LEUNG & FAN
[2020] FCCA 764
•3 April 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LEUNG & FAN | [2020] FCCA 764 |
| Catchwords: FAMILY LAW – Pre-marriage financial agreement – property – maintenance – application to set aside financial agreement – whether a financial agreement – whether agreement void, voidable or unenforceable – allegations of duress withdrawn – allegations of undue influence withdrawn – unconscionable conduct – applicable principles – Thorne v Kennedy (2017) 263 CLR 85 distinguishable – whether applicant at special disadvantage – whether disadvantage seriously impeded applicant’s ability to make decision to enter agreement – whether improper advantage taken – where parties each attended upon independent lawyer and obtained advice – certificates issues by lawyers – forensic onus not discharged – application to set aside agreement refused – whether agreement binding – declare agreement void insofar as it purported to exclude or limit the power of a court to make an order for maintenance – orders permitting applicant to amend application to pursue application for maintenance – orders permitting respondent to amend response to seek order that agreement binding. |
| Legislation: Evidence Act 1995 (Cth), s.140 |
| Cases cited: Jabour & Jabour [2019] FamCAFC 78 Jenyns v Public Curator (Qld) (1953) 90 CLR 113 Kuglioski v Metrobus (2004) 220 CLR 363 Louth v Diprose (1975) 175 CLR 621 |
| Applicant: | MS LEUNG |
| Respondent: | MR FAN |
| File Number: | MLC 11878 of 2018 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 10 March 2020 |
| Date of Last Submission: | 10 March 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 3 April 2020 |
REPRESENTATION
| Counsel for the Applicant: | Dr R. Smith |
| Solicitors for the Applicant: | McKean Park Lawyers |
| The Respondent: | In person |
ORDERS
Declare that insofar as cll.17 or 19 of the agreement made between the parties in 2009 (agreement) purport to exclude or limit the power of a court to make an order for maintenance, it is void.
By 4.00pm on 1 May 2020, the applicant file and serve any Third Amended Initiating Application so as to pursue any application for maintenance.
Declare that the agreement is not binding by reason of non-compliance with s.90(1)(c) of the Family Law Act1975 (Cth) (Act) in that, following execution of the agreement, neither the applicant nor her solicitor was provided a statement signed by the solicitor who had proffered legal advice to the respondent in accordance with s.90(1)(b) of the Act.
By 4.00pm on 15 May 2020, the respondent file and serve any amended Response so as to seek a declaration pursuant to s.90G(1B) of the Act, that the agreement is binding.
Upon the preliminary determination of whether the agreement should be set aside, the application for such declaratory relief be dismissed.
The costs of the preliminary hearing be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Leung & Fan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 11878 of 2018
| MS LEUNG |
Applicant
And
| MR FAN |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain orders which are made upon the hearing of a preliminary issue in relation to a financial agreement made between the parties in 2009 (agreement). By way of overview, the applicant is a Chinese national who came to Australia in 2008. The respondent, who is of Chinese ethnicity, is an Australian citizen. The parties were married in 2009. The agreement was executed two days before the parties’ marriage in circumstances where her Temporary (Proposed Marriage) visa expired in 2009 and at a time when the applicant was some six months pregnant. Since 2008, the respondent had made plain his desire that the parties should enter a binding financial agreement before their marriage. There was no concealment of his desire or reasons for an agreement.
In summary, I have concluded that the parties entered into a financial agreement within the meaning of the Family Law Act 1975 (Cth) (Act). While I consider it is presently not binding, this is for a reason that may be cured by declaration. Claims of duress and undue influence were properly abandoned. There was no unconscientious conduct. Further, I would not have exercised my discretion to set the agreement aside.
I also consider the applicant may seek to amend her Further Amended Initiating Application to pursue a claim for maintenance.
Background
The applicant is a Chinese national who was born in 1975. From the details provided with her Initiating Application she described herself as being present, ordinarily resident and domiciled in Australia. The applicant has secured part-time employment as a health care worker and established her business.
The respondent, who was born in 1950, works as a health care worker and is described in the Initiating Application as being present, ordinarily resident and domiciled in Australia and an Australian citizen.
Neither of the parties has any close relatives in Australia.
The parties commenced living together in 2008 and were married in 2009. By her Initiating Application, it was contended that final separation had occurred on 24 May 2018. However, on the evidence, the parties executed a shared parenting agreement in which separation was recorded as having occurred on 3 September 2013. The applicant also advised Centrelink of that date of separation.
There is one child of the relationship, a girl, born in 2009.
Procedural history
On 12 October 2018, the applicant wife filed an Initiating Application seeking “a just and equitable division of the asset pool” together with such further and other orders as the court deemed appropriate. No other relief was sought.
By his Response, the respondent contended that the parties’ pre-nuptial agreement regulated their financial relationship but that the “applicant could keep invest (sic) property in China, for it was in the form of spouse maintenance. And willing to help more if Applicant has real financial difficulties.” The respondent also sought parenting orders.
By two affidavits, each made on 21 November 2018, the respondent deposed that he was about to retire and for that reason had time to look after the parties’ daughter and that orders should be made for this to occur in circumstances where the applicant worked full-time as a customer service officer and held part-time employment as a health care worker on Saturdays and Sundays. He complained that the applicant prevented him from spending more than day time on a Saturday with the child who otherwise was left to fend for herself.
By his further affidavit, the respondent levelled criticism at the applicant for failure to make proper disclosure, including in relation to her true income and her ownership of an investment property which she had purchased in China. The respondent reiterated that the applicant was overly restrictive in limiting the amount of time that the child could spend with him. In a more recent affidavit, the respondent stated that the applicant continues to restrict the amount of time which she will allow the child (who is now aged twelve years) to spend with him. He deposed that he would soon be seventy years of age and (as the applicant’s mother had recently died from a stroke at that age), it should not be difficult for the applicant to recognise the benefit to the child of spending time with him.
The respondent’s first affidavit also stated the parties had entered into a binding financial agreement and a shared parenting agreement, recording that separation occurred on 3 September 2013.
The respondent exhibited copies of a parenting (and a supplementary parenting) agreement. Recitals to the supplementary agreement made on 17 June 2016 include that the child liked “to spend 50/50% time with her father and mother” and set out a timetable whereby the child would stay with her father (in week one) on Saturday and Sunday afternoons, Mondays and Fridays and (in week two) on Saturday and Sunday mornings and on Thursdays. The first recital to the supplementary parenting agreement also indicates the parties had agreed to the child spending equal time with each of her parents, but that they had signed a “shared parenting agreement about 2/7 and 5/7 care arrangement” as the applicant was “about to move to her new living place, has financial difficulties and needs all family tax benefit A So Mr Fan signs name on shared parenting arrangement about 2/7 and 5/7 care arrangement.”
In a responsive affidavit made on 20 December 2018, the applicant expressed surprise that the respondent sought parenting orders, stating her belief that he was happy with existing arrangements. Her affidavit did not address his contention that the parties had entered a binding financial agreement and a shared parenting agreement. Nor did she contest that final separation had occurred on 3 September 2013.
On 27 November 2018, a registrar made orders for financial disclosure and a conciliation conference. On 30 January 2019, the proceeding was transferred to this court.
In circumstances which are not entirely clear, the applicant has now filed an Amended Initiating Application, a Further Amended Initiating Application and a Further Further Amended Initiating Application. In summary, the applicant seeks property orders together with parenting orders providing for the parents to have equal shared parental responsibility and for the child to live with her. She also proposes that the child should have limited time with her father (confined to spend time on Saturdays or as may otherwise be agreed). In relation to property, more extensive orders are now sought, including for the sale of a property situate in Suburb H and an equal division of the net proceeds of sale, together with an adjustment of superannuation interests.
By an Amended Response, orders are sought to dismiss the application for an adjustment of property interests on the apparent basis that the issue is governed by the parties’ financial agreement.
On 31 May 2019, an order was made fixing the proceeding for final hearing. An order was made for the provision of an s.11F report (which has now been provided). Other directions were made regulating the preparation of the matter for trial. Later, an order was also made for the appointment of an independent children’s lawyer (ICL). On 11 March 2020, the ICL sought, and an order was made, for a family report. All attempts by the ICL to secure a relaxation of current spend time arrangements appear to have come to nothing.
At mention of the matter on 13 September 2019, an order was made listing the matter for an interim defended hearing. As the notations to that order confirm, the order was made so as to permit the determination of a preliminary issue whether a binding financial agreement had been made between the parties.
On 10 March 2020, when the proceeding was called on for hearing, the respondent was afforded an opportunity to consult the duty lawyer. When the matter was re-called for hearing, the court was assisted by Mr Williams of counsel who agreed to act amicus curiae on the discrete question whether it appeared any question of procedural fairness may have a bearing on the matter proceeding by way of preliminary hearing, particularly in circumstances where the respondent was self-represented. The court records its gratitude to counsel for that assistance. Being satisfied that there was no relevant impediment to proceeding, the hearing of the preliminary issue was conducted.
Applicable principles
Part VIII of the Act, which concerns the subject Property, spousal maintenance and maintenance agreements is comprised of ss.71-90 and so far as is presently material, does not apply to financial matters or financial resources “to which a financial agreement that is binding on the parties to the agreement applies.”[1] For the purposes of the Act, the expression “financial matters” means matters with respect to the maintenance of one of the parties (or a child) or the property of the parties or either of them.[2]
[1] Act, ss.71(1)(a)-(b).
[2] Act, s.4. The expression ‘financial resources’ is not defined by s.4.
Part VIIIA of the Act, which concerns the subject Financial Agreements is comprised of ss.90A-90Q and addresses the circumstances in which, relevantly, parties may make financial agreements before, during or after a marriage and the circumstances in which provisions of an agreement is void unless certain requirements respecting maintenance are satisfied. Part VIIIA also makes provision: (a) denying that certain agreements are effective to oust or limit the court’s power to make an order in relation to maintenance; (b) for the only circumstances in which a financial agreement will be binding; (c) governing the termination of a financial agreement; (d) as to the circumstances in which the court may set aside a financial or termination agreement; (e) to apply the principles of law and equity in determining the validity, enforceability and effect of such agreements and purported agreements; (f) conferring powers respecting the operative effect of such agreements and to adjust property the subject of a financial agreement that has been set aside.
Where a financial agreement is binding, it is of no force or effect until a separation declaration is made (unless the parties should divorce or one or both of them has died).[3] The Act regulates the manner and formal requirements of such separation declarations.[4]
[3] Act, s.90DA(1)-(1A).
[4] Act, s.90DA(2)-(4). See cl 16 of the agreement.
Sections 90E – 90F of the Act address provisions of financial agreements that relate to the maintenance of a party or child. A provision in such an agreement that relates to maintenance is void unless it specifies:
(a)the party, or the child or children, for whose 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, or of the child or each child, as the case may be.
It is convenient to address in more detail below s.90F which provides that, in defined circumstances, no provisions of a financial agreement exclude or limit the power of a court to make an order in relation to the maintenance of a party to a marriage.
The circumstances in which a financial agreement is binding are regulated by s.90G which is structured at essentially three levels. First, s.90G(1) provides that, subject to sub-s (1A), a financial agreement is binding on the parties if, and only if, five cumulative requirements are satisfied. Again, it is convenient to address the detail of those requirements below. Secondly, s.90G(1A) provides an alternative means by which a financial agreement will be binding upon the parties. In substance, it provides a savings mechanism whereby the court may order that the agreement is binding notwithstanding the requirements of s.90G(1) have not been met and certain other criteria are satisfied. Thirdly, ss.90G(1B)-(2) confer power on, and facilitate the making of orders by the court to declare that a financial agreement is binding. Such power is conditioned upon an “enforcement application” being made.
The court may declare, in an enforcement application, that a financial agreement that is not binding for want of compliance with s.90G(1) of the Act may nonetheless be declared to be binding pursuant to s.90G(1B) of the Act. By this means want of compliance with a statutory requirement may be cured and the agreement held to be binding.
Section 90K of the Act regulates the circumstances in which a financial agreement may be set aside. So far as material, s.90K(1) provides:
A court may make an order setting aside a financial agreement or a termination agreement if, and only if, this court is satisfied that:
(a). . .
(b)the agreement is void, voidable or unenforceable; or
(c). . .
(d)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 caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreements aside; or
(e)in respect of the making of a financial agreement – a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or
(f) – (g) . . .
For these purposes, 90KA of the Act provides that a question whether a financial agreement is valid, enforceable or effective is to be determined according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and that the court has the same powers, and may grant the same remedies, as the High Court has (including as to interest), and may order that “the agreement, or a specified part of the agreement, be enforced as if it were an order of the court”.
Where a financial agreement has been set aside, the court may make such order (including for the transfer of property) as it considers just and equitable for the purposes of preserving or adjusting the rights of persons who were parties to that agreement.[5]
[5] Act, s.90K(3).
Evidence
In the course of the proceeding, the parties filed a series of affidavits which addressed the circumstances in which the financial agreement was executed. Their affidavits also addressed parenting issues which are unnecessary to rehearse any further. Such affidavits as were relied upon had all been filed and served before the mention of the proceeding on 30 September 2019. Commendably, counsel for the applicant did not delay the hearing of the preliminary issue by raising objections to the content of the respondent’s affidavits. Further, counsel accepted that insofar as the applicant’s affidavits contained matter which was expressed in a conclusory form or was by way of submission, they should be read with recognition of those factors in mind.
In deciding disputed issues of fact, I have applied the civil standard of proof to the resolution of that issue.[6] Where the evidence does not permit the court to make an affirmative finding either way on a particular issue, the court is not bound to do so, and may find that the party which bears an evidentiary onus of proof has failed to discharge it.[7] The court may accept some parts of a witness’s evidence and reject other parts of it.[8] The court, in reaching a decision, is not required to refer to every piece of evidence or submission presented during a trial.[9]
[6] Evidence Act 1995 (Cth), s.140.
[7] Kuglioski v Metrobus (2004) 220 CLR 363.
[8] Jabour & Jabour [2019] FamCAFC 78, [110] and cases cited.
[9] Citing Bell & Nahos [2016] FamCAFC 244.
On all occasions when the matter has been listed before court, the applicant has been legally represented while the respondent has been self-represented. While his affidavits reflect those circumstances, they also indicate a consciousness of, and addressed, the issues which are relevant to the allegations raised in relation to the preliminary issue.[10] One difficulty in the form of the respondent’s affidavit is that he annexed, by way of exhibit FDF-2,[11] additional “Info for Affidavit.” Much of the cross-examination was focused upon the circumstances surrounding the creation and execution of the agreement, the parties taking little time to investigate the background and related aspects of their relationship. In some respects, the applicant’s affidavits were notable for the sparsity of detail that was provided and on occasion, they did not address the matter in the respondent’s affidavit. As a result, parts of the respondent’s evidence were uncontradicted.
[10] His affidavit affirmed on 2 September 2019 addressed “Thorn v Kennedy case” at [46].
[11] Affidavit affirmed 24 May 2019.
Notations to a series of orders have recognised the desirability of a Mandarin interpreter being made available to the respondent. Despite an interpreter being provided, at the most recent hearing, the respondent was reasonably insistent that he not be interrupted by the interpreter. Indeed, on one occasion, in the course of cross-examination he appeared to speak directly, in Mandarin, to the applicant. In addition, when attempting to deal with his cross-examination it was often more efficient to ask him (or his interpreter) to clarify the issue upon which his question was focused and to frame the question in a form that might elicit a precise answer from the applicant.
It was, however, equally clear that each of the parties has a better than reasonable command of English in terms of their ability to read. During the course of the hearing, when asked to read certain parts of their respective affidavits, each of them proceeded to read aloud the paragraph to which their attention had been drawn. This occurred on more than one occasion. From the particulars of jurat, each of the parties affirmed their affidavits without the use of an interpreter. Equally, each of them demonstrated a good comprehension of spoken English. Although the applicant adhered to the use of an interpreter, on more than one occasion she either answered a question directly, or nodded her assent to the question, before it had been translated to her. As described above, the respondent preferred to speak in English, however, his replies were enunciated in a manner which was often difficult to understand. Sometimes it was necessary to insist, despite his preference, that the Mandarin interpreter who had been provided for his assistance, spoke to him in Mandarin and gave his answer, or made his submission, in English once that assistance had been provided.
Each of the parties readily accepted that central events about which they gave evidence had occurred in 2008 or early 2009 and candidly recognised that their recall of the events in question was imperfect. The applicant presented as a person with a capacity to reflect upon her evidence before answering questions and in some respects I considered her to be a plausible witness. She was prepared to give answers against interest and on occasion volunteered information which completely undermined the primary basis upon which a claim had been made. In other aspects, I found her evidence unreliable or unpersuasive. The respondent presented as an honest man of humble origins who was also prepared to make admissions against interest. In many ways, he presented as a person who seemed quite unable to comprehend the basis upon which it was being suggested he had exerted undue influence on the applicant, subjected her to duress or engaged in conduct that was objectively exploitative or otherwise unconscionable.
The following findings are based upon an analysis of the parties’ affidavits, viva voce and documentary evidence and the inferences which I consider are properly made. The matters set out below include those that were common ground and my findings of fact upon particular issues. Matters addressed above in my summary of the background and history are incorporated in my findings.
Background to relationship
Before coming to Australia, the applicant had lived in City K, China.
The respondent’s uncontradicted evidence was that the applicant had studied at a Chinese University for some three years and obtained a diploma. His evidence was that, when working in China, the applicant had variously held employment as: sole trader of various businesses and as a customer service officer and manager. He contended that the applicant had worked for ten years before coming to Australia in 2008. Despite those circumstances there was no evidence as to the assets (if any) which the applicant may have accumulated in that time.
In terms of other life experience, the respondent adduced evidence that the applicant had previously been married in China and had participated in family law proceedings on two occasions involving both child custody and a property settlement. The parties were in dispute whether the applicant’s family law litigation in China related only to custody with the respondent contending, and the applicant denying, that the applicant’s ex-husband had invested capital in her beauty parlour business and that there had been a property settlement between those parties. Again, no evidence was given as to the result of the applicant’s claim (if any) for an adjustment of property interests in China.
One aspect of the case is that neither the applicant nor the respondent had any relatives in Australia in 2008 and that the applicant had one friend with whom she was not close while the respondent also had only one or two friends in Australia. My impression is that the respondent has had a relatively isolated existence and pursued his work as a health care worker living in very modest surroundings (which he shared). Another aspect of the case is that each of the parties had the practice of remitting part of their incomes to their relatives in China.
In 2005, the parties first met via the Internet after which they began writing to one another. In late 2005, the respondent told the applicant he was going to visit his family (mother and sister) in City J China. During that trip he stayed with the respondent for a fortnight. The parties remained in contact and in 2006 and 2007, the respondent travelled to China to visit his family and, again, stayed with the applicant. When the respondent travelled to China in 2007, he attended the wedding of his nephew. The applicant attended that wedding with him.
At the same time, in 2006 the respondent assisted the applicant in her dealings at the Australian Embassy in China in making application for a visitor visa. The application was refused in 2007.
At some point in 2008 the parties discussed marriage which the applicant said she was prepared to entertain provided the respondent supported her both in learning to speak English and with financial support. It was the respondent’s case that the applicant, having been divorced, resolved custody and property issues, and lost her mother and employment, wished to explore the prospect of starting a new life in Australia and take the opportunity which that offered. The applicant’s evidence was that there had been no property settlement with her husband in China and that when she arrived in Australia she had no assets. Later, when asked to explain why she had not disclosed her ownership of a flat in China[12] in her earlier affidavits, she stated that she understood she was only required to disclose her Australian assets.
[12] The flat had not been purchased at the time of execution of the agreement.
In late 2007 – early 2008, the respondent assisted the applicant in making application for a Prospective Marriage (Temporary) visa. A condition for the grant of such a visa application is that the applicant is outside of Australia when applying for the grant of the visa.[13] I find that the applicant made application for the visa from China and that she did so with the respondent’s assistance. A Prospective Marriage (Temporary) visa is a class of visa which requires sponsorship. The respondent sponsored the applicant’s visa application and he paid all of her visa, medical and associated fees. The respondent’s uncontradicted evidence was that he warned the applicant not to get her hopes up in relation to the visa application and reminded her that the earlier application for a visitor visa had been refused. At about this time, the applicant’s mother died, the applicant was retrenched from her employment and the applicant had resolved the issue of custody of her son, leaving him in the care of her ex-husband.
[13] Migration Regulations 1994 (Cth), reg.1215(3)(b).
The visa application was granted. Although the applicant did not produce the visa, her evidence (which I accept on this issue) was that the visa was operative for a period of nine months. Contrastingly, I also accept the respondent then believed that the visa was valid for a period of twelve months. There was some suggestion that in the process of completing the sponsorship forms it had been necessary for the respondent to secure evidence of a nominal wedding date and for this purpose he had attended the Registrar of Births, Deaths and Marriages and obtained a nominal wedding date of 2008. I accept that the respondent supplied this information to the Australian Consulate in China for the purpose of his sponsorship of the visa application.
As the visa expired in 2009, I find that the application was granted in 2008. The applicant came to Australia in 2008.
A condition of the visa was that the parties produced a marriage certificate to the Department of Immigration within nine months. The respondent’s uncontradicted evidence was that the Department of Immigration wrote in relation to the visa reminding the parties “about Provisional Booking Pending Essential outstanding documentation.” As I understood his evidence, having regard to the nominal wedding date, the Department of Immigration fixed in 2008 as the date by which the ‘essential’ documentation needed to be supplied to it. He deposed and gave evidence that, with the applicant, he went to the Department of Justice (Registry of Births, Deaths and Marriages) and made an appointment fixing the marriage date for 2009. He stated that the wedding date “was determined by both of us” and that the date, 2009, was placed on the form. I find that, as the respondent said, the parties completed that form together. I infer that the respondent obtained from the Registry of Births, Deaths and Marriages a record confirming this marriage date and that a copy of the record was supplied to the Department of Immigration. I reject the applicant’s denial of having attended with the respondent at the Registrar of Births Deaths and Marriages. The denial was unpersuasive.
Insofar as the respondent was asked to provide a rationale for appointing 2009 as the firm wedding date, he identified two factors; namely, that in 2008, before her pregnancy, the applicant was unsure: (1) whether she wanted to proceed with the relationship; and, (2) whether she wanted to remain in Australia. For each of those reasons he considered it appropriate to allow a period of several months to elapse before the proposed wedding would take place. I do not ignore that the respondent also gave evidence that the applicant “before we got married, she wanted to stay in Australia and while she was still in China she actually wanted to stay in Australia already.” However, I view that evidence in the context of the applicant’s own evidence that after arriving in Australia, for at least some time, she remained uncertain whether she wanted to enter the relationship and then settle here.
In particular, though pressed on the issue, the respondent rejected the suggestion that it was merely a coincidence that the wedding date was less than a fortnight from the expiry date of the applicant’s visa. I accept his rejection of that suggestion because I accept his evidence that he believed the visa was valid for twelve months.
The applicant gave evidence that the respondent was reluctant to agree to marriage. I reject that evidence. It is entirely inconsistent with the very nature of the type of visa that was applied for and which respondent agreed to sponsor. It is also inconsistent with the matters upon which I have made findings at [49]-[51] above. Further, as appears below, the respondent undertook all of the steps necessary to arrange for the wedding ceremony to occur. In addition, the respondent was delighted at the news of the applicant’s pregnancy. In cross-examination, the applicant agreed he had never said he did not want to marry.
The applicant’s evidence was that respondent did support her financially after she came to Australia and in this regard I also accept that the respondent bore her costs of travel to Australia. There was also some evidence that the respondent had responsibility to support his mother (aged 80 years) and the expense of a full-time care worker to look after his disabled brother. Relatedly, the respondent states that his mother has now passed and that his brother who is disabled continues to need the assistance of a care worker to look after him twenty-four hours a day. It seemed implicit that the respondent also bore these financial costs. There is some evidence that the applicant also sends money overseas so as to support the aged care costs for her father and the care for her son.
After the applicant arrived in Australia, she moved into the respondent’s rental accommodation in Richmond which they shared with another person. The description of the premises was uninviting, there being no supply of hot water, being a generally basic form of accommodation.
It was the respondent’s case that the applicant wasn’t unsure about her desire to settle permanently in Australia but was unsure about whether the parties would have a long lasting or permanent relationship. He also stated that the parties were attempting to consolidate their relationship at the time the applicant became pregnant and that the pregnancy occurred before the parties were entirely certain about the relationship. In cross-examination, the applicant denied she had said something like needing his help to remain permanently in Australia and explained that what she said to him was “that when I come to Australia, I will see how our relationship goes, and then to decide whether I – we are getting married (sic) stay in Australia.” Offered the opportunity to respond to the proposition that the respondent asserted she had agreed to marry him because he agreed to help her remain permanently in Australia, she stated “Yes. If he treats me well, I was willing to stay in Australia with him, but if not then also willing to go back with him to China to live.”
When asked to clarify the recollection of her position at the time before she was pregnant, the applicant stated that when they went shopping and had a discussion the respondent “he just kept encourage (sic) me to stay here” for at that time she was thinking of going back to China. She also explained that if she was not in the relationship she would not have stayed in Australia as she didn’t have any friends or relatives here.
The respondent deposed that it was the applicant who made the choice to become pregnant. The applicant did not contradict this evidence. It was the respondent’s case that he knew the applicant employed contraceptive practices in China and had not told him she had removed an intra-uterine device until after informing him of her pregnancy.
The applicant’s evidence was that she became pregnant in 2008. I am satisfied the applicant first told the respondent of her pregnancy in 2008 and that (as he said repeatedly) he had a very positive attitude toward the parties’ marriage and that they would “establish a warm family for upcoming baby.” The applicant was clear that both parties wanted the baby which was born in 2009. I accept the respondent’s evidence that in 2008, the applicant did not urge him to proceed with the marriage. I also accept that, by then, both parties knew the wedding appointment was made in 2009.
From the respondent’s perspective, once the applicant became pregnant, the “next thing is we needed (sic) married” and that “there is no doubt that our next step is to establish a warm family for our child” and further “but later after she got pregnant, I no longer want to rent. I want to purchase my own property so we can build our family.” I accept the respondent’s evidence that upon learning of the pregnancy he no longer wanted to live in shared accommodation and decided to purchase a home where the parties could raise a family. The parties agreed that together they searched for a home. The applicant agreed that before Christmas 2008, they attended home inspections and auctions together.
There is very little evidence of the applicant’s financial and no-financial contributions to the relationship. On the available evidence, she brought no assets from China and had no assets in Australia. She did not work from 2008 until late 2012. During that period she was supported by the respondent. The relationship ended in September 2013. I accept that both parties cared for the child. However, there was some evidence the respondent carried the share of housekeeping and shopping.
Circumstances surrounding the agreement
It was common ground that the respondent raised the subject of a pre-nuptial agreement with the applicant in about 2008 and again at Christmas 2008. In cross-examination, the applicant conceded there may have been more than two conversations in relation to the agreement.
Although the precise circumstances involving the first mention of the agreement are somewhat unclear, I accept that the parties discussed the subject of a pre-nuptial agreement on at least two occasions and that they agreed to enter into an agreement of that kind.
From the respondent’s perspective, he was approaching his retirement, then aged fifty-nine years and somewhat concerned about his future. His view was that the applicant was some 25 years younger than he and that, while she had the ability to continue working into the future, he was nearing the end of his working life. In addition, I infer that he was conscious the applicant had been somewhat uncertain whether she wanted to enter the relationship or to remain in Australia. The respondent’s evidence was that the applicant understood his worries and concerns, including of the need for a pre-nuptial agreement in circumstances where the parties were some twenty-five years apart in age. While it was somewhat unclear, the parties’ discussion may have included a proposal that following the respondent’s retirement he would be able to care for their child and the applicant would secure employment. As he said, the applicant had left her son in China to be cared for by her ex-husband and in the same vein, upon his retirement, he could care for their child, leaving the applicant free to pursue her work and business.
The parties first discussed the subject of a pre-nuptial agreement in about 2008 while they were driving to go shopping. When asked to detail the content of the discussion, the applicant spoke largely in generalities. In cross-examination the respondent stated that when the subject of a pre-nuptial agreement was raised in 2008 he had not said anything about ‘signing’ and had just said “that we should actually make a financial agreement between the two of us.”
In the form in which the applicant’s affidavits had been prepared they suggested that the respondent had placed her under pressure to sign the agreement and that she had been unwilling to do so. However, from her oral evidence it is clear there was no foundation for those allegations. The applicant deposed that the respondent raised the issue of a financial agreement on the basis that she had two choices: “1. To sign the agreement and we would get married or 2. If I did not sign the agreement I would have to go back to China.” The respondent vigorously denied he had made any such statements, doing so both in his affidavit, oral evidence and submissions. I accept his denial.
In cross-examination the applicant volunteered the respondent had never stated to her that she had two choices and that when they had discussed the matter he had not raised the signing of the agreement in the manner of issuing her with a formal warning. At another stage the applicant stated that the discussion over the need to make a financial agreement had not taken place in a formal setting. The applicant was also clear that the respondent mentioned the agreement several times but had never made a formal statement such as by putting his position to her in writing. To the contrary, the applicant volunteered that the parties had discussed the making of a pre-nuptial agreement while driving. As I understood it, the premise for a joke was that the parties would agree to enter a pre-nuptial agreement and that if they did not, there would be no wedding. While the applicant said that she knew she would have to go back to China and that “my visa would be expired (sic) very soon” I did not understand her evidence to mean that the visa or its expiry date was the subject of that discussion and, as stated elsewhere, I prefer the respondent’s evidence that, at this time, he believed the visa was valid for one year. While the form of the joke was not evident, the applicant was quite clear that the discussion was light hearted and that the respondent had not adopted a formal manner when the topic had been discussed between them. When the applicant gave this evidence it clearly caught her counsel and solicitor unawares. On the second day of the hearing, counsel quite properly abandoned any suggestion of duress and any claim of undue influence.
So far as concerned the discussion during Christmas 2008, very little was said. The applicant first stated that this conversation had occurred after Christmas but that it had happened so long ago and she was not quite sure whether it was before or after Christmas. When asked to recount the detail of this conversation, the applicant replied that she was then six months pregnant and had asked the respondent to marry her and that the respondent said “You have to sign the agreement. If you don’t sign the agreement, you will have to go back to China.” When asked whether anything further was said she replied “That’s it.” I did not regard the evidence as persuasive or reliable, particularly in light of the applicant’s description of the discussion as having taken place so long ago. Later, the applicant was asked whether, when responding to her question, the respondent had said that he refused to marry her. The applicant’s answer was that the respondent did not reply. However, she agreed that after Christmas 2008, the respondent had attended to preparing all the documentation that was required in relation to the wedding ceremony. The most that I could infer is that the parties discussed the need to address the matter as their wedding was due to occur in 2009. Insofar as the applicant’s affidavits gave a different account of these conversations I also did not regard the evidence as persuasive or reliable.
I am satisfied that the subject of a financial agreement was raised on at least two occasions. There was no guise, trickery or other attempt on the respondent’s part to conceal his desire for a pre-nuptial agreement or that he had engaged in any plan or design to secure an agreement by improper means. At least at this level, as concerned the applicant’s desire for the agreement, there was no lack of transparency. It was quite plain. While the agreement itself was admittedly executed very late in the piece, I am not satisfied there was any attempt to manufacture a situation in which the applicant was impelled to enter into the agreement. I am satisfied that the parties had agreed in principle to making such an agreement. This is of some importance in the assessment of the question whether the respondent had engaged in conduct of a kind that sought to take an unconscientious advantage of the applicant in seeking to procure her signature to the agreement.
The respondent denied he used any unlawful methods or pressure to procure the applicant’s entry into the agreement. He also denied engaging in conduct to secure an improper advantage from her, observing that she was an educated and mature businesswoman who had experience in life including a prior marriage in China and participating in family law proceedings in that country on at least two occasions.
In this respect the applicant deposed that, as a result of the parties discussions related to the making of a financial agreement, she telephoned her brother in China and spoke to him about it. It was not clear when she made this phone call, however, from the sequence of her narrative I infer it occurred in 2009. She deposed:
I rang my brother in China after I had been told by Mr Fan that I had to sign the Agreement which would mean that I would get nothing if the marriage failed, and his response was “well you have got no choice, you can’t do anything”, meaning that I had to stay in Australia and have the baby.
In cross-examination the applicant also stated that while she had no relatives in Australia she confided “to my close friends and my brother.”
At the least, I am satisfied beyond argument the applicant was clear that she understood the substantive effect of the agreement at the time she discussed it with her brother and close friends.
The making of the agreement
At the time of execution of the agreement the applicant and respondent were aged nearly 34 and 59 years respectively.
I prefer the respondent’s evidence that the parties discussed the making of their agreement and that they would leave it to a lawyer to prepare it. In the event, the respondent located a lawyer (from a newspaper), Mr A, and instructed him to prepare the agreement. Mr A had not previously worked for the respondent and didn’t know him at all. The respondent provided the instructions for the preparation of the agreement including the details of the parties’ assets. The respondent told Mr A that the applicant had no assets because that is what she had told the respondent. When this work had been undertaken, another lawyer, Mr B (who had never acted for the respondent) was retained to give advice to the applicant in relation to each of the matters addressed by the certificate attached to the agreement.
It seems implicit that either the respondent chose, or the parties accepted it would be preferable to choose, a lawyer who was fluent in Mandarin and so more easily able to discuss the matter with them. The respondent located Mr A and I find that they conferred with that lawyer in mid-January 2009 and he discussed the need for the applicant to obtain independent legal advice before signing the agreement. The applicant did not distinctly address the contention in the respondent’s affidavit that “It was my lawyer pointed out that Ms Leung should consult and her own independent lawyer’s advice, then could process the FA sign procedure. Ms Leung chose one of lawyers from my lawyer’s recommendation.” There was also some suggestion that the lawyer who advised the applicant, Mr B, had been chosen from amongst a number of business cards proffered by Mr A to the parties but the applicant denied that this had occurred. I accept the respondent’s evidence that his lawyer, Mr A, made recommendations to the respondent of the available lawyers and that she made a choice to consult Mr B. Again, it seems implicit that Mr A’s recommendation recognised the desirability that the applicant could obtain independent advice from a lawyer fluent in Mandarin.
After the respondent located Mr A he was instructed in mid-January 2009 to prepare the agreement and did so. Execution occurred on in 2009 in essentially three stages: first, the respondent collected the agreement, in duplicate, from Mr A’s office in C Street, Melbourne. As to this, I accept the respondent’s evidence that this did not take very long; secondly, the parties took the agreement to Mr B, whose offices were located in D Street, Melbourne, where it was executed by the applicant after she had conferred with him for upwards of an hour; thirdly, the parties took the agreement back to Mr A’s offices where the respondent executed it in his presence. I find that the agreement was given to them by Mr A and that they took the executed agreement, in duplicate, away with them.
While there was a paucity of evidence as to the circumstances in which the agreement was prepared or executed, the applicant stated (as did the respondent) that she and the respondent went to see a lawyer some twenty or thirty days after the parties conversation at Christmas 2008 for the purposes of executing the agreement. It was also common ground that neither of the parties had sighted the agreement beforehand.
The parties were in dispute as to whether the respondent attended the conference conducted by Mr B when he advised the applicant in relation to the agreement. The applicant maintained that both parties had conferred with Mr B while the respondent was insistent that Mr B told him to wait in the reception area of his offices. In cross-examination the respondent stated that, when Mr B came to the reception area to meet the parties and proceeded to take the applicant away so that he could confer with her, he followed them but was told by Mr B to wait in reception which he did for about an hour. I prefer the respondent’s evidence as to this issue. I found the applicant’s assertions that the respondent had been present to be quite unconvincing. At one point the applicant seemed to suggest both parties had signed the agreement at the same time. She was less certain as to this when given an opportunity to recognise that the signatures of the witnesses to the parties’ execution of the agreement were quite different.
In her first affidavit to address the agreement,[14] the applicant deposed that she had signed the agreement two days before the parties’ marriage at a time when she was six months pregnant and that the respondent had made an appointment for her to see Mr B to discuss that agreement. The applicant merely deposed:
At the time, I was feeling very vulnerable as I was six months pregnant and my wedding date was two days later, in 2009. I was aware of the contents of the document, but I was not in a position to refuse to sign a document as I was very keen for the marriage to go ahead so that [the respondent] and I would be married when a child was born.
Despite hearing the advice which was given to me by Mr B, I did not feel that I couldn’t refuse to sign the Agreement, as it was clear to me that our marriage would not proceed on the due date in 2009 if I did not sign it. (Emphasis added)
The brevity of this affidavit served, in part, to explain why orders were made permitting the parties an opportunity to file further evidence upon the questions arising for preliminary determination.
[14] Applicant’s affidavit affirmed 29 July 2019.
However, from her first affidavit it is at least apparent that the applicant was aware of the contents of the document and heard the advice that was given to her by Mr B. Her affidavit attributed her state of vulnerability to the fact of her pregnancy and the imminent date of the parties’ wedding. This affidavit contained very little further evidence.
The applicant did not call Mr B to give evidence. No attempt was made to explain his absence or whether or why he might have been unable to give evidence.
However, the applicant was clear that when she met him, Mr B introduced himself as a lawyer and that he read and translated for her the terms of the agreement from English to Mandarin. She stated that the lawyer had read the agreement to her in English first and then explained it to her in Chinese. She confirmed that he had spoken with her in Mandarin and that this was her first language. She was equally clear that he had discussed the terms of the agreement with her and that she had no difficulty in communicating with him. The applicant stated that at no time during her discussion with Mr B did she say to him that she didn’t understand what he was talking about. She deposed that she was advised by Mr B that if she divorced the respondent she would not get anything. She was quite clear of her understanding on this issue.
Insofar as the applicant’s affidavits suggested that she was highly emotional at the time and believed she had no choice but to sign the agreement I do not accept that evidence. On the whole of her evidence I find that the respondent never suggested to the applicant that she had no choice and that if the issue of making the agreement was discussed by anybody in terms of it being a matter of ‘choice’, this arose during a discussion with her brother. I also find that at no stage did the applicant suggest or indicate to the respondent or Mr B that she did not want to sign the agreement. Insofar as the applicant described herself as being in an emotional state, I certainly did not gain this impression of her nature during her evidence.
While her evidence was given at this level of generality, she gave no evidence that she did not understand the terms of the agreement or their effect. I do not accept her evidence that she did not know that Mr B was acting for her independently of Mr A, the lawyer who had prepared the agreement. The applicant’s evidence was that both of the parties attended upon Mr B where they signed the agreement but over a series of questions the applicant vacillated over the question whether the respondent had signed the agreement before or after she had signed it, retreating to the haven that it was a very long time ago. Otherwise, there would have been no point in returning to Mr A.
I find that two copies of the agreement were executed by the applicant in the presence of the lawyer, Mr B, who conducted practice in D Street, Melbourne, and that the agreement was executed by the respondent in the presence of the lawyer, Mr A, who conducted practice in C Street, Melbourne. The parties signed every page of the agreement including the schedules. The addresses of the two lawyers appeared to be in reasonably proximate location in Melbourne.
While the applicant was insistent that the respondent had been present during the conference held in 2009 at which she executed the agreement, she was unsure whether he had executed the agreement before or after she had done so. Having regard to the signatures of the person who witnessed the respondent’s signature and signed the certificate, I find it is more probable that counterparts of the agreement were first signed by the applicant at the offices, and in the presence, of Mr B and shortly afterward by the respondent at the offices of E & Associates in the presence of Mr A.
There was dispute as to whether the applicant had been given a copy of the agreement. The applicant deposed that she was not given any copies of any documents. She confirmed this in cross examination. By contrast, the respondent’s affidavit evidence was that Mr A told him to keep the copies safely. On this view of the evidence, after the respondent had executed the agreement, neither the applicant nor Mr A was given a copy of the agreement. However in cross-examination, he said that Mr A had given one copy to Ms Leung and one copy to him. I prefer the applicant’s evidence on this issue and I find it more probable that the counterparts of the agreement were taken from the offices of Mr B to the offices of Mr A in whose presence they were executed by the respondent. I further find it more probable that at the conclusion of this process, the counterparts of the agreement were given to the respondent at which point the parties left his offices and drove home. I do not accept that the applicant was provided a copy of the agreement as executed by the respondent, including the certificate signed by his lawyer.
The respondent gave some evidence that no pressure was brought to bear upon the applicant to execute the agreement and that if the applicant had “had any reasonable worried (sic) and concern, it should be no problem for her to put on the table according to her rich life experience and the ability how to protect her own benefits and interests.” I cannot ignore that those statements were largely expressed in conclusory and self-serving terms. In cross-examination the applicant agreed that she did not state to the respondent at any time words the effect “I am not willing to sign this document.” In this context the applicant was asked why there would have been any necessity to suggest she would have to go back to China if she had not said at any stage that she would not sign the agreement. Pressed on this issue, the applicant replied “He just hope I will sign this agreement. Also, he like me to keep the baby.” As the respondent had not heard the applicant’s reply to that question clearly, she was asked to repeat her answer. She did so. In those circumstances I do not accept the respondent stated to the applicant in the course of the Christmas 2008 conversation or otherwise that if she did not sign the agreement she would have to go back to China.
I do not accept the applicant’s evidence that the respondent had been present during her conference with Mr B. I accept the respondent’s evidence that Mr B had told him he could not be present during his consultation with the applicant. Nor do I accept her evidence that she had been unwilling to sign the agreement or that she conveyed at any time any such unwillingness or concerns in relation to the substantive effect, or specific terms, of the agreement. Further, there was no suggestion that before, or at the time of, her consultation with Mr B, the respondent placed any pressure upon the applicant either to sign the agreement or to complete that consultation without further delay. The respondent’s evidence was, in effect, that he was open to consider any reasonable worry or concern that the applicant may have harboured in relation to the making, or terms, of the agreement at that time.
I find that there were no circumstances in which the applicant was placed under any form of duress or subjected to any undue influence. Although her affidavits had been drafted in conclusory terms which suggested the respondent had engaged in conduct of that kind, there was in truth no foundation for such allegations. It is a matter of regret that the affidavits had been prepared in a form that appeared to differ from the applicant’s evidence in such a significant respect.
While the applicant gave evidence that it was only after Christmas 2008 (when they held a discussion about making a pre-nuptial agreement) that the respondent told her wedding date was in 2009, for the reasons at [49] above I reject that evidence and find that from about 2008 the applicant knew that the nominal wedding date (i.e. in 2008) had been replaced with a firm date in 2009.
It is convenient to consider the terms of the agreement below.
Marriage ceremony
At the time of their marriage in 2009, neither party had any close relatives in Australia.[15] I accept the respondent’s evidence that they did not have a wedding ceremony or celebration. The respondent’s evidence was that the parties were married at Suburb F. I reject the applicant’s evidence that the parties were married in a church and find that: their wedding took place in a registry; the respondent invited two friends to act as witnesses; the applicant did not invite any person to attend; and, had the applicant wished to postpone the wedding “it could have been easily postponed.” There was no reception.
[15] It seems the applicant now has a niece living in Australia.
The respondent gave evidence that no pressure was brought to bear upon the applicant to proceed with the wedding.
I infer that as a consequence of the parties’ marriage, the applicant became entitled to apply for a Partner (Temporary) (Class UK) visa and, as a consequence she was required to apply at the same time for a Partner (Residence) (Class BS) visa and further, having regard to the period of her residence in Australia that she has obtained permanent residence.[16]
Living arrangements
[16] Migration Regulations 1994, Reg.1214C(3)(a).
The respondent’s uncontradicted evidence was that the applicant was not eligible for permanent residence for a period of two years after her marriage but that “not long after Ms Leung got permanent resident visa, oral English improved, got driving license and got job, successfully settled in Australia, then Ms Leung decided separate with me.” From this I infer that the applicant has secured permanent residency in Australia. The fact of such residency is supported by the statements contained in each of the four iterations of the applicant’s Initiating Application.
Consistently with the applicant’s stated conditions for her agreement to travel to Australia, the respondent supported the applicant in learning English and by way of financial support. Following the parties’ marriage in 2009, the applicant did not work until 2012. In the interim, the applicant undertook an English course at G School and then a course in health care (each course being of about 18 months duration).
The respondent contends that he did all the house work because the applicant was unable or unwilling to do so. Somewhat surprisingly, the applicant did not respond to this aspect of the respondent’s affidavits.
The child was born in 2009 and in 2009 the respondent paid a deposit upon the property in Suburb H. The parties travelled with the child to City J, China in 2009 and moved into this property in 2009. I am satisfied that the respondent applied the whole of his life savings to this purchase and that the property is now unencumbered by any debt. He has paid all rates and insurance on the property and undertaken the maintenance as required.
The applicant accepted that the respondent made all contributions for the purchase of the property and did not contradict his evidence that the relationship ended in September 2013. Her acceptance of this is consistent with the substantive effect of the agreement whereby each of the parties would retain their own assets if the marriage failed and that neither would be obliged to contribute capital to the assets of one another.
The respondent also gave evidence that with his assistance the applicant purchased a flat in China at a cost of $80,000 and that he paid the initial deposit of $12,000 and a further instalment of $12,000. He said that the flat was purchased after the child’s birth in 2009. The applicant agreed she had omitted to disclose this asset and apologised for the oversight. On the respondent’s uncontradicted evidence, he made the first payment in 2009 and a further payment in 2011. The respondent questioned how the applicant had been able to secure mortgage finance to complete the ‘turnkey’ purchase of the property in 2013 if she had no assets in China. He also challenged the suggestion that the applicant was not deriving income from renting the property from 2013 to date.
In late 2012, the applicant commenced work in health care.
Separation
The respondent deposes that he respected the applicant’s wish that they not have a second child but that she left him once she had secured residency and established herself financially. The applicant’s answering affidavit did not distinctly contest any of that evidence.
Having commenced work in 2012, the respondent’s evidence was that the parties were separated under the one roof from September 2013 until the applicant moved into rental accommodation in 2016. The respondent’s evidence was that he assisted the applicant in moving the furniture into her new accommodation and that the applicant took furniture and effects from the matrimonial home with her.
The respondent contends, correctly, that from the terms of the parties’ separation agreement, it was recorded that the parties had separated on 3 September 2013. The shared parenting agreement made on 21 May 2016 was amended by a shared parenting supplementary agreement made on 17 June 2016. The respondent adduced evidence that the parties had separated under the one roof on 3 September 2013 and that when he had questioned the applicant in relation to the date of separation as inserted in the shared parenting agreement (which she had prepared), she had replied “from that day we were no more sex and cooked separately.” He also stated that the date of separation of 3 September 2013 was also inserted by the applicant in her Centrelink forms for child support under the heading “Separated under one roof.” The respondent maintained that apart from cooking meals separately from September 2013, he was left to do most of the house work from that time also. None of those matters were addressed or contradicted by the applicant.
Elsewhere, the respondent deposed that the applicant had handed him the shared parenting agreement a few days after his 65th birthday. From other evidence it appears the respondent assisted the applicant to move into her new accommodation in about 2016.
The respondent contends that after the applicant moved into separate accommodation she obtained government support to undertake a course for which she obtained a license and has since established the business and continues her work in health care. He asserts that the applicant earns $300 to $400 per day from her business, contrary to the details in her financial statement. The parties are in contest as to the applicant’s earnings, however, at this point there is a dearth of documentary evidence before me on the issue.
The respondent states that the applicant has flown to China on several occasions since the parties’ separation. The applicant agrees that she travels to China annually to see her son.
The respondent exhibited letters he had written to the applicant and gave evidence of his requests that she agree to him travelling with their child to China. The respondent’s evidence is that the applicant has blocked such travel plans including by taking the child’s passport.
The respondent also contends that he has paid maintenance for the child represented by one half of her expenses and contributing $100 per week and further, that the applicant retains all government child support. The respondent adduced documentary evidence proving his support in payment of his daughter’s educational expenses.
Following separation, the applicant’s former lawyer lodged a caveat on the property.
The applicant is now aged nearly seventy years. The respondent deposes that he continues to work two days per week and cannot decide whether to cease working while present proceeding is on foot.
Consideration
The preliminary determination of the challenge to the parties’ agreement has been complicated inasmuch as the precise basis of the challenge, and any response thereto, have not been fully defined. This could and should have been avoided by the provision of particulars.[17]
[17] Compare Scott & Scott (No.3) [2019] FamCA 936, [25]-[26] (Austin J).
Counsel for the applicant submitted there were three questions posed for determination upon the hearing of the preliminary issue. First, whether there was a financial agreement within the meaning, and for the purposes, of Pt VIIIA, of the Act. Secondly, the question arose whether the agreement should be set aside. The applicant submitted that the agreement should be set aside on either of two alternative bases: (1) upon principles of unconscionability, the court should find that the agreement is void; (2) as concerned the question of maintenance, the court should find that this provision of the agreement was void by operation of s.90F of the Act. If it was determined that the agreement should be set aside, it followed that the applicant was free to pursue an application for an adjustment of property interests. Thirdly, if the court held that the agreement should not be set aside, the further question arose whether the agreement was binding. As to this, it was submitted the agreement was not binding by reason that the applicant had not been provided with independent legal advice.[18]
The agreement
[18] Act, s.90G(1)(b).
The coversheet of the agreement bears the name of a legal firm, E & Associates. I find that the agreement was prepared by that firm.
The agreement, the cover sheet to which is headed Financial Agreement, is expressed to be made in 2009, and is entitled Pre-Nuptial Agreement pursuant to section 90(G) of the Family Law Act 1975. Substantive provisions in the agreement, however, make clear that the agreement was made pursuant to s.90B of the Act.
Recitals A-B to the agreement record that the parties were engaged and intended to marry in 2009 and that they wished to state how their financial relationship with each other following their marriage should be regulated.
The agreement provided, by recital C that the parties owned the respective assets specified in schedules thereto. By the first schedule to the agreement, the list of assets owned by the respondent identified the sums then held by him in fixed term, deposit or savings bank accounts, amounting in total to $385,000 together with superannuation of $34,650. By the second schedule to the agreement the assets owned by the applicant was stated as follows: “Nil”.
Recital D to the agreement recorded the parties desire, so far as possible to contract out of the provisions of Pt VIII of the Act if their marriage broke down irretrievably, to enter into a financial agreement under s.90B of the Family Law Amendment Act 2002 providing how “in the event of the breakdown of the marriage, their property and financial resources at the date of this agreement, or at a later time and before the dissolution of the marriage is to be dealt with.” Recital D also recorded a similar mutual desire in relation to maintenance.
Pursuant to the terms of the agreement, the parties acknowledged and were agreed upon the following matters:
a)each had received separate advice as to the effect of the agreement, whether or not it was prudent or to the advantage or otherwise of each party to make the agreement, whether its terms were fair and reasonable and that they had understood the nature and effect of the agreement and the obligations and risks involved in signing it and that they had done so freely, voluntarily and without pressure from the other party or any other person: cll 1(a)-(f);
b)the agreement was binding upon execution: cll 2-3;
c)the parties agreed that each had made no financial contributions to the assets, resources, gifts or inheritances of the other: cll 4-5;
d)should the relationship end, each party would be solely entitled to retain their respective assets and superannuation: cll 6-7, 12;
e)as to how joint assets would be held: cll 8, 15;
f)as to their respective liability for costs associated with, and any liability encumbering, any of their assets and expenses: cll 9-11;
g)upon separation, neither party would have any claim against the separate assets of the other and any contributions (financial and non-financial) to order maintenance or upkeep of the separate assets of the other party would create no right in such assets, save that contributions of capital would be repaid: cll 12(b), 13, 14;
h)what constituted irretrievable breakdown of the marriage: cl 16;
i)any void, unenforceable or illegal provision of the agreement was severed; the parties intending that the remainder of the agreement would continue in full force and effect: cl 20;
j)the parties could plead the agreement in bar to, and discharge of, any claim in any court in proceedings brought by the other in relation to the subject matter of the agreement: cll 21-22.
In particular, by cll 17-19 of the agreement the parties acknowledged and agreed that their agreement, made pursuant to s.90B of the Act, was intended to settle and discharge any claim relating to financial matters under the Act and that the benefits which it conferred were accepted in full satisfaction and substitution for any such rights. These clauses read:
The parties acknowledge and agree that all claims of any nature relating to financial matters that either has or may have against the other under the provisions of the [Act] are intended to be settled and discharges (sic) by the provisions of this agreement.
That the parties make this agreement pursuant to Section 90B of the [Act]. Should there be amending Legislation to provide for the registration of Financial agreements the parties shall do all acts and things required to cause an Agreement in identical terms to this agreement to be registered under the amending Legislation.
[The parties] hereby accept the benefits conferred on them in this Agreement in full satisfaction of and in substitution for the respective rights of each of them to seek Orders for periodic maintenance, lump-sum maintenance and allegations and declarations of proprietary interest (or property settlement or otherwise under Part VIII of the [Act] or any other act dealing or amending the same) save and except in the following circumstances:
(a)The Parties enter into a Termination Agreement pursuant to Section 90j (sic) of the Act.
(b)The Financial Agreement is set aside or terminated by the court pursuant to the provisions contained in Section 90K of the Act.
The certificates
Attached to the agreement were two certificates, each entitled Certificate of Independent Legal Advice. Each of the certificates is dated 2009; however, in the case of the certificate which relates to the legal advice that was said to have been given to the applicant, the date was inserted in handwriting, while the date appearing on the certificate given by a lawyer who advised the respondent had been inserted in type.
The certificate given in relation to the applicant reads:
I, Mr B, of [address] HEREBY CERTIFY that in relation to an agreement to be entered into between MR FAN and Ms Leung (“the parties”) I advised Ms Leung (“my client”) independently of the other party, and before the time at which my client signed the agreement, as to the following matters:
1.The effect of the agreement on the rights of the parties to apply for an order under the provisions of the Family Law Act 1975, the Family Law Amendment Act 2000 and otherwise at law and in equity.
2.Whether or not at that time it was to the advantage, financially or otherwise for her to enter into the agreement.
3.Whether or not at that time it was prudent for her to enter into the agreement.
4.Whether or not, at that time and in the light of such circumstances as were reasonably foreseeable, the provisions of the agreement were fair and reasonable between the parties.
5.the client stated she understood the nature and effect of this agreement and the obligations and risks involved in signing this agreement. It appeared to me that she did have such an understanding; and
6.she further stated to me that she was signing this agreement freely, voluntarily and without pressure from the other party to the agreement or from any other person.
The certificate given by Mr A in relation to the respondent is in relevantly identical form.
It is convenient to recognise that by his certificate, Mr B certified that the applicant had stated she understood the nature and effect of this agreement and the obligations and risks involved in signing this agreement and it appeared to him she did have such an understanding.
The parties made a financial agreement
Within the meaning of Pt VIIIA of the Act, a financial agreement includes an agreement made between people who, relevantly: (1) are contemplating entering a marriage; (2) make a written agreement concerning how, upon the failure of their marriage, their property and financial resources are to be dealt with; (3) make a written agreement respecting maintenance; (4) are not already spouse parties to any other binding agreement; (5) provide that their agreement is expressed to be made under s.90B of the Act. A financial agreement may also address incidental, ancillary and other matters.[19]
[19]Act, 90B(3). Insofar as a financial agreement deals with “other matters”, those provisions are of no force or effect until the marriage breaks down: s.90DB(2).
It was correctly submitted there was no doubt the parties had entered into a financial agreement within the meaning of s.90K(1) of the Act.
At the time of execution of the agreement the parties were contemplating their marriage, an appointment for which was made for 2009. Neither of them was party to any other binding financial agreement.[20] Their agreement addressed each of the matters for which s.90B(2)(a)-(b) made provision; namely, as to how, upon the breakdown of their marriage, their property and financial resources were to be dealt with and as to the maintenance of each of them during their marriage and after divorce. The agreement was expressed to be made pursuant to s.90B.
[20] Agreement, Recital E.
The agreement provided that it would become immediately effective upon execution and that for the purposes of its operation, their marriage would be regarded as having broken down irretrievably if they had lived separately and apart for a period of not less than three months and notification had been given by one of the parties that he or she was of the opinion that the marriage had broken down irretrievably.[21] It appears the parties are not divorced. There is no evidence a separation declaration has been signed. On the assumption that the agreement is otherwise binding and is not set aside, although the agreement is presently of no force or effect,[22] it will become so once one or other of the parties have made and notified the other of such a separation declaration.
[21] Agreement, cll.2, 16.
[22] Act, s.90DA(1).
Where the parties’ agreement has not been set aside and is binding, the court’s jurisdiction under Pt VIII of the Act is ousted.[23]
Maintenance provisions
[23]Act, s.71; see Scott & Scott (No.3) [2019] FamCA 936, [143] (Austin J).
As noted above, ss.90E-90F provide for circumstances in which a provision of a financial agreement relating to maintenance will be void.
In the present case, I conclude that the agreement did not specify the amount provided for, or the value of the portion of the property attributable, to the maintenance of the applicant or their child.
Instead, it recorded their desire “so far as is possible to contract out of the provisions of Part VIII of the [Act]” if their marriage broke down irretrievably, including with respect to the maintenance of either of them during their marriage and after its dissolution.[24] The agreement provided that during their marriage, and to the extent they were able, each would contribute equally to joint expenses including those associated with common household expenses, including food, entertainment and cleaning, joint travel and other costs as defined or agreed.[25]
[24] Agreement, Recital D b).
[25] Agreement, cl 11.
The agreement provided that each party accepted the benefits conferred under that agreement in full satisfaction of, and in substitution for, their respective rights to seek orders for periodic or lump-sum maintenance, save and except in circumstances where, so far as material, the agreement was set aside pursuant to s.90K of the Act.[26] As noted above, the agreement provided for the matters in respect of which each would make contributions during their marriage. It did not expressly provide for whether either party would provide maintenance.
[26] Agreement, cl 19.
In particular, the agreement did not specify the amount to be provided for, or the value of the portion of any relevant property attributable to, the maintenance of either party or any child of their union.
Furthermore, the agreement made no express provision for maintenance after the parties were separated or divorced. While there may be a question whether, properly construed, cll 11 and 19 of the agreement operate to deny either party recourse, following divorce, to make an application for maintenance, I would also regard such provisions as void insofar as they purported to do so.[27]
[27]Accepting that the child was, at the time of execution of the agreement in utero, I consider cl 19 of the agreement would also have been void on that basis.
In a dissenting judgment, Gleeson CJ and Callinan J considered the rejection of a claim of undue influence did not lose significance for the determination of the claim of unconscionability. Their Honours noted that, in the face of concurrent findings of fact in the court below (which had been based on ample evidence), the testator was not under any special disability. Contextually, their Honours observed the features of earlier leading cases including that: a person had been considered “markedly dull-witted and stupid” and as having no idea of what he was doing; in another case, suffering alcoholism and whose judgment was seriously affected by drink; a case involving guarantors who, having limited English, had been dependent upon their son, the principal debtor, when pressured by him (not the bank) into executing the guarantee; and in another, to have been utterly infatuated and manipulated at a time of vulnerability by a person who threatened suicidal ideation. Gleeson CJ and Callinan J acquitted the nephew of any unconscientious conduct.
The foregoing review of authority demonstrates the highly contestable nature of such claims, particularly where, as here, allegations of duress and/or undue influence have been made and rejected. Adopting a high level of scrutiny to the agreement, and all of the circumstances which ought to influence the court’s determination of the real justice of the case, there are many factors in play in this matter.
As stated, it is essential to locate a defect in how the agreement was entered into, and if a special disadvantage is established, that it was sufficiently evident to the respondent to make it unconscientious that he had procured or accepted her entry into that agreement. Here, the applicant said nothing to the respondent or to either of the lawyers indicating that she was unwilling to enter into the transaction.
In contrast with the foregoing authorities, the present case does not involve the making of a substantial gift. However, it bears some similarity with a transaction which, in effect, operated to remove substantial assets from the reach of a potential claim. That is so because the agreement provided for acceptance of the benefits which it conferred in substitution for, and surrender of, any entitlement to claim under the Act for an adjustment of property interests if the parties’ marriage was to fail. And as is readily apparent, the benefits under that agreement were framed in terms of the parties retaining their own property but doing so in the context where schedule 2 to the agreement disclosed that the applicant had no assets at that time.
There is no doubt that the respondent played a central role in organising for a lawyer to prepare the agreement and for an independent lawyer to provide legal advice to the applicant in relation to it. Further, the terms of the agreement provided for the parties to keep their property and financial affairs entirely separate, save as to their joint obligations respecting day-to-day living expenses. I cannot ignore that the terms of this agreement struck a bargain which preserved the financial position of each party as they were, when made, and at first sight, this is problematic. Although it will not be an essential, sufficient or decisive factor, nonetheless it a may be a significant and material consideration that the terms of a financial agreement are grossly improvident and that the terms for which they provide were extraordinarily and disproportionately small in contrast with a parties likely entitlements upon the failure of a marriage which proved to be of some years duration. But to reason in that way is to ignore that the Act does not provide – as it does in relation to maintenance in certain circumstances – that every financial agreement which contains such terms will be void. To reason in that way would be to adopt no more than an intuitive and idiosyncratic view of the case. It is not unimportant that the Parliament did not enact a provision in s.90K or elsewhere in Pt VIIIA providing that an agreement framed in terms whereby each party would retain their own property was void.
To adapt the reasoning in Thorne, if there is a proper basis for equitable intervention it must reside in some defect in how the agreement between these parties was entered into. As Gordon J stated, “that defect will exist if the special disadvantage was sufficiently evident to the stronger party at the time of the transaction to make it unconscientious to procure or accept the assent of the weaker party.”[125]
[125] (2017) 263 CLR 85, [114].
Further considerations which may militate in favour of the conclusion that there has been the unconscientious taking of advantage are: the circumstances in which a party had arranged for the agreement to be executed; the proximity of the date on which legal advice was given in relation to the agreement to the date of the wedding appointment; whether the ‘stronger’ party had brought the ‘weaker’ party to Australia; when detailed information was provided by the ‘stronger’ party in relation to his or her financial position.
There was no basis for a suggestion that the respondent, either consciously or unconsciously, sought to exploit or take advantage of the applicant. Indeed, the case was advanced on the basis that the applicant had voluntarily entered into and executed the agreement and it was not said the respondent had consciously sought to exploit or predate her.
Just as a substantive issue to be addressed in the adjustment of property interests is whether it is just and equitable that there should be any adjustment, the circumstances that the parties decide and agree to keep their financial affairs quite separate may be a significant consideration in the determination whether such an adjustment is warranted. By parity of reasoning, where before their marriage parties enter into a financial agreement which records that they agreed to keep their financial affairs quite separate, this is a material consideration which informs the nature of the marriage which they contemplated.
I have considered the nature of the parties’ relationship which I have described above in addressing the evidence. The applicant, who is some twenty-five years younger than the respondent was a Chinese national who had in contemplation that she would, if married to the respondent, acquire Australian residency and the benefits which accrued from it. The applicant impressed me as an articulate and clever person. She had held employment in China for ten years. The respondent presented as a man of relatively humble origins. It was not submitted and there was no basis for a suggestion that the respondent had acted in a way which was redolent of dishonesty, trickery, sharp practice or as having manufactured a design.
As concerns the relative financial positions of the parties, this should be considered from a number of perspectives. First, as the agreement records, the applicant had no assets as at 2009 while the respondent had savings of $385,000 and superannuation of $34,650. Secondly, upon the whole of the evidence, I am satisfied the respondent intended to support the applicant financially in their marriage. I am reinforced in that conclusion by the text of the relief sought by his Response which he completed as a self-represented person and also by his evidence. Thirdly, I cannot ignore that while the applicant’s circumstances as a Chinese national may have been modest, in an aspirational sense she clearly hoped to gain a better life for herself in Australia if she secured a marriage to the respondent. She has been vindicated in the pursuit of that objective in a number of ways including that the respondent was prevailed upon to make substantial contributions so as to enable her to purchase an investment property in China and, further, that she has secured employment and accrued superannuation. Fourthly, as a result of her engagement and as a result of her marriage, the applicant secured the contingent right to obtain employment in Australia and the benefits which it would entail. Fifthly, by reason of her engagement, the applicant obtained the expectation that she might also secure Australian residency or citizenship. In the particular circumstances of this case, I do not consider it appropriate to pay regard to the parties’ financial circumstances from a narrow perspective. Objectively, I consider that it is appropriate to examine the parties’ past, existing and potential financial circumstances flowing from the fact of their engagement, agreement and marriage.
As concerned the question of independent advice, I conclude that such advice was obtained. I reject the submission that the advice was not independent. It is clear that the respondent instructed a lawyer (whom he identified from a newspaper) to prepare the agreement and when this occurred, another lawyer (who had never acted for the respondent) was retained to give independent advice to the applicant in relation to each of the matters addressed by the certificate which was signed by Mr B and dated in his handwriting. On the face of the certificate, Mr B was an Australian legal practitioner within the meaning of the Legal Profession Act 2004 (Vic). In its express terms, the certificate confirms that the applicant was provided with legal advice about: the effect of the agreement on her rights to apply for an order under the Act, as amended, and otherwise at law and in equity; the advantages and disadvantages, at the time that the advice was provided to her.[126] Contemporaneously with execution of the agreement, Mr B completed the certificate of independent legal advice. So too, did the respondent’s independent legal advisor, Mr A.
[126] Act, s.90G(1)(b).
Insofar as it was suggested Mr B’s legal advice lacked independence, the applicant’s evidence satisfies me that she discussed the agreement with him for up to an hour. I am satisfied that the agreement was translated to the applicant by Mr B, that he explained its terms to her and that the applicant well understood the legal effect of the agreement. The agreement was signed by each of the parties who, absent statutory or other relief, are bound by the legal rights and obligations it records.[127]
[127] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471, [33]-[34].
Counsel for the applicant accepted that the applicant had not called Mr B to give evidence. Contrary to the applicant’s submission, I am not prepared to infer that the applicant did not receive independent legal advice which satisfied the requirements of s.90G(1)(b) of the Act. The applicant has been legally represented throughout this proceeding. The failure to call Mr B should in the circumstances support an inference that his evidence would not have assisted her case. Nor am I prepared to accept that the applicant’s generalised evidence, in the absence of Mr B, rebuts the prima facie evidence established by the certificate that the advice was given. In short, the applicant’s evidence has not thrown into doubt that the advice was given. She has not shifted the forensic onus of creating the necessary doubt on this issue.
In contrast with Kobelt, this agreement was to continue in operation despite the death of either party and was binding on their respective heirs, executors, administrators and assigns,[128] and in those respects, the agreement largely mirrored s.90H of the Act. As a result, the parties were bound by their acceptance of the benefits under that agreement in substitution for those which might accrue under the Act, unless it was terminated in the limited circumstances afforded by the Act.[129]
[128] Agreement, cl. 3.
[129] Act, s.90J.
It is frequently said that it is neither essential nor necessarily decisive to a claim of unconscionable conduct that the terms of an agreement are not fair, just or reasonable or that inadequate consideration has been given. Equity does not relieve parties from a bargain freely made at arm’s length merely because its terms are unfair or unreasonable. However, it will not ignore a conclusion that the entitlements for which a financial agreement provided upon the irretrievable breakdown of the relationship were “extraordinarily and disproportionately small in comparison to what [a party] would have been entitled to if she had not entered into the agreements”: Thorne v Kennedy.[130]
[130] (2017) 263 CLR 85, [124]
From one perspective, had the parties’ not entered into the agreement, it is not immediately obvious that the applicant’s entitlements would have been extraordinarily and disproportionately small in comparison to what she would have been entitled to upon the failure of the marriage. In my view, sight has been lost in this case of the financial and non-financial contributions which the respondent has made to the applicant (and child) before, during and after their marriage including in relation to her visa application, English and educational courses and accommodation after they were separated under the one roof from September 2013. And while the comparison in entitlements under s.79 would be concerned with entitlements to an adjustment of the parties existing property interests, in my view, it is legitimate to consider also that, had the agreement not been made and the marriage not proceeded, the applicant would have returned to China, not secured permanent residency and the opportunities which have accrued to her as a consequence. As importantly, it should not be ignored that had the agreement not been made and the parties existing interests the subject of consideration under s.79 of the Act, an issue that would have required determination on the evaluation of the claim was to take into account the effect upon the respondent of the relief being sought – here, the sale of the property.
Upon detailed consideration of all of the connected circumstances considered above, I am not satisfied that there was a defect in how the agreement was made between these parties and I do not accept that it was, or should have been, sufficiently evident to the respondent at the time the agreement was made that the applicant was under a special disadvantage such as placed her at a serious disadvantage in making a judgment as to whether it was in her best interests to enter the agreement or such as would make it unconscientious for him to have procured or accepted her assent to that agreement.
For all of the foregoing reasons, I decline to set aside the agreement.
Material change
The second basis on which the applicant sought to have the agreement set aside was that there had been a material change in circumstances causing hardship. The text of par 90K(1)(d) has been set out above.
The material change relied upon was said to be comprised of the birth of the child combined with the parties having separated earlier than they intended. Counsel drew attention to the decision in Fewster & Drake.[131] There Aldridge and Kent JJ, with whom Strickland J agreed, could “not see why a birth cannot be a material change in circumstances for the purposes of s.90K(1)(d). Whether it is in fact is such change will depend on all of the circumstances.” In upholding the determination that there had been a material change where, having executed a financial agreement in 2006, the parties gave birth to a second child in 2009, the Full Court endorsed the reasoning that the birth of the second child constituted a major change in the circumstances underlying entry into the agreement and that the agreement thereby inevitably created hardship. In this context, the court focused upon the proper meaning of ‘material’ noting that the fact needed to be relevant to the issues arising and of sufficient importance to be likely to have a bearing on the case.[132]
[131] [2016] FamCAFC 214, [60]-[63].
[132][2016] FamCAFC 216, [53] citing Sola Optical Australia Pty Ltd v Mills (1987) 163 CLR 628, 637.
In my opinion, Fewster & Drake is distinguishable from the present case insofar as the question of the child is concerned. In this case, the parties executed their agreement upon a matrix of facts which included their mutual knowledge that the applicant was six months pregnant. I do not accept that the existing pregnancy of itself would constitute a material change: see and compare, Milavic & Banks (No.2).[133]
[133] [2016] FamCA 884, [94] (MacMillan J) (where child later diagnosed with autism).
Equally, I do not accept the submission that a material change is established in this case by the parties having separated earlier than was intended. As raised with counsel in closing submissions, the agreement was made on the express basis that the parties wished to state how their financial relationship should be regulated following marriage.[134] Moreover, the agreement was expressly made pursuant to s.90B. I do not accept the suggested “earlier separation” provides a basis for finding there has been a material change for the purposes of par 90K(1)(d). No authority was cited of where a so-called premature separation had been accepted as constituting a material change. On one view the proposition has an element of illogicality inasmuch that the shorter the period of the parties’ relationship, the stronger might be the argument against an adjustment of the parties’ existing property interests.
[134] Agreement, Recitals B, D, cl 18.
It follows that I am not satisfied of the first element of s.90K(1)(d). However, it is appropriate to consider the question of hardship also.
Hardship
As counsel for the applicant properly submitted, the court’s power to set aside the agreement was engaged if, but only if, the court was satisfied that as a result of a material change in circumstances having occurred since the making of the agreement, the child or the applicant would suffer hardship if the agreement was not set aside. Approached in this way, before the power to set aside the agreement was engaged, the question of hardship must also be addressed.
Fewster & Drake[135] also confirms that for the purposes of this provision, the hardship must result from the material change in circumstances, and not from some other cause. As to this, the Full Court identified error in the failure to consider whether as a result of that material change a child or party to the agreement having caring responsibility for the child will suffer hardship if the agreement is not set aside.[136] It is settled that the hardship must arise from the changed circumstances and not the agreement itself. The Act contains no provision which enables a binding financial agreement to be set aside merely because it is unfair.[137] For those reasons, correctly understood, hardship is not established merely by demonstrating that the outcome of any s.79 application is likely to be very different from that provided by the agreement. It would be erroneous to analyse the matter in that way because it distracts attention from the nature of hardship for the purposes of par 90K(1)(d) and the causal requirement that it would be suffered as a result of the material change in contention.
[135] [2016] FamCAFC 216, [60]-[63].
[136] [2016] FamCAFC 216, [48]-[51].
[137] Hoult & Hoult (2013) FLC 93-546, 87,283, 87,296-7.
For the purposes of addressing hardship, the court must determine that issue by undertaking “some comparison between the position of the child, or the person with caring responsibility, if the agreement remains in place and the position of that child or person if the agreement is set aside.”[138] I accept that if the agreement was set aside it is probable that an order would be made adjusting the parties’ property interests; however, they would be adjusted taking into account the facts and circumstances described above including that, on the applicant’s case, the respondent provided financial support to, and accommodation for, the applicant and child before, during and after their marriage which began in 2008 and failed in September 2013. Contrastingly, if the agreement remains in place the applicant will retain her assets and superannuation of ~$114,000 and the respondent will retain assets and superannuation of ~$1M. The disparity is readily apparent.
[138] [2016] FamCAFC 216, [67]; see also Frederick & Frederick [2019] FamCAFC 87, [42].
In order to demonstrate hardship, something more burdensome than appreciable detriment must be shown. Synonyms such as hardness, severity and privation have been employed as are concepts including that which is hard to bear or substantial detriment. Equally, the comparative process does not require the applicant to call evidence to the same degree as would be required at a final property hearing.
I am not satisfied there has been a material change in circumstances since the making of the agreement or that as a result of any suggested change, the child or the applicant will suffer hardship if the agreement is not set aside. In particular, as I am satisfied the provision of the agreement relating to maintenance is unenforceable, it must follow that the applicant is free to pursue an application for maintenance.
The respondent deposes that the applicant has the capacity to earn between $300 to $400 per day from her work as a customer service officer.
The applicant deposed as to her estimate of the parties’ financial position. In summary, she described the matrimonial home as being worth $700,000 and that the respondent had savings of ~$82,000, a motor vehicle worth $17,000 together with superannuation of $203,000. By contrast, the applicant deposed that the unit in China is still worth $80,000 and that she has savings of ~$14,000 together with a motor vehicle ($13,000) and superannuation of $22,000. She disclosed liabilities of $50,000.
To some extent, the parties respective financial positions may be gleaned from the financial statements which, although somewhat out of date, I have also considered. While she has the care of the child, the applicant’s earnings are greater than those of the respondent.
While the court is not required to undertake a comprehensive analysis of the likely outcome of a s.79 application, the evidence adduced by the applicant was presented at the broadest level so as to indicate the parties’ respective asset pools but without making any attempt to address questions of contributions of all kinds before, during and after their relationship. This was somewhat unsatisfactory and seemed to assume that the applicant was entitled to such relief.
As noted above, the parties have entered into various parenting plans and the respondent has paid maintenance for the child as described above. No suggestion is made that the respondent has been dilatory in the observance of his obligations to maintain the child.
The question of hardship could be considered from another perspective. On the facts of this case, the applicant had arrived in Australia with no assets or income and had recently been retrenched from her employment. By contrast, the applicant has now secured Australian residency and, by dent of an admirable work ethic, has employment as a health care worker and is the proprietor of her own business; from her financial statement she earns slightly more than $1,000 per week. This sum is made up of the following: (a) salary or wages: $500; (b) business income: $200; (c) family tax benefit and Newstart allowance $230; (d) maintenance: $100: total – $1030.
Having regard to the principles stated above, I am not prepared to find that the applicant or child has or will suffer hardship as a result of a material change in circumstances: cf Milavic & Banks (No.2).[139]
Discretionary considerations
[139] [2016] FamCA 884, [95], [110-]-[111], [120] (MacMillan J).
The power conferred by s.90K(1) is cast in discretionary terms: “A court may make an order setting aside a financial agreement” if, and only if, satisfied of one or more of the matters addressed by par 90K(1)(a)-(g).
The conclusion that cl 19 of the agreement (to the extent it was expressed as involving acceptance of the benefits of the agreement in full satisfaction of, and in substitution for, any rights to seek orders for maintenance), is unenforceable carries the following consequences. First is that cl 19 is unenforceable insofar as it purports to record the Parties agreement that they have accepted the benefits conferred by the agreement in full satisfaction of, and in substitution for rights respecting maintenance. Secondly, it follows that the applicant is free to pursue claims for maintenance. Thirdly, the availability of that right is a relevant consideration against the conclusion that the court should exercise its discretion to otherwise set aside the agreement in its entirety.
In this context it is useful to consider the scheme of s.79 of the Act which governs the circumstances in which the court may make an order altering the interests of parties to a marriage and property. The scheme of this provision was examined by the High Court in Stanford & Stanford.[140] As this decision makes clear, s.79(2) which provides that “the court shall not make an order under that section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order” is of central importance in such an application.[141]
[140] (2012) 247 CLR 108.
[141] (2012) 247 CLR 108, [2], [35]-[52].
As Stanford holds, the questions posed by ss.79(2) and 79(4) are not to be conflated.[142] In the result, the determination whether it is just and equitable that there should be an adjustment of property interests is not to be answered by: (a) “assuming that the parties’ rights or interests in marital property are or should be different from those that then exist”; (b) “beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property . . .” The plurality also emphasised that the power conferred by s.79 was to be exercised, not upon judicial discretion, but in accordance with legal principles including those laid out in the Act. For those reasons, their Honours stated in relation to a financial agreement as follows:[143]
If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot (s.71A) make a property settlement order under s.79.
The plurality further recognised that those principles could also accommodate circumstances where the parties had expressly considered how the property interests should be arranged during their relationship and cases where they had not turned their minds to the question.
[142] (2012) 247 CLR 108, [35], [40].
[143] (2012) 247 CLR 108, [41].
Stanford is also of significance to the present application because it recognises a court may be satisfied that it is just and equitable for an order to be made adjusting property interests where, for example, one parties unmet needs cannot be met by a maintenance order.[144] Although the appeal was allowed, the plurality confirmed the Full Court’s analysis that there had been an error at first instance in a failure to take into account the consequences for the husband of the relief being sought; namely, that “he would be required to sell the matrimonial home, in which he was still living, despite the needs of his wife then being met . . . and the possibility, if needed, of making a maintenance order.”[145] I have found this reasoning of assistance in relation to the exercise of discretion.
[144] (2012) 247 CLR 108, [45].
[145] (2012) 247 CLR 108, [46]-[47]; see also at [62]-[63], (Heydonlu J).
In my view, parity of reasoning would support consideration of whether the discretionary power to set aside the agreement ought be exercised in favour of the applicant in all the circumstances including: the absence of duress or undue influence; the applicant not being at a special disadvantage which seriously affected her ability to decide whether it was in her interests to execute the agreement; the contributions made by the respondent by the application of his entire savings to the purchase of the matrimonial home; the relatively brief period of the marriage; the respondent’s position in this proceeding that he has maintained, and remains willing to maintain, the applicant and their child; the maintenance provisions of the agreement are void such that there is no impediment to the applicant pursuing a claim for maintenance.
It is also important, consistently with Stanford, to consider the effect upon the respondent of making an order for the division of the parties property would require that he sell the matrimonial home. p
Had I been satisfied that the requirements of pars 90K(1)(b), (d) or (e) were made out, for those reasons also, I would have declined to exercise the discretion conferred by the section to set aside the agreement.
A binding agreement?
As the respondent sought to uphold the agreement, and thereby secure the protection which it afforded from claims under the Act, he assumed the primary burden of proving the binding nature of the agreement.[146] Although counsel drew attention in general terms to amendments that had been made to Pt VIIIA of the Act,[147] it was not submitted that consideration of a particular point-in-time version of the legislation was necessary to the proper determination of the case. It was correctly submitted that, in respect of agreements made before 2010, it was not necessary for the agreement to record that the parties had received independent legal advice; what was of relevance was whether the advice had actually been given.[148]
[146] Scott & Scott (No.3) [2019] FamCA 936, [36] and cases cited (Austin J).
[147] Citing Wallace & Stelzer [2013] FamCAFC 199, [72].
[148] Ibid.
It was submitted that the mandatory requirements stipulated by s.90G(1) of the Act had not been met in that the applicant had not been provided with independent legal advice. It was properly conceded that the court was not concerned to inquire as to the correctness of the advice but rather whether advice had been given as to the matters prescribed by par 90G(1)(b). However it was submitted that advice was never given, and if it was, that it had not been independent legal advice.
By cl 1 of the agreement, each party acknowledged that they had received separate advice as to the effect of the agreement, whether or not it was prudent or to the advantage or otherwise of each party to make the agreement, whether its terms were fair and reasonable and that they had understood the nature and effect of the agreement and the obligations and risks involved in signing it and that they had done so freely, voluntarily and without pressure from the other party or any other person. Having regard to their agreement, coupled with the certificates which were annexed to it, the requirements of par 90G(1)(b) were met and in those circumstances I am satisfied that the respondent has discharged the burden of proving compliance with the Act: cfScott & Scott(No.3)[149] citing Hoult & Hoult.[150] As Austin J held in Scott & Scott (No.3), thereupon, the evidentiary burden shifted to the applicant to demonstrate some deficiency in the nature of the advice that she received.[151]
[149] [2019] FamCA 936, [39].
[150] (2013) FLC 93-546, [101], [279].
[151][2019] FamCA 936, [39] citing Hoult & Hoult (2013) FLC 93-546, [62]-[63], [249]; Logan & Logan (2013) FLC 93-555, [44]-[45], [49]-[50].
While the applicant submitted that the agreement was not binding for want of independent legal advice, there was a paucity of evidence as to the precise basis on which the advice was lacking in independence or veracity. I reject the applicant’s evidence that the process of obtaining legal advice was wanting in independence on the basis that the respondent had been present throughout her conference with Mr B. The applicant did not call the legal advisor and I prefer the evidence of the respondent that he was not permitted to attend the conference. The evidence satisfies me that the lawyer spent up to an hour conferring with the applicant and that during this time he translated and discussed the terms of the agreement with her.
Counsel drew attention to Renard & Geach,[152] in which Small J considered a party afforded a conference of one hour to be an insufficient period in which to provide the instructions necessary to adequately allow for proper consideration of the relevant issues.
[152] [2013] FCCA 617, [83].
Some three weeks later, Hoult & Hoult was decided.[153] There the Full Court held that it was not the content of the advice, but whether it had been given which was of determinative significance.
[153] (2013) 50 Fam LR 260, [100]-[101], [279].
In Scott & Scott(No.3)[154] Austin J seemed untroubled by the circumstance that the applicant had conferred with her lawyer for a period of up to thirty minutes in discussing the subject agreement (and presumably the matters with which par 90G(1)(b) is concerned). This may be explained in the circumstance that his Honour’s reasons demonstrate the more fulsome evidence which was adduced in that case as to the parties’ exchange, negotiation and agreement over terms for a prolonged period.[155] Contrastingly, there is no evidence as to the amount of time spent by Mr B before that conference in giving consideration to its terms. In the face of the applicant’s failure to call Mr B, I am not prepared to infer that there was a want of due care on his part or that the quality or sufficiency of his advice was lacking.[156]
[154] [2019] FamCA 936, [45].
[155] [2019] FamCA 936, [76]ff.
[156] Cf Scott (No 3), [2019] FamCA 936, [46], [47], [48], [53].
It was for the applicant to discharge, and she has not discharged, the evidentiary burden which was cast upon her on this issue.
In Scott & Scott (No.3), Austin J also accepted that the parties’ mutual forbearance from resort to the Act for relief was proper consideration for their entry into a binding agreement.[157] The present agreement is framed in terms whereby the parties’ mutual forbearance is given as their consideration for the agreement.
[157][2019] FamCA 936, [112].
The agreement was said not to be binding on another basis. In closing submissions it was submitted that the evidence also supported a finding that a copy of the agreement, as executed by each party, had not been supplied to the applicant or her lawyer, Mr B, and for that reason also was not binding for want of compliance with par 90G(1)(ca) of the Act. This requirement was inserted into s.90(1) so as to ensure that objective evidence was readily available to each spouse party that legal advice had been provided to the other spouse party if it was later sought to enforce the terms of the agreement.[158]
[158]Federal Justice System Amendment (Efficiency Measures) Bill (No.1) 2009, Supplementary Explanatory Memorandum, [7]. The amendments appear to have been proposed in response to difficulties identified by the Law Council of Australia arising from Black & Black (2008) FLC 93-357 to ensure the validity of existing agreements and reduce the scope for disputes about formal validity.
Although I am satisfied in compliance with ss.90G(1)(b)-(c) of the Act, that each party was provided with independent legal advice and a signed statement was made by each of their respective lawyers, I am unable to be satisfied that a copy of the statement – being the certificate of independent legal advice – made by the respondent’s lawyer, Mr A, was given to the applicant or her lawyer in compliance with ss.90G(1)(ca) of the Act. Subject therefore to s.90G(1A) of the Act, presently, the parties’ agreement is not binding on them.
As noted above, the Act provides an alternative means by which the parties may be bound by their agreement.[159] In the present case, the respondent has not brought an ‘enforcement application’ seeking a declaration that the parties agreement is binding. In my view, in all the circumstances, it is appropriate to afford the respondent an opportunity to amend his Response so as to seek a declaration pursuant to s.90G(1B) of the Act, that the agreement is binding.
[159] Act, s.
Conclusion
For the reasons above, my conclusions can be stated as follows:
a)insofar as cll.17 and 19 of the agreement address maintenance, those provisions are void. The applicant may decide to pursue an application for periodic or lump-sum maintenance;
b)I can find no principled basis for a conclusion that the applicant was under a special disadvantage which seriously affected her ability to make a judgement whether entering into the agreement was in her best interests;
c)nor are the circumstances such that the respondent procured or accepted her entry into the agreement by unconscientious means;
d)nor has there been a material change in circumstances such that the applicant would suffer hardship if the agreement was not set aside. I would not have been satisfied that as a result of the suggested material change, the applicant or their child would suffer hardship if the agreement was not set aside;
e)in the exercise of the discretion conferred by s.90K(1) of the Act, I would not have set the agreement aside;
f)the agreement is not binding by reason that upon execution, a copy of that agreement, signed by the respondent, was not given to the applicant or her solicitor. The respondent may decide to pursue an enforcement application pursuant to s.90G(1A) of the Act for a declaration that the agreement is binding.
For the reasons above, it remains open to the applicant to pursue an application for maintenance and the respondent to bring an enforcement application seeking an order declaring that the agreement is binding; however, no such applications have yet been made. Although a court might make orders in aid of the implementation of an agreement in circumstances where no precise relief of that kind is made,[160] I consider that it is necessary for the parties to give consideration to the nature of any further relief which they might seek by way of amendments to their Initiating Application and Response respectively. Orders have been made allowing the parties an opportunity to pursue either course.
[160]Scott & Scott (No.3) [2019] FamCA 936, [147].
I wish to acknowledge and record the particular assistance of counsel.
I certify that the preceding two hundred and ninety (290) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 3 April 2020
90G(1A).
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