Joyce and Joyce - [2011] FMCAfam 898

FEDERAL MAGISTRATES COURT OF AUSTRALIA

JOYCE & JOYCE

[2011] FMCAfam 898

FAMILY LAW – Validity of binding financial agreement – allegations of oppressive conduct – allegations of fraud – relevance of changes in arrangements for children – nature of independent legal advice – duty of disclosure – summary dismissal.

Family Law Act 1975, ss.90G, 90K
Federal Magistrates Act 2000, s.17A
Child Support (Registration and Collection) Act1988
Child Support (Assessment) Act 1989
Workers Compensation Act 1987

Friar & Friar [2011] FamCAFC 71
Lindon & The Commonwealth [1996] HCA 14
Black & Black [2008] FamCAFC 7
Garlick & Garlick (1993) FLC 92-428
Weir & Weir (1993) FLC 92-338
Black & Kellner (1992) FLC 92-287
Cording & Oster [2010] FamCA 511
Commercial Bank of Australia & Amadio [1983] HCA 14
Gebert (1990) FLC 92-137
Cameron (1988) FLC 91-946

Applicant:

MS JOYCE

Respondent:

MR JOYCE

File Number:

SYC 3801 of 2008

Judgment of:

Harman FM

Hearing date:

30 June 2011

Date of Last Submission:

30 June 2011

Delivered at:

Parramatta

Delivered on:

30 June 2011

REPRESENTATION

Counsel for the Applicant:

Mr Ladopoulos

Solicitors for the Applicant:

E Berman & Co

Counsel for the Respondent:

Ms Winfield

Solicitors for the Respondent:

Lexington Law Group

ORDERS

Pursuant to s.90G of the Family Law Act 1975, I declare that the binding financial agreement entered into between Mr Joyce and

Ms Joyce and dated 17 July 2008 is binding upon those parties.
Discharge the orders made 24 January 2001 to the extent that they remain extant and as a consequence the husband shall be and is hereby immediately entitled to the release to him by Lexington Law Group of all funds together with any interest accumulated there upon held by them in trust pursuant to those orders.
The wife shall within seven days do all acts and things and give all consents and authorities necessary to deliver to the husband or his attorneys a form of withdrawal of caveat in registrable form capable of immediate registration and so as to allow and permit the husband to cause the removal of such caveat and title of the property [omitted].
In the event that either party shall fail, neglect or refuse to sign any deed, document or instrument required by or to give effect to these orders then the Registrar of the Federal Magistrates Court Parramatta shall be and is hereby authorised, directed and empowered to sign such deed, document or instrument in the name of the defaulting party (same to be proved by production of an affidavit by the party requesting signature) and to thereafter do all things and acts necessary to give validity and operation to same.
Upon the expiration of the Appeal period and in the event that no appeal is lodged that all exhibits then be returned to the party who tendered same and that all material produced on subpoena be returned to the person or organisation who produced same.
All outstanding Applications and Responses are withdrawn and dismissed and all issues are removed from the list of matters awaiting hearing.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PARRAMATTA

SYC 3801 of 2008

MS JOYCE

Applicant

And

MR JOYCE

Respondent

REASONS FOR JUDGMENT

This is an application with respect to summary dismissal or interim summary judgment with respect to an application to set aside a binding financial agreement.
The applications are all at large before this Court, both on a summary basis and as to their merits.
On 19 April 2011 orders and directions were made by me which adjourned the proceedings to today for possible hearing and/or to entertain an oral application for summary dismissal.
Orders were also made on that day requiring that the wife file and serve an affidavit providing full and documented particulars of all matters alleged by her to justify and support the relief sought by her, being the setting aside of the financial agreement such as to include all evidence relied upon by her in support of the allegations to warrant such relief and to be filed and served by close of business 20 May 2011.
There are now three affidavits in the wife’s case before the Court, all of which have been read and considered. I have one affidavit in the husband’s case which has been read and considered, together with financial statements by each of the parties. I also have the benefit of case outlines and lengthy written submissions and the tender of a quantity of documents, particularly in the wife’s case and a limited number of tenders in the husband’s case.
The matter is listed both for hearing and to consider the application for summary dismissal made orally on 19 April 2011, and both applications fall to be determined today.
The proceedings came about unusually by an application in a case being filed as the initiating application on 19 January 2011. That application in a case sought a declaration pursuant to s.90G of the Family Law Act 1975 that the financial agreement entered into between the parties is binding upon the parties.
Section 90G provides the basic requirements of a binding financial agreement. It provides that for a financial agreement that is binding on the parties it must:
a)be signed by all parties;
b)contain, in relation to each spouse party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him and her as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to a number of matters;
c)the annexure to the agreement contains a certificate signed by the person providing that advice;
d)the agreement has not been terminated and has not been set aside by the Court; and
e)finally that the agreement is signed and the original agreement is given to one of the spouse parties and a copy given to the other;
There is no dispute, it would appear, to any of the above and prima facie the agreement would meet the requirements of s.90G.
Section 90K, which is the basis of relief sought by the wife in an application filed by her in these proceedings on 15 March 2011, provides the grounds and circumstances in which the Court may set aside a financial agreement or termination agreement.
The wife’s application specifies three grounds which are spoken to by each of the three affidavits filed. It seeks orders which would set aside the binding financial agreement, which is the application that is listed to deal with on an interlocutory basis and seeks, subject to that relief being granted, orders with respect to property adjustment which, whilst not apparent from the face of the document, clearly is intended to be relief pursuant to s.79.
Each of the parties has filed material to address those issues and I take it that such material as is filed in the wife’s case is in compliance with order 2 made by me 19 April 2011, being that all evidence relied upon with respect to the interlocutory issue of setting aside the financial agreement be filed. Notwithstanding that, submissions have been put that the wife would seek, if the agreement was set aside, to put on further material, but that is not what was ordered by the Court.
The Full Court most recently dealt with issues of summary dismissal or summary entry of judgment in Friar & Friar [2011] FamCAFC 71 earlier this year. In the judgments of Thackray and Watts JJ a useful summary of principles dealing with summary dismissal was set out commencing at para.48.
The appeal arose from orders made by Fowler J in reliance upon s.118 of the Act. Section 118 of the Act applies in the Federal Magistrates Court. Section 118 provides, under the heading “Frivolous or Vexatious Proceedings”, that the Court may, at any stage of proceedings under the Act, if it is satisfied that proceedings are frivolous or vexatious, dismiss the proceedings, make such order as to costs as the Court considers just, and if the Court considers appropriate, make a number of other orders in the nature of restraining orders and/or permanent stay.
The Federal Magistrates Court is created by the Federal Magistrates Act 1999 rather than the Family Law Act 1975, although in the case of this application the proceedings are dealt with under the Family Law Act 1975. However, the provisions of the Federal Magistrates Act 1999 also apply to process and procedure in this Court.
Section 17A of the Federal Magistrates Act 1999 provides that the Court may give judgment for one party against the other in relation to the whole or any part of the proceedings if the Court is satisfied that the party prosecuting the application has no reasonable prospect of successfully prosecuting those proceedings or any part thereof.
Subsection 3 of that of section makes clear that, for the purpose of the section, a defence or a proceedings or part of a proceedings need not be hopeless, or bound to fail, for it to have no reasonable prospects at success. It is otherwise expressed that the section does not limit any other power that the Federal Magistrates Court may have apart from that jurisdiction.
Section 42 of the Federal Magistrates Act 1999 requires that the Court operate informally but in the circumstances such as an application for summary dismissal, informality must give way to due process.
As the Full Court had highlighted in Friar & Friar and in summarising the judgment of Kirby J in Lindon & The Commonwealth [1996] HCA 14:
“It is a serious matter to deprive a person of access to the Courts of law for it is there that the rule of law is upheld including against government and other powerful interests. That is why relief, whether under the relevant section dealt within that decision or the inherent jurisdiction of the Court, is rarely and sparingly approved as regard summary dismissal.”
Their Honours go on to indicate that:
“To secure such relief, the parties seeking it must show that it is clear on the face of the opponent’s documents that the opponent lacks a reasonable course of action or is advancing a claim that is clearly frivolous or vexatious.”
I am not called upon to deal with or dispose of this matter on the basis that it is frivolous or vexatious under s.118 of the Family Law Act 1975, but instead application is made for summary judgment or summary dismissal under s.17A of the Federal Magistrates Act 1999.
Friar & Friar goes on to indicate in summary of Kirby J’s judgment “An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not alone sufficient to warrant summary termination.”
However, this case has a number of elements to it which must be dealt with by reference to the evidence available and the relevant statutory provisions that would apply.
I am satisfied, for reasons that will become apparent, that the case could be summarily dismissed and judgment entered in favour of the respondent in this case for want of the applicant demonstrating through the evidence filed suggesting any reasonable prospect of success. Lest I am wrong in that regard, I note that the interlocutory application, being the application to set aside the agreement, is also at large before the Court.
Section 90K deals, as I have indicated, with the circumstances upon which the Court may set aside a financial agreement. Whilst a number of recent Full Court decisions have been critical and have required strict compliance with each of the components of s.90G - see for instance Black & Black [2008] FamCAFC 7 and Garlick & Garlick (1993) FLC 92-428– s.90K has been the subject of amending legislation since those initial decisions.
In any event, the grounds of s.90K are clear and specific. Three are relied upon by the wife in her case and I will deal with each of the grounds individually.
Subsection 90K(a) provides that “The agreement was obtained by fraud including non-disclosure of a material matter.”
That ground is relied upon by the wife and of necessity it relates to circumstances predating the agreement.
Subsection 90K(aa) provides that:
“A party to the agreement entered into the agreement for the purpose or for the purposes that included the purpose of defrauding or defeating a creditor or with reckless disregard to the interests of a creditor.”
Indeed, if the matters that were the subject of the evidence between these parties regarding events leading up to the financial agreement’s execution had come to fruition, (ie, a business which had been operated by the parties as joint and equal shareholders and which was under the agreement transferred to the husband) and a business had, in fact, failed and/or there had been a prosecution for trading insolvently and imposing personal liabilities upon directors, there would have been a dramatic negative outcome for the asset pool of these parties, something in the vicinity, certainly in excess of $150,000 without any consideration of costs, charges or administrator’s fees.
On that basis and if, indeed, the agreement had proceeded and, if the circumstances which it would appear from the evidence of both parties were anticipated had come to pass, (ie, financial ruination), there may well have been grounds for one of the parties or, indeed, a creditor, to have made application to set aside this agreement, as clearly both parties were fully aware - and I accept they were both fully aware - of the debt position of the relevant company. However, it is not agitated as a ground relied upon in these proceedings.
Subsection 90K(ab) provides that:
“A party to the agreement entered in the agreement for a purpose that included defrauding another person including a party to a de facto relationship.”
This ground is clearly not relevant.
Subsection 90K(b) provides that “The agreement is void, voidable, or unenforceable.”
It is not suggested or agitated that this ground would be relevant.
Subsection 90K(c) provides that:
“In circumstances that have arisen since the agreement was made, it is impractical for the agreement or a part of it to be carried out.”
That ground is not relied upon, nor could it be, as the agreement has, albeit with some delay, to which I will refer later, been put into effect and completely complied with.
Subsection 90K(d), which is relied upon, provides that:
“Since the making of the agreement a material change in circumstances has occurred being circumstances relating to the care, welfare and development of a child of the marriage, and as a result of the change the child or, if the applicant has care and responsibility for the child, a party to the agreement will suffer hardship if the Court does not set aside the agreement.”
As I have indicated, that ground is relied upon and will be returned to.
Subsection 90K(e) provides that: “In respect of the making of the agreement a party to the agreement engaged in conduct that was in all circumstances unconscionable.”
That ground is relied upon.
Subsection 90K(f) deals with issues relating to payment flags for superannuation which are not germane or relevant, as does sub-s.90K(g).
In relation to each of the ground relied upon, I propose to summarise the evidence, both by the parties’ affidavit material and from tenders.
I will first deal with the ground relied upon being that the agreement was obtained by fraud.
In the first of the affidavits filed in these proceedings by the wife, it is alleged that prior to the agreement being entered into that a conversation occurred between the parties in April 2008 and to the following effect:
“ WIFE: Why don’t we sell the house to pay off the debts to keep you out of gaol?
HUSBAND: No. Why don’t you stay on in the business for a while and do the books and the admin?
WIFE: I can’t and I don’t want to be a part of this as you are trading insolvent.
HUSBAND: I will be going bankrupt as I have to pay for all the debts of [J] [being the company which was then being operated by the parties, [J] Proprietary Limited]”
The earlier portions of that affidavit indicate that in late January 2008 the wife went into the business to “clean up the books” to have them ready for her accountant, Mr J, to look at them. She continued to deal with the books of the company until about April of 2008.
The material produced and tendered into evidence, particularly in the husband’s case, would suggest that the wife had previously and for some little time has some employment in the business. It is asserted by the wife that while she received some income from the business she had not, in fact, other than for the limited purpose of tidying up the books, performed work on behalf of the company.
There could potentially be some equitable barrier to that being asserted as it would potentially represent a fraud upon the Commissioner of Taxation. In any event, I do not take that point for this purpose.
There is material tendered in the husband’s case, exhibit ‘H4’, being a facsimile from the company’s accountant to the wife at the company’s premises, reading:
“Dear [Ms Joyce], As requested, please find attached Certificate of Registration of a company [and then attaching a certificate of registration for a company [Joyce] Proprietary Limited]
Trust Deed Schedule [being a trust deed with respect to the Joyce Family Trust of which [Joyce] Proprietary Limited is the trustee company]
Two Certificates of Registration of Business Name [being certificates of registration of the business name [Joyce] Proprietary Limited as trustee for the Joyce Family Trust, as well as for a company [omitted] which was a business name owned by the wife and which was on or about 3 October 2006 transferred by the wife by transfer of registration form signed by the wife to [Joyce] Proprietary Limited as trustee for the Joyce Family Trust]”
That is a matter of relevance to which I will return.
Exhibit ‘H3’, similarly, is a declaration of estimated wages for the purposes of the Workers Compensation Act 1987 (NSW) executed by Ms Joyce and dated 27 October 2006.
Each of those documents would cast some doubt upon the veracity of the wife’s evidence at least insofar as she asserts that she did not have any active involvement whatsoever in that company. It is also to be noted that Ms Joyce was an equal shareholder in that company and that the binding financial agreement between the parties dealt with the shareholding of each of the parties and provided for an indemnity by the husband as against the wife for the debts of that company, being dealt with respectively in paras.3.4 and 3.5 of the binding financial agreement dated 17 July 2008 which agreement is an annexure to the husband’s affidavit sworn 17 January 2011.
The fraud that is alleged by the wife, as summarised in her application, is that there alleged to have been a material non-disclosure by the husband within the meaning of sub-s.90K(1)(a). It is not entirely clear what is suggested to be the material non-disclosure.
It is submitted that the agreement does not represent effective disclosure on a number of grounds. Firstly, it is suggested that whilst the agreement refers to the business [J] Proprietary Limited that it is misleading in its terms in suggesting that the husband is personally responsible for the liabilities of that company. I do not accept that submission.
The recital contained within the binding financial agreement at para.2.42 provides:
“The husband is the sole director of the company [J] Proprietary Limited, which the husband and the wife agree for the purposes of this agreement herein has present liabilities of approximately $250,000 ([J] liabilities).”
Exhibit ‘H2’ is a document tendered in the husband’s case and being an integrated client service account for the company with the Tax Office which demonstrates debts certainly not of $250,000 but of $118,504.11 as at 16 April 2007. That provides some limited corroboration for the fact that significant debt existed for this company. Clearly this company would not have, as its only creditor, the Tax Office.

The agreement at para.3.4 does deal with the parties’ interests in that company and as follows “The wife is to transfer to the husband the whole of her interest in that company, the one share owned by her therein.”
And at para.3.5 that “The husband shall and does forthwith indemnify the wife and keep her indemnified with respect to the [J] liabilities.”
It is also asserted that there has been no valuation or full and proper disclosure of financial documents relating to that business prior to the agreement being entered into. However, I am satisfied on the basis of the material tendered that the wife has been less than frank and candid as to her level of involvement with the business, her knowledge of its affairs, and certainly her knowledge of its pending potential financial ruination and that the company was trading insolvently.
The wife’s affidavit material makes clear at para.8 of her affidavit filed 23 February 2011, that she had instructed her own accountant, Mr J, to look over the books and that a few days after doing so, as deposed at para.10, the wife met with the accountant at the [J] office and the accountant said to her words to the effect, “This company is trading insolvently”. He then called in the applicant, being the husband, and said to him in the wife’s presence words to the effect, “You should be shutting the doors and sending everyone home. What you are doing is illegal.”
Following this exchange, whereby the wife clearly had full and accurate access to her own financial adviser in the form of an accountant who was inspecting the books of the company which she had herself “cleaned up”, it could not be otherwise than the wife had been made aware of the perilous position of the company.
Following this and at para.12 of the wife’s affidavit, the wife refers to having a discussion with her mother, Ms H. The wife’s mother, Ms H, is also the legal practitioner who provided the wife with independent legal advice with respect to the agreement.
It is suggested that the wife said to her mother:
“‘I met with [Mr Joyce] today and he said he will be going bankrupt as he has had to pay for all of the debts of [J].’ My mother replied, ‘If he goes bankrupt you won’t have child support as he can only earn a certain amount of money per year.’”
The basis for that assertion is entirely unclear and would, on its face, appear quite wrong. It is then suggested that in May of 2008 the husband indicated to the wife “As you know, I have gutted the two bathrooms at the property as they were not development approved. I can’t sell the property with bathrooms that are in a bad state of repair.”
It is suggested that at para.14 of the wife’s affidavit that in June of 2008 there was a conversation between the husband and the wife that included the following:
“ WIFE: To pay off the debt you may have the house to sell. I request $5000, the fridge, the dishwasher, the outdoor setting and the barbecue.
HUSBAND: I cannot afford to replace those items. Will you accept a sum of $10,000 and I will get my solicitors to draw up the agreement?
WIFE: Okay.”
It continues:
“In about July 2008 [it transpires on the 16th thereof ]the financial agreement was sent by the applicant’s solicitor, Marcus Alessandra, and my solicitor at the time, Ms H, of [omitted] Solicitors of [D]. Ms H is also my mother. On about 16 July 2008 I had a meeting with Ms H who repeated her words to the effect, ‘As I said before, if you do not sign this you will get nothing out of [Mr Joyce].’”
It is asserted by the wife, as follows in para.17:
“Based on a combination of the statements from the applicant, “I am going bankrupt”, the advice I received from my accountant, the advice I received from my solicitor, the contents of the financial agreement and the condition of the property at the time, I executed the financial agreement on 16 July 2008.”
It is difficult, if not impossible, to comprehend that it could then be asserted that there has been a fraud by the husband on the basis of his assertion alleged to have occurred on one occasion that he had indicated, “I will be going bankrupt as I have to pay for all of the debts of [J]”. It is also unclear, as there is no evidence to that effect, as to whether there was, at any point in time, any suggestion, whether to the husband or the wife from any person qualified to give that advice, that there may be a possibility for the husband as the sole director of that company to have been personally liable for its debts.
Clearly, based on the advice that the wife received from her own accountant, as set out in her affidavit material, and whereby the accountant advised her that the business was trading insolvently, there would have been a valid basis if that assertion were, in fact, correct for the husband to be rendered personally liable for some or all of the [J] debt.
However, that assertion aside, the agreement of itself does not in any fashion repeat that assertion. The agreement, in its recitals, as I have indicated, does nothing more than to recite that the husband is the sole director of the company and both parties agree that the business has liabilities of $250,000.
On the basis that the wife had independent accounting advice, as well as independent legal advice, I am satisfied that she cannot and should not now, by way of equitable estoppel, if not other bases, be allowed to assert that she had no knowledge whatsoever of the financial affairs of that business as she seems to assert.
In relation to the balance of the ground of fraud, the wife also asserts that there was the other company, [Joyce] Proprietary Limited as trustees for the Joyce Family Trust, as to which there was no disclosure and as to which she had no knowledge. Clearly, Exhibit ‘H4’ casts such significant doubt on that issue and I cannot accept her evidence.
The evidence suggests that she was sufficiently aware of those matters that she had requested of the accountant for the businesses that she be provided with certain documents by them. She had completed a transfer of registration of business name document to the very company as trustee for the trust which she denies all knowledge of. That would create, at least on its face, some real and substantial credit difficulty,.
Also in that regard, the level of involvement of the wife, as I previously referred to and as gleaned from the documents tendered, would suggest that her statements as to a complete lack of knowledge could not be supported.
While certainly it is well established by Full Court authority that parties have, both in contested proceedings before the Court (see Weir & Weir (1993) FLC 92-338, Black & Kellner (1992) FLC 92-287), an obligation to provide full and frank disclosure, the issue of disclosure as dealt with by the Full Court in cases such as Black and Garlick is such that the parties have an obligation to ensure, through their own efforts and otherwise and through disclosure by each party, that they are fully aware of and able to negotiate within an environment of mutual knowledge of each others’ financial affairs.
It is asserted by the wife that she did not have any knowledge and did not prior to executing the agreement have any knowledge, not only of the affairs of the enterprise to which I referred, [Joyce] Proprietary Limited as trustee for the Joyce Family Trust, but that she did not even know they existed. Clearly, the latter proposition is false.
In relation to the business affairs, the basis of sub-s.(a) of s.90K(1) is that there was a material non-disclosure or, more correctly, a non-disclosure of a material matter. The existence of that business entity is not in dispute and cannot be in dispute on the evidence that is before the Court today. Whether the wife was fully apprised of all financial affairs of those enterprises is not, in my mind, the germane issue to establish the material matter component of that ground.
The material that has been tendered into evidence with respect to those businesses does not support the wife’s position. There are tax returns by the wife which are pointed to as showing no distribution of income from the trust of which she is a discretionary beneficiary, as is the husband. Similarly, however, the husband’s tax returns do not show any distribution of income. That in all probability is consistent with there being no distribution to either of the parties of income by the trust. The returns that are provided in relation to that business and the trust show net losses. They also show that whilst there is a gross trading figure that there are expenses, none of which on the face of the documents would appear to be fanciful, inflated or non-explained, and those expenses exceed such gross returns such that there is an overall net loss.
One cannot rely upon the fact that the business produces income substantial or otherwise as an assertion that it must of necessity have value. It also has expenses and unless it can be demonstrated that there is some reason to doubt the veracity of those documents, it is difficult to understand the submission that such should be the case.
In relation also to the investment company, the wife has asserted, including in her affidavit of 24 May 2011, that she had no knowledge of the affairs of that company, although it is not asserted in the latter affidavit that she was not aware of its existence, although it is inferred and put so in submissions. The difficulty for the wife in that regard is she annexes to her own affidavit a search of Australian Securities and Investment Commission (“ASIC”) with respect to an extract of the company’s affairs. It demonstrates that the company was registered on 18 August 2006, some two years prior to the binding financial agreement, and that the wife is an equal shareholder with the husband in that company.
For her to assert that she has no knowledge when the public record maintained by ASIC that the wife is a shareholder is fanciful. The wife also annexes to that same return the Joyce Family Trust’s profit and loss statement for the financial year ended 30 June 2008 which suggests that the family trust had a trading profit for 2008 at $65,954.45 but a net loss after deduction of expenses at $2,796.25. It is asserted that the company had cash at hand. That, indeed, is correct for that financial year, being $68,870. It also had receivables from trade creditors of $70,327 and total current assets at that year at $139,227.98. The trust also had current liabilities of $146,570.73 and, again, there is a net liability for the trust of $3,142.51.
The issue in my mind is that the wife must establish that she had no knowledge of the existence of the entities which she cannot. The wife asserts that she had no reasonable opportunity to undertake any enquiry. But she did have the opportunity and the benefit of an Accountant’s investigation and advice. The wife asserts that there should have been a substantial difference to the outcome by reference to the material now available to her. On a reading of the very limited material that is available and clearly available to the wife as it is annexed to her material there would not be such a difference.
Accordingly, I am not satisfied that there has been fraud with respect to obtaining of the wife’s signature to the agreement. What there is, is clearly each of the parties having advice from an accountant, in the case of the wife an independent accountant engaged by her and in the case of the husband the company’s accountant, suggesting to each of them that the business was about to hit the rocks. That is abundantly clear. Also there is the wife’s understanding, not only based upon what the husband is alleged to have asserted to her on one occasion in April of 2008, but also the accountant’s advice and her own legal advice.
On that basis, I am not and do not believe that I can be satisfied as to fraud based on non-disclosure.
As regards the other aspect relied upon with respect of fraud, the wife asserts that the home, the subject of the binding financial agreement, should be also taken into account as part of the fraud as alleged by the wife. The home was subsequently sold earlier this year and the sale of the home was, in fact, the precipitating event that led the husband to bring proceedings before this Court so as to secure the wife’s execution of a transfer to enable the sale to proceed.
The financial agreement executed by these parties provided that the husband was to pay to the wife a sum of $10,000 and that this sum of money was to be paid within 30 days of the agreement, being 17 July 2008. The husband did not pay on time. The husband paid, it would appear, some few days late.
The time of the payment was not excessively overdue and the husband, again to his material, annexes a copy of the bank cheque which was drawn in the wife’s favour and provided, together with a copy of a receipt signed by the wife on 25 August, approximately a week after the due date for payment by the husband and reading:
“I, Ms Joyce, hereby acknowledge receipt of $10,000 by way of bank cheque drawn to myself from Mr Joyce for payment in accordance with our financial agreement dated 17 July 2008.”
That demonstrates a tender and acceptance and as an equitable principle one could not now rely upon the husband’s default in being one week late in payment as a ground alleged to constitute fraud on any other basis.
The wife asserts, however, that the husband was also required by the agreement, as indeed he was, to refinance the mortgage into his sole name so that he would be solely liable for the new mortgage. That was to be contemporaneous with the payment of $10,000. That did not occur. The mortgage was not, in fact, discharged and the joint liability of the parties was not discharged until the sale of the property in January of 2011.
The agreement did provide, however, that the husband, as well as discharging the mortgage and placing it into his sole name, was to indemnify the wife with respect to all outgoings for the property including the mortgage, rates, taxes, charges, insurance and other expenses. There is no complaint that he did not.
It also provides a self-executing enforcement mechanism that in the event that the husband had not done that which was required of him regarding the refinance of the mortgage that the property would be listed for sale and that both parties would take all necessary steps and execute all necessary documents to cause their matrimonial property to be sold, the net proceeds of sale to then be received by the husband. There were additional provisions to provide for what would happen if this home was not sold by private treaty within three months and the like.
Again, as an equitable principle, the wife cannot rely upon her own delay as a basis for suggesting that there has now been some fraud to her.
As a matter of the construction of sub-s.90K(1)(a) the wife could not rely upon delay at all as the fraud that is required by that subsection must induce a party to enter into the agreement and, accordingly, must pre-date it, not post-date it.
In any event, no other ground under s.90K provides for a consideration of failure to comply with the agreement other than sub-s.90K(c) referring to circumstances having arisen since the agreement was made. Clearly there was delay on the husband’s part. The wife’s laches would preclude her bringing suit in that regard. The section also but goes on to provide that events arising out of that circumstance of non-compliance must render the agreement impractical or incapable of being carried out.
Clearly, it was possible at all relevant times for the agreement to be carried out. All it required was action by the wife to enforce the agreement. The agreement was ultimately carried out, albeit with significant delay, but delay acquiesced to by both parties.
The second ground relied upon by the wife relates to the alleged change in circumstances of a material nature regarding the care, welfare and development of the children of the marriage such that a party will suffer hardship if the Court does not now set aside the agreement.
From the outset I have expressed my concern in understanding how that ground could be relied upon by the wife in the following circumstances.
At the time of the agreement the parties recited clearly that they had two children. Those two children are set out in para.2.3 of the agreement being [names omitted]. They were, at the time of the agreement, seven and five years of age respectively and they both lived with the wife.
Following the agreement being entered into arrangements changed whereby for some period of time both children passed to live full time with their father. Subsequent to that, and allegedly on the basis of one of the children wishing to return to their mother, the children have lived spilt between the parents’ households so that one child lives with their mother and one with the father. I fail to understand, with all respect to the wife’s case, how she could seek to rely upon sub-s.90K(d) in that regard in that the change in circumstances that has occurred has seen her go from the full-time care of two children to the full-time care of no children and then resuming the care of one child.
It is sought to make it relevant on the basis of asserting that the husband is $1500 in arrears with respect to child support payments. Whether referrable to the period when both children lived with the wife or the present arrangement of one child in each household being unclear. In any event, that is not a material change in circumstances in my mind such as would meet the test required by sub-s.90K(d) that a party will suffer hardship if the agreement is not set aside.
The agreement does not deal with child support. Child support can be and is administratively assessed by the agency under the provisions of the Child Support (Assessment) Act 1989. That liability can, accordingly, be registered with and collected by the agency under the Child Support (Registration and Collection) Act 1988. I am not satisfied that this ground is or could be made out.
The third ground that is relied upon is sub-s.90K(e) being an allegation that prior to the making of the agreement the husband induced the wife to enter into the agreement by engaging in conduct that was, in all of the circumstances, unconscionable.
The extent of that argument would appear, from the three affidavits filed by the wife, to be an assertion by the wife that she was induced to enter into the agreement solely as a consequence, or at least in large part as a consequence, of the husband’s assertions that he was going to go bankrupt as he was liable to meet all of the debts of the company which the parties agreed were $250,000. This amount far exceeded the net available asset pool. The wife asserts in the alternative that she was concerned that if she did not do as the husband required by entering into the agreement that something unspecified would occur.
There are a number of difficulties with that argument. Firstly, the wife’s own evidence, and it is to be remembered for both the purpose of considering the husband’s oral application for summary judgment and in dealing with the interlocutory application under s.90K, that I have had primary regard to the wife’s own evidence, does not support the allegation. The wife, as I have already indicated, instructed her own accountant to look over the books of [J] and advise her whether she should accept the offer and after receiving that advice did so.
The wife does not specifically say whether the accountant told her to enter into the agreement, but she does give the evidence previously referred to that the accountant, having viewed the books and having attended at the office of the business, indicated to her that the company was trading insolvently, they should be shutting the doors and sending everyone home because what they were doing was illegal.
The wife is then the one who makes the proposal that the house should be sold so that debts could be paid off and attempt to keep the husband out of gaol, a most gratuitous offer at the time bearing in mind these parties were separated. The wife’s evidence is that she had then made a further proposal.

In June of 2008, immediately before the agreement was prepared and as set out in para.14 of her first affidavit made the following proposal:
To pay off the debt you may have the house to sell. I request $5000 and a number of items of furniture as previously recited.
It is after the wife has considered her position, with the input of her own independently instructed accountant and her own independent legal advice, although it is asserted that the wife’s independent legal advice, having been obtained from her own mother, then a practicing solicitor, cannot be considered genuinely as “independent” legal , advice, that she had entered into the agreement.
To deal with the above I do not accept the submission that the wife, having chosen to obtain advice from her own mother, whilst that may have been imprudent and ill-advised, had not received independent legal advice. The wife would suggest that the requirement of s.90G that each party receive independent legal advice has not been made. The requirement of independent legal advice is legal advice independent of the other party and the other party’s interests. There is no suggestion that Ms H, in providing advice to her daughter in her capacity as a legal practitioner, was in any way associated with, influenced by, or connected with the husband nor having provided advice to the husband.
Accordingly, I am satisfied the wife had, indeed, received independent legal advice, albeit that in reliance upon that advice and that of her accountant that she has entered into an agreement that she has in hindsight found entirely unacceptable. The gravamen of that issue, as regards unconscionable conduct is the suggestion that the wife had entered into this agreement based solely upon the husband’s assertions that he was personally liable for the debt and that this is what the agreement provided.
However, the agreement, as drafted and signed, does not assert that the husband is responsible for the company debt. It asserts that the company has a debt and nothing more. It makes very clear that the husband is the owner of one share in the company and the wife agrees that his share is worth $1, that the wife is the owner of one share and the parties agree her share is worth $1. Accordingly, those recitals of themselves and based upon the enquiries that the wife had the opportunity to make and, in fact, made and the advice that she had the opportunity to seek and, in fact, obtained was fully aware of the arrangement to which she was consenting.
It was agreed by the parties, in the recitals to the agreement, that they had each made direct and indirect contributions. They each acknowledged that they had made full and frank disclosure, although it is now asserted that the husband had not.
With respect to disclosure, because it would also relate potentially to unconscionable conduct, I am satisfied that it cannot be asserted by the wife who has been involved in the business with their husband and owned shares in the company that she had “no knowledge” of that company’s affairs.
The wife quite clearly has dealt with the company’s accountant, requested documents from them, including documents that would verify that she was aware of the existence of entities which she has decried knowledge of, even if she has not cited their full financial returns and has had involvement in the affairs of those entities, including her husband’s day-to-day life and bookkeeping for whatever period of time that she may have been in the business. I am satisfied that the wife had knowledge of those affairs.
It is far too often assumed in proceedings before this Court, or at least it would appear so, that parties who have lived together for some significant time have no knowledge whatsoever of the other’s financial affairs. That more often than not is a ludicrous position. As to whether it is ludicrous in this case I do not comment, save the comments I have already made based on the evidence and based on the tendered material in the case that make it clear in my mind that the wife had a sound and far greater knowledge than she concedes of the affairs of the husband, the company, the existence of the other entities and the general nature of the operation of the trust as she had requested and been provided with a copy of the trust deed or at least a significant portion thereof.
I cannot be satisfied in those circumstances that it could be asserted that the husband’s conduct in failing, as it is asserted he should have, to commission a valuation of the business at some substantial cost and when both parties agreed on value and, on the wife’s own evidence, the doors should have been closed and the employees all sent home immediately, is an appropriate position that can be adopted in this or any other matter. Surely these parties, as is consistent with the spirit of private ordering envisaged by s.90G, are entitled to rely upon their own inquiries and their own knowledge.
Certainly one can envisage many circumstances of oppressive conduct as has been referred to in the various authorities recited in the husband’s case outline and submissions where a party may well find themselves at a disadvantage. But I am not satisfied that is the case in this circumstance.
The wife had knowledge, had advice before she signed the agreement and after separation from an independent accountant with full access to the company’s records as well as involvement with the company’s accountant and that advice was that the company was in trouble. It is on that basis, it would appear clear from all of the evidence of both parties, that both of these parties, together with their legal advisers, in the wife’s case her own mother, gave advice that the wife should get out of this situation as quickly as possible and in the vernacular, take what she could and run whilst there was still something to take.
I have also had regard to the case law referred to and as indicated in the husband’s submissions commencing with Cording & Oster [2010] FamCA 511. In that case Cronin J said that the legislature has been careful to include strict requirements if a financial agreement was to be binding including the requirement of independent legal advice.
It is asserted, again, that the wife has not had independent legal advice although it has been legal advice but not from someone “independent”. That is the wife’s choice and it would be a dangerous precedent for this Court to set for the Court to interfere in orders that have been made or in this case a binding financial agreement between the parties on the assertion by the wife that the legal adviser she chose, her own mother, was not considered by her, with hindsight, to have been appropriate.
The Court remains the supervisory power with respect to such agreements but I am not satisfied the agreement should be interfered with. The wife has to potentially waived legal professional privilege by reciting in her affidavit material the very advice that she received from her mother and legal adviser, being advice to sign the agreement quickly. As quoted in para.12 “If he goes bankrupt you won’t have child support and he can only earn a certain amount.”
And then repeated specifically with respect to the financial agreement “As I said before, if you do not sign this you will get nothing out of [Mr Joyce].”
The wife has received, albeit belatedly, a week late in the case of the payment of $10,000 and two and a half years later as regards the discharge of her liability under the mortgage, that which she bargained for under the agreement. That is not to suggest that what she bargained for under the agreement, objectively and with the wisdom and benefit of hindsight, represents as advantageous arrangement had facts and circumstances had been different. However, there is nothing at all to suggest that the ultimate issue in this case, being that the husband did not find himself personally liable for the debts of the business which went into liquidation, were foreseeable or were known or in any way reasonably, plausibly predictable.
Also, in relation to unconscionable conduct I have regard to the High Court’s decision in Commercial Bank of Australia & Amadio [1983] HCA 14. For a party to demonstrate unconscionable conduct a party to the transaction must demonstrate they are 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.
That is not asserted by the wife and could not be on the basis of the evidence I have referred to above.
Further, the disability must be sufficiently evident to the stronger party to make it prima facie unfair or unconscionable. At its highest, the wife asserts that the husband had made the representation he is alleged to have made on one occasion being that he was going to go bankrupt as he was going to be personally liable for the company’s debts and that he did so knowingly to procure her agreement or knowing that it was false. There is no such evidence. Indeed, it would appear from the totality of the evidence, including the wife’s evidence at its highest that, indeed, both of the parties were advised of the difficulties they faced, indeed the illegality of their insolvent trading and advised of that by the wife’s own independent accountant procured for the purpose of providing her with advice to assist her in determining whether she should or should not enter into this agreement.
Following on from that and as referred to in the husband’s case outline document, I have also had regard to the Full Court of the Family Court’s decisions in Gebert (1990) FLC 92-137, Cameron (1988) FLC 91-946 and to the High Court’s decision in Commercial Bank of Australia & Amadio, as I have indicated.
All of that case law would cause such substantial difficulty for the wife that I am satisfied, firstly, that the application has no reasonable prospect of successful prosecution, but lest I am wrong in that regard and on the merits of the application pursuant to s.90K, that the application must fail.

I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of Harman FM

Date: 1 September 2011