Jennings & Ellerton
[2021] FCCA 1213
•15 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Jennings & Ellerton [2021] FCCA 1213
File number(s): ADC 4050 of 2020 Judgment of: JUDGE C KELLY Date of judgment: 15 March 2021 Catchwords: FAMILY LAW – Binding Financial Agreement – interpretation – enforceable – spousal maintenance Legislation: Family Law Act 1975 (Cth) ss 90E, 90F Cases cited: Guild & Stasiuk [2019] FamCA 167
Cumpton & Rainford [2020] FCCA 3441
Number of paragraphs: 27 Date of hearing: 15 March 2021 Place: Adelaide Counsel for the Applicant: Ms Ross Solicitor for the Applicant: Camatta Lempens Pty Ltd Counsel for the Respondent: Ms Boyle Solicitor for the Respondent: Duncan Basheer Hannon ORDERS
ADC 4050 of 2020 BETWEEN: MR JENNINGS
ApplicantAND: MS ELLERTON
Respondent
ORDER MADE BY:
JUDGE C KELLY
DATE OF ORDER:
15 MARCH 2021
THE COURT ORDERS THAT:
1.Pursuant to section 90F of the Family Law Act 1975, the Applicant is permitted to proceed with his Amended Application for Spousal Maintenance filed 19 February 2021.
2.The Respondent file and serve her Financial Statement within 14 days.
3.The parties exchange proposals in relation to interim/urgent spousal maintenance within a further seven (7) days thereafter.
4.In the event no agreement is reached, the Applicant file one Affidavit to be relied upon in relation to his Application for urgent or interim spousal maintenance, to be filed no later than 21 April 2021.
5.Liberty to the Respondent to rely upon her Affidavits filed 4 November 2020 and 25 January 2021.
6.Each party provide discovery of all relevant financial documents.
7.The matter is adjourned to 30 April 2021 at 9.30am (allowing ½ hour).
8.At least 48 hours prior to the adjournment, each party file and exchange brief written submissions not to exceed three (3) pages in length.
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 under the pseudonym Jennings & Ellerton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Judge C Kelly
These reasons were delivered orally at the conclusion of an interim argument. They have been edited and corrected from transcript to correct any grammatical errors and generally to make my oral reasons easier to read.
These proceedings relate to the parties’ Binding Financial Agreement dated 21 April 2006 (“the Agreement”) and, in particular, the provisions relating to spousal maintenance. The applicant is seeking a declaration that the whole of the Agreement is invalid and should be set aside. In the alternative, and more specifically for today’s purposes, the applicant seeks a declaration that those clauses relating to spousal maintenance be declared void or of null effect. Following on from that he seeks to pursue an order for interim spousal maintenance.
The parties agree that recital 4.2.2 and clauses 19, 20 and 21 of the Agreement address the topic of spousal maintenance. Recital 35 also makes it clear that the parties agree to waive all rights to spousal maintenance from the other, except as provided for in the Agreement.
Issues with respect to Binding Financial Agreements and spousal maintenance are governed by ss. 90E and 90F of the Family Law Act (1975). Both counsel have filed very helpful written submissions addressing the legislation and the relevant authorities and I thank them for that assistance and their further oral submissions today. Section 90E states that a clause in a financial agreement providing for the maintenance of a party or a child is void unless it specifies:
(a)the identity of the party for whom the maintenance provision is made, and
(b)the amount provided for, or the value of the portion of the relevant property attributable to the maintenance of the party.[1]
[1] Section 90E
Ms Ross argues that the Agreement falls at this very first hurdle, as the relevant clauses do not specify an amount. The relevant clauses in the Agreement read as follows:
19. The parties acknowledge that they are currently self-sufficient and capable of supporting themselves, and that no provision of spousal maintenance is necessary or desired.
20. Both parties fully and freely waive any and all rights or claims they may now or in the future have to spousal maintenance under the Family Law Act 1975 and under any or all statutes now or later enacted in this or any other state or country having jurisdiction over the parties.
21. The parties agree and covenant that in the event of the breakdown of marriage and a claim being made for settlement of property, variation of property interests or spousal maintenance by either or both of them, the terms of this Agreement will determine the issues between them.
The recitals to the Agreement make it clear that the parties intended covering all financial issues arising from their relationship. This includes provisions to apply in the event of the breakdown of the relationship, how their property and financial resources are to be dealt with, and how maintenance issues, whether during the marriage or after divorce, are to be dealt with.[2]
[2] Binding Financial Agreement dated 21 April 2016, Recital 4.2.2, annexed to Initiating Application filed 27 August 2020
Both parties clearly intended the Agreement to identify their obligations to each other in the event of any subsequent separation and have done their best to cover all potential exigencies. The Agreement goes on to deal precisely with what may be identified as joint property, which must be property purchased under joint names under a full and proper agreement, not just used together, or referred to as “ours”. Both parties acknowledge that all the other aspects of the legislation have been complied with in terms of separate legal advice, and that both parties then endeavour to voluntarily waive all rights of spousal maintenance from the other, except as provided for in the Agreement.[3]
[3] Ibid, recital 35
DOES SECTION 90E APPLY TO THE SPOUSAL MAINTENANCE AGREEMENT?
Ms Ross argues that s.90E applies because the clauses relating to spousal maintenance do not identify an amount – a quantum of spousal maintenance – as required by s.90E(b). In that regard she relies upon the authorities of Guild & Stasiuk[4] and Cumpton & Rainford.[5] Ms Ross argues that the decision of Justice Cronin in Guild & Stasiuk, in particular, is clear authority for the requirement that the quantum of spousal maintenance must be identified.
[4] Guild & Stasiuk [2019] FamCA 167
[5] Cumpton & Rainford [2020] FCCA 3441
When considering how to apply s.90E in relation to a financial agreement, Justice Cronin says:
29. In my view, the words “provided for” must refer to an identifiable quantum. To argue otherwise opens up debate about the extent of the possible quantum.
30. As s.90E makes any provision void if it does not meet the requirements of the Act, any uncertainty or vagueness cannot assist the party who seeks the protection of the provision of the Act.[6]
[6] Guild & Stasiuk, ibid, at paras 29, 30
Justice Cronin then discusses other authorities in relation to the interpretation of the legislation, before concluding, at paragraph 32:
The language of section 90E makes clear that the purpose is to ensure that people cannot avoid their maintenance obligations, each to the other without precise reference to an amount. [7]
[7] Ibid, para 32
Ms Boyle argues that clause 19 of the Agreement does include a precise reference to an amount, in that the phrase “no provision of spousal maintenance is necessary or desired” implicitly identifies the quantum, which is none at all. To further require the parties to add in the words “nil” or “zero spousal maintenance” or “nil spousal maintenance” is unnecessary. I agree with Ms Boyle. The phrase “no provision of spousal maintenance is necessary or desired” must be read at face value. It includes a clear intention that no amount of spousal maintenance is to be paid. This does not require that the parties’ intention be further defined as “zero spousal maintenance”, “nil spousal maintenance” or any other similar phrase. The wording in Clause 19 of this Agreement can be contrasted with the clause considered by Justice Cronin, which simply provided that the wife agreed that she ‘will make no claim for maintenance for herself…”, with no reference to any amount or quantum.[8]
[8] Ibid, para 15
My conclusion is strengthened when one considers clause 20 of the Agreement. In this clause, the parties have attempted to achieve an outcome where they “fully and freely waive all rights and claims to future spousal maintenance”. This is a much more generic phrase which is similar to the wording rejected by Justice Cronin in Guild & Stasiuk.
I conclude that clause 20 does fall foul of s.90E, as it does not identify what quantum, or potential quantum, of future spousal maintenance the parties are each foregoing. This contrasts with clause 19, which makes it clear that there is to be no provision of spousal maintenance – and no provision must mean nil, zero, none. I conclude that clause 19 in relation to spousal maintenance does meet the requirements of s.90E and is not void for that reason.
DOES SECTION 90F APPLY TO THE SPOUSAL MAINTENANCE AGREEMENT?
The interaction between the Agreement and s.90F is more complicated. Section 90F says:
(1) No provision of a financial agreement excludes or limits the power of a court to make an order in relation to the maintenance of a party to a marriage if subsection (1A) applies.
(1A) This subsection applies if the court is satisfied that, when the agreement came into effect, the circumstances of the party were such that, taking into account the terms and effect of the agreement, the parties was unable to support himself or herself without an income tested pension, allowance or benefit.
Both parties agree that the Agreement as it relates to spousal maintenance came into operation at the time the parties separated, in May 2018. The parties, therefore, must consider their financial circumstances at that point in time, taking into account the terms of the Agreement.
Ms Boyle argues that the applicant has failed to establish any basis to set aside the Agreement. Indeed, she submitted that his Initiating Application filed 27 August 2020 sought only interim spousal maintenance, not urgent spousal maintenance and did not address the requirements of s.90F(1A) at all. That must be acknowledged, given that on 28 January 2021, the applicant was directed to file an amended Initiating Application and an Affidavit in reply to the respondent’s Affidavit filed 25 January 2021.
The question then to be determined is whether, at the time when the terms of the Agreement regarding spousal maintenance came into effect – that is, at the time of separation in May 2018 – was the applicant, Mr Jennings, able to support himself without an income-tested pension, allowance or benefit?
According to his Affidavit and his Financial Statement, the applicant says that his current weekly income is $576, including a small pension payment from his time working in Country A (now $178 per week), and his Australian “Centerlink [sic] Retirement pension” in the sum of $398 per week. His weekly expenses were listed at $720.[9]
[9] Applicant’s Financial Statement filed 27 August 2020, para. 12
The applicant tells the Court that his income at the time the parties separated was limited to his Country A pension. In those circumstances it is easy to accept that Mr Jennings would also have been eligible for a Centrelink income-tested pension or benefit. The applicant goes on to say that he applied for an Australian aged pension shortly after separation but there were delays in assessing his eligibility. He was eventually granted the pension approximately 9 months later, in late 2018 or early 2019.[10]
[10] Applicant’s Affidavit filed 19 February 2021, paras 5 & 7.
Whether the applicant was similarly entitled in May 2018, at the time the parties separated may depend on his other financial resources, of course. In his original Affidavit filed 27 August 2020 the applicant says that respondent “divided up” a joint account, taking $2,500 and leaving him with the balance of $2,900 or so. He then relied upon financial support from his brother for a period, before eventually receiving the Australian aged pension.
The wife argues that the applicant owned or retained the other assets that he had brought into the relationship, including his half-share in Company B and premises at Location C. He also owned a half share of the business contents which were insured at $100,000[11] but were likely to be actually valued much less. The applicant also held approximately $73,000 in savings at the time the Agreement was signed. This financial background is useful, but it does not give me any insight as to what the applicant owned at the time the Agreement came into effect with respect to spousal maintenance.
[11] Binding Financial Agreement dated 21 April 2016, Schedule B, annexed to Initiating Application filed 27 August 2020
The applicant says that he relied upon financial support from his brother and also from his son Mr E, including accommodation. This continued until Mr E’s tragic death in 2020. The applicant continues to live in Mr E’s home with his daughter-in-law and grandchildren and he is not able to meet his own expenses other than with the support of his daughter-in-law and support provided to him by family and friends.
The respondent alleges that the applicant is living with his girlfriend Ms D. The applicant concedes that he is in a relationship with Ms D, but says they are not living together, and his Centrelink status is still recorded as single. There is no independent evidence to justify the respondent’s claim.
The Court has not received any documentation from Centrelink that the applicant was in receipt, or was likely to have been eligible for a Centrelink pension immediately following separation in 2018, but the evidence indicates that is likely to have been the case. I am certainly satisfied the applicant was struggling financially after separation and was reliant upon financial support from his family at this time. The applicant may have held his half-interest in the business and the location C property, but the value of that interest is unknown and may not have affected his eligibility for a government pension or allowance, in any event.
I note the applicant transferred his interest in Company B to his son Mr E in the months following separation, allegedly in lieu of various debts he owed to his son. Whether those debts related to financial support provided by Mr E, or related to the business, is unclear, but I do not consider this affects my decision in this matter today.
CONCLUSION
On the evidence before me, I am satisfied that at the time the Agreement in relation to spousal maintenance came into effect, the applicant was likely to have been eligible for an income-tested pension, allowance or benefit from the Australian Government. Accordingly, pursuant to s.90F(1A), he is entitled to proceed with an application for spousal maintenance, notwithstanding the terms of the 2006 Agreement and I make orders accordingly.
The Court is unable to hear submissions regarding that application today and it will need to be adjourned. The application to set aside the whole of the Agreement also remains before the Court. I will adjourn these proceedings to another date and will make orders for the respondent to file her Financial Statement (regarding the spousal maintenance issue) and for the parties to provide discovery of relevant financial documents. The parties should also undertake some sensible, focussed negotiations, in light of my decision today.
I now make orders as published at the commencement of these Reasons.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of Judge C Kelly. Associate:
Dated: 3 June 2021
I note in my oral reasons I said that the applicant was granted a pension “… that might have been dated back to February or so in 2020 -…-sorry, February 2019 or late in 2020…” I have corrected those dates in these written reasons.
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