ruane & Ors [2009] FamCA 1101
Senior & Anderson (2011) FLC 93-470
Wallace & Stelzer [2011] FamCA 54

Applicant:

MS HAGAN

Respondent:

MR CANN

File Number:

ROC 215 of 2011

Judgment of:

Cassidy FM

Hearing date:

16 September 2011

Date of Last Submission:

16 September 2011

Delivered at:

Rockhampton

Delivered on:

16 September 2011

REPRESENTATION

Counsel for the Applicant:

Mr Fleetwood

Solicitors for the Applicant:

Madden Solicitors

Counsel for the Respondent:

Ms Carmody

Solicitors for the Respondent:

Carne Reidy Herd

THE COURT ORDERS:

That the Financial Agreement dated 7 May 2008 be set aside.

THE COURT ORDERS BY WAY OF CONSENT ON A FINAL BASIS:

That within forty-five (45) days the Husband pay to the Wife the amount of $55,000 made payable to the Trust Account of Madden Solicitors.
That except as otherwise specified in these Orders the Wife forthwith retain all her right title and interest in and to and the Husband relinquish all his right title and interest to and in:-
(a)Furniture & Chattels in the Wife’s possession;
(b)Any money standing in any bank accounts in the Wife’s name;
(c)Any superannuation entitlements in the Wife’s name;
(d)Any motor vehicle in the Wife’s possession.
That except as otherwise specified in these Orders the Husband forthwith retain all his right title and interest in and to and the Wife relinquish all her right title and interest to and in:
(a)Property H;
(b)(omitted) motorbike;
(c)The business (omitted) trading as (omitted);
(d)(omitted) Boat;
(e)Furniture & Chattels retained in the Husband ’s possession;
(f)Any money standing in any bank accounts in the Husband ’s name;
(g)Any superannuation entitlements in the Husband ’s name;
(h)Any motor vehicle in the Husband’s possession.
That except as otherwise specified in these Orders the Wife and Husband are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements, and personal effects currently in the possession or control of each of them respectively including any liabilities attached thereto, and as at the date hereof and indemnifies the other party against any responsibility.
That except as otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date.
(b)Any credit card debt is to be the sole responsibility of the person so named as the primary card holder.
(c)Each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other.
(d)All insurance policies to become the sole property of the beneficiary named therein.
(e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
That in the event that either party refuses or neglects to do any act or sign any document required to be signed or executed in compliance with the provisions of these orders then pursuant to section 106A of the Family Law Act 1975 the Registrar of the Family Court of Australia at Brisbane and/or Townsville is hereby appointed to execute all deeds and documents in the name of the defaulting party and do all acts and things necessary to give validity and operation to the said order and the affidavit of the solicitor for the non defaulting party shall be sufficient evidence of such non-compliance. The party in default is ordered to pay all reasonable solicitor/own costs incurred by the non -defaulting party.
That each party bear their own costs of an incidental to these proceedings and that there be certification for the attendance of counsel.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT ROCKHAMPTON

ROC 215 of 2011

MS HAGAN

Applicant

And

MR CANN

Respondent

REASONS FOR JUDGMENT

EX TEMPORE

The parties entered into a binding financial agreement. This is an application by the wife to have that binding financial agreement set aside. A binding financial agreement requires under s.90G(1)(b) of the Family Law Act 1975 (“the Act”) that:
“(1) Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
…
(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 …”
It is conceded by the husband’s counsel that no independent legal advice was provided. The reason for that was that a lawyer from the same firm as had been instructed by the husband gave advice to the wife.
Counsel for the husband relies on s.90G(1A)(a) of the Act, a provision that says :
“(1A) A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b) one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c) a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made)…”
One of those exception provisions, therefore, covers each spouse being provided with independent legal advice. I was assisted in this matter with some submissions as to the law and I have relied heavily on those in coming to the conclusion that I have.
I was referred to the case of Parker & Parker (2010) 43 Fam LR 548. Particularly I was referred to paragraph 109, where it said:
“[109] In my view, s 90G(1A)(c) therefore contemplates the court looking at the nature of the non-compliance with s 90G(1), and determining whether, in the circumstances, it would be unjust and inequitable if the agreement was not binding on the parties due to the failure to comply with a “technical” requirement.”
That case goes on at paragraphs 113 to 114 to say this:
“[113] As mentioned above, the intention of the amendments is to avoid financial agreements being found not to bind the parties due to technical difficulties. Although s 90G(1A)(b) includes subs (1)(b) in the list of relevant subsections, it could be argued that the provision of legal advice is not a “technical” issue but a substantive matter going to the heart of the agreement. The Supplementary Explanatory Memorandum explains that the new s 90G(1)(b) is intended to ensure that parties receive independent legal advice before signing the agreement so that they are able to make an “informed decision”.
[114] In these circumstances, I am not satisfied that it would be unjust and inequitable if the financial agreement was not binding. If the only issue of non-compliance with s 90G was that, for example, one of the parties had not been provided with a copy of the relevant statement from their solicitor or a copy of the statement from the other party's solicitor, the court may indeed be satisfied that it would be unjust and inequitable in such circumstances for the parties to not be bound by the agreement due to a so-called “technical” omission.”
I consider the relevant passage in this case is paragraph 115. The Judge goes on to say:
“[115] However, the receipt of independent legal advice by all parties to a financial agreement is an essential requirement. Indeed, it could well be unjust and inequitable to the wife if she was bound by the financial agreement in circumstances where I have found she was not fully advised of the implications of the amendment to cl 15.”
In the present case there is a concession that the wife had not obtained independent legal advice. I was also referred to the case of Ruane & Bachman-Ruane & Ors [2009] FamCA 1101 and, in particular, at paragraphs 81 to 82 of that case, the court said:
“[81] The giving of legal advice lies at the very heart of the practice of the law (see Cornall v Nagle [1995] 2 VR 188).
[82] Thus, to achieve the fundamental purpose of Part VIIIA, consistent with the common purpose of various state legislation, the ordinary meaning of "legal practitioner" must be a person who fits the description …”
I was also referred to Wallace & Stelzer [2011] FamCA 54 at paragraph 259 and 269. Paragraph 269 echoes the earlier observations I have made about the cases where the court said:
“[269] The 2010 amendments were also discussed by Young J in Senior v Anderson [2010] FamCA 601. In this case his Honour discussed the amendments and the reason for the amendments in particular the Second Reading Speech of the Attorney-General made 3 December 2008 when it was said:
The amendments are made because the government is concerned about the possible consequences of that decision on the validity of existing financial agreements which may contain technical errors. …”
I do not consider the wife’s failure to obtain independent legal advice to be a technical error. I was referred by Ms Carmody of counsel for the husband to Senior & Anderson (2011) FLC 93-470, a decision of the Full Court, in which Strickland and Murphy JJ made some observations, and I consider them relevant to the present case. In particular, Strickland J said at paragraph 154, 155 and 156:
“[154] Although we heard limited argument from the wife’s counsel as to whether we could be “satisfied that it would be unjust and inequitable if the agreement were not binding”, I consider it necessary to remit the matter to Young J for determination of that issue. In my view, as I said in Parker & Parker [2010] FamCA 664, is it unclear precisely what this means and what evidence may be required for the Court to be satisfied. In other words, does s 90G(1A)(c) require the Court to consider the efficacy of the settlement and the entitlements that the parties are to receive pursuant to the agreement or does it simply invite the Court to refer back to the nature of the complaint. In Parker I expressed the view that s 90G(1A)(c) contemplates the Court looking at the nature of the non-compliance with s 90G(1) and determining whether, in the circumstances, it would be unjust and inequitable if the agreement was not binding on the parties due to the failure to comply with a “technical requirement”.”
I accept that assessment and I am not satisfied that the failure to obtain independent legal advice is a technical requirement. As Strickland J pointed out in Parker & Parker (supra), failure to provide the appropriate piece of paper or form from the solicitor or such may be a technical requirement, but, intrinsically, independent legal advice is not.
So I am not persuaded that it would be appropriate to apply the exception that is set out in s.90G(1A) and, given the concession the parties made with respect to s.90G(1), I am therefore not satisfied that the financial agreement is a binding financial agreement, which leaves the wife at liberty to pursue her application under s.79 of the Act.
Those are my reasons.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Cassidy FM

Date: 2 February 2012.