Logan and Logan
[2012] FMCAfam 12
•10 January 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LOGAN & LOGAN | [2012] FMCAfam 12 |
| FAMILY LAW – Property – wife’s application to have a Financial Agreement declared non-binding or alternatively set aside – wife alleging that she did not receive independent legal advice as required by s.90G(1)(b) of the Family Law Act before signing the agreement – where a solicitor signed a certificate stating that the wife was given the requisite legal advice – wife alleging that that she was led to sign the Agreement by the husband’s unconscionable conduct or signed under duress – whether the wife has discharged the onus of proving that she did not receive legal advice or alternatively that the husband behaved unconscionably or subjected her to duress. |
| Family Law Act 1975, ss.90C, 90G, 90K, 90KA |
| Briginshaw & Briginshaw (1938) 60 CLR 336 Sanger & Sanger [2011] FamCAFC 210 |
| Applicant: | MS LOGAN |
| Respondent: | MR LOGAN |
| File Number: | BRC 4449 of 2010 |
| Judgment of: | Terry FM |
| Hearing date: | 15 July 2011 |
| Date of Last Submission: | 15 July 2011 |
| Delivered at: | Newcastle |
| Delivered on: | 10 January 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Myers |
| Solicitors for the Applicant: | Speakman Lawyers |
| Counsel for the Respondent: | Mr George |
| Solicitors for the Respondent: | Porter Mulett |
ORDERS
That the wife’s application filed on 22 December 2010 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Logan & Logan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 4449 of 2010
| MS LOGAN |
Applicant
And
| MR LOGAN |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Logan and Mr Logan separated in September 2008 after a twenty three year marriage. In November 2008 they settled their property matters by signing a s.90C Financial Agreement.
Pursuant to the Agreement the wife received 15% of the property pool and the husband 85%. In real terms the wife received a cash sum and some smaller items, and the husband received the unencumbered former matrimonial home, the business and some smaller items.
On 22 December 2010 the wife filed an application in which she sought to have the Agreement declared non-binding or alternatively set aside. If the wife is successful she will be able to request the court to consider the division of property afresh, and it is clearly her expectation that she will then receive a much greater share of the property pool.
The wife submitted that the Agreement should be declared non-binding because she did not receive independent legal advice before she signed it as required by s.90G(1)(b) of the Family Law Act.
In the alternative the wife submitted that the Agreement should be set aside because she signed it as a result of duress and as a result of the husband’s unconscionable conduct. She alleged that the husband exerted pressure on her to settle on his terms by playing on the guilt she felt over ending the marriage, threatening to publish private emails to third parties and threatening to withhold funds from her until she signed.
The husband sought the dismissal of the wife’s application. He submitted that the wife should not be allowed to go behind the Certificate of Independent Legal Advice signed by her solicitor, and he denied that he had subjected the wife to duress and engaged in any unconscionable conduct.
The Evidence
The wife relied on her application filed on 22 December 2010, her affidavits filed on 22 December 2010 and 22 June 2011 and her Financial Statement filed on 22 December 2010.
The husband relied on his response filed on 28 March 2011, his affidavits filed on 28 March 2011 and 24 June 2011 and his Financial Statement filed on 28 March 2011.
A copy of the file of Mr William York, the solicitor who prepared the Financial Agreement and signed the certificate of legal advice in respect of the wife was produced on subpoena and tendered by the wife. Mr York was not called to give evidence.
At the hearing on 15 July 2011 the husband was cross-examined but the wife was not required.
The husband was a satisfactory witness. His answers in cross-examination were consistent with the evidence in his affidavits and he made no concessions which assisted the wife’s case.
Background
The husband and wife commenced cohabitation in 1984[1] and married [in] 1985. There are two children of the marriage, [X] born [in] 1991 and [Y] born [in] 1994.
[1] The email exchanges between the parties which are copiously reproduced in their affidavits hint at an even longer relationship prior to marriage but the husband did not contradict the wife’s assertion that cohabitation commenced in 1984.
During the marriage the parties acquired a home and they also operated a business. The wife’s evidence was that in addition to being the primary homemaker and parent she:
…… was a director of and actively worked in our business, [L] Pty Ltd, which [omitted].[2]
[2] Wife’s affidavit filed 22 December 2010 paragraph 25.
The husband maintained that he and the wife ‘shared the domestic duties more or less equally’ but he agreed that the wife was involved in the business.
From 2001 onwards the wife was also involved in [occupation omitted], and may have had some other paid employment from time to time.[3]
[3] Wife’s affidavit filed 15 June 2011 paragraph 5.
On 26 September 2008 the husband and wife separated. The separation was initiated by the wife, who had formed a new relationship, and it came as a shock to the husband. In the post-separation emails the husband sent to the wife his distress is palpable.[4]
[4] The wife reproduced many of these emails in her affidavits.
The wife said that she felt guilty about what had occurred, and this is evident in the emails emanating from her.
It was not in dispute that at or about the time of separation the husband obtained access to some emails which had passed between the wife and her new partner and the wife and one of her girlfriends. It was effectively the husband’s case that the significance of the emails was that they confirmed that the wife had been seeing someone else prior to the end of the marriage, while the wife claimed that the husband used possession of the emails as a weapon.
On 29 September 2008 the husband transferred a large sum of money from the business account into an account in his sole name. The wife referred to this in her affidavit but did not clearly explain the extent if any to which it had an immediate financial impact on her.
The parties began to discuss a property settlement soon after separation. In her first affidavit the wife did not give any clear evidence about who initiated this, although she said as follows:
The property settlement as detailed in the agreement, namely that Mr Logan would retain the business and the house, was
Mr Logan’s idea right from separation. I do not recall ever being asked by Mr Logan what I wanted in regard to the property settlement.
In her second affidavit the wife said that:
In the days after our separation Mr Logan was constantly approaching me with different offers of settlement and at times used words to the effect that if I wanted ‘out’ it was going to ‘cost’ me. At times Mr Logan also threatened disclosure of my private emails which he had in his possession.
The husband’s version of events was as follows:
In the days immediately following my discovery of certain emails between Ms Logan and her now partner, Ms Logan and I negotiated between ourselves without the benefit of any advice an arrangement where I would pay Ms Logan $20,000.00 and retain the former matrimonial home and the business.
The husband denied that he had ever said to the wife that if she wanted out it was going to cost her and he denied threatening disclosure of the emails, either in connection with the property settlement negotiations or at all.
Soon after separation Mr William York, a solicitor with Hopper Green & Associates, was engaged to prepare documents to carry a property settlement into effect. There was a dispute between the parties about how he came to be engaged and who engaged him.
Mr York had previously prepared wills for the parties and the wife’s case was that the parties had jointly engaged ‘the family solicitor’ to deal with their property matters. She said as follows:
Mr Logan & I engaged Mr William York to draft what Mr Logan & I called ‘a separation agreement’.
The husband’s evidence was that he told the wife that she needed to engage a solicitor and that she telephoned Mr York.
Mr York’s file notes and the contents of the Financial Agreement confirm that Mr York treated the wife alone as his client. However after he was engaged the parties jointly attended three meetings with him.
The husband said that at the first meeting Mr York told the parties that the amount of $20,000.00 they were then discussing as a payment by the husband to the wife was inadequate.
The wife professed to have no recollection of any discussions concerning an amount of $20,000.00 but it seems most unlikely that the husband would have invented such a detail, and the best the wife could say was that she did not remember it. I accept the husband’s evidence about this issue.
The husband said that he and the wife negotiated further and agreed on a figure of $100,000.00. Mr York was later advised that the parties had reached that agreement and the amount was subsequently increased to $112,500.00 to take account of superannuation.
After the initial meeting emails were exchanged between Mr York and the wife and Mr York informed the wife that the matter could be resolved either by way of Consent Orders or by way of a Financial Agreement.
Mr York ultimately prepared a Financial Agreement. Why that choice was made was not explained. Mr York’s office sent drafts of the Agreement to the wife and the wife made suggestions for changes. The husband’s unchallenged evidence was that he never received any draft documentation or communication direct from Mr York.
It was common ground that prior to the signing of the Agreement the parties had discussions about the husband paying the wife an additional $250,000.00 if certain things happened. On one version this was to occur if the husband sold the house or re-partnered. On another version it was to occur if the husband was in a position to pay it, for example if he re-partnered or received an inheritance.
Nothing to this effect appears in the Agreement.
The wife said that she ultimately let the matter drop because she was made to feel guilty about requesting that it be included in the Agreement. She said as follows:
Originally it was agreed between Mr Logan and me that I would receive an additional $250,000.00 when he was in a position to provide it to me, for example, if he received an inheritance or had a new partner who could buy into the former matrimonial home. This was not included in the Binding Financial Agreement.
At one point I indicated to Mr Logan that contingencies needed to be put into place to protect my additional $250,000.00. Mr Logan responded abusively and I was made to feel extremely guilty for not trusting him. Accordingly, I never followed up on this issue because I did not want to rock the boat. I also did not want to upset him further as I was fearful of what Mr Logan would do with the emails he had accessed from my email account.[5]
[5] Wife’s affidavit filed 22 December 2010 paragraphs 51, 52
The husband’s evidence was that the wife made a conscious choice not to pursue the matter. He said as follows:
On 10 November 2008 I received an email from Ms Logan which stated: “Mr Logan, I just want to clarify that I do not want to create any financial hardship, I never want any disruption to the business and any time restrictions on what we agreed or introduce any changes to what we agreed on. I am sure William should come up with some ideas to address your concerns regarding a new partner so I will leave you to talk about with him. I don’t want any changes. Ms Logan.”
On 11 November 2008 I received an email from Ms Logan which read: “Subject: Re: I’m sorry. Mr Logan I know I have really fucked up and the distructive(sic) nature of the grudges and I want to talk to you about the issue of the house before we go into see William. For the way I have hurt you I don’t care if I never see any money from the house. Ms Logan.”[6]
[6] Husband’s affidavit filed 24 June 2011 paragraphs 15, 16
It was put to the husband during cross-examination that there was a “side agreement” that he would pay the wife $250,000.00 in certain circumstances. The husband denied it, and the wife did not seek rectification of the Agreement as one of her alternative orders sought. I am not satisfied on the balance of probabilities that there was ever any concluded ‘side agreement’ which somehow did not make it into the Agreement.
The Agreement in its final form provides for the husband to pay the wife $112,500.00 ($40,000.00 of which she acknowledged having already received) and for the wife to retain some shares, a motor vehicle, her superannuation and a 50% share of the furniture and chattels.
It provides for the husband to receive the unencumbered former matrimonial home, the business (operated through a company), the remainder of the cash at bank after he paid the wife her cash entitlement, his superannuation and a 50% share of the furniture and chattels.
On the values attributed to assets in the Agreement this gave the wife assets to the value of $185,000.00 and the husband assets to the value of $995,000.00.[7] This represents an 85/15 division in the husband’s favour.
[7] The wife said that she received $175,000.00 in total but I have used a figure of $185,000.00 which includes the $40,000.00 received earlier by the wife rather than the $30,000.00 which she had left of this money in November 2008.
The wife complained that it was the husband who gave Mr York information about the value of assets, and she complained that Mr York did not suggest to her that she obtain independent valuations. She hinted that she disagreed with some or all of the values placed on items but she did not directly come out and say so, nor did she produce any evidence that there was something seriously wrong with the values assigned to assets.[8]
[8] For example wife’s affidavit filed 22 December 2010 paragraph 55
The husband agreed that he was the one who obtained an appraisal of the house. He said that he gave the wife a copy. The husband’s evidence was that when he asked the wife what value she was placing on the business she said
nothing, because you are the business.[9]
[9] Husband’s affidavit filed 28 March 2011 paragraph 20
A value of $170,000.00 is nevertheless assigned to the business in the Agreement.
The Agreement contains the following references to disclosure:
10. Ms Logan and Mr Logan agree and acknowledge that he or she has given full and fair financial disclosure of the property and interest in property owned or believed to be owned by him or her as required for a recognised agreement under the Act and each is satisfied with the financial disclosure he or she has received from the other party.
11. Ms Logan and Mr Logan agree to voluntarily waive the right to any additional disclosure of the property and financial obligations of the other party.
The Agreement contains the following clauses about legal representation:
21. In preparation of this Deed and prior negotiations
Ms Logan has been represented by William John York, Solicitor of the law firm Hopper Green and Associates and Mr Logan understands and acknowledges that Hopper Green and Associates do not represent him in relation to this matter.
22.In the preparation of this Deed and prior negotiations Mr Logan has been represented by Craig Turvey of the law firm MDRN. Ms Logan understands and acknowledges that MDRN do not represent her in relation to this matter.
On 24 November 2008 the wife attended alone on Mr York and signed the Agreement. Attached to the Agreement is the following Certificate signed by Mr York and dated 24 November 2008:
CERTIFICATION BY SOLICITOR
I, William John York, Solicitor, hereby certify that in relation to an agreement in writing proposed to be entered into by [Ms Logan] and Mr Logan (hereinafter called “the parties”), I advised
Ms Logan (hereinafter called “my client”) independently of the other party and before the time at which my client signed the Agreement, as to the following matters:
(a)The effect of the Agreement on the rights of the parties, particularly my client;
(b)The advantages and disadvantages to my client at the time that the advice was provided of making the agreement.
The wife gave the signed Agreement to the husband and on
27 November 2008 the husband went to see Mr Turvey. Mr Turvey signed a similar certificate in respect of the husband and the husband signed the Agreement.
Mr York’s account was subsequently paid by [L] Pty Ltd.
The provisions of the Agreement were carried into effect. In particular in December 2008 the husband contacted Mr York to inquire about whether the home had been transferred to him and as a result Mr York did the necessary paperwork.
The wife denied that she had received half of the “furniture, shares and chattels” but she did not provide any detail of this assertion and she certainly received some of these items, because in September 2009 she sent the husband an email in which she requested certain specific items from the home.
The children remained living with the husband after separation. After the Agreement was signed there was some friction between the parties about whether the wife was spending sufficient time with them, with the husband complaining that the wife was not making enough effort to do so. However the parties continued to talk to each other and until May 2009 the wife continued to do paid work for [L].
On or about 13 May 2010 the husband received a letter from solicitors acting on behalf of the wife informing him that the wife was seeking to have the Agreement set aside on the basis that she had not received independent legal advice prior to signing the Agreement as required by s.90G(1)(b) of the Family Law Act.
I accept the husband’s evidence that he had no prior warning that the wife was dissatisfied with the Agreement. Indeed as late as 19 January 2010 the wife sent him an email which included the following:
My share of the assets that I worked for since I was 18 was left so that the kids and the business were not disrupted. No that is certainly not selfish or arrogant. I believe I have been more than generous in considering your needs and even you said that as well.[10]
[10] Husband’s affidavit filed 24 June 2011 paragraph 59
On 17 June 2010 the wife lodged a caveat over the title to the former matrimonial home.
On 23 June 2010 the husband responded through solicitors to the letter from the wife, indicating that he would not consent to the agreement being set aside.
On 22 August 2010 the parties were divorced.
On 22 December 2010 the wife filed an application seeking to have the Agreement either declared non-binding or set aside.
The wife’s evidence about the receipt of independent legal advice
The wife’s evidence about this issue in her 22 December 2010 affidavit was as follows:
I was not at any time, prior to the execution of the agreement, provided with any legal advice, whether independent or otherwise, as to the effect of the agreement on the rights of either myself or Mr Logan, nor any advice on the advantages and disadvantages in making the agreement.
At no time did Mr York advise me of what my entitlement might be in terms of a property settlement having regard to the length of our relationship and that [sic] fact that our joint assets had been accumulated by the joint endeavours of Mr Logan and myself throughout our relationship. Neither was anything said about any adjustment of property interests with respect to my contributions as a wife, homemaker and mother, with particular regard to the specials needs of [X].
At no time was I provided with independent legal advice regarding my entitlements.[11]
[11] Wife’s affidavit sworn 20 December 2010 paragraphs 30, 31, 41.
In her 22 June 2011 affidavit the wife said as follows:
On 24 November [2008] I attended Mr York’s office on my own for the first time. My conference with Mr York was only to sign the agreement. I state that other than specifying the amount of money I was to receive Mr York provided no additional advice, nor did he advise me of his duty to independently advise me of the effect of the document and its advantages and disadvantages to me, in particular.[12]
[12] Wife’s affidavit filed 22 June 2011 paragraph 44
In support of her claim that she did not receive the necessary legal advice the wife relied on the contents of the Hopper Green file in respect of which she waived privilege. There is nothing in the brief file note for 24 November 2008 to confirm that Mr York gave the wife advice on that day as envisaged by s.90G(1)(b) of the Family Law Act.
The evidence relevant to duress and unconscionable conduct
In emails the husband sent the wife after separation he vented at length his feelings of hurt and betrayal, and on 20 November 2008 he told the wife that his distress was such that he had contemplated suicide. Later that day however he sent her an email apologising for his previous email and telling her that he had made an appointment to see a men’s health clinic to get some help for the pain he was feeling.
The wife did not seek to persuade me that there was something feigned about the husband’s distress, but she did claim that the husband was aware that she felt guilty about her actions and responsible for his distress and that he used this knowledge to extract a favourable property settlement from her.
The wife alleged that after the Agreement was signed the husband ceased exposing her to his distress and began trying to make her feel guilty about not spending sufficient time with the children.
The husband denied that he had ever exaggerated his distress or used his distress to gain an advantage in negotiations with the wife.
There was no dispute that at the time of separation the husband accessed the wife’s email account and found emails which had passed between the wife and her new partner and the wife and one of her girlfriends. It was the wife’s case that the husband held these emails over her head to gain an advantage. She said as follows:
I found that during this time if anything came up that was a point of disagreement between myself and Mr Logan, Mr Logan would say “if anything happens I’ve got these [the emails]” or words to that effect. Mr Logan also threatened on numerous occasions to post the emails to my mother who resided in [omitted] NSW.
I was concerned that Mr Logan in his emotional state would do something reckless and expose the emails on the internet on [Mr A’s] business (an [omitted] business) website or generally otherwise make them public property.
The husband denied that he had ever threatened to publish the emails or used the existence of the emails to pressure the wife as she alleged.
The wife said that she was placed under pressure by [X] asking her if she intended to ‘kick them out’ of the house. The husband denied knowing anything about this conversation and denied saying anything to his son which might have prompted his son ask the wife such a question.
The wife further alleged that the husband placed her under pressure by refusing to make money available to her until she signed the Agreement. The husband denied that he had withheld money from the wife either as a bargaining tool or at all and said that on one occasion he transferred money to her at her request and would have transferred a much larger amount but for the restrictions on his internet transfers.
The law
The parties in this matter chose to finalise their property matters by making an agreement pursuant to s.90C of the Family Law Act.
Such agreements are binding provided that the provisions of s.90G(1) of the Act are complied with.
At the time the parties signed their Agreement, s.90G read as follows:
(1) A financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b) the agreement contains, in relation to each spouse party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i) the effect of the agreement on the rights of that party;
(ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement; and
(c) the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
(d) the agreement has not been terminated and has not been set aside by a court; and
(e) after the agreement is signed, the original agreement is given to one of the spouse parties and a copy is given to each of the other parties.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.
The relevant provisions of s.90G are now as follows:
(1) Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b) before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c) either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d) the agreement has not been terminated and has not been set aside by a court.
(1A) A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b) one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c) a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d) the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e) the agreement has not been terminated and has not been set aside by a court.
S.90G in its present form is the result of amendments made after the parties signed their Agreement, but the amendments operate retrospectively save that pursuant to Schedule 5, Part 1 item 8 of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 s.90G(1)(c) & (ca) have no application to an agreement signed prior to the amendments.
In Parker & Parker Strickland J, who was considering the validity of an Agreement made prior to the 2010 amendments, summarised the situation as follows:
As is made clear by these provisions, s 90G(1)(c) and (ca) thus have no application to this matter. For the financial agreement to be binding on the parties in this case, subject to subsection (1A), only paragraphs 90G(1)(a), (b) and (d) must be satisfied. However, if s 90G(1)(b) is not satisfied then the agreement can still be binding if s 90G(1A)(c) is satisfied.[13]
[13] Parker & Parker (2010) FamCA 664
Pursuant to s.90K of the Act a court can in certain circumstances set aside a Binding Financial Agreement. The wife relied on ss.90K(1)(b) and (e) which provide as follows:
Circumstances in which court may set aside a financial agreement or termination agreement
(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
(b) the agreement is void, voidable or unenforceable; or
…………………………………….
(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;
Finally, s.90KA of the Family Law Act provides as follows:
Validity, enforceability and effect of financial agreements and termination agreements
(1) The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a) subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b) has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c) in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.
Discussion – is the Agreement binding?
The wife’s primary argument was that the Financial Agreement should be declared non-binding because she had not received independent legal advice as required by s.90G(1)(b) of the Family Law Act.
The wife’s counsel submitted that:
·Mr York was never independent. He had previously prepared wills for both parties and he was engaged by them both to prepare the Financial Agreement. His lack of independence was illustrated by the fact that after the Agreement was signed he effected the transfer of the home to the husband at the husband’s request.
·In the alternative the only opportunity for the wife to have received legal advice from Mr York as required by s.90G(1)(b) was during the last conference with him; the husband was present at all of the other conferences and he did not assert that the wife received any legal advice about the advantages and disadvantages of the Agreement during those conferences.
·The wife’s evidence was that she did not receive any such legal advice during the last conference and this evidence should be accepted because Mr York’s file note did not contain any reference to him having provided that advice.
The wife’s counsel submitted that the receipt of each party of independent legal advice was an indispensible requirement and that if the advice was not provided the defect was fatal. He referred me to the following passage in Parker & Parker in which Strickland J, in the course of considering whether s.90G(1A)(c) could save the Agreement in the case before him, said:
…the receipt of independent legal advice by all parties to a financial agreement is an essential requirement. Indeed, it could well be unjust and inequitable to the wife if she was bound by the financial agreement in circumstances where I have found she was not fully advised of the implications of the amendment to clause 15.
In Ruane & Bachmann-Ruane and Anor [2009] FamCA 1101, Cronin J, in the context of the provisions of s 90G prior to the recent amendments, discussed the need to obtain legal advice with respect to entering into a financial agreement. His Honour said at [76]:
In addition, the plain reading of s 90G is for parties to obtain legal advice. It does not follow that the advice has to be accepted or followed nor for that matter, for the advice to be correct. The purpose of the provision is to ensure the party understands not only the rearrangement of property and financial resources but also that rights are being affected. Those rights include exclusion of access to the courts subject to certain exceptions.
The husband’s counsel variously submitted that it would be improper to allow the wife to go behind the Certificate of Legal Advice, that the wife was estopped by the existence of the Certificate from asserting that she did not receive legal advice and that it would be unconscionable to allow her to go behind the Certificate.
The husband’s counsel was not able to point me to any authority which supported his contentions.
He referred me to Ryan & Joyce,[14] a decision by Neville FM in which estoppel is discussed, but that case turned on whether an Agreement which incorrectly stated that it was made pursuant to s.90B rather than s.90C of the Family Law Act should be rectified.
[14] Ryan & Joyce [2011] FMCAfam 225.
There are some single instance decisions which at first glance do not assist the husband.
In Fevia & Carmel-Fevia,[15] decided in 2009, Murphy J rejected the argument that estoppel could apply to s.90G, and in Parker & Parker,[16] decided in 2010, Strickland J concurred with Murphy J that estoppel could not apply to s.90G and rejected an argument that s.90G(1A) could save an agreement if the requisite legal advice had not been given. He expressed the view that s.90G(1A) was only intended to come to the aid of a party where there had been a failure to comply with a “technical” requirement, and that the failure by a legal practitioner to provide any legal advice at all was not a technical breach of s.90G(1)(b)
[15] Fevia & Carmel-Fevia (2009) FLC 93-411
[16] Parker & Parker [2010] FamCA 664
Fevia & Carmel-Fevia and Parker & Parker however both involved factual situations where the husbands changed the agreement after the wives had signed them and after the wives’ solicitors had signed certificates of legal advice. Murphy J and Strickland J respectively found that the wives had not been given legal advice about the agreements as amended and as a consequence held that the agreements were non-binding.
The factual situation in the case before me is different. The wife signed the Agreement and her solicitor signed a certificate of legal advice, and the husband did not make any changes to the Agreement after this occurred. Why in those circumstances should the husband not be entitled to rely on the certificate in which the wife has held out that s.90G(1)(b) has been complied with?
S.90G has always required, not just that each party receives independent legal advice, but that they provide the other party with proof that they have received it. It could be argued that this requirement only has meaning if the party who receives the proof is entitled to rely on the assertion in it that the other party has received the requisite legal advice.
If estoppel cannot be used to prevent one party resiling from the assertion that they have received independent legal advice, why should s.90G(1A) not be called in aid by the party who has relied on the assertion to organise his affairs?
S.90G of the Act was amended after the decision in Black & Black, where an agreement was struck down because of technical non-compliance with the provision concerning certificates of legal advice. One of the amendments was the addition of s.90G(1A), and s.90G(1A) has been drafted to apply not just to non-compliance with s.90G(1)(c) and (ca), which require the provision of statements (formally certificates) of legal advice, but to s.90G(1)(b), which refers to the actual provision of the advice.
Technical issues could arise in this regard, for example a person signing the agreement first and receiving the advice second, but it may be open to argument that s.90G(1A) should have a wider application.
In Wallace & Stelzer,[17] a 2011 decision by Benjamin J, the husband, like the wife in the case before me, denied that he had received legal advice as required by s.90G despite the existence of a certificate saying that he had. Benjamin J referred to the existence of certificates of legal advice and expressed the opinion that:
[17] Wallace & Stelzer [2011] FamCA 54
Each of the parties was entitled to rely on [the] assertions [in the certificate]…..
Benjamin J did not expand on this statement however and ultimately nothing turned on it, because Benjamin J did not accept the husband’s claim that he had not received independent legal advice and it was on that basis, and not because of the existence of the certificate that he rejected the husband’s argument that the agreement was non-binding.
I also need to start by considering whether I accept the wife’s contention that she did not receive independent legal advice, because if I do not then that is the end of the matter.
It is the wife who asks the court to find that the Financial Agreement is non binding by virtue of the non-provision to her of the requisite legal advice, and it is the wife who bears the onus of proving her case.
The standard of proof which applies is the civil standard, and in Briginshaw v Briginshaw[18] Dixon CJ said as follows:
Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal.
But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding, are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Every one must feel that when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency. Thus Mellish, LJ, says — "No doubt the court is bound to see that a case of fraud is clearly proved, but on the question at what time the persons who have been guilty of that fraud commenced it, the court is to draw reasonable inferences from their conduct" — Panama and South Pacific Telegraph Company v India Rubber, Gutta Percha and Telegraph Works Company, (1875) LR 10 Ch App 515 at p 530.
[18] Briginshaw & Briginshaw (1938) 60 CLR
The consequences which will flow from a finding that the wife was not given independent legal advice as envisaged by s.90G(1)(b) of the Family Law Act are grave.
They are grave for the husband, because the provisions of the Agreement have been carried into effect, and the husband has for some time proceeded with his life on the assumption that the property matters are finalised. If the Agreement is declared non-binding then the property matters will need to be considered afresh, and considered afresh from the standpoint of where financial matters are at present, not where they were three years ago.
Another grave consequence which flows from accepting the wife’s evidence is that it entails a finding that an officer of the court has provided a false Certificate.
Against that background I need to consider whether I am reasonably satisfied that the wife did not receive independent legal advice as required by s.90G(1)(b).
I do not accept the submission that Mr York did not provide independent representation for the wife.
I am satisfied that it was the wife alone who engaged Mr York. The wife rang him to make the first appointment, he treated the wife from the first as his client, he communicated with the wife alone on the issue of whether the property matter should be settled by way of consent orders or a financial agreement and he sent the wife alone drafts of the Financial Agreement for her consideration.
There was no evidence which would support a finding that the husband pressured the wife to choose Mr York in preference to any other solicitor.
The fact that the husband attended the first three consultations jointly with the wife does not alter my view. The wife attended alone on
Mr York on 24 November 2008 to sign the Agreement.
I do not consider that anything turns on the fact that [L] ultimately paid Mr York’s account, or on the fact that Mr York later organised the transfer of the home at the husband’s request.
I am conscious of the fact that Mr York told the wife, when she sought parenting advice from him after the Agreement was signed, that he could not assist her because he had acted for both parties in respect of their property matter, but when all of the evidence about Mr York’s actions in treating the wife alone as his client during the preparation of the Agreement are taken into account this single statement does not alter my view that Mr York provided independent representation to the wife in respect of the property matter.
Mr York signed a Certificate stating that he had provided advice to the wife as required by s.90G(1)(b). As against this, the wife made general assertions that she did not receive such advice. Her evidence on the issue came down to nothing more than ‘inexact proofs [and] indefinite testimony.’
The wife could have, but did not, provide detail about what she and Mr York discussed at their final appointment. There must have been some words exchanged. The wife did not provide this evidence and thus allow the court to assess whether the words which were exchanged were evidence that some legal advice was given. She chose simply to rely on a bald assertion that she was not provided with the advice.
The wife did not call the solicitor to give evidence. The wife’s counsel submitted that this was not fatal to the wife’s case as there was no property in witnesses and the husband could have called the solicitor. However the wife bore the onus of proof and the failure by the husband to call the wife’s solicitor cannot be used to fill a gap in the wife’s case.
I am not persuaded that the absence of any reference in Mr York’s file notes, and in particular in his file note of 24 November 2008, to having provided legal advice to wife in the terms envisaged by s.90G(1)(b) is sufficient without more to satisfy me that no such advice was provided. Most of Mr York’s file notes, and not just that of 24 November 2008, are elliptical and brief.
The wife’s evidence is not sufficient to allow me to be reasonably satisfied that the provisions of s.90G(1)(b) were not complied with and the wife’s application to have the Agreement declared non-binding must fail.
Discussion – should the Agreement be set aside?
The wife’s alternative argument was that the Agreement should be set aside because she had signed it under duress or alternatively because the husband had procured her signature to it by engaging in unconscionable conduct.
The wife bears the onus of establishing that she was subjected to duress or that the husband behaved unconscionably.
It is easy enough to accept that the wife made a bad bargain in agreeing to the terms of the Financial Agreement.
The parties had a long marriage. It was not in dispute that neither had any significant assets at the commencement of cohabitation, and it seems likely, although it is impossible to make other than a tentative finding about it, that their contributions during the marriage were equal.
The children remained living with the husband after separation. [X] has autism spectrum disorder, and the husband’s assertion that he still requires some financial and non-financial support seems more likely to be correct than the wife’s assertion that he is largely independent. [Y] was 14 at separation and is now 17 and to the best of my knowledge is still at school. The wife has not been paying child support. However it is somewhat unlikely that the husband’s responsibility for these children would have resulted in a 35% adjustment in his favour for s.75(2) factors.
There is no requirement however that the terms of a Financial Agreement to be just and equitable and as the Full Court observed in Sanger & Sanger:
…… the provisions of s 90K are not designed to, and do not facilitate a party escaping from what proves, or is perceived to be a “bad bargain”.[19]
[19] Sanger & Sanger [2011] FamCAFC 210
The fact that a bargain is bad however may arouse the court’s suspicions about whether the result has been brought about by unconscionable conduct or duress and this is what the wife sought to establish.
This is not a case in which there was any obvious power imbalance between the parties prior to separation. They had been married for
23 years, had brought up two children and had worked together in a business. The wife did not suffer under any special disability such as a mental health problem or alcoholism or lack of understanding of English or lack of familiarity with Australian laws and customs. There were no allegations of family violence.
The separation was distressing for both parties in different ways. The wife felt guilt about ending the marriage and guilt about the distress this caused the husband and the husband felt considerable pain and anguish about the (for him) sudden and unexpected end of a 23 year marriage.
The parties both expressed their feelings of guilt and anguish in the emails they exchanged after separation, and they expressed those feelings as they negotiated about the property settlement. They were both under considerable emotional strain at the time.
There is absolutely no evidence that the husband faked or exaggerated his anguish or distress or that he threatened suicide in a calculated attempt to place pressure on the wife to agree to a particular settlement.
The wife claimed that the husband pressured her by threatening to withhold money and publish emails. The husband denied that he did these things and I have no reason to prefer the evidence of the wife to that of the husband. I cannot be satisfied on the balance of probabilities that these threats were made.
Even if they were however, the evidence would not support a finding that the threats placed the wife under duress or amounted to unconscionable conduct.
The wife did not provide any detailed information about her financial circumstances at the time of separation or cogently explain why a failure by the husband to transfer funds to her placed her under such pressure that she felt that she had no option but to sign the Agreement.
The wife did not provide any information about the content of the emails in question and thus allow the court to assess whether there was any reasonable basis for the wife to fear them being published.
These deficiencies in the evidence are fatal to any claim by the wife that she was subjected to duress and leave me unconvinced that the husband engaged in unconscionable conduct.
There was no evidence to support a finding that the husband put [X] up to asking the wife about the house.
I am not satisfied on the balance of probabilities that the husband by his conduct unfairly pressured the wife out of requiring that a provision about payment of an extra $250,000.00 be included in the Agreement. I have no reason to prefer the wife’s evidence to that of the husband, and I cannot dismiss the possibility that the wife for reasons which were valid for her at the time decided not to pursue the inclusion of this term.
It might well be that the wife would have made a different decision about a property settlement had she considered the matter at a later time and under the influence of different emotions. That is not a sufficient reason however to set aside the Agreement.
In Gebert & Gebert (a case in which the husband within two weeks of separation signed consent orders which saw him receive about 10% of the property pool after a seven year relationship) the Full Court said as follows:
…..there may be circumstances where the order is so unreasonable as to give rise to an inference that some matter has affected the party's reasoning, which would vitiate the order. On the other hand, we think that it must be appreciated, as the Full Court said, that the fact alone of an apparently unreasonable order does not necessarily lead to such a conclusion. If the order is apparently unreasonable and there is no rational explanation of it having been agreed upon, then the inference referred to by the Full Court may be capable of being drawn. On the other hand there may be quite rational explanations for such an order having been made. There may be many situations where a party acting perfectly rationally, for reasons of his or her own, is prepared to make a more substantial allowance to the other spouse than would normally be the case. Indeed, there may be some cases where a party will voluntarily concede the whole of the matrimonial property to the spouse. [20]
[20] Gebert & Gebert (1990) FLC 92-137
There is some evidence that the wife was acting rationally for reasons of her own when she signed the Agreement on 24 November 2008. In an email she sent to the husband on 21 November 2008 she said as follows:
As I have said before I now know the issue of the fucking grudges and for that I can’t stress enough how ashamed and deaply(sic) sickened at how I have hurt you. And as we spoke about things before we seen William that because of that I am prepared to give you the house. I said that I will help you out in whatever way I can. Things are not great in my life I feel constantly sick the weight is just falling off me I don’t have any friends. probably because of my grudges. There is no bloody guarantee of my future, I can’t [occupation omitted] now and I now have to look at going into another line of work if things turn to shit in the future here and can still support myself and do what ever I can for the kids and have to rent for the rest of my life. I will come over on Saturday morning to see the kids and do some things. The solicitor sent the amended draft through and still can’t get it right so I will be talking to the girl in the office or William this morning. [21]
[21] Husband’s affidavit filed 24 June 2011 paragraph 54
On 15 December 2008, three weeks after she signed the Agreement, the wife sent the following email to Mr York:
I am just wondering in relation to the living arrangements for the children, can Mr Logan force me to take 50% custody of the children considering the main assets were retained by him in order for continuity of the children’s environment and also to meet their needs. Especially if I don’t have the resources available to me to be able to properly meet there (sic) needs now. I just need to know where I might stand if any thing arose.[22]
[22] Wife’s affidavit filed 22 June 2011 annexure KSL10
To quote again from Gebert:
In Blomley v. Ryan (1956) 99 C.L.R. 362 at p. 405 , Fullagar J. said:
`` The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other.''
We find it difficult to apply these principles to the facts of the present case. In the first place, there was clearly no inequality between the parties. Even if there had been, as Gibbs C.J. pointed out in Amadio's case, transactions will be unconscientious within the meaning of the relevant equitable principles only if the party seeking to enforce the transaction has taken advantage of his own superior bargaining power or of the position of disadvantage in which the other party was placed. It is clear that in the present case, absolutely no criticism of this nature could be levelled against the wife. At best it could be argued in the present case, that the husband was under some emotional stress and that the agreement was entered into at a time shortly after the break-up of the marriage which would have exacerbated this emotional stress. It may be that in some cases, such circumstances could give rise to a miscarriage of justice. On the other hand, it seems clear that his Honour did not consider that this had occurred in the present case and we see no reason to disagree with his Honour.
I am not satisfied in the case before me that the husband even had superior bargaining power let alone
“took advantage of his own superior bargaining power or of the position of disadvantage in which the other party was placed.”
The wife has not discharged the onus of satisfying me on the balance of probabilities that there is any basis for setting aside the agreement pursuant to s.90K.
For all of the above reasons the orders of the court shall be as set out at the beginning of this judgment.
I certify that the preceding one hundred and thirty-six (136) paragraphs are a true copy of the reasons for judgment of Terry FM
Date: 10 January 2012
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