Innis & Dalziel (No 2)
[2023] FedCFamC2F 638
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Innis & Dalziel (No 2) [2023] FedCFamC2F 638
File number(s): LEC 440 of 2018 Judgment of: JUDGE L. TURNER Date of judgment: 30 May 2023 Catchwords: FAMILY LAW – Property – discrete issues – whether agreement entered into by parties is a binding financial agreement –– held that the financial agreement was not a binding financial agreement as there are grounds to set the financial agreement aside.
Spousal maintenance – application to stay the collection of spousal maintenance and discharge of orders – held that as financial agreement has been set aside then a new application to be filed by husband as to variation or discharge of spousal maintenance orders accompanied by an affidavit and financial statementLegislation: Family Law Act 1975 (Cth), ss. 90AD, 90B, 90G, 90K, Pt VIIIA Cases cited: Bachman & Donohoe [2021] FedCFamC1F 240 Division: Division 2 Family Law Number of paragraphs: 63 Date of last submission/s: 5 May 2023 Date of hearing: 5 April 2023 Place: Brisbane Counsel for the Applicant: Mr Gordon Solicitor for the Applicant: Farrar Gensini Dunn Sydney Counsel for the Respondent: Mr Jordan Solicitor for the Respondent: Barry Nilsson Lawyers ORDERS
LEC 440 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS INNIS
Applicant
AND: MR DALZIEL
Respondent
order made by:
JUDGE L. TURNER
DATE OF ORDER:
30 May 2023
THE COURT ORDERS BY WAY OF FINAL ORDER THAT:
1.The financial agreement entered into by the parties dated October 2011 be set aside pursuant to section 90K Family Law Act 1975.
2.The application in the proceeding filed by the respondent husband on 17 March 2023 is hereby dismissed.
FURTHER THE COURT ORDERS:
3.The matter be listed for mention in Town M at 9.00am on 18 July 2023 with the parties and legal representatives to appear in person.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Innis & Dalziel has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE L. TURNER:
INTRODUCTION
The parties have been involved in extensive property litigation since 2018.
Before the matter can progress any further determinations must be made as to:
(a)The financial agreement.
(b)The interim spousal maintenance orders made in favour of the wife.
EVIDENCE
In considering the issues regard has been had to:
(a)The relevant material on the court file.
(b)The written and oral evidence of the parties.
(c)The points of claim and response.
(d)The transcript.
(e)The exhibits.
(f)Part VIIIA Family Law Act 1975.
(g)Relevant authorities.
The parties are legally represented.
Mr B and Ms C were not required for cross-examination.
For the husband the following witness was called and cross-examined:
(a)The husband.
Unless addressed elsewhere in the judgment, I find the husband to be a credible witness.
For the wife the following witness was called and cross-examined:
(a)The wife.
Unless addressed elsewhere in the judgment, I find the wife to be a credible witness.
The written submissions of the parties have been properly considered in reaching a determination although each submission may not have been specifically addressed or responded to in the judgment (Baghti & Baghti [2015] Fam CAFC 71).
Findings of fact are made on the balance of probabilities having regard to the evidence and in what follows statements of fact constitute findings of fact.
I will now consider each issue.
FINANCIAL AGREEMENT
Proposals
Wife’s position
The wife seeks:
(a)An order that the financial agreement is not a binding financial agreement (BFA) for the purposes of section 90G Family Law Act 1975.
(b)If the court was to make a finding that the financial agreement was a BFA then the BFA be set aside pursuant to section 90K(1)(b) Family Law Act 1975 as it is void, voidable or unenforceable.
(c)Alternatively pursuant to section 90K(1)(d) since the making of the BFA, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of the children of the marriage) and as a result of the change, the child or the mother will suffer hardship if the court does not set the agreement aside.
(d)Alternatively pursuant to section 90K(1)(e) the husband in the making of the BFA engaged in conduct that was, in all the circumstances, unconscionable.
(e)If there is a BFA the husband is estopped from relying on the BFA.
(f)The BFA is of no force or effect by reason that no separation declaration has been made as required by section 90AD Family Law Act 1975.
Husband’s position
The husband seeks orders that there is a BFA.
Before any findings can be made as to the financial agreement it is useful to capture the relevant events that led up to the execution of the agreement.
Relevant events
Having considered the evidence and taking into account the written submissions, I find that the series of events resulting in the preparation of a written agreement between the parties as to their finances prior to marriage occurred as follows:
DATE EVENT 2011 The parties were engaged. 2011 - September 2011 The husband’s family wanted the parties to enter into a financial agreement which was at times was discussed between the parties. September 2011 The parties had conversations about the drawing up of a financial agreement. September 2011 The husband booked an appointment with D Lawyers (D Lawyers) to discuss the financial agreement. September 2011 The parties attended upon Mr B at D Lawyers to discuss the preparation of the financial agreement. September 2011 D Lawyers prepared the financial agreement. September 2011 A first draft of the financial agreement was prepared by Mr B and forwarded to the husband for consideration and clarification. September 2011 The husband engaged the services of Mr E, a partner at E Lawyers (E Lawyers), to act on his behalf in respect to the financial agreement. September 2011 The wife attended an appointment with Ms C, a solicitor in the employ of D Lawyers to discuss the financial agreement. September 2011 Mr E sent a letter “attention of Ms C” to D Lawyers confirming their earlier telephone conversation and setting out amendments required for the financial agreement. September 2011 The wife signed the amended financial agreement with her signature being witnessed by Ms C. September 2011 Ms C signed the Certificate of Independent Advice for the wife. September 2011 Ms C sent a copy of the signed financial agreement to Mr E and in the letter requested that the husband collect the original financial agreement from the offices of D Lawyers. October 2011 The husband collected the signed financial agreement from the offices of D Lawyers. October 2011 The husband signed the financial agreement with his signature witnessed by Ms F. October 2011 The financial agreement was dated 7 October 2011. October 2011 Ms C issued a tax invoice addressed to Ms Innis (the wife) from D Lawyers for $1,540 for “our costs in attendance on you taking instructions for preparation of Binding Financial Agreement, consider requested amendments, finalise agreement and attending to execution” October 2011 Mr E in a letter to “Ms C” requested information as to whether the husband had collected the financial agreement and if not to forward the original financial agreement to E Lawyers. October 2011 Ms C in a letter to E Lawyers confirmed that the financial agreement had been collected on 11 October 2011 and in the letter requested the return of the completed and signed BFA. 2011 The parties married in Country G. 2011 The parties returned to Australia. December 2011 Mr E signed the Certificate of Independent Advice for the husband. December 2011 Mr E sent to the husband a copy of the completed financial agreement, a copy of Mr E’s statement of independent legal advice and the lawyer’s final account. In the accompanying letter the husband was informed that the original financial agreement had been sent to the wife’s solicitors, D Lawyers. December 2011 Mr E sent to “Ms C” the “binding financial agreement duly executed by each of the parties and with the relevant certificates attached” noting that the agreement was dated October 2011. Is the written agreement dated October 2011 a financial agreement for the purposes of Part VIIIA Family Law Act 1975?
Part VIIIA Family Law Act 1975 contains the relevant legislation as to financial agreements.
As to what is constitutes a financial agreement made prior to marriage is set out in section 90B which provides that an agreement will be viewed as a financial agreement if:
(a)The persons entering into the agreement are contemplating marriage [90B(1)(a)].
(b)The person entering into the agreement are not spouse parties to any other binding agreement under various sections contained in Part VIIIA [90B(1)(aa)].
(c)The agreement refers to any of the below:
(i)How, in the event of the breakdown of the marriage, all or any of the property or financial resources of the spouse parties at the time when the agreement is made, or at a later time and before divorce, is to be dealt with [90B(2)(a)].
(ii)What maintenance is to be paid to either spouse during the marriage and/or after divorce [90B(2)(b)].
(iii)What matters are incidental or ancillary to the distribution of property for the payment of maintenance [90B(3)(a)].
(iv)Any other matters [90B(3)(b)].
(d)The agreement is expressed to be made under section 90B.
Conclusion
I find that the written agreement between the parties dated October 2011 is a financial agreement for the purposes of section 90B based on the following:
(a)The written agreement was made at a time the parties were contemplating marriage with the parties marrying within weeks of the written agreement being completed.
(b)At the time of entering into the written agreement neither party was a spouse to any other binding agreement.
(c)Under the heading INTRODUCTION on the first page of the written agreement (under A) the document is identified as a financial agreement under section 90B.
(d)The written agreement contains information as to what is to happen with the property and financial resources of the parties in the event of a marriage breakdown as well as express provisions as to maintenance.
The next question to explore is whether the financial agreement is a binding financial agreement.
Is the financial agreement dated October 2011 a binding financial agreement?
According to section 90G a financial agreement is binding if and only if:
(a)The agreement is signed by all parties [90G(1)(a)].
(b)Before the agreement was signed by the parties, each spouse party is provided with independent legal advice from a legal practitioner about the effect of the agreement on their rights and the advantages and disadvantages of making the agreement at the time that the advice was provided [90G(1)(b)].
(c)Either before or after signing the agreement, the spouse party is provided with a signed statement by the legal practitioner stating that the advice was provided to that party [90G(1)(c)].
(d)A copy of the signed statement by the legal practitioner is provided to the other spouse party or their legal representative [90G(1)(ca)]
(e)The agreement has not been terminated [90G(1)(d)].
(f)The agreement has not been set aside by the court [90G(1)(d)].
I will now consider each requirement of section 90G.
Signed by the parties [90G(1)(a)]
I find that the financial agreement was signed by both parties.
In reaching this conclusion I make the following findings:
(a)Ms F witnessing the husband’s signature does not impact on whether the financial agreement is binding based on the following:
(i)The husband’s signature on October 2011 was witnessed by Ms F, a worker at the husband’s business.
(ii)Ms F placed the initials JP after her signature.
(iii)Subsequent enquiries by the wife revealed that that at the time the document was witnessed by Ms F, Ms F’s appointment as a Justice of the Peace had expired.
(iv)It is not a requirement of the legislation that the financial agreement, in order for it to be binding, is sworn or affirmed or needs the signature of a JP.
(v)As is the common law practice, provided the signature to a deed is witnessed by an adult (someone over the age of 18) then there is no issue as to who can witness a signature.
(vi)As Ms F was over 18 then she was a valid witness, whether or not her JP status was current.
(vii)I therefore find that this is not an issue which impacts on whether the financial agreement is binding.
(b)The wife was aware that the husband had signed the financial agreement based on the following:
(i)The wife maintains that it was not until December 2021 that the wife became aware of the financial agreement having been signed by the husband with the husband having informed the wife verbally on or around October 2011 that the husband had not signed the agreement.
(ii)I do not accept the wife’s version of events for the following reasons:
(A)The wife was aware that the husband and his family required a financial agreement to be entered into by the parties prior to their wedding in 2011.
(B)Why would the parties jointly attend an appointment to enquire about a financial agreement if it was never the intention of the husband to go through with it?
(C)Why would the parties go to the expense of having their own lawyers if it was not the intention of the husband to proceed with the financial agreement?
(D)Why would the husband insist on amendments to the financial agreement if the husband never intended to sign it?
(E)Why did the wife keep a copy of the financial agreement in her folder if the wife thought it was no longer relevant?
(F)Mr E completed the declaration in 2011 after the parties had returned to Australia from Country G.
(G)Why would that occur if the husband had no intention of going ahead with the financial agreement?
(H)Ms C subsequently received the original document in 2011 when the wife was back in Australia.
(I)There is no reason why Ms C would not have informed the wife as to the signed financial agreement and in accordance with the legislation provide a copy of the completed financial agreement to the wife.
(J)The subsequent enquiries by the wife of D Lawyers as to the file resulted in:
· The wife being informed by the receptionist that only the husband was listed as a client in the system and the wife being provided with a copy of the financial agreement signed only by the wife.
· Unfortunately there was no affidavit filed by the receptionist as to how it was ascertained who was the client and where the copy came from when the hard file had been destroyed years before.
· Mr B informed the wife that the hard file had been destroyed.
· The destruction of the hard file would not have extended to the destruction of the original financial agreement which was sent to D Lawyers by E Lawyers in December 2011.
· Lawyers are well aware as to the importance of retaining such a document and the necessity of keeping it in a safe place.
· There is no evidence as to what has happened to the original document.
· As the wife was their client the only explanation is either the original financial agreement is still at the offices of D Lawyers in their safe custody (with no evidence that a search of the safe custody has taken place) or that at some point the document was collected by the wife.
· Either scenario would result in the wife having been aware of the executed document.
(K)In any event the wife was aware after commencing legal proceedings in July 2018 as to the existence of the signed completed financial agreement as her then solicitor told the wife about the BFA and that the husband was not pressing the BFA.
(L)Again an affidavit (or subpoena for the giving of evidence) to her then solicitor would have assisted as I struggle to understand how experienced solicitors acting for both parties would have been so dismissive as to such an important document and why no mention of this incident appeared in either party’s affidavits leading up to this issue being the subject of a discrete hearing.
(M)The other burning question which places in doubt the wife’s version of events is why the wife did not mention the BFA (whether binding or not) to her initial lawyers at the time of giving her instructions for the initiating application or any subsequent affidavits.
(N)As to whether the husband told the wife something contrary as to what happened leading up to the wedding is neither here or there as the wife became aware of the signed financial agreement through her lawyers, I find, on or around December 2011.
(O)I find that the wife was aware that the financial agreement had been signed by the husband who had obtained independent legal advice.
Independent legal advice [90G(1)(b)]
I find that both parties were provided with independent legal advice as to the effect of the agreement on their rights and the advantages and disadvantages of making the agreement.
In reaching this conclusion the following findings have been made:
(a)The husband did not receive legal advice from D Lawyers
(i)There is no evidence before the court to suggest that Mr B or any other solicitor at D Lawyers had previously acted for either party prior to the parties’ appointment with Mr B in September 2011.
(ii)Both parties attended the appointment with Mr B in September 2011 to enquire about how to obtain a financial agreement.
(iii)The appointment before Mr B in September appeared to be an information gathering session about the parties’ financial affairs.
(iv)This is demonstrated by the husband’s following answers in cross-examination:
Counsel: You sat in the appointment together?
Husband: Yes
Counsel: Mr B was the person that both you and her saw?
Husband: Yes
Counsel: And you accept that, during that meeting, you did the majority of speaking on your and my clients behalf?
Husband: Yes
Counsel: And that, during that conference, you were asked by Mr B on you and your wife’s financial position?
Husband: Yes
Counsel: And you answered for both of you
Husband: Incorrect…
Counsel: Okay. You answer for you, do you say?
Husband: Correct…
Counsel: Okay. Now you gave instructions to Mr B to draft a binding financial agreement, didn’t you?
Husband: I asked him advice on getting a financial binding agreement.
Counsel: And he gave that advice?
Husband: Correct.
(v)There is no evidence that apart from discussing the contents needed for the preparation of a financial agreement and the process of getting a financial agreement that legal advice was given to either party at this interview as to the impact, advantages or disadvantages of the financial agreement.
(vi)Subsequent to the appointment the wife chose to use the services of D Lawyers in the preparation of the financial agreement and the husband chose to use Mr E from E Lawyers as his legal representative.
(vii)I find that at no time did D Lawyers act for both parties in the same or related matters and therefore this is not a matter where Reg 11 Legal Profession Uniform Law Australian Solicitors’ Conduct Rules (NSW) applies.
(viii)Likewise the decision of Rees J in Bachman & Donohoe [2021] FedCFamC1F 240 is also not applicable. In that matter where it was held that independent legal advice had not been given, it was clear that the lawyer was involved with one of the parties (as a friend and part owner of a boat), had acted for one party in the preparation of a will, had given advice to both parties in respect to a property transfer and refinance, had subsequently given legal advice to both parties resulting in the drafting of a financial agreement and it was only shortly before signing that financial agreement that one of the parties was referred to another lawyer for independent advice. This is a very different fact scenario to this matter where the lawyer did not know the parties, had not acted previously for the parties, the joint appointment was information sharing and gathering only and that after the appointment and prior to the preparation of the agreement the wife had chosen D Lawyers to retain as her lawyer and the husband had chosen E Lawyers as his lawyers.
(ix)It was only after the parties had chosen to obtain their own lawyers that the financial agreement was prepared by the wife’s lawyers and subsequently amended at the insistence of the husband’s lawyers.
(x)Advice as to financial agreement was then provided to the wife and the husband by their respective lawyers.
(xi)I therefore find that the husband had never been in receipt of legal advice from D Lawyers about the financial agreement and therefore there was no conflict in D Lawyers acting for the wife in respect to the financial agreement.
(b)The wife did receive independent legal advice in respect to the financial agreement
(i)The wife does not dispute that she was in receipt of legal advice from D Lawyers but denies that such advice was independent.
(ii)The parties had been in discussion about having a financial agreement drawn up prior to marrying.
(iii)The wife was aware that the husband’s family together with the husband wanted the financial agreement because of the financial discrepancy between the parties.
(iv)No matter who chose the lawyers or how the booking came about for the parties to attend upon D Lawyers, the wife knew of the appointment (as evidenced by her diary entry in her 2011 day timer) and the purpose of the appointment.
(v)I accept the husband’s evidence that during the joint initial consultation the parties were each informed that they would each require their own legal representation if they wished to proceed with the financial agreement.
(vi)I accept the wife’s evidence that the joint initial consultation, which according to the wife who had a nail appointment (as noted in her 2011 day timer) at 3.30pm to 4.00pm, would have only lasted until then and that during that time a series of questions were asked by Mr B, mostly of the husband, as to their financial situation.
(vii)I accept the evidence that at the initial joint consultation with Mr B the wife chose to stay with D Lawyers for the purposes of the preparation of the financial agreement.
(viii)I do not accept the wife’s evidence that she did not instruct D Lawyers to prepare the draft financial statement.
(ix)The wife is an educated and intelligent woman who was aware that the husband and his family required that a financial agreement be entered into prior to the wedding.
(x)The wife was aware after the initial consultation with Mr B as to what needed to be done in order to proceed with a financial agreement.
(xi)I find that at the initial joint consultation the wife in effect gave the go ahead to Mr B to prepare the financial agreement based on the information gathered at the initial consultation.
(xii)Within days of the initial joint consultation Mr B provided a draft of the financial agreement to the husband which was subsequently provided to the husband’s solicitor Mr E at E Lawyers.
(xiii)The wife then attended an appointment at D Lawyers at 10.00am in September 2011 (as evidenced by the wife’s diary entry in her 2011 day timer).
(xiv)The appointment in September 2011 was with Ms C, an employee of D Lawyers, who from thereon in had the conduct of the matter on behalf of the wife, with one of her obligations being to inform the wife as to the ramifications of entering into a financial agreement.
(xv)As explained by Ms C in her affidavit “I sometimes took meetings with clients independently of Mr (B). Sometimes he would see new clients for initial appointments and then hand the file to me. I would then run with it generally unless there were any concerns, in which case I would go back to Mr B” [8].
(xvi)From the evidence it would appear that the appointment in September 2011 was not for the signing of the financial agreement but to go through the draft of the agreement.
(xvii)I do not accept the wife’s evidence that the wife thought at the time that D Lawyers was acting either for both of them or for the husband.
(xviii)It is clear from the evidence that Ms C was acting for the wife and Mr E was acting for the husband.
(xix)Mr E required several amendments to the financial agreement which was communicated to Ms C both orally and in writing in September 2011.
(xx)Ms C in her affidavit explained her limited recall as to her involvement with the matter swearing in her affidavit “I do not specifically recall meeting Ms Innis or providing advice to her. Noting that I signed Annexure D to the Financial Agreement, I presume I did but it was too long ago to remember [6]”.
(xxi)Ms C however had a vague recollection of the wife remembering that she was a student [5].
(xxii)Ms C further stated “my level of responsibility while employed at D Lawyers depended on the type of matter. I sometimes gave advice on financial agreements. I gave such advice in a combination of oral and written form. I cannot remember whether it was always oral and written at that time - certainly my practice now is to do both” [7].
(xxiii)There is nothing in the evidence to suggest that Ms C acted inappropriately at any time in her role as a qualified solicitor acting for the wife in the financial agreement.
(xxiv)I do not accept that the wife was not aware of the husband having other lawyers acting on his behalf in respect to the financial agreement.
(xxv)I have no doubt that Ms C would have obtained instructions from the wife as to the amendments to the financial agreement as suggested by the husband’s lawyers.
(xxvi)Although the wife has no recollection as to the subsequent appointment with Ms C in September 2011 (although her written and oral evidence on this issue was muddled), the evidence supports that on that day the amendments had been made and incorporated into the financial agreement, the financial agreement had been signed by the wife (with Ms C witnessing her signature), Ms C had signed the Certificate of Independent Advice and was provided with a copy of the financial agreement ([67] wife’s trial affidavit).
(xxvii)I do not accept the wife’s evidence that the wife had never received any legal advice from Ms C about the financial agreement or that she was unaware of the impact that it would have upon the wife should the parties separate.
(xxviii)I have no doubt that Ms C would have explained the financial agreement to the wife and provided her with independent evidence as to the effect, advantages and disadvantages of the agreement.
(xxix)If Ms C had not done so, Ms C would not have signed the requisite certificate.
(xxx)I do not accept that the wife was not aware of the contents of the financial agreement when the wife had read the draft, had been spoken to about the amendments, had signed the document and had kept a copy of the financial agreement in her possession since October 2011.
(xxxi)Subsequently on October 2011 the wife was sent a tax invoice prepared by Ms C from D Lawyers as to services rendered for the preparation, amendment and execution of the financial agreement.
(xxxii)I find that this tax invoice is evidence that:
(A)D Lawyers acted only for the wife.
(B)D Lawyers prepared the financial statement, amended the financial statement and had the financial statement executed.
(xxxiii)The tax invoice was subsequently paid.
(xxxiv)I therefore find that the wife was in receipt of independent legal advice from the lawyers that were acting for her in regard to the financial agreement.
(c)The nonexistence of a cost agreement and the who paid the account is not relevant in determining whether the financial agreement is binding
(i)The wife cannot recall receiving or signing a costs agreement from D Lawyers.
(ii)The hard file of D Lawyers is no longer in existence, having been destroyed after 7 years.
(iii)The best evidence that exists is a copy of a tax invoice rendered to the wife by D Lawyers for $1,540.
(iv)There is no evidence that the account was disputed.
(v)The account was subsequently paid.
(vi)As to who actually paid the account is irrelevant as it was issued to the wife and then paid.
(vii)I find that how the account came about and how it was paid is not relevant in determining whether the financial agreement is binding.
Signed statement by the legal practitioner [90G(1)(c)]
The evidence supports that:
(a)Ms C signed (in September 2011) and subsequently provided a copy of the Certificate of Independent Advice to the wife in September 2011.
(b)Mr E signed (in December 2011) and subsequently provided a copy of the Certificate of Independent Advice to the husband in December 2011.
I therefore find that the each party’s solicitor signed the Certificate of Independent Advice and provided a copy of the signed statement to their respective clients.
Copy of the signed statement to the other party or their legal representative [90G(1)(ca)]
The evidence supports that:
(a)A copy of the Certificate of Independent Advice signed by Mr E for the husband was provided to the wife’s legal practitioner in December 2011.
(b)A copy of the Certificate of Independent Advice signed by Ms C for the wife was provided to the husband in December 2011.
I therefore find that a copy of the signed statement for each of the parties was provided to the other party or their legal representative.
Agreement has not been terminated [90G(1)(d)]
There is no evidence that the agreement has been terminated by either party
Agreement has not been set aside by the court [90G(1)(d)]
Pursuant to section 90K, a financial agreement can be set aside if:
(a)The agreement was obtained by fraud including the non-disclosure of a material matter [90K(1)(a)]; or
(b)A party entered into the agreement for the purpose of defrauding or defeating a creditor or with reckless disregard of creditor’s interests [90K(1)(aa)]; or
(c)A party entered into the agreement to defraud another person who a party to the de facto relationship with a spouse party or to defeat the interests of that person or with reckless disregard of that person’s interests [90K(1)(ab)]; or
(d)The agreement is void, voidable or unenforceable [90K(b)]; or
(e)Circumstances have arisen since the agreement was made whereby it is impracticable for the agreement or part thereof to be carried out [90K(1)(c)]; or
(f)Since the making of the agreement, a material change has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and as a result of the change the child or the party who has care of the child will suffer hardship if the court does not set the agreement aside [90K(1)(d)]; or
(g)A party to the financial agreement has engaged in unconscionable conduct in the making of the agreement [90K(1)(e)]; or
(h)A payment flag is operating on a superannuation interest covered by the agreement or the agreement covers at least one superannuation interest that is unsplittable [90K(1)(f) and (g)].
Only one ground is required to be established to successfully set aside a BFA.
Upon considering the evidence I find that the financial agreement in this matter is to be set aside as the agreement is void or voidable [s90K(1)(b)] due to the misrepresentations made by the husband to the wife and to his legal representative as to his assets and liabilities including his failure to disclose his true financial situation.
I make this finding based on the following:
(a)Under the heading BACKGROUND in the financial agreement, Clause 2.10 states that the husband “confirms that Annexure A fully and adequately discloses the identity, nature and estimated value of his separate assets, financial resources and liabilities as at the date of this agreement”.
(b)The husband sets out in the financial agreement under Annexure A his assets liabilities and financial resources (Annexure A) as follows:
Assets
Agreed estimated value
Real estate
H Street, Town J
Business interest in Company K of Country G (Equipment and Liquid Assets)
Assets
Silver bonds
Gold bonds
Motor Vehicles
Motor Vehicle 1
Superannuation
Husband’s Australian superannuation
$365,000.00
$950,000.00
$220,000.00
$1,300,000.00
$30,000.00
$10,000.00
Total assets
$2,875,000.00
Liabilities
Agreed estimated value
Mortgage
ANZ bank
Outstanding loans to brother Mr L with respect to business interest detailed above
$30,000.00
$200,000.00
Total liabilities
$230,000.00
Total net assets
$2,645,000.00
(c)The husband in Annexure A made misrepresentations as to the following assets and liabilities:
(i)Extent of the husband’s equity in H Street, Town J
(A)The husband acquired the title to H Street, Town J (H Street, Town J) in September 2011, one month before the execution date of the financial agreement.
(B)It is not in dispute that as at the date of the financial agreement, H Street, Town J was valued at $365,000 which reflected the purchase price paid by the husband.
(C)The husband however stated in Annexure A that the mortgage to ANZ (mortgage) over H Street, Town J was $30,000, which inferred that the husband had equity in H Street, Town J in the sum of $335,000.
(D)However the husband states in the trial affidavit that the mortgage was the difference between the purchase price of $365,000 and the deposit of $50,000 [9].
(E)Therefore as at October 2011 the mortgage was $315,000 (and not $30,000 as indicated by the husband) and the husband’s equity was $50,000 and not the sum of $335,000 as reflected in Annexure A.
(F)The husband therefore misrepresented the extent of his equity in H Street, Town J.
(ii)Value of Company K, Country G
(A)The husband in Annexure A values Company K of Country G (Company K) with its equipment and liquid assets at $950,000.
(B)In addition under the separate heading of “Assets” the husband includes silver bonds of $220,000 and gold bonds of $1,300,000 (the bonds).
(C)How the husband came to these figures has not been addressed by the husband in his trial affidavit.
(D)During cross-examination the following emerged:
· The bonds were not separate but formed part of the assets of Company K.
· The $950,000 figure was incorrect as the bonds should have been included in the value of Company K.
· The husband said that he calculated the value of the bonds by looking at their current value in 2011 although no explanation was given as to what that actually entailed and the husband admitted that he did not know the number of bonds held by Company K.
(E)The husband therefore misrepresented the true value of Company K.
(F)As it unclear as to what the true value of Company K was, it is not possible to ascertain the total net assets.
(iii)Ownership of Company K
(A)A reading of the financial agreement and Annexure A indicates that the husband was the sole owner of Company K.
(B)The husband’s trial affidavit states however that “the Country G assets in which I have an interest were owned with my brother, Mr L (Mr L), namely… an interest in a business, the Company K of Country G of which, in 2011, I was a director and shareholder; and… Gold and Silver bonds, which were assets of the Company K” [27].
(C)However in cross-examination the following emerged:
· The husband’s brother (the brother) was the sole person who established Company K at a time when the husband was living overseas.
· The husband’s only hands on involvement with Company K was to help out the brother when he was visiting Country G doing such things as answering the phone, cleaning the floors or locking up.
· In 2006 or 2008 the brother transferred for “no money” Company K (together with the interest in the bonds) to the husband.
· The reason for the transfer was to protect the brother’s assets from any liabilities, provide possible tax breaks to the brother and to take the brother’s assets as he was going through some legal problems.
· As a consequence of the transfer the husband became the sole director and sole shareholder of Company K.
· The husband had no difficulty with the transfer as he felt that he owed the brother because of the extent of the financial support the brother had provided when the husband was studying.
· The husband was aware that whilst the transfer resulted in the husband being the legal owner of Company K, there was no financial benefit for the husband as he was holding Company K on behalf of the brother to protect the brother.
· This continued to be the situation when the husband entered into the financial agreement in October 2011.
· The husband maintained that he had informed Mr B that on paper Company K belonged to the husband.
· From 2006 or 2008 until the return of Company K to Mr L in 2013 the husband received “no money” from Company K.
· In 2013 the husband for “no money” transferred his interest in Company K and the bonds back to the brother.
·The transfer took place because by that time the brother was no longer in a position where the brother feared losing his assets and the husband was in a position where as a non-resident of Country G there were “astronomical” tax implications in Country G if the husband was to continue to be involved in Company K.
(D)The financial makes no reference to this arrangement between the husband and the brother as to Company K (the arrangement).
(E)I do not accept that the arrangement was discussed adequately with Mr B because if it had been then it would have been reflected in the financial agreement.
(F)Further there is no evidence that the husband raised the arrangement with Mr E.
(G)Again Mr E would have ensured that the arrangement was reflected in the financial agreement.
(H)The inclusion of the arrangement was not one of the amendments sought by the lawyers for the husband to the financial agreement in September 2011.
(I)I find that the husband misrepresented the arrangement when providing instructions to his lawyers in respect to the financial agreement and therefore misrepresented in the financial agreement that the husband had an entitlement of any nature to the assets of Company K including the bonds.
(J)As the husband had no financial entitlement to Company K or the bonds, then these items should never have been included in Annexure A as property owned by the husband.
(iv)Loan of $200,000
(A)An explanation as to this loan is not contained in the financial agreement.
(B)An explanation as to this loan is not contained in the husband’s trial affidavit.
(C)The husband in cross-examination was adamant that Company K was acquired by the husband for no money, that the husband did not receive any money when Company K was in his name and that no money was received when Company K was transferred back to the brother.
(D)An explanation as to this loan was not the subject of cross-examination.
(E)I find that in the absence of any evidence to support a legitimate loan of $200, 000, that the husband misrepresented the existence of this loan.
(F)This amount should therefore have not been included in Annexure A.
(d)The wife had no comprehensive knowledge of the arrangement and I make this finding based on the following:
(i)I accept from the evidence that the wife has very limited knowledge as to the assets and liabilities that the husband supposedly held as at the date of the financial agreement.
(ii)The husband admits that at the joint consultation with D Lawyers, it was the husband that answered the bulk of the questions about the parties’ financial affairs.
(iii)It is clear from the wife’s trial affidavit that the wife held no understanding as to the arrangement between the husband and the brother.
(iv)I accept that the wife’s attempts to extract information from the husband as to his financial affairs and in husband’s interest in the brother’s business were unsuccessful leading up to the preparation of the financial agreement.
(v)The husband in cross-examination was vague as to whether he had informed the wife as to the arrangement in regard to Company K, or his financial situation using such phrases as:
(A)“I’m sure we’ve had a discussion that I had assets in Country G”
(B)“It would have been raised”
(C)“We would have had discussions”
(D)“I would have said”
(vi)The husband’s vagueness continued in the following exchange between the bench and the husband during cross examination:
Judge: Can you recall whether there was any specific discussions with the wife about this issue, because obviously your mother and your brother were aware of the arrangements in place in respect to Company K and the bonds?
Husband: Correct
Judge: So can you recall specifically any discussions that you had with the wife about this particular issue prior to the binding financial agreement?
Husband: Yes. I would have discussed this issue with my wife.
Judge: Well can you recall specifically…?
Husband: I can -I can…
Judge: Because again you’re saying coming “would have”?
Husband: I can remember our first meeting with Mr B. We have to discuss these assets…
Judge: Okay. But prior to that first meeting where you’re discussing it, not with the wife, but discussing it with the lawyer, did you discuss it with her prior to that?
Husband: Yes.
Judge: When? I need you to recollect. I don’t want you to…
Husband: It would have…
Judge: Speculate?
Husband: I can’t recall the exact date, but it would have been within a six-month period before the wedding after we had gotten engaged, probably shortly after my brother or mother bought it to my attention, so maybe 3 months before marriage
Judge: In those discussions, was the wife aware of the set up between you and the brother?
Husband: Yes
Judge: That these assets didn’t really belong to you, you were just holding them to protect you?
Husband: Correct. She would have.
Judge: are you saying she would have been aware of that time she executed this document?
Husband: Yes.
(vii)The husband admitted in cross examination that:
(A)That the conversation with the wife about the arrangement “wasn’t a very in-depth or lengthy conversation. I would have mentioned about how my brother - I was holding these assets in my brother’s name in Country G”
(B)The husband cannot completely recall the conversation that he had with the wife.
(C)The husband did not provide the wife with any documentation regarding his financial situation at the time of the signing of the financial agreement.
(viii)I accept that there was no disclosure of material by the husband to the wife prior to the financial agreement.
(ix)The husband in the trial affidavit did not address any conversations about his financial affairs that he had with the wife prior to the financial agreement.
(x)I find the wife was not made aware of the husband’s financial situation or the arrangement prior to the financial agreement.
(xi)I further find that the husband did not inform the wife that in real terms his net assets were not $2,645,000 but $90,000 consisting of the equity in H Street, Town J ($50,000), his motor vehicle ($30,000) and his superannuation ($10,000).
(e)The husband misrepresented to the wife his intentions as to why a financial agreement was required and I make this finding based on the following:
(i)The evidence supports that the husband required the financial agreement not for the purpose of dealing with the property upon the breakdown of the marriage but to protect the assets that the husband held on behalf of the brother namely Company K and the bonds.
(ii)This was the position also adopted by the husband’s family who were part of the driving force to ensure that a financial agreement was entered into prior to the marriage.
(iii)The wife was never informed as to the complexities of the arrangement believing that the husband was wealthy and that he wished to protect his assets in the event of a marriage breakdown.
(iv)Therefore the husband misrepresented the purpose of the need for a financial agreement.
I therefore order that the financial agreement be set aside pursuant to section 90K.
As a consequence, the financial agreement cannot be binding on the parties due to section 90G(1)(d) not being satisfied.
As an order has been made to set aside the financial agreement it is not necessary to the other basis upon which the financial agreement could be set aside as set out in the written submissions of the wife.
As the financial agreement has been set aside then there is no longer a question as to the validity of any court orders that have been made to date and consideration can now be given to the remaining issue of spousal maintenance.
SPOUSAL MAINTENANCE
Proposals
Husband
Leading up to the discrete hearing the husband filed an application in a proceeding seeking that:
(a)The application be heard at the discrete hearing.
(b)The collection of any arrears allegedly owing by the husband to the wife pursuant to the registrable maintenance liability registered in July 2022 be stayed.
(c)The order for spousal maintenance be discharge with any arrears discharged.
(d)The registrable maintenance liability be discharged with any arrears discharged.
(e)Upon the making of these orders the child support registrar make such variations to the particulars as are necessary to give effect to the orders.
(f)The wife pay the husband’s costs of and incidental to the application.
Wife
The wife is seeking that the husband’s application be dismissed.
History of spousal maintenance
In July 2018, at the first mention date, an interim order was made by consent whereby the husband pay to the wife $1500 per week until further order by way of spousal maintenance with that sum to be reduced by any amount of child support paid to the wife in accordance with a child support agreement or assessment.
In May 2022 the parties entered into final parenting orders by consent which provides for the children (X) (10½), Y (8) and Z (6½)) to live with the wife 8 nights per fortnight and with the husband 6 nights per fortnight whereby by 2024 the children live in an equal shared care arrangement with the parties.
In July 2022 the husband was assessed by the Child Support Agency (the Agency) to pay child support for the children in the sum of approximately $2,230 per month.
In July 2022 the wife registered the spousal maintenance orders for collection by the Agency.
In July 2022 the husband put the wife on notice of his intention to cease paying the spousal maintenance because of his debt with the Australian Taxation Office (ATO debt) and the existence of the BFA.
In or around August 2022 the husband ceased payment of the spousal maintenance, having missed several partial payments of spousal maintenance and child support between March 2020 and August 2022.
In August 2022 the Agency issued the husband with a new assessment of $6,522 per month for child support.
In September 2022 the husband’s lawyers wrote to the Agency questioning the ability of the Agency to be able to collect spousal maintenance due to the issues before the court as to the BFA. The letter also addressed the financial hardship being experienced the husband due to the ATO debt.
Further in the legal correspondence it was requested that the Agency suspend any registration or enforcement pending the determination of the court.
It appears that no such suspension by the Agency has occurred.
In October 2022 the husband lodged an objection to the Agency but was informed that despite the submissions that have been made by his lawyers in September 2022 that the deadline for the lodging of an objection by the husband had passed.
The husband has subsequently lodged an application with the Administrative Appeals Tribunal seeking a review of the Agency’s decision whereby the husband was refused the ability to object.
The husband estimates that his arrears are in excess of $32,000.
Conclusion
As the financial statement has been set aside, the interim consent orders made in July 2018 remain in force until such time as the orders are changed or discharged.
The supporting material previously filed by the husband for the purpose of the discrete hearing was inadequate to address these issues.
If the husband seeks a discharge or variation of that order and a discharge of any arrears, then the husband must make the necessary application accompanied by a supporting affidavit and a financial statement.
Upon receipt of that application consideration can then be given to the spousal maintenance orders and whether such orders should be discharged and arrears discharged.
FUTURE DIRECTION
This matter has a lengthy history and with its complexities has resulted in the parties incurring significant costs.
The wife has incurred just under $600,000 with her current lawyers with more costs having been paid to her previous lawyers.
The husband has incurred just under $220,000 with his current lawyers with more costs having been paid to his previous lawyers.
The property pool is not large and would be beneficial, now that the issue as to the financial agreement has been addressed, for the parties to enter into further negotiations in an attempt to resolve this matter without incurring further costs.
Should the parties choose not to take that step then I seek consent orders as to what procedurally needs to take place to this matter to proceed to a final hearing at the next mention date.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge L. Turner. Dated: 30 May 2023
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