Hay and Hay
[2014] FCCA 775
•16 April 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HAY & HAY | [2014] FCCA 775 |
| Catchwords: FAMILY LAW – Property – financial agreement – whether husband has established duress, undue influence, unconscionable conduct, misrepresentation – whether it is impracticable to carry out the agreement – allegation by the husband of the wife’s failure to obtain requisite legal advice before entering agreement – financial agreement not set aside. |
| Legislation: Family Law Act 1975 (Cth) ss.90D, 90G(1)(b),(c), 90K(1)(b),(c),(e), 90KA |
| Cole & Cole [2008] FMCAfam 664 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 |
| Applicant: | MS HAY |
| Respondent: | MR HAY |
| File Number: | HBC 627 of 2011 |
| Judgment of: | Judge Baker |
| Hearing dates: | 9 & 10 September & 16 December 2013 |
| Date of Last Submission: | 16 December 2013 |
| Delivered at: | Hobart |
| Delivered on: | 16 April 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Fitzgerald |
| Solicitors for the Applicant: | Fitzgerald & Browne |
| Counsel for the Respondent: | Self Represented |
| Solicitors for the Respondent: |
ORDERS
The Husband’s Response filed 20 May 2013 is dismissed.
The hearing of the Wife’s application for enforcement of the binding financial agreement made 30 March 2012 is listed for hearing on a date to be fixed.
IT IS NOTED that publication of this judgment under the pseudonym Hay & Hay is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT HOBART |
HBC 627 of 2011
| MS HAY |
Applicant
And
| MR HAY |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Hay (hereinafter “the wife”) filed an application on 21 December 2012 in which she sought the enforcement of a “Binding Financial Agreement” made on 30 March 2012 between her and Mr Hay (hereinafter the “husband”) pursuant to s.90KA of the Family Law Act 1975 (“the Act”).
The husband filed a Response on 19 February 2013, in which he sought that the “BFA” be set aside pursuant to s.90K(1)(b) and s.90K(1)(c) of the Act. He sought that he be given leave to apply for a division of property pursuant to s.79 of the Act.
On 20 May 2013, the husband filed an Amended Response and further relied upon s.90G(1)(b) and asserted that the “BFA” is not binding. In his Case Outline, he further relied on s.90K(1)(e). He also sought an order for spouse maintenance.
The wife filed an Amended Initiating Application on 22 May 2013 and sought an order that the Response be dismissed. The wife asserted that the financial agreement is binding and ousts the jurisdiction of the Court to make orders under Part VIII of the Act.
At the hearing the wife did not seek to enforce the financial agreement. The wife’s Counsel submitted the only matter that required determination was the husband’s application to set aside the financial agreement. The hearing proceeded on that basis and the husband’s application to set aside the financial agreement was heard.
Both parties referred to the financial agreement as the binding financial agreement or as the BFA. I will refer to it as a financial agreement throughout these Reasons.
Background
The following background facts were uncontroversial.
The parties married on (omitted) 1988 and separated on (omitted) 2008. They divorced on 7 October 2011. The husband remarried in October 2011.
At separation the wife moved to live at the parties’ Property S property (“Property S”) which had been previously tenanted.
Tragically, the parties’ son X died on (omitted) 2009.
In February 1999, the parties had purchased a property known as Property O, with a view to future subdivision and development.
In 2003, the husband applied to the (omitted) Council (“the Council”) for subdivision of part of Property O. A dispute arose when the Council declared that legal and appropriate access to the subdivision over (omitted) could not be provided. The Council said that (omitted) had never been dedicated as a public highway, but was a private right of carriageway.
The parties have, since around 2005, been involved in extensive litigation with the Council, with several decisions made in both the Supreme Court of Tasmania and the Full Court of the Supreme Court of Tasmania.
In April 2011, the parties were in the process of negotiating a property settlement. On 3 May 2011, the wife’s solicitors wrote to the Registrar of the Supreme Court to indicate that the wife was negotiating a matrimonial property division with the husband and that, although negotiations had not yet finalised, it had been agreed that the husband would retain the entire interest in Property O and that the wife would have no further interest in the action before the Court.
On 5 May 2011, in (case omitted), Holt AJ ordered that:
upon the filing of a copy of a title search showing that the second defendant is no longer a registered proprietor of the property comprised in certificates of title volume (omitted) folio 1 and volume (omitted) folio (omitted), the name of the second defendant is removed from the action with the plaintiff and second defendant to bear their own costs of the proceedings between them.
The wife was the second defendant in the proceedings. The property referred to was Property O.
On 16 May 2011, the wife signed a transfer of her interest in Property O to the husband.
In October 2011, the husband informed the wife that he intended to marry again. In response, the wife told him it was imperative to settle their financial affairs.
The husband prepared and conducted the civil trial regarding (omitted) in the Supreme Court of Tasmania in February 2012 before Justice Evans.
The parties entered into the financial agreement pursuant to s.90D of the Act on 30 March 2012. On the same day the wife paid the husband the sum of $80,000 pursuant to a term of the financial agreement.
The husband did not provide the wife with signed transfers in respect of Property S and the Volkswagen motor vehicle in accordance with the terms of the agreement, which required him to provide them within 21 days of the date of the financial agreement. As a result the wife filed her enforcement application on 21 December 2012.
The decision of Evans J in respect of the trial in the Supreme Court of Tasmania was delivered on 28 May 2012. His Honour ruled that (omitted) was not a public highway or a highway maintainable by Council. Costs of $80,000 were awarded to the Council on an indemnity basis.
The husband appealed the decision. The appeal was dismissed by the Full Court of the Supreme Court on 26 July 2013. The husband subsequently applied for special leave to appeal to the High Court. There was no evidence of the outcome of that application.
Issues
The main issue was whether there has been duress, undue influence, unconscionable conduct or misrepresentation by the wife and so that the financial agreement was void, voidable or unenforceable. In addition, the husband asserted lack of ‘capacity’, either of himself or of the wife. He contended that the financial agreement should be set aside pursuant to s.90K(1)(b). He also contended that it should be set aside pursuant to s.90K(1)(c), as it is impracticable to carry out the financial agreement given Property O cannot be subdivided. Finally, he contended it should be set aside pursuant to s.90K(1)(e) because the wife’s conduct during settlement negotiations was unconscionable.
If the financial agreement is not set aside, the issue was whether the financial agreement is binding. The husband asserted that there was a failure by the wife to obtain independent legal advice prior to signing the financial agreement under s.90G(1)(b). If this sub-section is not satisfied, the Court has discretion to consider whether it would be unjust and inequitable to not bind the parties to the financial agreement, pursuant to s.90G(1A).
Evidence
The husband relied on his affidavits filed 19 February 2013 and 24 July 2013, and the affidavit of Dr R filed 25 July 2013. He also relied on his Case Outline filed 4 September 2013, which was tendered into evidence during the hearing.
The wife relied on her affidavits filed 21 December 2012 and 21 May 2013.
The husband was cross-examined by Counsel for the wife. The wife did not require Dr R for cross-examination. The husband cross-examined the wife.
Both parties relied on annexures to their affidavits, which were in the main email correspondence which was not controversial.
The parties
The husband was self-represented. I acknowledge the challenges faced by him as a self-represented litigant in a matter involving complex legislation about financial agreements. At times it was difficult to follow his submissions. He was confident and assertive when giving evidence and at times he was argumentative. I do not consider that he was untruthful. However, he was intent upon proving his claims and this affected his evidence. He was not prepared to make concessions and was intent on laying blame on the wife. One example was when he blamed her about the failure to file an application in the Family Court by her not responding to his emails for about six weeks from January to mid-March. He suggested that this gave her an advantage. However, he was the party telling her about the time frame for applications in the Family Court and did not file an application.
The wife was cross-examined at length by the husband. At times she became frustrated with the husband, but she was responsive to his questions. She answered questions to the best of her ability. She made appropriate concessions. For example, she conceded that the actions which she took would have put the husband in a difficult situation. I consider that she was a reliable witness.
Nevertheless, this is not a matter where I dismiss all of the evidence of one party. I shall consider the probative force of the evidence and make findings on the facts in relation to disputed issues.
Relevant law
Part VIIIA of the Act provides that the parties may enter into financial agreements. If a financial agreement is binding pursuant to s.90G, the Court’s jurisdiction to make orders under Part VIII of the Act is removed.
The legislation in respect of financial agreements is complex, so I will set out the relevant sections of the Act and refer to several helpful decisions.
A financial agreement is defined in s.4 of the Act as follows:
financial agreement means an agreement that is a financial agreement under section 90B, 90C or 90D, but does not include an anti-nuptial or post-nuptial settlement to which section 85A applies.
In the Full Court decision of Senior & Anderson,[1] Strickland J gave a helpful summary of the legislative framework in respect of financial agreements.[2] I quote several of those paragraphs:
88. Despite its wide circulation as a term of convenience, the expression “binding financial agreement” is not defined in the Act. Rather, as can be seen, the Act refers to and defines a particular form of agreement called a “financial agreement”. Further, as s.4 makes plain, a financial agreement has two essential components. It must first be “an agreement”, and it must also be an agreement that is made “under section 90B, 90C or 90D”.
89. “Agreement” is also not defined and thus carries its ordinary and natural meeting. Accordingly, just as with any agreement, principles of law and equity will apply so as to vitiate the agreement if the relevant circumstances are made out. So it is, in my view, with an agreement that purports on its face, to be a “financial agreement.” That interpretation is reinforced by s 90KA, noting that this section refers to “financial agreements” as distinct from “agreements”.
[1] (2011) FLC 93-470.
[2] Ibid, at paras.83–94.
Justice Strickland referred to the distinction in the legislation between agreements which are “financial agreements” and those financial agreements which are “binding”:
The Act in effect draws a distinction between agreements which are financial agreements (s4, s90B, s90C, s90D) and those financial agreements which are binding (s90G). Financial agreements can, like any other agreement, govern the actions of the parties to them and bind the parties to obligations, but do not oust the jurisdiction of the court. Parties to an agreement that satisfies the definition of “financial agreement” are bound by its terms (or not bound as the case may be), just as they would be bound (or not bound) by any other agreement (s 90KA) …[3]
[3] Ibid, at para.94.
His Honour noted that s.90G is not relevant in respect of the contractual rights and remedies of the parties. If an agreement satisfies the definition of “financial agreement”, s.90G becomes relevant in determining whether the agreement is effective to bar claims by either party pursuant to Part VIII of the Act (s.71A) which will be the case “if and only if” it is “binding” within the meaning of s.90G.[4]
[4] Ibid, at para.96. See also, the judgment of Murphy J in Fevia & Carmel-Fevia (2009) FLC 93-411, at paras.121–128, where his Honour outlined the approach to considering the validity and binding nature of a financial agreement.
Section 90G provides as follows:
(1) Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(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
(d) the agreement has not been terminated and has not been set aside by a court.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995 .
(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); and
(d) the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e) the agreement has not been terminated and has not been set aside by a court.
(1B) For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application ) by a spouse party seeking to enforce the agreement.
(1C) To avoid doubt, section 90KA applies in relation to the enforcement application.
(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.
Section 90KA deals with the validity, enforceability and effect of financial agreements and termination agreements and provides:
The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a) subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b) has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c) in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.
Counsel for the wife relied on Pascot & Pascot,[5] in which Le Poer Trench J followed the legislative framework set out in Senior & Anderson. His Honour quoted the following passages from Senior & Anderson:
[5] [2011] FamCA 945, at para 19–24.
106. In my view, the “principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts …” (s 90KA) are applicable in deciding whether (a) there is an agreement and (b) the application of s 90B, s 90C and s 90D to that agreement …
…
110. As previously set out, for there to be a financial agreement there must be an agreement, and to determine that, the principles of law and equity apply, and such an agreement is subject to equitable remedies such as rectification. This is reinforced by s 90KA, but noting again that section refers to “financial agreements” as distinct to “agreements”. However, that does not affect the force of the argument.
Section 90K sets out the circumstances in which the court may set aside a financial agreement or termination agreement. The provisions of s.90K relevant to this matter are as follows:
(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
…
(b) the agreement is void, voidable or unenforceable; or
(c) 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; or
…
(e) in respect of the making of a financial agreement--a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or
…
(3) A court may, on an application by a person who was a party to the financial agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.
(4) An order under subsection (1) or (3) may, after the death of a party to the proceedings in which the order was made, be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(5) If a party to proceedings under this section dies before the proceedings are completed:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings; and
(b) if the court is of the opinion:
(i) that it would have exercised its powers under this section if the deceased party had not died; and
(ii) that it is still appropriate to exercise those powers;
the court may make any order that it could have made under subsection (1) or (3); and
(c) an order under paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
(6) The court must not make an order under this section if the order would:
(a) result in the acquisition of property from a person otherwise than on just terms; and
(b) be invalid because of paragraph 51(xxxi) of the Constitution.
For this purpose, acquisition of property and just terms have the same meanings as in paragraph 51(xxxi) of the Constitution.
I turn now to discuss the evidence.
The Financial Agreement
The financial agreement between the parties was made pursuant to s.90D of the Act. Section 90D provides as follows:
Financial agreements after divorce order is made
(1) If:
(a) after a divorce order is made in relation to a marriage (whether it has taken effect or not), the parties to the former marriage 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, the parties to the former marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90C) 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. The parties to the former marriage may make the financial agreement with one or more other people.
(2) The matters referred to in paragraph (1)(a) are the following:
(a) how all or any of the property or financial resources that either or both of the spouse parties had or acquired during the former marriage is to be dealt with;
(b) the maintenance of either of the spouse parties.
(3) A financial agreement made as mentioned in subsection (1) may also contain:
(a) matters incidental or ancillary to those mentioned in subsection (2); and
(b) other matters.
(4) A financial agreement (the new agreement ) made as mentioned in subsection (1) may terminate a previous financial agreement (however made) if all of the parties to the previous agreement are parties to the new agreement.
In the current case the parties were married and divorced; the agreement was in writing; the agreement was about how their property or financial resources were to be dealt with and about spouse maintenance; they had not entered another binding agreement; and the agreement was expressed to be made pursuant to s.90D.
The financial agreement included a schedule containing a summary of assets, liabilities and financial resources of the parties, and gave estimations of value in respect of some of assets and liabilities as follows:
Assets
Property at Property S E$670,000
Property at Property O E$700,000
House and land in (country omitted) E$20,000Sale proceeds from contracted sale of strip of E$20,000
land at Property O property
Mr Hay’s motor vehicles E$22,500
Mr Hay's (omitted) boat, motor and trailer E$20,000
Horse float E$4,000
(omitted) mower E$3,000
John Deere tractor and (omitted) slasher E$7,000
Mr Hay’s savings E$14,000
Ms Hay's Volkswagen motor vehicle E$17,000
Ms Hay’s savings E$1,000
Ms Hay’s inheritance from her father’s estate E$70,000
Ms Hay's (omitted) Superannuation E$292,000Total (E) $1,860,500
Liabilities
Mortgage loan E$220,000
Ms Hay’s credit card E$5,674
Mr Hay’s credit card E$NILDebt to (omitted) in relation to Ms Hay’s E$15,000
motor vehicle
Costs order payable by the parties to the E$50,000
(omitted) Council (presently stayed)
Fees payable to Mr C in relation to E$2,300
development of the Property S property
Arrears of rates (Property S) E$3,000
Arrears of rates (Property O) E$5,000
Legal fees payable to Mr D E$10,000Liability to (omitted) for fencing in E$2,500
relation to Property S
Total (E) $313,474
Net Total (E) $1,547,026
(My additions)
Pursuant to the financial agreement, the wife was to acquire the following assets and liabilities:
Assets
Property at Property S E$670,000
VW motor vehicle E$17,000
Inheritance E$70,000
Savings E$1,000Superannuation E$292,000
Liabilities
Mortgage E$220,000
Credit card E$5,674
(omitted) Finance E$15,000
Arrears of rates (Property S) E$3,000
Fees Mr C E$2,300
(omitted) fencing E$2,500The wife was also required to pay the husband $80,000 within 48 hours of signing the financial agreement
Pursuant to the financial agreement, the husband was to acquire the following:
Assets
Property at Property O E$700,000
Property at (country omitted) E$20,000
Sale proceeds contracted land (Property O) E$20,000
Motor vehicles E$22,500
Boat, motor and trailer E$20,000
Savings E$14,000
John Deere tractor and slasher E$7,000
Mower E$3,000
Horse Float E$4,000(The Husband was also to receive from the wife $80,000 within 48hrs from signing the financial agreement.)
Liabilities
Costs order ((omitted) Council) E$50,000
Arrears of rates (Property O) E$5,000
Payment of legal fees (Mr D) E$10,000The financial agreement required that the parties be equally responsible for legal fees (to Mr D),[6] but that the husband was to reimburse the wife for her share of those costs.[7]
[6] Binding Financial Agreement, at para 19(a).
[7] Ibid, at para.20.
The financial agreement provided that the husband “be solely responsible for the payment of all fees and disbursements incurred in any costs awarded against the parties or either of them in relation to the Property O litigation …”.[8]
[8] Ibid, at para.17.
In respect of Property O, it provided that the wife “assigns to Mr Hay all her rights in relation to the Property O property and the Property O litigation …”.[9]
[9] Ibid, at para.18.
The negotiations and relevant events leading to the making of the financial agreement
The parties reached agreement in respect of an adjustment of property interests in April 2011. On 26 April 2011, the husband wrote the following email:
… the estimated values applied whichever way you shake them up or down are fairly equal. It is my firm view that in all the circumstances you are considerably better off than myself as a result of your election to terminate our marriage and that a 45/55 split would be more appropriate.
…
If you are in agreement to drawing a formal balance sheet for mutual consent to my estimations and offers in the short-term … Alternatively, qualified security valuations would need to be arranged at your expense.[10]
[10] Affidavit of the wife (filed 21 May 2013), Annexure A.
When the wife’s father died on 26 June 2011, the husband wrote an email to the wife on 5 July 2011 confirming that he expected the father’s estate to be included in any consideration of their property settlement. He proposed a division of the property on a 60/40 percentage basis in his favour, including the wife’s share of her father’s inheritance.
In October 2011, the husband advised the wife that he intended to marry again. The wife told him that his remarriage made it more imperative to settle their financial affairs. They again discussed financial settlement and agreed to terms similar to those agreed in April 2011.
In November 2011 the husband travelled to (country omitted) to marry. He returned to Australia in late December 2011.
On 3 January 2012 the wife stopped her salary of $2,300 per fortnight being paid into the parties’ joint (omitted) Bank account. The husband’s credit card payments had been deducted automatically from the joint account until 3 January 2012.
The husband said that during negotiations for the sale of Lot (omitted) of their Property S property, the wife advised him that she would not consent to its sale. The wife’s evidence was that there was no contract and there was no agreement between them about any sale. She said she would not consent to further transactions until they had a property agreement in place.
The wife said that on 5 January 2012, she found the husband working on Lot (omitted) of the Property S property. On that day he informed her that he had removed $25,000 from their joint (omitted) Bank bank account. He told her that he had placed it in a separate account to isolate his expenditure without discussion with her.
Because the husband had done this without her consent, the wife informed him that she could no longer trust him and would not proceed with further transactions of any sort until they had an agreed financial settlement.
The husband justified the withdrawal of $25,000 by stating that the wife had taken about $16,000 in the same period without obtaining his consent. This was despite her salary being paid into the account and his government benefits not being paid into the account. He said that he was not receiving child support or maintenance, had to live and wanted to separate finances.
The husband also justified the withdrawal on the basis that he could repay the funds upon the settlement of the sale of Property H. His evidence was that, on 2 November 2011, he had entered a conditional contract for its sale for the sum of $25,000, plus $5,000 accountancy fees, less the cost of upgrading. He had possession of the transfer of Property O signed by the wife, which meant he could sell this portion of land. The husband said that the contract became unconditional in January 2012. The completion date was the date of granting of approval by the Recorder of Titles to issue amended titles to the purchaser.[11] It was not clear from the evidence when the amended titles issued, although settlement of the sale did not occur until around one year later.
[11] Exhibit H1.
The wife disputed the husband’s evidence that on the same day that he told her he had sold Property H, he told her would repay the $25,000 upon settlement of the sale. During cross-examination, she conceded that he told her about the Property H sale, but she could not recall exactly when. The Husband’s email dated 15 January 2012 indicated he had offered to “rebate the $25k proceeds from the sale of part of the fee simple to Property H”. The wife therefore must have been aware about this in January 2012.
On 6 January 2012, the husband emailed to the wife a matrimonial property settlement offer. The wife said that this led her to believe that the husband may take further actions which could disadvantage her, including registering the transfer of Property O.
On 11 January 2012, the husband emailed the wife and wrote:
… an appropriate course would be to commence proceedings in the Family Court as soon as possible. A directions hearing can be set down about 6-8 weeks from the date of filing the application and as you would be aware these applications should be made within 12 months of the date of our divorce. Could I please have your advice on the commencement of proceedings ASAP.[12]
[12] Affidavit of the husband (filed 24 July 2013), Annexure D.
On 12 January 2012, the wife lodged a caveat to prevent the registration of the transfer of Property O because she was concerned that the husband may take further actions to disadvantage her before a property settlement was made.
On 15 January 2012, the wife withdrew $25,000 from the (omitted) Bank joint account. On the same day, she asked the husband to sign a joint authority form so that both their signatures would be required to withdraw funds. The wife told him she had lodged a caveat over Property O. Later that evening she withdrew a further sum of $115,000 from the account.
The wife said when she advised the husband about the caveat, he denied any knowledge of the transfer form. When reminded of the circumstances of her signing it, he remembered her signing and told her that the transfer had been lodged at the Australian Embassy in (country omitted). The husband answered in his affidavit: “Ms Hay’s assertion that I didn’t have any knowledge of the Property O transfer form is fatuous”. He agreed that the transfer and the title to Property O were lodged at the Embassy as proof of asset ownership to show that he could support his new wife in Australia.
The wife said that she was not reassured by any of the husband’s actions.
The husband signed the joint authority form to the (omitted) Bank and the wife gave it to the (omitted) Bank on 16 January 2012. This prevented both parties from withdrawing funds without the signature of the other.
The wife repaid all the funds, which she had withdrawn, amounting to the sum of $140,000 on 18 January 2012. She withdrew a further $25,000 in late February to ascertain if the joint authority would prevent the withdrawal, as she had seen a bank statement with withdrawals which she had not countersigned. She told the (omitted) Bank and it then reversed her withdrawal of $25,000 and addressed the issue about the joint authority not operating. The wife’s repayment of all the funds was consistent with her evidence that she wanted to prevent further spending from an account for which she was jointly and severally liable.
Around this time the wife agreed to withdraw the caveat on Property O on the basis that the husband reversed the transfer of her interest. She explained during cross-examination that the transfer was signed by her in 2011 so she would have no further interest in the Supreme Court litigation and as part of a property settlement. She found the litigation very stressful. She was away from home for around 10 hours per day, five days per week for work and spent 10, 20 or even 30 hours per week preparing documentation for the court case. She found working with the husband stressful. When she signed the transfer in 2011, she was not aware that the husband was negotiating the sale of Property H.
Her concern about the transfer being registered was due to the parties not having an agreement in place. She said that before the husband went to (country omitted) to get married, she took the day off work so they could discuss a settlement. She said that the fact that the husband remarried was a critical factor in getting an agreement sorted and getting their matters finalised. She said that they reached agreement on several occasions, but he would never confirm the agreement. She said: “I felt after you taking the $25,000 out of the account … you were just stringing me along and that I was actually never going to be free of you”.
In an email dated 15 January 2012, the husband wrote to the wife requesting mediation and commenting on her response to his offer to settle the property. He referred to the wife’s inheritance as follows:
… you have another $100K plus coming in with your father’s estate and my offer to rebate the $25K proceeds from the sale part of the fee simple to Property H, and secondly you are aware that I am engaged in hostile litigation which to date there is no end in sight. You clearly expressed that you want to settle now and in response I have offered what I can whilst virtually trying to look into a crystal ball. I cannot repay any borrowings under the present circumstances …
…
Without putting my settlement case to you it is likely that a Family Court judge would make interim orders to prevent you from attempting to stifle the ongoing commercial commitments which I have retained from our jointly commenced litigation which you have elected to abandon. The court should recognise that you have a secure income and that I have none, nor do I have any reasonable prospects of borrowing until such time as the matters on foot with the Council are resolved. Attempting to weaken my position to force a settlement is in my view unreasonable as your actions in lodging a caveat on our Property O property and your stated intention of getting a court order to freeze our joint account.
…
… I have made full disclosure of the intended sale of the fee simple laneway strip to you … all purchases have been made in joint names and you have been made fully aware of my intentions …[13]
[13] Affidavit of the husband (filed 24 July 2013), Annexure E.
Between January and March 2012, the husband emailed the wife detailing his predicted outcomes if the matter was heard by the Court.[14] He proposed settling their property with a binding financial agreement, referred to by the parties as a “BFA”.
[14] Affidavit of the wife (filed 21 May 2013), Annexures D–N.
In an email to the wife dated 27 January 2012, he wrote that the matter is a complex one and needed to be decided in the Supreme Court in the absence of a BFA in the short-term.
By email dated 2 February 2012, the husband wrote to the wife seeking advice about the removal of the caveat on Property O. On 3 February 2012, the husband wrote:
There are a few hard facts that you appear not to be taking into consideration in reaching a settlement agreement.
…
I have no hesitation in pursuing a remedy. In this case I consider (aside from the advice of Mr M) the likely remedy in the prevailing circumstances to be a just personal and financial exercise
…
Because of the complexity of the matter the only alternative to an imminent BFA settlement is the filing of an equity argument in the Supreme Court …[15]
[15] Affidavit of the husband (filed 24 July 2013), Annexure H.
The husband pressed the wife to obtain legal advice and gave her a time-frame to do that. By email dated 27 February 2012, he wrote that, in the event that she continued to decline to accept the settlement terms offered, he considered that a reasonable time for her to obtain and to consider legal advice “will have lapsed by 5.00pm Friday 2 March 2012”.
By email dated 4 March 2012, the husband wrote to the wife acknowledging her advice that she had obtained legal advice:
… on a Supreme Court equity judgment and that the last ‘without prejudice” settlement offer that I put you is not acceptable is noted. I have advised you that your “without prejudice” counteroffer to that offer is also not acceptable to me.
From my perspective only two things can be assumed, those being that you are confident with your legal advice, or alternatively, that you remain of the belief that your decision to mislead me, and in so doing starve me of my funding, strengthens your position in forcing a settlement out of Court …
…
I will then either be filing proceedings against you and remaining in Hobart due to the urgency of having an injunction for Interlocutory relief heard, or alternatively we can act privately or through a mediator if you prefer, in an attempt to sort the issues between us before I file that action.[16](My emphasis)
[16] Affidavit of the husband (filed 24 July 2013), Annexure J.
The husband was critical of the wife for not responding to him over a five or six week period to any of his propositions about settlement of the matter in the Family Court. The wife answered: “… I felt intimidated by your emails and I didn’t intend to respond to them and open up an email war when you had taken no action to implement the course that you said you wanted to take”.
On 11 March 2012, the wife discovered that the husband had purchased a boat. He purchased it on 3 January 2012 for the sum of $85,000 and the contract was due to settle around the end of March. The husband had not discussed the purchase with her or told her about it. The husband did not deny this.
In his email dated 15 January 2012 the husband wrote:
… I have made full disclosure of the intended sale of the fee simple laneway strip to you … all purchases have been made in joint names and you have been made fully aware of my intentions …[17]
[17] Affidavit of the husband (filed 24 July 2013), Annexure E.
In his affidavit, the husband said that he did not need to notify or involve the wife in the contract for the boat purchase because he held the transfer to Property O and was free to borrow against the unencumbered property without her consent.
During cross-examination, the husband reiterated that he was not obliged to tell the wife about the boat purchase. His evidence was that he signed an unconditional agreement and paid a deposit of $8,500 in January 2012. He bought the boat believing he could on sell it for a profit. He thought the settlement date for the purchase was “30 March or 3 April 2012”. He paid the balance of the purchase when he received the sum of $80,000 from the wife pursuant to the financial agreement.
He said that he intended to transfer Property O into his name and borrow against the property to settle the unconditional contract for the boat purchase within 90 days or to permit the on sale of the boat to (country omitted) for a profit of $15,000.
The husband disputed that he wanted the financial agreement to be made so he could complete the purchase of the boat. He insisted that the reason he wanted the financial agreement was because the wife had withdrawn the transfer of Property O. He said he was forced to sign the agreement to complete the contract for the boat and the alternative to the agreement was to lose his deposit and get sued.
The husband did not deny that he told the wife on around 11 March 2012 that he was going to Sydney on 22 March 2012 and that he wanted the matter resolved urgently or he would commence court action.
The wife was willing to attend mediation in March. In an email to the husband dated 13 March 2012, the wife wrote:
I am and always have been willing to participate in a mediation process facilitated by an independent third party, and have in fact suggested such a course on a number of occasions.
…
If you object to using Relationships Australia I suggest you provide me with details of another organisation which will prefer to conduct this service.[18]
[18] Affidavit of the wife (filed 21 May 2013), Annexure J.
In an email dated 14 March 2012, the husband asked the wife:
… can you indicate what numbers we are supposed to be mediating, and if the process is necessary when? I have a limited window before committing to litigation which by my calculations see me about 300k better off than what I have been offering you to settle. Since that time you have acted, unjustifiably in my view, against my interests on a number of fronts.
…
If you could explain your future intentions for Lot (omitted) it would be of assistance to me. We may then be in a position to negotiate to avoid the alternatives of mediation and litigation.[19]
[19] Affidavit of the wife (filed 21 May 2013), Annexure J.
By email dated 16 March 2012, the husband informed the wife that he had not been able to finalise a settlement list, as he was still trying to identify and plan for all contingencies and also to take advice from his brother Mr M, who is a lawyer. He wrote: “Could you please put anything on your checklist (outside of the obvious that was contained in a past communications and those of today) and send it to me ASAP”. The husband responded to this evidence of the wife by stating that his brother’s only advice was to settle their financial affairs by equity judgment.
On 18 March 2012, the husband emailed the wife a draft financial agreement for her consideration. He asked her to notify him urgently of any amendments or further conditions that she may require. He indicated that he would be flying to Sydney on 22 March and would be in Hobart on the afternoon of Tuesday 20 March. During cross-examination, when asked whether he sent the draft agreement, he answered, “I was forced to send it under duress”. He agreed that he prepared the draft.
On 19 March 2012, the husband emailed the wife an amended draft which he had prepared, with changes to three paragraphs of the agreement, including an amendment to paragraph 6.1 which made “it a condition precedent to settlement that upon the execution of this agreement Ms Hay covenants with Mr Hay to immediately transfer the sum of $80,600 to Mr Hay apportioned as follows …”.
As set out in the emails between the parties, they agreed on terms and between them put together the basis of a draft financial agreement.
One of the matters they had agreed upon at the husband’s request was that the wife would pay the husband the sum of $80,000 within 48hrs of signing it.
The wife said that the husband suggested that they enter into a financial agreement, as there was not time to register an agreement with the Family Court within the 48 hour time frame. The husband did not deny this. In response he said that he was without capacity to agree upon anything.
On 20 March 2012, the wife provided the terms of the draft financial agreement drafted by the husband to her solicitor. The wife and her solicitor settled the terms of the draft financial agreement on 21 March 2012.
The husband provided his solicitor with a copy of the draft financial agreement prepared by the wife’s solicitor. The husband agreed that his solicitor redrafted the financial agreement on his behalf and forwarded it to the wife’s solicitor. The husband complained that he had to pay $2,500 in legal costs for its re-drafting. He said that his solicitor had been derogatory about the wife’s solicitor’s work and had told the husband that he would take it over.
After the wife considered the redrafted financial agreement and took into account the amendments and also advice from her solicitor, she instructed her solicitor that she agreed to the terms of the financial agreement.
Following receipt of a final draft from his solicitor on 28 March 2012, the husband signed the financial agreement on that day and returned it to his solicitor. The husband agreed that he signed it on the basis of his solicitor’s advice. The wife signed the financial agreement on Friday, 30 March 2012.
The wife transferred the sum of $80,000 into the husband’s account after she signed the financial agreement on 30 March 2012.
In early May 2012, the husband started suggesting that the financial agreement was not binding. On 24 May 2013, he wrote an email to the wife informing her that he had requested his brother to make enquiries with a Family Law specialist as to what impediment there is to a binding financial agreement when one of the parties to it has remarried, and if any authority or law supports that position.
On 19 June 2012, the wife’s solicitor wrote to the husband enclosing: a discharge of mortgage authority with the (omitted) Bank; a transfer in respect of the Property S property; and a transfer of the Volkswagen motor vehicle for his signature. The husband responded by email dated 24 June 2012 refusing to sign the transfers. He asserted that the financial agreement was unjust and inequitable.
Discussion
The husband alleged the agreement is void, voidable or unenforceable due to duress, undue influence and unconscionable actions by the wife, which caused him to enter into the agreement. He also alleged that there has been misrepresentation by the wife. He asserted that the financial agreement should therefore be set aside. I shall discuss each of these claims separately.
In Saintclare & Saintclare,[20] Ryan J considered the following questions provided the appropriate pathway:
·Is there a financial agreement?
·If that question is answered in the affirmative, should that agreement be set aside?
·If the answer is negative and the financial agreement should not be set aside, is the financial agreement binding?
[20] [2013] FamCA 491.
Following this approach, I will consider whether there is a financial agreement which is valid, enforceable and effective, having regard to the principles of law and equity. If it is, I will consider whether the financial agreement should be set aside. Then I will consider whether the financial agreement is binding on the parties in that it complies with s.90G of the Act.
It is relevant in respect of each of the husband’s allegations that he proposed a “BFA” in late January and early February 2012. On 18 March 2012, the husband emailed to the wife a draft agreement for her consideration. On 19 March 2012, he emailed her an amended draft prepared by him. The wife consulted her solicitor, who made amendments and returned it to the husband’s solicitor. The husband then instructed his solicitor to re-draft the agreement.
The husband obtained independent legal advice from his solicitor before signing the agreement on 28 March 2012. Exhibit “H2” sets out in writing the advice the husband’s solicitor gave him about the agreement, his entitlements, and the effect of the agreement on his rights. The wife obtained independent legal advice from her solicitor before she signed the agreement on 30 March 2012.
Was there duress?
Duress is a form of pressure, which must be “illegitimate”. It causes a person to act in a way which is usually to the benefit of the person applying the pressure.
The meaning of “illegitimate pressure” was considered by McHugh JA in Crescendo Management v Westpac.[21] In rejecting the “overbearing of will” theory of duress, his Honour said:
A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.[22]
[21] (1988) 19 NSWLR 40.
[22] Ibid at pp 45–46.
The husband alleged that the wife put him under duress when she stopped his access to joint funds, refused to sign the transfer of Property H and prevented him from transferring her interest in Property O to him in January 2012.
I consider that the wife required the husband to obtain her consent to access to joint funds, rather than stop his access to funds. I accept the wife’s evidence that she did this because the husband had withdrawn the sum of $25,000 from the account without her consent.
The wife denied that she stopped the settlement of the sale of Property H. She signed the transfer when the husband’s solicitor explained the transfer was for Property H and not for Property O, well over a year later. She said the husband told her there were a number of delays about the sale. She assumed that the delay was about those matters and signed the transfer when she was requested to by Mr F. I accept the wife’s evidence about this. The completion date was not a certain date in the contract. The wife’s evidence about the husband talking about delays is consistent with this.
In respect of the transfer of Property O, the wife said that the property was always going to be the husband’s property, but that she did not need to sign the transfer and transfer it to him until they had an agreement in place. She said that she signed the transfer in May 2011 when the husband came into her office and demanded that she sign it, otherwise she had to turn up in court to appear in the (omitted) Council case. She was concerned after the altercation they had in January 2012, that he would register the transfer and remove her name from the property. She lodged the caveat to prevent the registration of the transfer.
During cross-examination, the wife said her actions were not done to restrict his finances. She said:
They were made to try to bring to a conclusion our marriage so that both of us were free to get on with our lives without the situation becoming more and more complicated. We had already been separated for years and our finances were getting more and more… complicated and harder to separate… no, they weren’t …about restricting your finances and, in any event, you had just taken $25,000 from the joint account so…you got money to survive on ... I knew that you had money. I knew that you were pressuring me to do an agreement. You were ringing me. You were sending me emails. I thought that you wanted it is desperately as I did ...
The husband asked her whether she would concede that, by her saying to him that she was not going to do anything about the sale of the Property S block until they had an agreement in place, this would have put him under duress. She answered: “that may have been the case. But my intention was not to put you under duress, except to try to get an agreement sorted out”.
The husband insisted that the reason he wanted the financial agreement was because the wife had withdrawn the transfer of Property O. He said he was forced to sign the financial agreement to complete the contract for the boat and the alternative to the financial agreement was to lose his deposit and get sued.
I do not accept the husband’s evidence that he was forced to enter the financial agreement because the wife reversed the transfer of her interest of Property O. I do not accept that he believed there was no other option to the financial agreement other than to lose his deposit and be sued. The wife required the reversal of the transfer two months before the financial agreement was signed. He was aware of his option to attend mediation or to commence an urgent application in Court. He did not inform the wife about the purchase of the boat and did not ask her for access to joint funds to complete its purchase. I consider that the husband has reconstructed this to justify his claims.
The husband also said he would have borrowed against the title to purchase the boat, “but she forced me to hand back the transfer by removing all money out of the bank”. He said he could have got the title and borrowed funds from his brother and settled the contract with that. He said he did not register the signed transfer over the previous six-seven months because he did not have $10,000 to pay stamp duty on it.
His evidence that he could have borrowed to complete the purchase is contrary to his statements in emails that he could not borrow. In an email dated 15 January 2012 he wrote:
I cannot repay any borrowings under the present circumstances …
…
The court should recognise that you have a secure income and that I have none, nor do I have any reasonable prospects of borrowing until such time as the matters on foot with the Council are resolved.[23]
[23] Affidavit of the husband (filed 24 July 2013), Annexure E.
The wife demanded the return of the Property O transfer because she was concerned about the husband acting to her disadvantage. I consider that it was not unreasonable for her to want the Property O transfer reversed until a property agreement had been reached. She wanted it reversed in early January, before she knew about the husband’s purchase of the boat.
The husband put to the wife that she closed off all his financial options. She answered: “I can appreciate that at the time I had protected you using joint funds for your own purposes. If you – you never at any stage said to me I need funds for X, Y or Z. The funds were still available …”.
I accept the wife’s evidence that she had no knowledge that the husband needed money immediately until he told her that he needed it immediately, and put the words “within 48 hours of signing it” into the financial agreement about the payment of $80,000.
On 15 January 2012, the wife withdrew $140,000 from the (omitted) Bank account without the husband’s approval. She was concerned that he may withdraw the funds. The husband asserted that this conduct was consistent with the wife’s intention to weaken his liquidity to force a settlement favourable to her. However, the wife returned the funds into the account after the husband signed the joint authority to the (omitted) Bank.
During cross-examination the wife said that the parties had discussions on the evening of 15 January 2012. She said that the husband refused to sign the joint authority to (omitted) Bank and was abusive. He told her that she was the reason for X’s death and it was a well-known psychological fact that a mother can make a son take his own life. The wife said that he followed that up by many phone calls, “both semi-rational and abusive” and, when he was desperate to get the caveat withdrawn, he agreed to rescind the transfer and sign a joint authority on the basis that she would remove the caveat.
The husband did not deny that he made this comment about X’s death and said:
… I am not aware of any ‘psychological facts’ only ‘psychological factors’ … the point I attempted to make was that Ms Hay, in attempting to apportion blame to me for X’s suicide, Ms Hay remained in denial of how she reacted to the stress caused by the litigation and how that reaction compounded the critical circumstances confronting the family unit …[24]
[24] Affidavit of the husband (filed 24 July 2013), para 72.
The wife explained her actions. The withdrawal of $25,000 by the husband without her consent caused her to act in the way she did. She did not want him to withdraw any further funds without her consent.
There was no evidence that the husband repaid those funds into the (omitted) Bank account before the financial agreement was signed.
The husband said that, shortly after he complied with the wife’s demands, she withdrew $25,000 from the account without his knowledge or consent. As already discussed, the wife explained the withdrawal and that she returned the funds to the account. She did not spend any funds.
The wife conceded that the actions which she took would have put the husband in a difficult situation and that is why she had been pressing for a settlement for three years. She said that she did not do any of those things “until [he] demonstrated to me that I could no longer trust you, because [he] took $25,000 out of the account without any discussion or explanation”.
There were no unlawful threats made by the wife. Whilst she conceded that she put the husband in a difficult situation, I am not persuaded that she placed illegitimate pressure on him amounting to duress to induce him to enter the agreement.
Was there undue influence?
The husband asserted undue influence by the wife. Undue influence involves “the improper use by a person (the stronger party) of an ascendancy for her or his … benefit so that the acts of the person influenced (the weaker party) are not free, voluntary acts”.[25] The focus is on whether the influence exerted prevented the weaker party from making an independent and informed judgement in affecting the transaction in issue. Undue influence looks to the quality of the consent or assent of the weaker party.[26]
[25] Dal Pont GE and Chalmers DRC, Equity and Trusts in Australia (Thomson Lawbook, 4th ed, 2007), p.198.
[26] Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447, at p.474 (Deane J).
There are two types of undue influence, “presumed” undue influence, and “actual” undue influence.
Some relationships are, as a matter of law, presumed to be relationships of influence, such as lawyer and client, doctor and patient and parent and child.[27] In these types of relationships, “it is the duty of the former to use her or his position of influence in the interests of the latter”.[28] As a consequence, “the law … places on the stronger party the burden of supporting the transaction and of rebutting the presumption of its invalidity”.[29] There is however no presumption of influence between husband and wife within a marital relationship, as confirmed by the Full Court in Pascot & Pascot.[30]
[27] See, Dal Pont GE and Chalmers DRC, Equity and Trusts in Australia (Thomson Lawbook, 4th ed, 2007), p.201.
[28] Ibid.
[29] Ibid at p.200.
[30] [2011] FamCA 945, at para.240.
The presumption of undue influence can also “arise on proof of a relationship such that one party has achieved an influence over the other in relation to the transaction in issue …”[31] In such situations, the weaker party may succeed only on the basis of proving that she or he “reposed trust and confidence in the wrong doer, without also proving the wrongdoer exerted actual undue influence or otherwise abused such trust and confidence …”.[32]
[31] Dal Pont GE and Chalmers DRC, Equity and Trusts in Australia (Thomson Lawbook, 4th ed, 2007), p.201.
[32] Ibid.
Separately, actual undue influence may arise irrespective of any presumption, where it is proved:
… there has been some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, and generally, but not always, some personal advantage by a donee placed in some close and confidential relation to the donor.[33]
[33] Allcard v Skinner (1887) 36 Ch D 145, p.181 (Lindley LJ).
It must be proved that the stronger party:
… exerted undue influence to enter into the transaction sought to be impugned. This requires proof of the capacity to influence the plaintiff, the exercise of that influence, that its exercise was undue, and that this brought about the transaction. Mere suspicion does not suffice. That is, the plaintiff must show that, as a result of the defendant/s influence, the transaction was not the result of the free exercise of her or his independent free will.[34]
[34] Dal Pont GE and Chalmers DRC, Equity and Trusts in Australia (Thomson Lawbook, 4th ed, 2007), p.204.
I consider that the husband entered into the financial agreement freely exercising an independent will. An important consideration in reaching this conclusion is the fact that he received independent legal advice. The signing of the financial agreement was not done spontaneously; he drafted it and he instructed his solicitor to make amendments to it.
The husband has not proved that the wife exerted pressure or undue influence upon him to enter into the financial agreement. There is no evidence that she had the capacity to influence him or that she did so to bring about the financial agreement. There was no coercion by the wife, and no unfair and improper conduct for personal advantage placed on the husband. The husband has not persuaded me that he did not enter into the agreement freely and independently.
Did the wife act unconscionably?
This ground relates to the husband’s assertion that the wife has acted unconscionably by being aware of, and taking advantage of, his mental and emotional incapacity. The husband asserted that the wife acted unconscionably by committing multiple acts of bad faith. He asserted that she has taken advantage of the circumstances he was involved in during the settlement negotiations and at the time of making the financial agreement, namely that he was conducting litigation in the Supreme Court and his mother was lying critically ill in ICU.
The Act also contains a specific provision regarding unconscionable conduct in s.90K(1)(e), which I will discuss later in these Reasons.
“Unconscionable conduct” involves the will of the innocent party, even if independent and voluntary, being as a result of the disadvantageous position in which he or she is placed and the other party taking advantage of that without good conscience.[35] “Unconscionable dealing” focuses more on the conduct of the stronger party than the relationship between the parties.
[35] Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, p.461 (Mason J).
In the leading case of Commercial Bank of Australia Limited v Amadio,[36] Deane J said:
The jurisdiction is long established as extending generally to circumstances in which i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or “unconscientious” that he procure, or accept, the weaker party’s assent to the impugned transaction in the circumstances in which he procured to accept it.[37]
[36] (1983) 151 CLR 447.
[37] Ibid, at p.474.
Further, his Honour said:
The adverse circumstances may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v Ryan (1956) 99 CLR 362, Fullagar J listed some examples of such disability:
“poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary”.[38]
[38] Ibid.
In Saintclare & Saintclare,[39] Ryan J discussed “unconscionable conduct” and stated that:
· If a stronger person enters into an improvident transaction with a weaker person, who in relation to the former, is in a position of special disadvantage that affects the weaker person’s ability to protect his or her own interests; and
· The stronger party either knows of the special disadvantage or knows of facts that would lead to constructive knowledge of that special disadvantage; and
· The stronger party takes advantage of the special disadvantage, either actively or by passively allowing the transaction to proceed; then
· The transaction may be set aside for unconscionable dealing or another equitable remedy may be applied.[40]
[39] [2013] FamCA 491.
[40] Ibid at para.108.
In that case, Ryan J found that there was undue influence and unconscionable dealing given that the evidence indicated that the wife had been diagnosed with post-natal depression, she was in debt, and the husband was abusive and threatening to her.
In the present matter, the husband asserted that both the wife’s conduct and his lack of capacity placed him at a ‘special disadvantage’. I do not accept that. The husband did not have any special disability or disadvantage.
The husband was stressed because of the litigation in the Supreme Court and the illness of his mother. However, there was no evidence that he was mentally incapacitated. He had use of the $25,000 which he had withdrawn from the joint (omitted) Bank account in early January 2012. He had savings. His credit card payments had been paid from the joint account until 3 January 2012. He was in receipt of government benefits.
I reiterate that the husband provided a draft financial agreement to the wife. His solicitor re-drafted the financial agreement. He had his own solicitor from whom he obtained advice before the financial agreement was signed. He was not the weaker party. He is an intelligent person who has been capable of conducting litigation on the parties’ behalf over many years. He is a businessman who has been involved in (business omitted). He has travelled overseas over the last few years. He has purchased property in (country omitted). He has a brother, who is a lawyer and from whom he sought and obtained advice during the negotiations.
The husband asserted that the financial agreement was unfair to him and therefore demonstrated unconscionable dealing. The wife asserted that the financial agreement resulted in the husband receiving 59% of estimated net property. The husband responded that this percentage was not based on any professionally qualified advice or opinion under current market conditions. He said that the claimed 59% net equity in his favour was unjust. He therefore did not dispute the wife’s percentage estimation of the settlement; rather he asserted that her belief was based solely on: “an unqualified view, rather than the principles and formulae applied in equity judgment”.[41]
[41] Affidavit of the husband (filed 24 July 2013), at para.78.
The parties’ marriage was over 20 years with financial and non-financial contributions, including contributions to the welfare of the family, made by both parties. The husband had been proposing a percentage division of 55/45 in his favour in April 2011. In July 2011 he proposed a 60/40 percentage division in his favour, including the wife’s inheritance. He made initial contributions, both parties contributed income and he had contributed a gift of $30,000 from his mother when they purchased Property O. During the negotiations from January 2012, the husband referred to the wife’s high income,[42] and the parties discussed child support which was payable by the wife to the husband, with a balance in arrears of $1,886.76 due by 27 March 2012.[43]
[42] Affidavit of the wife (filed 21 May 2013), Annexure H.
[43] Affidavit of the wife (filed 21 May 2013), Annexure K.
The financial agreement dated 30 March 2012 included a division of the wife’s estimate of her inheritance, received by her after separation. It included a provision for lump sum payment of $50 by both parties and that neither party pay further spouse maintenance to the other.
The issue of the subdivision of Property O was a risk about which I consider both parties were aware. The husband was certainly confident of success in respect of the decision of Evans J. He wrote in an email to the wife: “… I am certain that HH will have to uphold the law to my favour. This should necessitate a rebuttal of the findings of the Full Court …”.
However, he has been involved in numerous Supreme Court hearings and was aware there was no guarantee of success. This was contemplated by the parties by the inclusion of a clause in the financial agreement in which the husband was to be responsible for all fees and disbursements incurred in any costs awarded against the parties or either of them in respect of the Property O litigation.(Property O)
During cross-examination, in relation to the issue of Property O being subdividable, the wife said:
… from my point of view there was always a doubt about that and that’s why we came to an agreed figure. You took the gamble that it was going to be worth a lot more. I took the gamble that it was less valuable … It was win/win … If it was subdividable then you got all that extra money and you paid me back the small sum I’ve already paid … You wanted the money quickly… You put the words immediately into the agreement that we drew …
The wife said further: “… we estimated and agreed values, where if the land was subdividable and you became a millionaire, then good on you. That was … the risk I took …”.
The husband’s main complaint about the financial agreement being unfair related to the value of Property O, which he asserted was much less given the judgment of Justice Evans. He asserted that the value of the estimate of Property O:
… has been and remains a work in progress over the last 10 years. This being particularly so following the judgment of HH Justice Evans … which prevents the previously approved 29 lot subdivision of the land. Consequently a sworn valuation would not reasonably support an estimated value of $700K.[44]
[44] Affidavit of the husband (filed 19 February 2013), at para 74.
There was no valuation evidence by a registered valuer before the Court of Property O or any of the properties.
I am not persuaded that the settlement reached and encompassed in the financial agreement was an improvident one, which demonstrated unconscionable dealing.
The evidence indicated that the wife was seeking to have the parties’ affairs settled. This was not surprising as they had been negotiating a property settlement since 2011. The husband had remarried. She wanted to finalise their financial relationship. The wife believed that:
“the only alternative was to allow our finances to remain entangled until the final resolution of the various litigations in which Mr Hay is engaged, which by his own admission is ‘a very real prospect of years’”.[45]
[45] Affidavit of the wife (filed 21 May 2013), Annexure C.
During cross-examination, the wife explained her desire to finalise their property. She said:
“… I felt – after you taking the $25,000 out of the account I felt you were just stringing me along and that I was actually never going to be free of you … the fact that you were remarried was a critical factor in getting an agreement sorted out any matters finalised …”
The wife also said:
“… we had been separated for three years. Life wasn’t getting any simpler … we needed to get things sorted out … when was going to be a good time? In 10 years’ time, when you’ve finished all of the litigation about the land, and you were no longer under stress because of the court? Did you expect me to wait that long …”
I do not consider that the wife’s desire to finalise the parties’ financial matters and her actions leading up to the signing of the financial agreement amounted to unconscionable conduct. She did not subject the husband to conduct such as being “nagged and bullied … remorselessly”;[46] she wanted to end their financial relations to enable both parties to get on with their lives. There were no threats made by her to the husband.
[46] Mardones & Mardones [2012] FMCAfam 323, at para.83.
I am not satisfied from the evidence that the husband entered into the financial agreement unwillingly. There was no evidence that the husband was disadvantaged in the negotiations leading to the signing of the financial agreement. The financial agreement was made after negotiations over a period of three months from January 2012, following on from earlier negotiations regarding a property settlement in April 2011. The husband and the husband’s solicitor were involved in the drafting of the financial agreement.
The husband was enthusiastic about signing the financial agreement and reviewed the financial agreement with his solicitor. He wanted the financial agreement. The pressure to sign the financial agreement came from him. I consider that he wanted access to the sum of $80,000 scheduled to be paid to him by the wife, so that he could settle the purchase of the boat.
The husband was aware that he could have filed an application in the Family Court for injunctive orders against the wife.
Was there lack of capacity?
The husband asserted that he did not have the capacity to enter into the financial agreement at the time and that this caused him to be at a special disadvantage. He based this claim upon his mother’s ill-health and his ongoing depression and anxiety resulting from the trauma he was suffering and the pending decision of Evans J in (case omitted). The husband asserted that he was incapacitated by both his mental condition and the duress placed upon him by the wife’s alleged knowledge of his incapacity.
In Cole & Cole,[47] Wilson FM quoted the test for mental incapacity as contained in the Laws of Australia, noting that the person asserting such incapacity has the onus to show: (1) the incapacity existed at the date of signing the financial agreement; and (2) the other party knew or ought to have known of the incapacity at that time.[48]
[47] [2008] FMCAfam 664.
[48] Ibid at para.6.
In relation to the first limb of the test, his Honour found that, despite the husband (the party seeking to have the agreement set aside) having had known mental illnesses (major depression, dysthymia, narcissistic personality disorder, epilepsy and asthma) and detailed medical reports,[49] there was no way of knowing whether he was incapacitated at the time of signing the agreement.[50] In that case, the husband’s treating psychiatrist confirmed that: “expressing an opinion as to [husband’s] mental capacity at a date earlier than his consultation … would be entirely speculative”.[51]
[49] Ibid at paras.7–8.
[50] Ibid at para.17.
[51] Ibid at para.19.
The need for psychiatric evidence was also considered by Baker J in O’Brien and O’Brien,[52] where, in considering an application for revocation of the approval of a maintenance agreement under s.87 of the Act on the ground of undue influence, his Honour stated:
[52] (1981) FLC 91-094.
I am firmly of the view that for a party to succeed in an application to set aside an agreement approved under s.87 at a time when he or she had been given legal advice in relation to the agreement, he or she would need to produce evidence of a very cogent kind, including psychiatric evidence as to his or her state of mind at and prior to the signing of the agreement.
As a statement of general principle I am firmly of the view that a party who alleges undue influence against another in the context of s 87(6) must prove to the satisfaction of the court:
(a) that some illegitimate means of persuasion was used by the other party; and
(b) that the illegitimate means used was a reason (although not necessarily the sole reason, nor the predominant reason, nor the clinching reason) why the party entered into the agreement.[53]
[53] Ibid at paras.76,656–76,657.
In the current matter, the husband claimed that his severe anxiety, depression and post-traumatic stress have caused his incapacity. He said that he has impaired judgement, and an inability to make simple and/or rational decisions.
The medical evidence of Dr R (the husband’s treating GP) was contained in a short affidavit. Dr R said that the husband has been treated for anxiety and depression by his surgery since May 2006. He said that, since the husband’s mother became critically ill and was subsequently admitted to ICU and her death on 28 May 2012, and since the husband represented himself in the Supreme Court in February 2012, the husband has “suffered a worsening of his mental health”.[54]
[54] Affidavit of Dr R (filed 25 July 2013), at paras.1–2.
There was no medical evidence of the husband’s mental condition or capacity from a psychiatrist.
I consider that the evidence from Dr R was not cogent evidence that the husband was mentally incapacitated at the time of signing the financial agreement. He was able to draft the financial agreement and instruct his solicitor to amend the financial agreement.
In relation to the second limb of the test outlined by Wilson FM, I consider that the wife had no way of knowing the husband’s condition even if it could be shown that he had been incapacitated. She gave evidence that they had been separated for three years and she could not comment on his capacity.
The husband also asserted that the wife did not have the capacity to enter into the agreement. He said that the wife remained in a serious state of mental health and was still undergoing treatment for a condition until May 2010.
The wife agreed that she had had suicidal thoughts, due to the stress of litigation and her son’s death. She said however that over the last two years she has vastly improved in the functioning of all aspects of her life. She has not taken any anti-anxiety medication since May 2010. She said that she had full capacity to instruct her solicitor in relation to the financial agreement. There was no medical evidence to the contrary.
I am not persuaded on the medical evidence before me that the husband or the wife lacked mental capacity at the date of signing the financial agreement. They were both stressed but not to the extent that they were not able to rationally communicate and understand the nature and effect of the document they signed.
Was there misrepresentation by the wife?
The husband alleged the wife made a misrepresentation by failing to identify the exact amount of her inheritance.
In equity, a person may not benefit from a false representation which has induced another person to enter a contract that he or she may not otherwise have entered. Rescission may be granted where one party has been induced to enter a contract that he or she would not have otherwise have entered, on the basis of a representation made by the other party, and that representation, even if innocently made, has proven to be false. The party seeking rescission must show that he or she was influenced by the misrepresentation, and that that was one of the reasons, but not necessarily the major reason, for entering the contract; and the party making the representation intended other party to so act.[55]
[55] See, Dal Pont GE and Chalmers DRC, Equity and Trusts in Australia (Thomson Lawbook, 4th ed, 2007), p.252.
The learned authors of Equity and Trusts in Australia note:
Although there are statements by both judges and commentators that an innocent misrepresentation must be “material” to attract equity’s intervention, the modern approach locates materiality as a factor relevant to the issue of inducement, not distinct from it. The relevant question is: “Was the representation in the mind of the plaintiff so material that it was to her or him a real inducement?” (Australian Steel and Mining Corporation Pty Ltd v Corben 1974 2 NSW LR202 at 207–208 per Hutley JA).[56]
[56] Ibid.
The husband asserted that the wife knowingly underestimated the value of the inheritance from her father’s estate and was aware of her entitlement prior to entering into the agreement.
In her affidavit, the wife said that an amount of $70,000 from her father’s estate was acknowledged in the financial agreement. She said that this represented an approximate 20% share of the residual value of the estate following distribution of the proceeds of sale of her father’s property, given she had four siblings.
During cross-examination, the wife said that the $70,000 was an estimate, as she did not know the exact amount that she would get from her father. She said that there was no discussion in the family as to what the will contained, however that her and her siblings knew they would receive equal shares with $10,000 to go to her niece.
She said that she was aware her father had some debts, including a known debt of $30,000 resulting from a loan, and that she had allowed approximately $90,000 to be distributed out of the estate for debts and estate fees.
The additional amount received by the wife was $9,429. She said that she did not advise the husband of this additional amount as the agreement had been signed and finalised when she found out about the extra payment.
She denied that she was in breach of her obligation to make a full and proper disclosure at the time of making the financial agreement. She denied that the estimate of the amount she was to receive from the inheritance was a deliberate under-estimation.
I accept the wife’s evidence that she did not know at the time of making the financial agreement the exact amount of the inheritance. I consider that the wife’s estimate was made to the best of her knowledge at the time. I am not persuaded that her estimate was intended to induce the husband to enter into the financial agreement.
The husband’s evidence indicated that he was of the belief that the wife would inherit $100,000 from her father’s estate.[57] He signed the financial agreement on the basis of the amount being an estimated $70,000, rather than the actual amount of $79,429.
[57] Affidavit of the husband (filed 24 July 2013), Annexure E.
I am not satisfied by the husband’s evidence that the estimate was so material to the husband to induce him to enter the financial agreement. I do not accept that he would not have entered it if he had known the correct amount.
In considering the other approach of “materiality”, referred to by the learned authors of Equity and Trusts in Australia, was not material. Given the estimated value of the net property of the parties, the amount of the difference between the wife’s estimate and the exact amount of $9,429 was relatively insubstantial.
I consider that the husband was not induced into signing the financial agreement due to the estimate given by the wife.
I am not satisfied that the husband’s grounds of duress, undue influence, unconscionable dealing or misrepresentation against the wife have been made out. I consider that the financial agreement is not void, voidable or unenforceable.
Should the financial agreement be set aside?
Section 90K of the Act provides for circumstances in which court may set aside a financial agreement or termination agreement.
The husband relied on ss.90K(1)(b), (c) and ( e).
Section 90K(1)(b)
(b) the agreement is void, voidable or unenforceable;
I have already found that there was no duress, undue influence, unconscionable dealing or misrepresentation by the wife that would lead to the financial agreement being void, voidable or unenforceable. The effect of those findings is that I will not set aside the financial agreement made 30 March 2012 pursuant to s.90K(1)(b).
Section 90K(1)(c)
(c) 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;
The husband asserted that there has been a significant change in circumstances since the parties entered into the financial agreement, sufficient to cause it to be impracticable for the financial agreement to be carried out. He asserted that the decision in (case omitted)[58] affects the value of Property O, as the decision means that the previously approved 29 lot subdivision of the land cannot be undertaken.
[58] (2012) TASSC 26.
The husband asserted that, as a result of the court decision, the value of the property is now much less than its estimated value of $700,000 as contained in the financial agreement. He asserted that this loss of value was not anticipated at the time they entered into the financial agreement. The husband did not produce any expert evidence of the value of Property O, in its current state or otherwise, other than the value of E$700,000 contained in the financial agreement and his assertion of its value at $600,000 (GV $500,000) non subdivisible in his Case Outline.
The husband asserted that, due to the loss of value, the value of the property pool was far less than disclosed in the financial agreement. He claimed that it is, therefore impracticable to carry out the operative parts.
In Rohde and Rohde,[59] Gee J examined the meaning of the word “impracticability” and, referencing the Shorter Oxford Dictionary, noted the definition of “impracticable” includes: “not practicable”; “that cannot be carried out or done”; “practicably impossible”; and “unmanageable”.[60] However his Honour observed that:
‘impracticability’ is a conception different from ‘impossibility’; the latter is absolute, the former introduces at all events some degree of reason and involves some regard for practice, (per Veale J. in Jayne v. National Coal Board (1963) 2 All E.R. 220).[61]
[59] (1984) FLC 91-592.
[60] Ibid at 79,768.
[61] Ibid.
In La Rocca and La Rocca,[62] Kay J considered an application to set aside orders for alteration of property interests on the basis that circumstances had arisen since the order was made which resulted in it being impracticable for the order to be carried out, pursuant to s.79A(1)(b). His Honour noted:
the concept of impracticability is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the Court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to.[63]
[62] (1991) FLC 92-222.
[63] Ibid at para.78,538.
His Honour continued:
Now, in my view, what the appropriate application of s.79A(1)(b) ought to be is that that circumstances that have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders.[64]
[64] Ibid.
The inability of the husband to subdivide Property O does not make it impracticable to effect the terms of the financial agreement. The wife can transfer her interest in the property to the husband. The subdivision of Property O was not a condition of the financial agreement. Although the husband was confident that he would be able to subdivide the property, he could reasonably have contemplated that the Supreme Court action could fail. However, as I have said the loss of the ability to subdivide did not make it impracticable for the terms of the financial agreement to be carried out.
I will therefore not set the financial agreement made 30 March 2012 aside on this basis.
Section 90K(1)(e)
(e) in respect of the making of a financial agreement--a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable;
This sub-section provides for a separate statutory consideration of unconscionable conduct.
In Pascot & Pascot,[65] Le Poer Trench J noted:
It appears that the separate ground of “unconscionable conduct” was included to emphasise the Court should consider any such conduct as giving rise to the ability to set the agreement aside as well as the agreement being void or voidable as a consequence of such a finding.[66]
[65] [2011] FamCA 945.
[66] Ibid at para.296.
His Honour referred to:
The Further Revised Explanatory Memorandum of Family Law Amendment Act 2000 (Cth) explained the sec 90K(1) grounds:
160. Subsection 90K(1) provides that a court will be able to set aside a financial agreement if the court is satisfied that:
·the agreement was obtained by fraud (including non-disclosure of a material matter);
·the agreement is void, voidable or unenforceable including whether the agreement is obtained by the unconscionable conduct of one of the parties. These grounds reflect the principles of common law and equity, under which an agreement would fail because of lack of certainty, lack of intention to enter legal relations, or because the agreement is affected by duress, undue influence, unconscionability, misrepresentation or operative mistake. The inclusion of unconscionability as a separate ground is simply to make it clear that this ground is included within the grounds for setting aside an agreement. Unconscionability will retain its ordinary meaning within the law of contract. The provision is modelled upon the provisions of section 87(8)(c) of the Act and the Government expects it to be interpreted in a similar way (see for example the decision of the Full Court of the Family Court in Blackman v Blackman (1998) FLA [sic] 92-791);[67] (emphasis added)
[67] Ibid at para.297.
I agree with his Honour’s view that unconscionable conduct in the context of s.90K(1)(e) is not distinguishable from that referred in s.90K(1)(b).
The earlier discussion relating to the husband’s equitable claim of unconscionable conduct is therefore relevant to the claim under s.90K(1)(e).
I have found that there is no basis for the husband’s claim of conduct by the wife that was unconscionable. As I have said, the husband was at no special disadvantage, especially in relation to any claimed incapacity.
The financial agreement will therefore not be set aside.
Is the agreement a binding financial agreement?
The financial agreement is binding if it complies with s.90G of the Act. If it is binding it has the effect of ousting the jurisdiction of the court to make orders under Part VII of the Act (s.71A).
The husband asserted that the financial agreement was not binding because the wife did not receive the independent legal advice as required by s.90G(1)(b) of the Act. This subsection provides:
(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;
The onus of proving the financial agreement is binding lies with the wife in accordance with the decision of the Full Court in Hoult & Hoult.[68]
[68] (2013) FLC 93-546.
There was no issue that husband was provided with the requisite independent legal advice pursuant to s.90G(1)(b) of the Act.
The husband asserted that the wife was not provided with the requisite legal advice pursuant to s.90G(1)(b), notwithstanding that her solicitor signed a statement in accordance with sub-section (1)(c). He sought to cross-examine the wife in respect of the legal advice she received. The wife’s Counsel objected to the questioning about the content of the legal advice on the basis of legal professional privilege.
This matter differs from the scenario in cases such as Parker& Parker[69] and Hoult & Hoult. In both of those cases, the party seeking to have the financial agreement set aside based their claim on their own failure to receive the requisite legal advice. The respondent in each case was thus in the position of arguing that each party had received the requisite legal advice and called the other party’s solicitor to give evidence that such advice had been provided.
[69] (2012) FLC 93-499.
The difference is that, here, it is the party seeking to have the financial agreement set aside, namely the husband, who is arguing that the other party (the wife) had not received the legal advice. And, as noted earlier, the wife’s solicitor was not cross-examined. He was not called to give evidence.
The decision of Hoult & Hoult however provides authority for the distribution of the onus of proof. This decision was followed in Logan & Logan[70]:
· The onus of establishing that an agreement is binding falls upon the party asserting that fact.[71]
· The certificate … should have been treated as prima facie evidence of compliance with the legal advice component of s.90G(1).[72]
· [O]nce the party seeking to rely upon the agreement produces in evidence the certificate signed by the other party’s solicitor, there is a forensic obligation on the other party to adduce evidence which would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate …[73]
[70] (2013) FLC 93-555.
[71] Hoult & Hoult (2013) FLC 93-546, at para 60.
[72] Ibid at para 96.
[73] Ibid at para 62.
Consequently, in this matter, the onus of proof of establishing that the financial agreement is binding lies upon the wife, who must establish the existence of the matters set out in s.90G, including the giving of the requisite legal advice to both parties. As indicated in Hoult & Hoult, once the wife adduces in evidence a certificate signed by each party’s solicitors, there is an obligation on the husband to adduce evidence which would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate.
I turn to the evidence about this issue.
The financial agreement was annexed to the affidavit of the wife filed 21 December 2012. Recital N in the agreement provided:
Before each party signed this agreement they each received separate independent legal advice from a legal practitioner (as certified in the certificates annexed to this agreement) as to the following:
(i) The effect of this agreement on that party’s rights;
(ii) As to the advantages and disadvantages at the time the advice was provided of that party making this Agreement.
The financial agreement was signed by each party. A certificate was signed and dated by the solicitors for both parties. The certificate states that, before the financial agreement was signed by each party, he or she had been provided with independent legal advice about the effect of the financial agreement on his or her rights, and the advantages and disadvantages at the time the advice was provided of the making of the agreement. Both parties certified that, before signing the financial agreement, they each received the advice described.
After the financial agreement was signed by both parties and their solicitors, the wife paid the husband the sum of $80,000 on 30 March 2012 pursuant to paragraph 11of the financial agreement.
The husband indicated that he was disputing the financial agreement in an email dated 24 June 2012, in which he asserted:
(a) since entering into the BFA there has been a significant change of circumstances that make the agreement unjust inequitable;
(b) prior to entering into the BFA Ms Hay acted in bad faith, the effect of which financially forced me to enter into the agreement prior to, but on the understanding that, the particulars declared and implied in the recitals were true;
(c) in the circumstances I have been advised to have the validity of the BFA reviewed by either the Family Law Court or the Supreme Court.[74]
[74] Affidavit of the wife (filed 21 December 2012), Annexure F.
In an email dated 27 June 2012, the husband asserted that there should be a review of the agreement based on a variety of matters.
In his affidavit, the husband asserted such matters as the values itemised in Annexure A of the agreement are ‘fictitious’ (paragraphs 72–76); the wife failed to properly disclose a material matter (paragraphs 77, 110, 159); the wife acted unconscionably by committing multiple acts of bad faith (paragraphs 78, 80); the wife’s superannuation has increased in value since it was originally assessed (paragraphs 156); it is impracticable to carry out operative parts of the agreement (paragraphs 83, 149); he was incapacitated (paragraphs 80, 81, 90, 97, 110, 143, 144, 154, 164); he suffered duress (paragraphs 82, 110, 124, 126, 130, 132, 143, 144, 147, 154); and the BFA is unjust and inequitable (paragraphs 71, 110, 154).
Notably, the husband did not mention any issue in respect of the independent legal advice obtained by the wife.
The husband first included a reference to s.90G(1)(b) in his Response filed 20 May 2013 and he again referred to it in his Outline of Case filed 4 September 2013.
In his affidavit filed 24 July 2013, the husband did not adduce any evidence which would disprove or, at the minimum, “throw into doubt” any inference or conclusion to be drawn from the certificate.
The main thrust of his assertion about the wife not receiving legal advice was based on his claim that she had not disclosed to her solicitor that she had placed him under duress, that she had not disclosed the correct amount of her expected inheritance and she had not disclosed his and her incapacity. This argument assumed that there was a basis for his assertion.
As I have indicated, I have found that the wife did not misrepresent the amount of her inheritance. I consider that she did not place the husband under duress. Neither the wife nor the husband was incapacitated at the time of entering the financial agreement.
As I have indicated, the wife produced the certificate demonstrating she had received the requisite legal advice.
During cross-examination, the wife claimed legal privilege of her communications with her solicitor regarding the content of the advice. However, she conceded that she could be cross-examined on the issue of compliance, but that the husband’s questions must be “sufficiently precise and definite to displace the inference”.[75]
[75] Hoult & Hoult (2013) FLC 93-546, at para.97 (Thackray J), quoting Windeyer J in Purkess v Crittenden (1965) 114 CLR 164.
The wife answered questions about whether the relevant advice was given to her by her solicitor. She said that she was advised about the advantages and disadvantages of entering into the financial agreement. She said that she was given advice about a number of circumstances in which an agreement may be set aside, such as fraud and non-disclosure. I accept her evidence about this and accept that she received the requisite advice.
Although the wife did not call her solicitor to give evidence, the husband did not throw any doubt about this issue in his affidavit evidence. His cross-examination of the wife did not raise any doubt about the advice.
There was no evidence to support an inference being made that the wife’s failure to call her solicitor to give evidence would not have assisted her case.[76] As noted above, the wife discharged the onus of proving that the advice was given by producing the relevant certificate.
[76] Jones v Dunkel (1959) 101 CLR 298.
I consider that the financial agreement is a binding financial agreement as there was compliance with s.90G(1)(b).
I will therefore dismiss the husband’s Response.
The wife did not seek to enforce the financial agreement at the hearing. She sought that, in the event the financial agreement was not set aside, the matter be listed for determination of her Enforcement Application.
I certify that the preceding two hundred and thirty-nine (239) paragraphs are a true copy of the reasons for judgment of Judge Baker
Associate:
Date: 16 April 2014
Key Legal Topics
Areas of Law
-
Family Law
-
Contract Law
Legal Concepts
-
Appeal
-
Breach
-
Contract Formation
-
Remedies
2
11
2