MANNER & MANNER
[2015] FCCA 3043
•18 November 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MANNER & MANNER | [2015] FCCA 3043 |
| Catchwords: FAMILY LAW – Binding financial agreement – whether an agreement at law – whether agreement is a financial agreement per s.90B – whether financial agreement binding per s.90G – whether financial agreement should be set aside per s.90K. |
| Legislation: Family Law Act 1975, ss.4, 71A, 90B, 90B(1)(a), 90B(1)(aa), 90B(2)(a), 90C, 90D, 90G, 90G(1) 90G(1)(b), 90G(1A), 90G(1A)(a), 90G(1A)(b), 90G(1A)(c), 90G(1A)(e), 90G(1B), 90J, 90J(1), 90J(1)(a), 90J(1)(b), 90K, 90K(1)(e), 90KA |
| Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19 Black & Black (2008) FLC 93-357 Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447 Commonwealth v Verwayen (1990) 131 CLR 394 Crawley v Short [2009] NSWCA 410 G & G (2000) FLC 93-043 Hoult & Hoult [2013] FamCAFC 109 Jeeves & Jeeves (No.3) [2010] FamCA 488 Logan & Logan [2013] FamCAFC 151 Masters v Cameron (1954) 91 CLR 35 Raleigh & Raleigh [2015] FamCA 625 Savage v Lunn [1998] NSWCA 203 Senior v Anderson [2011] FamCAFC 129 Sullivan & Sullivan (2011) 46 Fam LR 164 Ryan & Joyce [2011] FMCAfam 225 Wallace v Stelzer (2013) 51 Fam LR 115 |
| Applicant: | MS MANNER |
| Respondent: | MR MANNER |
| File Number: | BRC 10789 of 2009 |
| Judgment of: | Judge Jarrett |
| Hearing dates: | 25 & 26 November 2013 |
| Date of Last Submission: | 27 January, 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 18 November 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bunning |
| Solicitors for the Applicant: | Simonidis Steel Lawyers |
| Counsel for the Respondent: | Ms McMillan QC |
| Solicitors for the Respondent: | HopgoodGanim |
ORDERS
The application for orders numbered 3, 4 and 5 of the Applicant's Amended Amended Initiating Application filed 15 January, 2013 be dismissed.
That pursuant to s.90G(1B) of the Family Law Act1975 (Cth) the Court declares that the financial agreement entered into by Mr Manner and Ms Manner on 16 November, 2007 is binding.
All outstanding applications be adjourned to 14 December, 2015 for further directions.
IT IS NOTED that publication of this judgment under the pseudonym Manner & Manner is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 10789 of 2009
| MS MANNER |
Applicant
And
| MR MANNER |
Respondent
REASONS FOR JUDGMENT
Ms Manner and Mr Manner purported to enter into an agreement that they have termed in these proceedings a “binding financial agreement” on 16 November, 2007. They married the on (omitted) 2007.
By these proceedings Ms Manner seeks:
a)a declaration that the agreement is not a financial agreement that is binding for the purposes of the Act; or, in the alternative,
b)if it is a financial agreement that is binding, an order be made that it be set aside.
Mr Manner opposes the application. He seeks an order that the application be dismissed and a declaration, pursuant to s.90G(1B) of the Act, that the agreement is binding on the parties.
There are some other proceedings on foot between the parties concerning spousal maintenance but they are not the subject of these reasons. These reasons relate to the parties’ principal applications concerning the purported financial agreement between them.
The trial of the matter was originally to be heard on 9 May, 2012, but on 8 May, 2012 Ms Manner became the subject of an involuntary treatment order and the trial was adjourned. Ms D was appointed litigation guardian for Ms Manner. However, after some time, Ms Manner regained her capacity and Ms D was discharged.
The trial was heard on 25 and 26 November, 2013.
Ms Manner relied upon:
a)her Amended Amended Initiating Application filed 15 January, 2013;
b)an affidavit deposed by her and filed on 16 October, 2013;
c)oral evidence from David Clifford Power, a solicitor; and
d)oral evidence from John Marshall Davies, a solicitor.
Ms Manner was cross-examined, as was Mr Power and Mr Davies.
Mr Manner relied upon:
a)his Amended Response filed on 22 November, 2013;
b)an affidavit deposed by him and filed on 7 November, 2013;
c)an affidavit deposed by him and filed on 22 November, 2013;
d)his Financial Statement filed on 14 February, 2013; and
e)an affidavit deposed by Geoffrey Wilson, a solicitor, and filed on 7 November, 2013.
Mr Manner was cross-examined. Mr Wilson was not.
Transcripts of both days of the trial were relied upon to prepare these reasons as were my notes of the trial and the parties’ written submissions. I have also again listened to the parties’ cross-examination contained in the audio recording of the trial.
The parties made their submissions in writing. The respondent’s submissions were filed on 13 January, 2014. The applicant’s submissions were filed on 27 January, 2014.
The task for the court
In cases requiring a decision about the existence of a financial agreement under the Act, there is a path to follow. In summary, for present purposes, the path is followed by asking and answering the following questions:
a)is there an agreement generally at law between the parties?
b)is the agreement a financial agreement for the purposes of s.90B of the Act?
c)is the financial agreement binding pursuant to s.90G of the Act?
d)should the financial agreement be set aside for any of the reasons specified in s.90K of the Act?
The parties’ contentions
First, Ms Manner contends that there was no financial agreement between the parties within the meaning given to that term by s.90B of the Act. She advances two reasons for that contention. More will be said about them later in these reasons, but for present purposes it is sufficient to state that:
a)Ms Manner contends that the parties entered into two distinct agreements around the time they were married. The first is described in Ms Manner’s written submissions as the “facsimile version” which was dated 16 November, 2007 signed by her on 15 November, 2007 before the parties married and signed by Mr Manner on 16 November, 2007 as a facsimile copy. The second is described in Ms Manner’s written submissions as an “original version”, which was dated 16 November, 2007 signed by her on 15 November, 2007 before the parties married and signed as the original version by Mr Manner on a date between 21 November, 2007 and 7 December, 2007 after the parties married. Mr Manner propounds the “original version” of the agreement (not the “facsimile version”) in these proceedings. Consequently, Ms Manner contends that because the “original version” was signed by one party pre-marriage and the other post-marriage it cannot be a financial agreement for the purposes of the Act.
b)Ms Manner argues that the terms of the agreement are uncertain in as much as it is not clear whether the agreement is made under s.90B, s.90C or s.90D of the Act. Therefore, it should be construed to have been made under more than one section of the Act and for that reason, it cannot be a valid financial agreement.
Second, Ms Manner contends that if there is a financial agreement between the parties for the purposes of the Act, the agreement is not binding because certain of the requirements set out in s.90G(1) of the Act were not met when the agreement was made. In particular, she argues that neither party was given independent legal advice in the way required by s.90G(1)(b) of the Act.
Third, Ms Manner contends that the financial agreement, if found to exist, should not be found to be binding by reason of s.90G(1A) of the Act, because the Court should not conclude that it is unjust and inequitable to find that the agreement was not binding notwithstanding a want of some of the matters required by s.90G(1) of the Act.
Fourth, Ms Manner contends that if there is a financial agreement between the parties, it should be set aside using the power given by s.90K of the Act for that purpose because, she contends, Mr Manner obtained the agreement by fraud. Alternatively, she claims that the making of the agreement was attended by conduct on Mr Manner’s part that was unconscionable and which would otherwise render the agreement void, voidable or unenforceable.
Mr Manner contends that the agreement is a financial agreement, that it is binding on the parties and that there is no basis to set aside the agreement.
The onus of proof
In Hoult & Hoult [2013] FamCAFC 109, at [60], [62] Thackray J said:
[60] In my view, the onus of establishing that an agreement is binding falls upon the party asserting that fact because the legislation provides that an agreement is binding “if, and only, if” the prescribed matters are established. It follows that the party relying upon the agreement must establish the existence of all those matters, including the giving of the requisite legal advice to both parties.
[61] I recognise the potential forensic difficulty faced by a party who seeks to uphold a financial agreement when the other party claims not to have received the prescribed legal advice. However, the fact there is difficulty in proving something within the knowledge of only the other party and their solicitor does not mean the legal burden of proof passes to the party who seeks not to be bound by the agreement.
[62] Importantly, however, I consider that once the party seeking to rely upon the agreement produces in evidence the certificate signed by the other party’s solicitor, there is a forensic obligation on the other party to adduce evidence which would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate (especially when read with the recital in the agreement to the same effect).
The incidence of the burden of proof as explained in Hoult & Hoult is apt to produce a paradox in some cases depending upon the orders sought by the applicant. This is one of those cases. Whilst in her Amended Amended Initiating Application filed on 15 January, 2013 Ms Manner has sought a property adjustment order and an order for spousal maintenance, she has sought to meet, head on, an anticipated argument from Mr Manner that she is barred from property adjustment orders because of the existence of the alleged binding financial agreement. The existence of such an agreement would preclude her from either property adjustment orders or, if the agreement deals with maintenance matters, spousal maintenance orders: s.71A(1) of the Act.
She has sought to meet the anticipated argument from Mr Manner in two ways. In that respect, she seeks the following orders:
3. The Court declare that the Financial Agreement executed by the Husband and the Wife and dated 16 November 2007 is not a Financial Agreement for the purposes of the Family Law Act 1975, and the provisions of the Act do not apply in relation to the Financial Agreement.
4. The Financial Agreement entered into between the Husband and the Wife pursuant to Section 90B of the Family Law Act 1975 and dated 16 November 2007 be set aside pursuant to Section 90K of the Family Law Act 1975.
The relief sought in paragraphs 3 and 4 of her Amended Amended Initiating Application is not expressed to be in the alternative, but plainly it must be. If the relief sought in paragraph 3 was granted, there would be no scope for the operation of s.90K of the Act. It is only if her claim for the relief sought in paragraph 3 fails that the Court could grant relief pursuant to s.90K of the Act.
For present purposes, the existence of a financial agreement is only relevant if it is a financial agreement that is binding on the parties. As explained in Hoult & Hoult the burden of establishing the binding nature of the financial agreement is on the person seeking to establish that fact. But, by including the declaratory relief that she has, Ms Manner has arguably cast upon herself an onus to establish that there is an agreement between the parties for the purposes of the Act. If she fails to succeed on that claim, arguably she bears an onus to establish that there is a financial agreement, because she seeks an order that it be set aside pursuant to s.90K of the Act. Relief can only be granted pursuant to that section in respect of a financial agreement or a termination agreement as defined for the purposes of the Act. Her application for an order that the financial agreement be set aside pursuant to s.90K of the Act might be seen as a concession that the agreement that exists between the parties is a financial agreement.
The alternative approach of seeking only property adjustment and spousal maintenance orders and leaving it to Mr Manner to raise the binding financial agreement by way of answer to those claims might have been more consistent with the way in which the burden of proof falls as described by Thackeray J in Hoult (above).
Nonetheless, these matters arise more from the imprecision of the drafting of the orders sought by Ms Manner in her Amended Amended Initiating Application than anything else and no point was taken by Mr Manner in that regard. He accepted that the onus of proof was upon him to establish that the financial agreement, if found to exists, was binding.
Moreover, notwithstanding that the burden of proof is upon Mr Manner to show that the agreement is binding on the parties for the purposes of the Act, insofar as Ms Manner alleges that agreement should be set aside pursuant to s.90K of the Act the onus, both legal and evidential, is upon her to prove the matters upon which she relies to engage that section.
Credit
The credit of the witnesses is relevant when considering if the requirement for independent legal advice under s.90G(1)(b) was met and whether the claims of fraud and unconscionable conduct are made out.
While the solicitors who gave evidence generally gave a reliable account of the events as they recalled them, the parties themselves presented as largely unreliable witnesses. It was for that reason that I sought to confirm my impressions of the parties as witnesses by listening again to their recorded cross-examinations. Mr Manner was evasive of the often straightforward questions that came from both the Bar and Bench, while Ms Manner revealed inconsistencies within her affidavit evidence and between her affidavit evidence and her oral evidence that were telling.
Where it has been necessary to do so, I have set out my findings about credit later in these reasons.
Background and findings of fact
Ms Manner was born on (omitted) 1963. She is now 52 years old. Mr Manner was born on (omitted) 1950. He is now 65 years old. There is little of the parties’ history that is relevant to these reasons. It will be suffice to record that:
a)the parties commenced an employer and employee relationship in 1996. At that time, Ms Manner was employed by Mr Manner to manage one of his (omitted) properties;
b)between 1996 and (omitted) 2007, the parties formed a personal relationship going beyond an employment relationship. Ms Manner says that the parties became engaged to marry in about 2004;
c)the parties married on (omitted) 2007;
d)they separated on 19 September, 2008
e)they were divorced on 15 May, 2010; and
f)there are no children of their relationship.
At about the time of their engagement in 2004 Ms Manner says that Mr Manner spoke to her about “an agreement to deal with our financial arrangements should the relationship not succeed.” Nothing came of those discussions, although Mr Manner had said that he wanted a “pre-nuptial agreement”. The parties discussed marrying in 2006 but the relationship did not progress as Ms Manner had hoped. Ms Manner’s evidence is that Mr Manner “had always indicated to me that his reluctance was that he wanted to get a ‘pre-nuptial agreement’ dealing with our assets”.
In 2006 Ms Manner had discussions with a solicitor, Mr John Davies, from (omitted). Initially those discussions were about a “pre-nuptial”, but there are no particulars about what was discussed. Mr Davies had two subsequent appointments with Ms Manner. On one of those, 6 December, 2006 she showed him a bruise on her arm that she said she had received from Mr Manner.
On 30 January, 2007 Ms Manner engaged Mr Davies to represent her with respect to the formation of a financial agreement between she and Mr Manner so that they could marry.
At about the same time Mr David Power from Bernays Lawyers was engaged by Mr Manner for the same purpose.
On 2 February, 2007 Mr Davies sent correspondence to Mr Power requesting details of the proposed “Pre-Nuptial Agreement” and “full details” of Mr Manner’s financial position.
On 7 February, 2007 Ms Manner and Mr Davies conferred with counsel. Part of the advice received concerned Ms Manner’s prospects of success in an application for de facto property division pursuant to chapter 19 of the Property Law Act 1974 (Qld). However, despite advice that she had good prospects, Ms Manner did not want to proceed against Mr Manner on that basis. She wished to marry him.
On 9 February, 2007 Mr Davies sent another letter to Mr Power requesting the information sought in the letter of 2 February, 2007.
On 17 April, 2007 Mr Power sent correspondence to Mr Davies. The correspondence suggests that Mr Manner had not then decided whether to enter into a “binding financial agreement” or a “cohabitation agreement”. He did not admit that the parties were in a de facto relationship and pointed out that they were not married. The letter contained some proposals for a financial agreement between the parties if they were to marry. No particulars of Mr Manner’s financial position were provided.
On 30 April, 2007 correspondence from Mr Davies rejected the terms proposed by Mr Power in his letter of 17 April. Particulars of Mr Manner’s finances were again requested in that letter.
The evidence suggests that in September and October, 2007 there were some discussions between the parties directly about the terms of a financial agreement between them, however, not much then transpired until shortly prior to the parties’ wedding. Documents produced from Mr Manner’s solicitors confirm that Mr Manner was receiving advice from them. He was, in turn, speaking with Ms Manner about a proposed agreement between them.
Sometime in November, 2007 a draft of a financial agreement began circulating between the parties and their solicitors. The precise origins of that draft are unclear, but it is clear that Mr Manner talked about its terms with his solicitor Mr Power on 14 November, 2007.
(omitted) days before the wedding, and on the morning of 15 November, 2007 Mr Manner instructed Mr Power that he was happy with the terms of a draft agreement prepared by Mr Power and that he should send it to Ms Manner’s solicitor. At about 10.25am that morning, Mr Power caused a draft version of the proposed financial agreement to be sent by fax to Mr Davies. The letter enclosing the draft said:
We enclose a draft financial agreement for your perusal. We understand our respective clients intend to marry this weekend and both of our clients are eager to have the Agreement signed by the weekend. We look forward to hearing from you.
(my emphasis)
Later that afternoon, sometime after 3.00 o’clock, Ms Manner met with Mr Davies to discuss amendments to the draft agreement. They discussed inaccuracies in the table of assets in the agreement and Ms Manner’s desire to have a new clause inserted that clarified when separation would be taken to have occurred if the parties separated after they married.
Later again on the afternoon of 15 November, 2007 Mr Davies proposed certain amendments to Mr Power for review and, if acceptable, he requested perfection of the financial agreement ready for the parties’ execution. The proposed amendments were apparently acceptable and Mr Power caused the final terms of the agreement to be engrossed.
Late in the afternoon of 15 November, 2007 Ms Manner collected the engrossed agreement from Mr Power’s office. She took the agreement to Mr Davies.
Mr Davies was called to give evidence, under subpoena, by Ms Manner. He gave evidence, which I accept, that he gave advice to Ms Manner about the effect of the agreement on her “rights”, although he kept no diary note of the advice that he gave and he did not confirm his advice by subsequent correspondence to Ms Manner. He gave oral evidence that he advised her as to the advantages and disadvantages of the agreement and the effect of the agreement on her rights.
Further, Mr Davies had also caused a proposed affidavit to be prepared on his behalf setting out his evidence in the matter. The draft affidavit is found as annexure GJW1 to the affidavit of Geoffrey John Wilson filed on 8 November, 2012. The affidavit was prepared at the request of Ms Manner, but she took issue with some of Mr Davies’ evidence. She did not insist upon him swearing the affidavit. However, in cross-examination by Mr Manner’s senior counsel, Mr Davies adopted his draft affidavit and swore that its contents were true and correct.
Mr Davies signed a certificate concerning the advice that he had given Ms Manner about the agreement. Ms Manner then signed the agreement, in triplicate. Mr Davies witnessed her signature.
The agreement signed by Ms Manner was delivered by Ms Manner to Mr Power who sent it via facsimile to Mr Manner.
The next day, 16 November, 2007 Mr Manner signed the facsimile of the agreement that he had received from Mr Power. He returned the agreement so signed, by facsimile, to Mr Power.
Later, on 16 November, 2007 and upon receipt of the signed agreement, Mr Power signed a certificate concerning the legal advice that he had given Mr Manner. He sent the fully executed facsimile version of the agreement to Mr Davies.
On (omitted) 2007 the parties were married.
On 20 November, 2007 Mr Power sent the original agreement, in triplicate, to Mr Manner by post. At some point between 20 November, 2007 and 7 December, 2007 which I am not able to determine from the evidence, Mr Manner signed the agreement signed as an original in triplicate by Ms Manner. No reason was given by Mr Power about why he did that.
On 7 December, 2007, Mr Power received by post the three signed original versions of the agreement from Mr Manner.
There is no dispute that the parties separated on 19 September, 2008 and divorced on 15 May, 2010.
Following separation, and in purported compliance with the agreement, Mr Manner has paid to Ms Manner $79,000 over the course of 2008 and 2009.
Consideration
Is there an agreement at all?
For there to be a financial agreement for the purposes of the Family Law Act, there must first be an agreement: Senior v Anderson [2011] FamCAFC 129 at [88]. The agreement must be a contract: s.90KA of the Act.
Next, the agreement must be one that meets the requirements of ss.90B, 90C or 90D of the Act if it is to be a financial agreement: s.4 of the Act and the definition of financial agreement.
Finally, to be a financial agreement that is binding upon the parties, the agreement must meet the requirements of s.90G of the Act.
The evidence reveals that a form of agreement, containing all of the terms agreed between the parties, was signed on a single occasion by Ms Manner and signed on two occasions by Mr Manner.
Ms Manner signed the agreement in triplicate on 16 November, 2007. Mr Manner signed the agreement for the first time on 16 November, 2007 when he signed a facsimile of the agreement that had been signed by Ms Manner. The second occasion upon which he signed the agreement was after the parties’ wedding and between 21 November, 2007 and 7 December, 2007. At that time, Mr Manner applied his signature to each of the copies signed in triplicate by Ms Manner.
The form of the agreement relied upon by each party is that signed as an original (in triplicate). A copy of that agreement appears as annexure ‘M1’ to Ms Manner’s affidavit filed on 16 October, 2013 and annexure ‘M1’ to Mr Manner’s affidavit filed on 7 November, 2013.
The agreement is dated 16 November, 2007. It purports to be made “in contemplation of Marriage under Section 90B of the Family Law Act 1975”. Clause 1 provides that the agreement comes into effect on the date of the parties’ marriage.
There are two schedules to the agreement. Schedule 1 lists the existing property, superannuation interests and debts of Mr Manner. Schedule 2 lists the existing property, superannuation interests and debts of Ms Manner as at 16 November, 2007. Schedule one is long. Schedule 2 is short. No values are attributed to the property in either schedule.
Appended to the back of the agreement are the certificates of independent legal advice purportedly given in accordance with s.90G(1)(b) of the Act by the respective solicitors engaged by the parties to prepare the agreement. Each certificate attests to the party to whom it relates having received legal advice as to:
a)the effect of the agreement on them individually;
b)whether the agreement was made to their individual advantage;
c)whether it was prudent for each of the parties to make it; and,
d)whether the agreement was fair and reasonable.
Relevantly, the agreement also provided:
a)by clause 16, that if the marriage ended within 12 months Mr Manner was to pay to Ms Manner $100,000 from a further 12 months after the marriage ended.
b)by clause 17, that:
i)any variation to the agreement was to be made by executing a new agreement under the ss.90C or 90D of the Act, which ever was appropriate (clause 17.1);
ii)the later agreement would cancel the existing agreement (clause 17.2);
iii)for the agreement to be valid, there could only be one in existence at any time (clause 17.3); and,
iv)as at the date of the existing agreement, there was no other agreements in place between the parties (clause 17.4).
c)by clause 19, that “[t]his Agreement is made under Section 90B (or Section 90C or Section 90D) of the Family Law Act 1975.”
By her counsel’s written submissions, Ms Manner contends that there is “not actually a valid Agreement in existence between the parties.”
Her argument draws a distinction between the facsimile of the agreement (containing her facsimile signature) signed by Mr Manner and the original document signed in triplicate by Mr Manner after the wedding. Counsel submits (at paragraph 39 of his written submissions):
“It is the case however that the Agreement was signed by the Husband after the wedding of the parties and there is no Agreement between them and the Court would so declare.”
To the extent that Ms Manner argues that there is simply no agreement between the parties, her case cannot succeed. There is an agreement between the parties constituted by the facsimile document signed by Mr Manner on 16 November, 2007.
Leaving aside the arguable construction of the facts that the parties had reached a concluded oral agreement that was simply awaiting documenting and formal execution (i.e., a third category Masters v Cameron situation) it is clear that by proffering the signed agreement to Mr Manner for execution in the way that she did, she was offering to enter into an agreement in the terms set out in the document. I find that by proffering the signed agreement to Mr Manner for execution in the way that she did, Ms Manner was offering to enter into an agreement in the terms set out in the document.
To accept that offer, Mr Manner had to sign the agreement that had been signed by Ms Manner. The circumstances in which she executed the agreement and took it to Mr Manner’s solicitor so that it could be sent by him to Mr Manner for execution by facsimile demonstrates that the application of his signature to the facsimile of the signed agreement was sufficient to constitute acceptance of the agreement.
The offer was made and the signed agreement proffered for acceptance in circumstances where Ms Manner knew that Mr Manner was not in (omitted), but rather was in (omitted). Both parties acted on the basis that Mr Manner would sign a facsimile copy of the agreement signed by Ms Manner. I find that acceptance of her offer was to be accomplished by Mr Manner signing a facsimile of the agreement signed by Ms Manner.
The agreement is supported by consideration. The document became an agreement when Mr Manner signed it, thereby accepting it, and his acceptance was communicated to Ms Manner. On the evidence there can be no doubt that both parties intended to enter into a binding contractual relationship with each other on the terms and conditions set out in the facsimile document that was signed by Ms Manner. Ms Manner did argue that the only way in which her offer could be accepted was by Mr Manner signing the documents executed by her as original documents.
I find that on 16 November, 2007 the parties entered into an agreement the terms of which are expressed in the facsimile document signed by Mr Manner and which contained a facsimile of Ms Manner’s signature. A copy of that agreement is in evidence: it forms annexure JMD24 to the draft affidavit of John Marshall Davies, which is itself annexure GJW1 to the affidavit of Geoffrey John Wilson filed on 8 November, 2013.
Was the agreement a financial agreement?
The Family Law Act recognises three distinct types of financial agreement, namely:
a)those that are made pre-marriage (s.90B);
b)those that are made during marriage (s.90C); and,
c)those that are made after divorce (s.90D).
The agreement here was made before the parties married. In that respect, s.90B (as it was at the time the parties made their agreement) was in the following terms:
90B Financial agreements before marriage
(1) If:
(a) people who are contemplating entering into a marriage with each other make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa) at the time of the making of the agreement, no other agreement (whether made under this section or section 90C or 90D) is in force between the parties with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement.
(2) The matters referred to in paragraph (1)(a) are the following:
(a) how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of them at the time when the agreement is made, or at a later time and before divorce, is to be dealt with;
(b) the maintenance of either of them:
(i) during the marriage; or
(ii) after divorce; or
(iii) both during the marriage and after divorce.
(3) A financial agreement made as mentioned in subsection (1) may contain matters incidental or ancillary to those mentioned in subsection (2).
(4) A financial agreement made as mentioned in subsection (1) may terminate a previous financial agreement made as mentioned in that subsection between the same parties.
There is no question that the first requirement, s.90B(1)(a) is satisfied. Both Mr and Ms Manner made the agreement in contemplation of their marriage. The agreement says as much in recitals A and B:
A. We are entering into this Agreement in contemplation of marriage.
B. We intend to marry each other on (omitted) 2007
Further, the agreement dealt with the matters set out in s.90B(2)(a) of the Act. Specifically, it dealt with how, in the event of the breakdown of the marriage, the property and financial resources of both of them at the time when the agreement was made, or at a later time and before divorce, was to be dealt with.
Subsection 90B(1)(aa) was also satisfied. At the time of the making of the agreement that I have found that the parties made, no other agreement under ss.90B, 90C or 90D was in force between the parties.
Counsel for Ms Manner argues that s.90B(1)(b) of the Act is not satisfied. He argues that the agreement purports to be made under more than one section of the Act. He refers to clause 19 of the agreement, which provides:
19. Legal Basis of this Agreement
This Agreement is made under Section 90B (or Section 90C or Section 90D) of the Family Law Act 1975.
In that regard, at paragraph 60 of his written submissions he submits:
As to the previous point, an agreement cannot be made under s 90B, 90C and 90D. It can only be under one section because the parties are only in one circumstance at any one time that the Agreement becomes binding upon them (i.e. they are either not married, married or divorced pursuant to those three sections).
(my emphasis)
Further, at paragraph 66 of his written submissions he argues:
The manner in which the various Sections of the Act are expressed, the confusion as to exactly under what section of the Act the Agreement is made under, the expression of the section under which it is made with respect to its commencement date and when on its face it is operative all mean that the Agreement can never be deemed binding upon the parties.
But there are two answers to Ms Manner’s argument. First, the list of sections pursuant to which the agreement purports to be made are alternatives. Counsel’s written submissions extracted above at [81] suggest that the list is cumulative such that the document might, on its face, purport to be made under all three sections at once. It does not. The list is a list of alternatives. The circumstances in which the document was executed are consistent with the agreement being an agreement under s.90B of the Act and not one of the other alternatives.
Second, in my view, clause 19 of the agreement is the victim of poor drafting. Whilst the references to ss.90C and 90D are irrelevant, they do not throw into doubt the intention of the agreement or that it was made under s.90B of the Act. For example, the intention and effect of the agreement is made clear by virtue of the title to the document contained on the cover page:
FINANCIAL AGREEMENT
in contemplation of Marriage
under Section 90B of the Family Law Act 1975
Moreover, the whole context of the document is suggestive only of the agreement being an agreement pursuant to s.90B. I have referred to recitals A and B above. The commencement date provided in clause 1 of the agreement is consistent with the agreement being made pursuant to s.90B of the Act. Finally, given that the parties intended and did enter into the agreement before their marriage, it could not have been made pursuant to any section other than s.90B of the Act.
The reference in the agreement to ss.90B, 90C or 90D as alternatives serves to distinguish this case from the facts of the application dealt with in Senior v Anderson (above) and the case dealt with by Young J in Sullivan & Sullivan (2011) 46 Fam LR 164. In those cases there were references in various parts of the relevant agreements to wrong sections of the Act (s.90C instead of s.90D in Senior and s.90B instead of, arguably, s.90C in Sullivan).
Here, the agreement expressly refers to s.90B. The reference is a primary reference followed in parentheses by alternatives. In my view, the parenthetical reference to alternatives does not detract from the fact that the parties intended that the agreement was to be an agreement under s.90B of the Act.
Counsel for Ms Manner argues that notwithstanding that the agreement was signed by Mr Manner on 16 November 2007, by clause 1 of the agreement the agreement “will come into effect on the date of our marriage”. That, he argues, is inconsistent with the agreement being one pursuant to s.90B of the Act, and more consistent with the agreement being made pursuant to s.90C of the Act. However, in my view, that the parties agreement is expressed to come into effect on the date of their marriage is not inconsistent with the agreement being made pursuant to s.90B of the Act. That section does not require the agreement to commence at any particular point in time. All that is required by s.90B(1)(a) is that the parties, who are contemplating entering into a marriage with each other, make a written agreement with respect to the relevant matters. That is what occurred here.
Moreover, I accept Mr Manner’s submission that the reference in clause 19 to ss.90C or 90D “ought to be read down”. In Ryan & Joyce [2011] FMCAfam 225, Neville FM, as his Honour then was, adopted a similar approach after recounting the following passage from Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19 (18 February 2011) at [122] (Keane CJ):
It is well established that the courts strive to uphold bargains: Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; [1932] All ER 494. To that end, the courts will construe the terms of an agreement with an inclination to give effect to the intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98, esp at [6]-[8]. Further, the courts may, where circumstances permit, apply objective standards of reasonableness to prevent the intention of the parties being defeated. And where the want of an express provision in an agreement can be supplied by implying a term in order to give efficacy to the bargain, the courts will make the necessary implication: Fletcher Challenge Electricity Corporation of New Zealand [2002] 2 NZLR 433 at [64]-[67]; Moffat Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60.
I find that the agreement which I have found was made between the parties was a financial agreement for the purposes of the Act because it meets the requirements of s.90B(1) of the Act.
Is there more than one agreement?
Counsel for Ms Manner submits with vigour that the agreement contended for by both parties is that signed by Mr Manner as an original after the parties were married. He points out that both Mr Manner and Ms Manner annexe to their affidavits of evidence in chief copies of the document signed as an original by both parties. He points out that neither party propounds in their evidence the facsimile copy of the document executed by Mr Manner on 16 November, 2007. He argues that a copy of that document is not in evidence.
However, by his written submissions, Mr Manner indeed contends that the facsimile document executed by him on 16 November, 2007 is the relevant agreement between the parties. A copy of that agreement is in evidence: it forms annexure JMD24 to the draft affidavit of John Marshall Davies, which is itself annexure GJW1 to the affidavit of Geoffrey John Wilson filed on 8 November, 2013. Mr Davies adopted the contents of that affidavit in the course of his cross-examination.
Arguably, there were two agreements made between the parties. The first was the agreement that I have identified above. The second was arguably an agreement which is constituted by Mr Manner’s execution of the triplicated original signed by Ms Manner on 15 November, 2007.
The point has some significance because if, in truth the agreement between the parties is constituted by the document which was executed by Ms Manner before the parties marriage and executed by Mr Manner after the parties marriage, the agreement cannot be one made pursuant to ss.90B, 90C or 90D: Sullivan & Sullivan (2011) 46 Fam LR 164 at [120] – [123].
However, insofar as Ms Manner might contend that the facsimile version of the agreement and the original version are two distinct and separate agreements on the basis that the latter is the original and the former is a copy, the argument must fail. There is nothing in the Act that requires parties to sign an original version of an agreement as opposed to a facsimile version to make it a valid agreement as at the date it is signed. As I have attempted to set out above, whether or not a contract has been formed between the parties is to be determined according to ordinary contractual principles. Those principles permit a contract to be formed between parties in the circumstances in which the agreement that I have found that the parties made, was made.
Further, Ms Manner seems to suggest that the facsimile version of the agreement and the original version are two distinct agreements on the basis that their content is different. The difference in content that counsel identified was the signature of Mr Power on the certificate given pursuant to s.90G(1)(b) of the Act. Referring to paragraph 49 of counsel’s written submissions, he argues:
49. …
r. The facsimile copy which is not in evidence and the Agreement as the parties seek the Court make findings about (albeit on different terms) are not the same,
s. Mr Power was asked questions about the signature on the Certificate and relevantly said the following in relation to the Agreement (and any earlier version):
‘But they’ve been signed differently, haven’t they?---Yes, my name at the top is printed with a pre-printed stamp.
So when did you sign that one?---The fax copy would have been filled in by hand by me and then my stamp would have been used on the three original copies - - -
Sure?--- - - - subsequently posted’
There are two answers to this proposition:
a)there is no requirement set out in s.90G(1) that the relevant certification should be given only once; and
b)as will be seen, in the circumstances of this case, there was no requirement to given any certification at all.
Ms Manner’s proposition must be that, having reached an agreement that was fully executed by the parties in the way in which they envisaged on 16 November, 2007, the subsequent execution of another form of the agreement was sufficient to terminate the first agreement reached on 16 November, 2007 and substitute in its stead another agreement in exactly the same terms but in a form of agreement signed as an original by both parties. In my view that argument cannot succeed.
First, there is no requirement under Part VIIIA of the Act for a financial agreement to be signed as an original by the parties together, or witnessed. Whether or not a contract has been formed is left, by the Act, to be determined according to the general law of contract.
Second, the execution of the agreement in the form that took place on 16 November, 2007 was expressly contemplated by the parties. There is no suggestion that either party did not consider themselves bound to the agreement once Mr Manner had signed the facsimile copy that was sent to him by Mr Power on 16 November, 2007.
Third, the execution of a document signed as an original after the parties’ marriage, but in exactly the same terms as the earlier agreement is inconsistent with an intention to terminate the earlier agreement. To do so would be a meaningless act.
Fourth, s.90J(1) (in the form in which it existed at the relevant time) provided:
90J Termination of financial agreement
(1) The parties to a financial agreement may terminate the agreement only by:
(a) including a provision to that effect in another financial agreement as mentioned in subsection 90B(4), 90C(4) or 90D(4); or
(b) making a written agreement (a termination agreement) to that effect.
The agreement made on 16 November, 2007 contained the following term:
17. Variation by us
17.1. Any variation of this Agreement must be in the form of a further written Agreement made either:-
· during our marriage (under s.90C);
· after separation but after divorce (under s.90C); or
· after divorce (under s.90D)
17.2. Any later written Agreement will automatically cancelled this Agreement
17.3. To be valid, there can only be one Agreement between us at any one time.
17.4. At the date of this Agreement, no other Agreement is in force between us.
17.5. We agree to have any further Agreement prepared by a Family Law Specialist so as to ensure that it complies with the Family Law Act 1975, and we will also both obtain independent legal advice in relation to any such Agreement before signing it, as we have in relation to this Agreement.
Ms Manner’s argument cannot succeed because the form of agreement signed after the parties’ marriage was not a further written agreement made under either ss.90C or s.90D of the Act as required by clause 17.1. Whilst clause 17.2, on its face, might suggest that the subsequent execution of the original documents by Mr Manner would work to “automatically” cancel the agreement made by the parties on 16 November, 2007 that cannot be so, because by clause 17.1 any variation of the agreement must have been by way of an agreement made pursuant to ss.90C or 90D. In my view, the reference in clause 17.2 to “any later written Agreement” is a reference to a “further written Agreement” made pursuant to clause 17.1 of the agreement.
The form of the agreement constituted by the documents signed in an original form by Mr Manner after the wedding, meets neither of those descriptions. In my view, it could not be read in such a way as to construe it as an agreement made between parties who were already married for the purposes of s.90C of the Act. The agreement is plainly an agreement made between parties who are contemplating entering into a marriage with each other. Further, s.90D plainly has no application.
The subsequent signature of Mr Manner on the copy of the agreement also signed as an original by Ms Manner was unnecessary. That it was so signed, does not change the nature or enforceability of the agreement entered between the parties on 16 November, 2007.
Further, the fact that Mr Power provided a second form of certificate concerning the advice that he gave Mr Manner is of no consequence. There is nothing in the Act to suggest that the relevant certificate can only be given once. It is the absence of such a certificate which is potentially important, not that such a certificate has been given on more than one occasion.
In my view, there was only one operative agreement between the parties namely that reached by them on 16 November, 2007. That agreement was a financial agreement for the purposes of s.90B of the Act.
Is the financial agreement binding on the parties?
Section 90G provides for the circumstances in which a financial agreement will be binding on the parties. At the time the parties entered into the agreement in this case it provided:
90G When financial agreements are binding
(1) A financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by both parties; and
(b) the agreement contains, in relation to each 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 parties and a copy is given to the other.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.
(2) A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.
However, by the Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009, the form of that section was amended, and its operation supplemented in certain ways. In relation to a financial agreement made on or after 27 December, 2000 s.90G(1) was amended so as to read:
90G When financial agreements are binding
(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.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.
Further, in respect of such agreements, item 8A relevantly provides:
8A Transitional – agreements made on or after 14 January, 2004 and before commencement
…
(2) Paragraph 90G(1)(b) of the Family Law Act 1975, as in force during that period, is also taken to be satisfied in relation to a spouse in relation to the agreement if, before signing the agreement, the spouse party was provided with independent legal advice from a legal practitioner about:
(a) the effect of the agreement on the rights of that party; and
(b) whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement; and
(c) whether or not, at that time, it was prudent for that party to make the agreement; and
(d) whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
(3) Paragraph 90G(1)(c) of the Family Law Act 1975, as inserted by this Act, applies in relation to the agreement as if the reference in that paragraph to the advice referred to in paragraph (b) included a reference to the advice referred to in subitem (2) of this item.
The form of s.90G(1)(b) of the Act to now be considered is that following the amendments to that section by the Efficiency Measures Act: Wallace v Stelzer (2013) 51 Fam LR 115 at [62] – [65]. Further, by reason of item 8A of schedule 5 to that Act, s.90G(1)(b) will be satisfied if the evidence satisfies either the form of s.90G(1)(b) as provided for in item 8(1) or the form provided in item 8A(2) of schedule 5 to that Act: Wallce v Stelzer at [72].
Signature
The agreement as found by me is signed by both Mr and Ms Manner. I find that s.90G(1)(a) is satisfied.
Independent legal advice and certification
I will deal with the position of each party separately.
Ms Manner
The evidence from Mr Davies, contained in his draft affidavit that was adopted by him, was that he had given Ms Manner advice about the advantages to her of signing the agreement (paragraphs 37 – 41 of his draft affidavit) and the disadvantages to her of signing the agreement (paragraphs 42 – 45 of his draft affidavit). He also gave her advice about the effect of the agreement on her rights (paragraphs 28 – 33, 35 – 48 of his draft affidavit).
He confirmed that he had given her that advice in his evidence-in-chief.
Ms Manner gave no evidence in her trial affidavit about the advice that she received, or did not receive, from Mr Davies about the matters dealt with by s.90G(1)(b) of the Act. Her affidavit sets out that she had meetings and conversations with him on various dates, including 15 November, 2007 but her evidence does not take issue with Mr Davies evidence that he had given her advice in the way and about the matters that he suggests that he did.
Indeed, Ms Manner called Mr Davies as her witness. His evidence confirmed that he had given that advice, although had not confirmed the advice in writing, nor kept a file note of it. It was not suggested to him that the certification that he had given on 15 November, 2007 was false.
Counsel for Ms Manner argues that:
a)there is nothing in the agreement itself that would help Ms Manner to understand it within the context of s.90G(1)(b) (this argument was presumably made with reference to Hoult & Hoult at paragraph 129);
b)her recollection of the conversations she had with her solicitor at the time the agreement was made proves she did not understand its terms;
c)the agreement was produced to her on short notice in the days immediately leading up to the parties’ wedding, which gave her little time to understand it and take advice with respect to it;
d)before signing the agreement, Ms Manner expressed to Mr Davies her concern about it not fairly representing her interests. Specifically at paragraph 87 of her affidavit filed 16 October, 2013, she swears that:
I told him [her solicitor] that I was not happy about the terms of the agreement. I was concerned about what I perceived to be the unfairness of the agreement. I considered that it failed to reflect the length of our relationship and the hard work that we had both put into the (omitted) business. During my conversation with Mr Davies I also told him that I was not happy about the definition of what separation was and that if the Husband and I separated, I would not quite know what separation was defined as and when the Agreement would take effect.
e)despite efforts to gain them, no particulars of Mr Manner’s financial position were ever received by Mr Davies and, without those particulars, it was impossible for adequate advice to be given;
f)any conversation had between Ms Manner and Mr Davies lasted only thirty minutes and occurred with respect to a draft version of the agreement, before it was prepared in final form; and
g)there were no file notes kept nor correspondence sent by Mr Davies that attest to any advice being given in satisfaction of section 90G(1)(b).
However, in my view, none of those matters falsify Mr Davies’ evidence that he gave to Ms Manner the requisite advice. Indeed, she does not give evidence that she did not receive the requisite advice from him.
I find that Ms Manner received independent legal advice from Mr John Davies, a legal practitioner, about the effect of the agreement on her rights and about the advantages and disadvantages, at the time that the advice was provided, to her of making the agreement.
On 15 November, 2007 Mr Davies signed a certificate concerning the agreement into which she and Mr Manner had entered. It appears as page 14 to the copy of the agreement which is annexure M1 to Ms Manner’s affidavit filed on 16 October, 2013. Relevantly, it is in the following terms:
…before the Agreement between Mr Manner and Ms Manner was signed by Ms Manner provided [relevant party] with independent legal advice as to the following matters:-
1. The effect of the Agreement on the rights of Ms Manner.
2. Whether or not, at the time when my advice was provided, it was to the advantage, financially or otherwise, of Ms Manner to make the Agreement.
3. Whether or not, at that time, it was prudent for Ms Manner to make the Agreement.
4. Whether or not, at that time and in light of such circumstances as were at that time reasonably foreseeable, the provisions of the Agreement were fair and reasonable.
The certification is curious because in his draft affidavit, Mr Davies swears:
33. When Ms Manner first came to my office on 15 November 2007, I recall that I asked her if she had read the Binding Financial Agreement. I recall that she said that she had. I recall that she said that she understood the contents of the Binding Financial Agreement. To my recollection, I advised Ms Manner that because there were no valuations in the agreement next to the assets of Mr Manner that it was unreasonable expecting her to sign it as I could not advise her of the fairness of the agreement. However, l had asked for Mr Manner’s financial information in writing from the Solicitor for Mr Manner previously and this had not been given. I refer to paragraphs 4 and 18 of this Affidavit.
….
45. I also advised Ms Manner that because reliable valuations for Mr Manner's assets were not available it was impossible for me to assess whether the financial agreement was fair and reasonable.
(my emphasis)
In addition to the certification recital J in the agreement is consistent with the terms of the certificate. It provides:
J. Before signing this agreement, we each received independent legal advice from a lawyer separately as to:-
· the effect of the Agreement on our rights
· whether or not, at the time of that advice, it was to our financial or other advantage to make the Agreement
· whether or not, at that time, it was prudent to make the Agreement
· whether or not, at that time and in light of such circumstances as were then reasonably foreseeable, the provisions of the Agreement were fair and reasonable
However, despite recital J and despite the certification that Mr Davies has given, both are contradicted in certain respects by his sworn evidence to the effect that he had not given advice about whether or not, at that time and in light of such circumstances as were at that time reasonably foreseeable, the provisions of the agreement were fair and reasonable.
The other matter to notice about the certification is that whilst it does certify that Mr Davies gave to Ms Manner advice about the effect of the agreement on her rights it does not certify that Ms Manner received advice about the advantages and disadvantages, at the time that the advice was provided, of making the proposed agreement.
But does that matter? The legislative framework within which the case must now be decided is that there are the two alternative requirements for legal advice which Ms Manner needed to have received. I have found that she received advice about the first of those requirements (s.90G(1)(b) as provided for in item 2 of schedule 5 of the Efficiency Measures Act). Was it necessary to certify the provision of that advice?
Mr Manner argues (at least in respect of the legal advice received by him) that it was not because of the operation of item 8(6) of schedule 5 of the Efficiency Measures Act. I agree. Wallace & Stelzer (above) deals with the point. It is clear from that decision at [100] that no certification was necessary.
Mr Manner
Mr Manner claims that he received his independent legal advice from Mr Power. At paragraph 5 of his affidavit filed on 22 November, 2013 Mr Manner swears that:
“Prior to the signing of the agreement I was advised by David Power of Bernays Lawyers as to the effect of the agreement on my rights, whether or not it was to my advantage financially or otherwise and prudent to make the agreement and whether the provisions of the agreement were fair and reasonable.’
No objection was taken to that evidence. But its form detracts from its probative value. The evidence would have significantly more weight if the relevant conversations (if the advice was given orally) or the documents (if it was given in writing) were set out. It would have been of great assistance for Mr Manner to give some evidence about when he received the advice, rather than the general claim that it was given “Prior to signing the agreement”. The deposition is plainly formulaic and expresses nothing more than a conclusion (or conclusions) without attempting to give evidence of the facts upon which the conclusions are based.
The following paragraphs in the affidavit (6 and 7) are of no assistance because of the general nature of what is stated in them. Indeed, it was curious to say the least that Mr Manner could swear that affidavit on 22 November, 2013 setting out some evidence about his discussion with Mr Power, but have no recollection at all at the trial about those matters.
Mr Manner was, however, cross-examined about the legal advice he received about the agreement. The extract is lengthy but it serves to demonstrate the difficult nature of Mr Manner’s responses to questions:
[Mr Bunning]: Now, you never physically attended your solicitor’s offices between the 7th and when you signed the agreement between the 21st and the 6th, did you? You never physically went to your solicitor’s offices? Between?
7 November 2007 and 6 December 2007, you never physically went to your solicitors to see them? I can’t remember. I can’t remember.
Now, you said to me before you don’t remember any conversations that you had with Mr Power on the 15th? Sorry, you didn’t have any conversations with Mr Power on the 15th, is that correct – 15 November? I can’t remember exactly.
You don’t remember on the 16th anything being discussed with Mr Power other than the practicalities of getting the agreement to you? No. That would be, you know, what was discussed at – like, that close to the – to the time that Ms Manner received the agreement.
Yes. Do you remember anything that was discussed between 7 and 14 November? I can’t remember having a conversation with him. I can’t remember.
You can’t remember. No. Okay. All right. And can you remember any conversations you had with him between 20 November and 6 December? Not really. No. Just – what did you say, the 16th of November?
No. 20 November and 6 December? Well, probably round about the 20th I probably wanted to confirm with him that he had received the documents and everything was in order.
I see. Okay. Yes. All right. When you sent them back, or something like that? Yes.
Okay. So, if you can’t remember any of the conversations how can you depose, as you do at paragraph 5 of the affidavit of 22 November, that prior to signing the agreement you were advised by Mr Power to the effect that:
The agreement on your rights and whether or not it was to my advantage financially and otherwise and prudent to make the agreement, and whether the provisions of the agreement were fair and reasonable? Well, I discussed the agreement with Mr Power over a period of three or four months, as we were drawing the agreement up.
Yes. Okay. But that’s not the question I asked you. The question I asked you was between a date range, being 7 November until 6 December, the extent of your conversations with your solicitor and other than the practicalities of getting the agreement to you for signature, you said you can’t remember anything that was discussed? No, I can’t.
No. So you can’t say to his Honour that between that period of time you were told any of those things or had discussions about any of those things I just asked you questions about? What things were you…
I will read you the paragraph:
Prior to signing the agreement I was advised by David Power of Bernays Lawyers as to the effect of the agreement on my rights, whether or not it was to my advantage financially and otherwise and prudent to make the agreement and whether the provisions of the agreement were fair and reasonable.
? Well, we had those discussions throughout the period of drawing up the agreement.
Between 7 November – when you gave instructions to draw it – and between 6 December, when would possibly be the last date you sent it back or signed it, pursuant to the date stamp, you told me before that other than practicalities you remember nothing of any of the discussions you had with Mr Power? No. That’s right.
So you can’t say to his Honour that he discussed those things with you during that period of time? What things?
Paragraph 5 of your affidavit. It’s not there? No. No. It’s not in my affidavit?
It’s not in front of you? Right.
I’ve read it to you twice. Do you want me to read it to you for a third time? Yes.. Yes. Yeah.
Continuing:
Prior to signing the agreement I was advised by David Power of Bernays Lawyers as to the effect of the agreement on my rights, whether or not it was to my advantage financially and otherwise and prudent to make the agreement and whether the provisions of the agreement were fair and reasonable.
? So what are you actually ask me? Like, prior – prior to signing the agreement that I was advised?
Do you want me to ask the question again? You said to me before between 7 November 2007 and 6 December 2007 the only thing you remember about any discussions you had with your lawyer was practicalities of getting the agreement to and from you for signature? Yes. That’s right.
Mr Manner gave no additional evidence about the legal advice he received about the agreement between the parties before he entered into the agreement.
I do not accept Mr Manner’s evidence about this matter. He was a very difficult witness who was argumentative, defensive and not interested in providing any evidence other than that which he thought assisted his case. Counsel for Ms Manner amply demonstrated on a number of occasions that Mr Manner was going out of his way to avoid answering simple direct questions.
On 16 November, 2007 Mr Power signed a form of certification concerning the legal advice that he says he gave to Mr Manner about the agreement. It appears as page 13 to the copy of the agreement which is annexure M1 to Ms Manner’s affidavit filed on 16 October, 2013. It is in the same form, leaving aside changes to take account of the fact that it was given in respect of Mr Manner, as the certificate given by Mr Davies in respect of the advice he gave Ms Manner.
Whilst there was no statutory obligation to give the certificate in the circumstances of this case, that it was given is important. The certificate from Mr Power attached to the agreement, when read with recital J of the agreement, might provide prima facie evidence that the relevant advice has been given s.90G(1)(b): Hoult at [95] – [102] (Thackray J), and [276] – [280] (Strickland & Ainslie-Wallace JJ). But should I draw the inference?
If I did draw an inference by reason of recital J and the certificate that the relevant advice had been given, the evidential burden of proving that Mr Manner did not receive the advice required by s.90G(1)(b) of the Act is cast upon Ms Manner. The onus will not revert to Mr Manner to show that he did receive that advice until there is evidence sufficient to displace the inference or at least to place the matter into doubt: Hoult at [99] (Thackray J) and [276] – [280] (Strickland & Ainslie-Wallace JJ).
In this respect, it is important to record that the inquiry required by s.90G(1)(b) is not as to the content or quality of the advice given by the solicitor to the relevant party, but rather, to the fact that advice of that nature was given: Hoult at [101] and [279]; see Wallace & Stezler [2011] FamCA 54 at [261]; on appeal [2013] FamCAFC 199 at [103] and Logan & Logan [2013] FamCAFC 151 at [51].
As I have said above, I do not accept Mr Manner’s deposition that he received the requisite advice from Mr Power. The only other evidence on this point (leaving aside the certificate and recital J) is the evidence of Mr Power. He provided no affidavit evidence. He was called to give evidence by Ms Manner. All of his evidence was given orally. He was not cross-examined by Senior Counsel for Mr Manner.
Mr Power gave evidence aided by reference to the file he kept in relation to Mr Manner’s affairs. In particular, he gave evidence about the instructions he received from Mr Manner from time to time, the creation of the agreement and the instructions that he had with Mr Manner about those matters generally. He gave evidence, which I accept, that:
a)his retainer concerning “specifically these matters concerning these proceedings” commenced around August, 2006;
b)at that point, he had advised Mr Manner that he (Mr Power) would need details of “all of his assets and liabilities”;
c)the first contact he had with Mr Davies about this matter was by way of letter dated 2 February, 2007 from Mr Davies along with a follow up letter on 9 February, 2007;
d)he conferred with Mr Manner on 30 March, 2007 and as a consequence of the instructions he received, he wrote in response to Mr Davies earlier correspondence on 17 April, 2007;
e)he received further correspondence from Mr Davies on 30 April, 2007 which he did not answer;
f)although it is not entirely clear, he had a telephone call with Mr Manner on 13 June, 2007 in which Mr Manner told Mr Power that he was finalising matters with Ms Manner within about a month or so and that he (Mr Manner) did not want to give details of his assets and liabilities at that stage;
g)he telephoned Mr Manner on the next day, 14 June, 2007 and, it seems, Mr Manner reiterated his instructions that he did not want Ms Manner to be given details of his assets and liabilities at that stage;
h)at that point Mr Power was “still trying to determine exactly what type of agreement may be needed and also exactly what Ms Manner, the applicant at that stage, may have been seeking, so there was no necessity at that stage to give the assets and liabilities”;
i)his understanding from his telephone conversation of either 13 or 14 June, 2007 was that Mr Manner did not want him to correspond with Mr Davies because Mr Manner was talking directly to Ms Manner about these matters;
j)commencing in September, 2007 Mr Power took instructions about Mr Manner’s assets and liabilities. No values were given for Mr Manner’s assets and Mr Power did not seek any;
k)on 5 September, 2007 it seems, Mr Manner told Mr Power that Ms Manner only wanted a binding financial agreement (as opposed to some other agreement) after the parties were married. Mr Power “discussed with Mr Manner the differences between a cohabitation agreement or a binding financial agreement subject to marriage.”;
l)on 29 October, 2007 he received a telephone call from Mr Manner, saying he wanted a “pre-nup” done in contemplation of marriage, but that he would let him know the next day if he was to proceed;
m)no further instructions were received from Mr Manner until 7 November, 2007 when he was asked to draw a draft of a proposed agreement. He sent the draft to Mr Manner between 7 November and 14 November, 2007;
n)he then did not hear from Mr Manner again until 14 November, 2007 when Mr Power made some changes to the draft agreement on Mr Manner’s instructions;
o)he had a discussion on 15 November, 2007 with Mr Manner in which he received instructions to send the draft agreement to Ms Manner’s solicitor. Nothing else of any consequence was discussed;
p)he had no other conversation with Mr Manner on 15 November, 2007; and
q)the only letter of advice written by Mr Power to Mr Manner concerning the agreement between the parties was the letter written by him on 12 May, 2009.
Of the conversations that took place between Mr Manner and Mr Power on 14, 15 and 16 November, 2007 after the agreement had reached its final form in so far as Mr Manner was concerned, Mr Power gave the following evidence:
[Mr Bunning] And you don’t recall that whether you had any discussions with him on the 16th about the effect of the agreement on his right?---
[Mr Power] Not on that day, no.
[Mr Bunning] No. Whether it was prudent to enter into the agreement?---
[Mr Power] Not on that day, no.
[Mr Bunning] No. Whether it was fair and reasonable for him to enter into the agreement?---
[Mr Power] Not on that day, no.
[Mr Bunning] Okay. And the extent of your discussions with him on the 15th had been in relation to his “okay” to send it over, if I can call it that?---
[Mr Power] Yes.
[Mr Bunning] Okay. And on the 14th, it is as per the file note we went through before?---
[Mr Power] Yes.
Again, leaving aside the certificate signed by Mr Power and recital J in the agreement, there is no evidence from Mr Power that he gave advice to Mr Manner about the matters specified in s.90G(1)(b) of the Act, or the matters provided for in item 8A(2) of the Efficiency Measures Act. The only evidence I have about those matters is in the certificate that is attached to the agreement and recital J in the agreement. At no time in the course of his evidence did Mr Power:
a)swear that what he certified in the certificate of advice annexed to the agreement was true;
b)give any particularity about the occasion or occasions upon which he gave the requisite advice to Mr Manner; or
c)give any particularity about the advice that he gave to Mr Manner.
In my view, the cross-examination of Mr Manner and the evidence from Mr Power raises serious doubts about whether Mr Manner received any relevant advice at all from Mr Power about the agreement. The evidence of Mr Power tends towards demonstrating that no such advice was ever given. Given that Mr Power was Mr Manner’s solicitor at the relevant time, and that Mr Manner had the opportunity to cross-examine Mr Power so as to firmly establish that the requisite advice was given, it is remarkable that was not done. Mr Power was not even asked to swear to the truth of the certification.
I accept the submissions of counsel for Ms Manner that in those circumstances, an inference is clearly open that Mr Power was not cross-examined because he could not give any evidence that would have been helpful to Mr Manner.
Further, as counsel for Ms Manner has successfully demonstrated, Mr Power’s evidence about his contact and discussions with Mr Manner from 29 October until the signing of the agreement demonstrates that no relevant advice for the purposes of s.90G(1)(b) of the Act (and as supplemented by the Efficiency Measures Act) was given. No other opportunities for the giving of the relevant advice were identified by Mr Power or Mr Manner. None are identified in his submissions.
I decline to draw an inference from the existence of the certification and recital J to the agreement that Mr Manner received from Mr Power the necessary legal advice. Without the benefit of that inference, and given the finding I have made earlier about the veracity of Mr Manner’s evidence on this point, Mr Manner does not discharge the onus on him to demonstrate that all of the necessary elements to conclude that the financial agreement is binding are present.
If I am wrong about that and I should draw the inference from the existence of the certification and recital J to the agreement that the requisite advice was given, I am of the view that Ms Manner has successfully established sufficient doubt so as to displace the inference.
Either way, I am not satisfied on the balance of probabilities that Mr Manner received independent legal advice as to the matters required by s.90G(1)(b) or item 8A(2) of the Efficiency Measures Act.
I am acutely conscious that Mr Power had signed a contemporaneous certificate certifying that he had given the advice. The parties’ own agreement identified that they had each received the requisite independent legal advice. But I am not persuaded to the requisite standard that the advice was given.
I find that s.90G(1)(b) is not satisfied because Mr Manner does not demonstrate that he received the requisite independent legal advice.
Consequently, I am not satisfied that the agreement made between the parties on 16 November, 2007 is a financial agreement that is binding for the purposes of s.90G(1) of the Act.
However, notwithstanding that finding, a financial agreement might nonetheless be binding upon the parties: s.90G(1A) of the Act. By that subsection:
90G When financial agreements are binding
…
(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.
For the purposes of s.90(1A)(d) of the Act a court may make an order declaring that a financial agreement is binding on the parties to the agreement. Mr Manner seeks an order pursuant to s.90G(1B) of the Act declaring that the agreement is binding upon Ms Manner.
It will be appreciated from the foregoing reasons that the requirements of ss.90G(1A)(a) and 90G(1A)(b) are satisfied. It is necessary to consider whether the requirements of ss.90G(1A)(c) and 90G(1A)(e) are met. The requirements of s.90G(1A)(e) go to the existence of the financial agreement at the time the Court is considering the application of s.90G(1A) of the Act. The requirements of s.90G(1A)(c) assumes the continued existence of the agreement. In those circumstances it is appropriate, in my view, to consider the requirements of s.90G(1A)(e) before considering the requirements of s.90G(1A)(c) of the Act.
Has the agreement been terminated?
To engage s.90G(1A) the agreement under consideration must not have been terminated. Section 90J of the Act provides for the termination of financial agreements. They may only terminate a financial agreement by including a provision to that effect in another financial agreement (s.90J(1)(a)) or making a written agreement to that effect (s.90J(1)(b)).
Neither party suggested that there was a written agreement that terminated the financial agreement between them.
Should the agreement be set aside?
Ms Manner argues that the financial agreement should be set aside pursuant to s.90 K of the Act. If the agreement is set aside, there will be no possibility that s.90G(1A) is engaged so as to permit a finding that the financial agreement is binding on the parties notwithstanding the non-compliance with s.90G(1)(b) of the Act.
The conclusion I have come to is that Mr Manner committed no fraud upon Ms Manner by not properly disclosing all of his assets when the parties made the agreement.
However, in respect of the making of the financial agreement Mr Manner engaged in conduct that was, in all the circumstances, unconscionable.
Nonetheless, the agreement should not be set aside because Ms Manner chose to affirm the agreement and insist upon its execution.
Section 90K generally
Section 90K invests a court with a discretion to make an order setting aside a financial agreement if it is satisfied that one or more of the matters set out in s.90K(1) is present. However, the existence of one or more of those matters does not mean that the court must proceed to set aside the financial agreement. The power is discretionary.
Once the discretion is enlivened by a court finding that one or other of the matters set out in s.90K(1) exists, the discretion is unfettered, but no doubt is to be exercised judicially according to the circumstances of the case. But the use of the word “may” in s.90K(1) clearly indicates the conferral of the discretion and that the setting aside of a financial agreement is not mandatory in the event that a court finds one or more of the matters present.
There can be no exhaustive list of factors which might engage the attention of a court called upon to consider setting aside a financial agreement pursuant to s.90K. The factors relevant will vary from case to case. I have identified the factors relevant in this case later in these reasons.
Fraud , non-disclosure and misrepresentation
In Jeeves & Jeeves (No.3) [2010] FamCA 488 Cronin J described the concept of fraud for the purposes of s.90K(1)(a) as follows (at [485]):
The simple use of the word “Fraud” in s 90K must be read widely because of the inclusion of the reference to non-disclosure of a “material matter”. Thus it encompasses knowledge and intention relating to financial matters that, if known, would create a different picture to that portrayed on the surface. It is hardly distinguishable from the s 90K(1)(e) reference to conduct that was in all the circumstances unconscionable. Fraud no longer means just the unlawful use of pressure to enter into such an agreement.
Ms Manner contends that Mr Manner intentionally withheld, and instructed his solicitors to withhold, the full details and values of his assets, liabilities and superannuation interests from Ms Manner in the “lead up” to the agreement being made. Counsel for Ms Manner makes the following points in that respect:
a)there were repeated requests by Ms Manner’s solicitor, Mr Davies to Mr Manner’s solicitor, Mr Power, commencing in February, 2007 asking for particulars of Mr Manner’s financial position;
b)there was oral evidence given by Mr Power to the effect that in August, 2006 he had advised Mr Manner of the need for him to provide to Ms Manner accurate details of his financial position;
c)there was oral evidence given by Mr Power to the effect that on 14 June, 2007 Mr Manner instructed him not to give details of his assets and liabilities to Ms Manner or Mr Davies at that stage.
The cross-examination of Mr Manner made clear that the list of assets included in the agreement made by the parties was deficient. It did not include Mr Manner’s shares in the company that ran the (omitted) businesses conducted upon his real properties, nor did it include shares in some public companies that he owned.
I am satisfied that Mr Manner was very reluctant to give to Ms Manner details of his assets and liabilities until such time as he had no other choice. To the extent that he suggested in cross-examination that he adopted his stance about disclosure of his assets and liabilities on the advice of his solicitor, I reject his evidence. Mr Power’s evidence was clear and unchallenged that it was Mr Manner who insisted on not disclosing those details.
A list of Mr Manner’s assets, liabilities and financial resources were only given to her solicitor on 15 November, 2007, (omitted) days before the parties’ marriage. The list was incomplete in that it omitted the assets to which I have just referred. It contained no values of Mr Manner’s assets, save for the estimated value of his superannuation.
I accept Mr Manner’s evidence that he “overlooked” the assets that he failed to include in the schedule to the agreement. That he might have overlooked assets is consistent with the hurried circumstances in which the agreement was proffered to Ms Manner for her consideration and signature. It is also consistent with the impression I formed of Mr Manner that he saw the whole business as an unnecessary intrusion upon his personal affairs. Despite having been told by his solicitor as early as August, 2006 that he had to provide such details and despite having been formally asked to provide the details of his assets and liabilities, Mr Manner did not instruct his solicitor to provide the details until (omitted) days before the parties’ wedding.
Ms Manner argues that Mr Manner’s failure to disclose the assets to which I have referred was a “demonstrated” misrepresentation that exceeded an “inadvertent and innocent” nondisclosure. However, in my view, that is not so. Mr Manner sought to persuade me that he did not disclose the assets because he was not specifically told to do so by his solicitor and did not think himself to include them. However, I do not think that nondisclosure should be attributed to the failure of Mr Power to advise Mr Manner of the need to disclose those particular assets. Mr Power’s obligation was not to identify each asset held by Mr Manner and then give Mr Manner advice as to whether he should disclose the asset. Mr Power gave the only advice that could be given, namely that Mr Manner needed to disclose all of his assets, liabilities and financial resources.
But I am satisfied that Mr Manner’s failure to disclose those assets was inadvertent. He had disclosed all of his other assets. They were considerable. Whilst he carried on his businesses through the use of companies, it was not suggested by Ms Manner that she did not know that Mr Manner carried on those businesses or, in a broader sense, owned them. Indeed it is her case that Mr Manner carries on successful (business omitted) enterprises.
I find that the non-disclosures were not material in that they did not “create a different picture to that portrayed on the surface” (Jeeves & Jeeves [2010] FamCA 488) and about which Ms Manner was generally aware. Ms Manner knew that Mr Manner had extensive pastoral interests in (omitted) and (omitted). She estimated his nett worth at about $12m. Whilst the undisclosed assets might have added to the list of Mr Manner’s property had they been included in the schedule to the agreement, there is nothing to suggest that Ms Manner’s view that he was worth about $12m, or anything less, would have changed.
In those circumstances, the failure of Mr Manner to identify and include in the schedule of his property in the agreement the undisclosed assets does not amount to fraud for the purposes of s.90K(1)(a) in this case.
The second basis upon which Ms Manner pursues her fraud claim is that Mr Manner never ascribed values to his assets in the schedule to the agreement, nor at any time prior to her entering into the agreement with him. But in my view, the failure to ascribe values to his assets in the agreement or at any earlier time is not apt, in this case, to engaged s.90K(1)(a).
Ms Manner knew that Mr Manner had not given her his estimates of the value of his assets at any time before she signed the agreement. The agreement arrived at between the parties provided in summary:
a)an amount the wife would receive upon a breakdown of the marriage by way of cash payment;
b)the quarantining to each of the parties of their own separate pre-agreement property: and
c)the division of joint property, being property acquired by them after marriage.
Given the terms of the agreement that was settled upon by the parties, and given Ms Manner’s view that Mr Manner had assets in the order of $12m, and given her own knowledge of her own financial circumstances, it is difficult to see how the provision of values or estimates of values by Mr Manner would have led to any different approach by Ms Manner. Put another way, the failure to provide values for his assets was not material.
Unconscionable conduct
Both parties suggested that the test of whether a party had engaged in unconscionable conduct leading to the establishment of an agreement comes from Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447. Mr Manner submits that having regard to the concept of unconscionability as derived from Amadio, Ms Manner was not under a special disability for the purposes of the principles that arise from that case.
However, the test of unconscionability in s.90K(1)(e) of the Act has a wider import than it has in ordinary commercial contracts. In Mardones & Mardones [2012] FMCAfam 323 Judge Burchardt said:
100. Although I have been referred to authority on the question of what constitutes unconscionable conduct, it needs to be borne in mind that much of that authority, stemming largely from the decision in the High Court in Commercial Bank of Australia Ltd v Amadio & Anor (1983) 1514 CLR 447 arose in circumstances of common law considerations.
101. Here, the words of the Statute are untrammelled and simply provide that if a party has engaged in conduct which is in all the circumstances unconscionable, the Court may make an order setting aside the agreement. Plainly, the capacity to do so is discretionary and is to be exercised judicially in the light of all the relevant circumstances.
See also Raleigh & Raleigh [2015] FamCA 625 at [174].
Ms Manner contends that Mr Manner engaged in conduct that was unconscionable which led to the making of the financial agreement between them. She relies upon G & G (2000) FLC 93-043, where it was held that the husband’s insistence that the wife sign a financial agreement before he would agree to marry her constituted unconscionable conduct. She argues that the evidence establishes that she felt that she had no choice but to sign the agreement on 15 November, 2007 otherwise Mr Manner would not marry her.
I am satisfied that:
a)Mr Manner had told Ms Manner from the time of their engagement that he would not marry her without a financial agreement;
b)consistent with that he commenced consulting Mr Power in August, 2006 about such an agreement;
c)Ms Manner wished to hurry up the parties’ marriage so she consulted Mr Davies in February, 2007;
d)Mr Davies commenced asking for particulars of the agreement that Mr Manner proposed from 2 February, 2007 and on two other occasions. It is unsurprising that Ms Manner would try to find out what Mr Manner wanted by way of an agreement given that it was he who was insisting upon such an agreement;
e)Mr Manner’s response, via Mr Power, was remarkable in that it sought to ascertain from Ms Manner what it was that she was after;
f)nothing by way of a draft agreement or proposed terms was produced to Ms Manner until mid-morning of 15 November, 2007;
g)by that time, arrangements have been made for the parties’ wedding (omitted) days later, guests were attending and arrangements had been made for the parties’ wedding breakfast;
h)Ms Manner felt that she had no choice but to sign the document, given what she had been told by Mr Manner in the past and reinforced by Mr Davies on 15 November, 2007 and that all wedding arrangements had been made.
Mr Manner insisted that he communicate directly with Ms Manner about the significant terms of the proposed financial agreement. He told Mr Power on 11 July, 2007 that he would communicate directly with Ms Manner and that Mr Power was not to communicate with Mr Davies. So much appears from the evidence of Mr Power. Mr Manner, however, quite disingenuously in my view, sought to distance himself from that proposition. The following extract from the transcript is lengthy but it illustrates the difficult nature of Mr Manner’s evidence and his deliberate evasiveness in relation to the issue of negotiations between the parties:
MR BUNNING: Yes. All right. Now, you also said to your solicitor, didn’t you, that you didn’t want him to negotiate by way of offers, you were going to do it directly with Ms Manner; is that right?---No, I never said that.
Okay. Look at page 46 of the book for me, thanks.
….
MR BUNNING: Have you read that?---Yes. Yeah.
So it’s right, isn’t it, that in your discussions with Mr Power, on 11 July 2007, that you said to him, as recorded there:
I don’t have to make offer; you will.
This is Mr Power talking. So I’m just asking you to accept the proposition that you told Mr Power, on 11 July 2007, that you’d make the offers to Ms Manner, directly?---Well, what sort of offers? I - you know, that’s - that’s pretty vague, that sort of a - a note. It just says, “Make offers.”
You know what I’m talking about, Mr Manner?---No, I don’t.
I’m - - -
HIS HONOUR: Sir, can you answer the question? The question’s a very simple one, and if you turn your mind to the question you can answer it. So counsel will ask the question again and you can answer it. Ask the question again, Mr Bunning.
MR BUNNING: Thank you, your Honour. On 11 July 2007 you had said to your lawyer that he didn’t need to worry about making offers on your behalf, that you’d make them directly with Ms Manner?---Well, I was talking to her about the - the - - -
HIS HONOUR: The question is, “Did you say that”?---Did I - well, I don’t know what I said. What’s - what’s it sort of - - -
The answer, then - - -?---“You will offer---‘
- - - is, “I don’t know”?---Oh, “You will offer to her” - oh, yeah. Righto. “You will offer to her 100K after a year, then 50K a year after that, for a maximum of five years.”
Sir, I’m not sure what you’re reading off, I don’t want to know?---No.
The question is, “Did you say those things - - -”?---She says - - -
Sir - Mr Manner?---Yes.
I’m asking you a question, please direct your attention to me, not to whatever’s in front of you?---Righto.
Counsel asked you whether you said those things to your solicitor. What’s your answer?---Well, just let me read them again ..... I’m getting confused here.
No, no, no, no, no. Just answer counsel’s question, please?---Well, can he direct his question again?
This’ll be the third time?---Yes. Yes.
Go on, Mr Bunning.
MR BUNNING: Did you tell your solicitor, on 11 July 2007, that he did not need to make offers on your behalf, that you would make the offers directly with Ms Manner?---Well, most likely I could have done. I had been negotiating with - with this amounts of money for a period right back from May or June. So I just find that a little bit sort of blasé those offers there of that amount of money, that was discussed long before this – this - - -
I’m not asking you about that?---That was the 11th of the 7th, that’s July. Okay. Yeah. Right. I’m confused. I’m thinking it’s September or October, sorry. I’ve missed the heading, the date. But it is July, the 11th of July.
HIS HONOUR: You’re not being asked about any of those documents that are in front of you that have offers on them?---No.
I don’t know why you’re referring to them. Counsel’s question is a pretty straightforward one. You either remember or you don’t.
…
Do you want counsel to ask the question again?---Yes. I remember making the offers myself
I’m not asking you about the offers?---Yes.
Direct yourself to counsel’s question. Do you want it asked again?---Yes, I do. Yeah.
MR BUNNING: On 11 July 2007 did you tell your solicitor that he didn’t need to make offers on your behalf, that you would make the offers directly with Ms Manner?---Well, I would make the offer of that money. It was an offer, not offers. Offer is the word that should be used. It was obviously offer of the money. That’s the only offer that I put to her and I actually put that in his office.
You’re not going to answer the question, are you?---Well, if it’s offers it’s no. If it’s an offer it is yes. That’s the only - - -
You didn’t want it going through her solicitor because you thought he would ask some more questions?---I never – never even – that never crossed my mind at all.
It hadn’t?---No’
In circumstances where:
a)Mr Manner was in a much stronger financial position and Ms Manner as each of them well knew;
b)Ms Manner asked three times in writing (2 and 9 February and 30 April 2007) for details of Mr Manner’s financial position;
c)Mr Manner gave instructions to his solicitor not to disclose his assets and liabilities and not to answer the correspondence from Ms Manner’s solicitor in any meaningful way;
d)Mr Manner then told his solicitor not to negotiate on his behalf, that he would do that directly with Ms Manner, thereby cutting out Mr Davies in the process;
e)Mr Manner knew that Ms Manner was very keen to marry him and had been for a long time;
f)Ms Manner knew that Mr Manner would not marry her unless she entered into a “pre-nup” before the wedding;
g)arrangements for their wedding had been made and guests were attending
Mr Manner, I am satisfied, either by design or by accident, created an atmosphere of crisis when he had his own solicitor deliver the first draft of the agreement to Ms Manner’s solicitor (omitted) hours before the wedding and apparently without warning. It was at that point, for the first time, that Ms Manner was given a list of Mr Manner’s assets and liabilities. In my view, there was insufficient time for her to form any view about the accuracy of that list let alone make her own inquiries about the value of his assets if that is what she wished to do.
That combination of circumstances set is apt, in my opinion, to constitute unconscionability for the purposes of s.90K(1)(e) of the Act on Mr Manner’s part. The making of the agreement came about in circumstances where the parties were not on the same footing. Mr Manner had engineered the circumstances so that he gave Ms Manner a short period of time within which to consider the formal terms of the financial agreement proposed should be between them. On the evidence, there was no good reason for him to do that.
I am satisfied that in respect of the making of the financial agreement between Mr Manner and Ms Manner, Mr Manner engaged in conduct that was, in all the circumstances, unconscionable.
The exercise of the s.90K(1) discretion
Because each of the parties approached the case on the basis that unconscionability for the purposes of s.90K(1)(e) was to be judged against established in equity, both referred to, and Mr Manner relied upon the equitable defences of laches, acquiescence and election.
But, Mr Manner’s submissions about the application of those defences are, in my view, misconceived. The remedy pursued by Ms Manner is not an equitable remedy. It is a remedy provided by statue. As the cases to which I have referred above demonstrate, the enquiry as to unconscionability under s.90K(1)(e) is different to an enquiry under the general law, although similar consideration may, in an appropriate case be relevant.
That is not to say, however, that questions of delay and affirmation of the agreement sought to be set aside are not relevant. Earlier in these reasons I pointed out that the power under s.90K to set aside a financial agreement is discretionary. In my view, the following matters inform the exercise of the discretion in this case:
a)the delay in Ms Manner seeking relief of the Court to set aside the agreement;
b)the affirmation of the agreement by Ms Manner by insisting upon its terms being carried out; and
c)the acceptance by her of payments made by Mr Manner in satisfaction of his obligations under the agreement.
The evidence concerning the parties dealings following their separation is contained within Ms Manner’s affidavit filed on 16 October, 2013 and, by her reference in that affidavit, Mr Manner’s affidavit filed on 18 July, 2011. I have had regard to those matters, and the cross examination of the parties and other evidence.
The parties agree that they separated in September, 2008. Their marriage lasted less than twelve months. According to the terms of the financial agreement, in those circumstances Mr Manner was obliged to take to pay Ms Manner the sum of $100,000 “within a further twelve months thereafter”. Thus, from the time of separation, Mr Manner was obliged to pay Ms Manner $100,000. Payment of that sum had to have taken place no later than twelve months from their separation.
Following separation the evidence reveals that the parties engaged in litigation in the local magistrates’ court. Mr Manner applied for a an “ouster order” against Ms Manner to have her ejected from the parties’ home. Each party applied for protection orders against the other pursuant to the Domestic and Family Violence Protection Act 1989 (Qld). Temporary orders were made.
On 24 October, 2008, Mr Davies, on behalf of Ms Manner wrote to Mr power on behalf of Mr Manner in the following terms:
Re: Ms Manner & Mr Manner
We refer to the above matter and advise that we have been instructed by our client to write to you to confirm:-
a. That our respective clients have separated on the 19 September, 2008.
b. That our client is entitled to payment of $100,000 by your client by 19 September, 2009 pursuant to a prenuptial agreement dated 16 November 2007.
c. That our client has agreed with your client that if your client pays an amount of $15,000 to our client today by direct deposit into the following bank account:
[account details given]
that this will be part payment of the $100,000 referred to in (b) above.
Could you please confirm the above.
Ms Manner deposes (in her affidavit filed on 16 October, 2013) that by the time Mr Davies came to write that letter she had attended upon him and had asked him “what we could do and whether we could start proceedings in relation to property settlement proceedings and having the Financial Agreement set aside”. She swears that she received advice from Mr Davies that: “you are desperate for money now, let’s get the money first and then go the pre-nupt”. She also swears to having received advice from Mr Davies during the consultation that she was to wait for twelve months before any payment was made to her. That was clearly not correct because Mr Manner’s obligation was to pay within twelve months of the parties separation not that Ms Manner had to wait twelve months before she was paid.
By letter dated 10 November, 2008 Mr Manner’s solicitors confirmed with Ms Manner’s solicitors that a payment he had made to her of $15,000 was to be seen as part payment of his obligation to pay her $100,000 under the financial agreement. The correspondence records that Ms Manner had moved from the parties’ property but had left certain items behind. Mr Manner wished to make arrangements for Ms Manner to remove those further items.
By letter dated 12 November, 2008, Mr Manner’s solicitors informed Ms Manner’s solicitors that Mr Manner was investigating paying the balance of $85,000 to Ms Manner “early”. Mr Manner insisted on Ms Manner removing all of her property, including livestock from the property that they occupied as a married couple. In subsequent correspondence on 12 November, 2008 Mr Manner suggested that for livestock left on the property which was owned by Ms Manner, Adjustment fees should be paid.
On 1 December 2008, Mr Davies wrote to Mr Power. In that correspondence he said this: “In respect to compliance with the prenuptial agreement, our client would accept $80,000 instead of the $85,000 remaining owing if it is paid within seven (7) days.”
That offer was not accepted, and there was correspondence between the parties in December and January 2009. Only the correspondence from Mr Power to Mr Davies is in evidence. The correspondence from Mr Davies to Mr Power is not.
On 5 February, 2009 Mr Manner paid Ms Manner $5000. She signed an acknowledgement that the $5000 “is to be deducted from my prenuptial amount”.
On 5 March, 2009 Mr Power wrote to Mr Davies. The letter recorded that $20,000 had been paid by Mr Manner to Ms Manner pursuant to the financial agreement. The letter suggested that Mr Manner was able to obtain finance to pay the balance to Ms Manner. The letter said:
We are instructed to advise that subject to receiving any contrary information from your office, our client will pay the sum of $40,000, less the $5000 paid on 5 February, 2009 less any amount paid this week to assist with Mortgage payments. Payment of that final calculated amount will be made within seven (7) days.
The remaining balance due under the Financial Agreement of $45,000 will be made within a further period of ninety (90) days subject to any adjustment that may have to be taken into account at that time.
On 6 March, 2009 Mr Davies responded:
we refer to the above matter and advise that we have now received instructions in respect of your facsimile of the 5 March, 2009.
We advise that our client confirms the arrangements contained
We await your advices regarding the final payment.
On 11 October, 2009 Ms Manner signed another receipt for payment to her by Mr Manner of $4000 in which she acknowledged that it would be accepted by her as part payment under the financial agreement.
On 20 October, 2009 Mr Power wrote directly to Ms Manner. The letter recorded that a total of $79,000 had been paid to Ms Manner by Mr Manner. The letter recorded the balance of $16,000 was owing to Ms Manner. However, the letter then set out a range of adjustments that Mr Manner wished to make such that the remaining $16,000 that was owed was taken up in those adjustments. The application of such adjustments was consistent with the offer that was made on 5 March, 2009.
On 4 December, 2009 a firm of solicitors, Norman & Kingston, wrote to Mr Power on behalf of Ms Manner. The correspondence recorded that Norman & Kingston acted for Ms Manner. The correspondence referred to the financial agreement between the parties and pointed out the decision of the family court of Australia in Black & Black (2008) FLC 93-357. The correspondence suggests that because of certain deficiencies, the financial agreement was not binding upon the parties. Correspondence suggested the parties to the financial agreement as not binding upon the. In the event that Mr Manner did not agree to that course, the correspondence threatened proceedings for a declaration that the document “is not a Binding Financial Agreement in accordance with the Act”.
These proceedings were commenced June 2011.
Ms Manner’s case is that whilst she insisted on performance of the financial agreement and payment to her of the amounts owed by Mr Manner pursuant to the agreement, she did so because she was otherwise desperate for money. She deposes, however, that:
It was always my intention and belief that the Financial Agreement was not binding upon the Husband myself and that I was going to bring an Application in relation to the Agreement in property settlement after I had received some moneys on which I could live.
There is significant delay between the parties’ separation and the commencement of these proceedings. Nearly two and three quarter years had passed before Ms Manner commenced proceedings. She argues that she did not have the financial resources to commence proceedings and needed to receive money from Mr Manner to enable her to commence the proceedings.
However, save for $16,000 in adjustments, by October, 2009 Ms Manner had received $79,000 from Mr Manner. There is no evidence that since that time her financial fortunes had changed thereby permitting her to commence these proceedings. The delay in commencing the proceedings is otherwise unexplained.
Of itself, though, the delay in commencing the proceedings would be insufficient to deny relief pursuant to s.90K(1) of the Act. But Ms Manner’s insistence upon the performance of the agreement is another matter entirely. By insisting upon performance of the agreement she has affirmed its binding nature between the parties (as opposed to its binding nature under the Act). Her actions are entirely inconsistent with the assertion now of a right to have the agreement set aside for unconscionability associated with its making. She cannot approbate and reprobate.
An analogy is to be found in the principle of election to which each of the parties referred me in their written submissions. In Commonwealth v Verwayen (1990) 131 CLR 394 at 407, the principle was described thus:
The doctrine only applies if the rights are inconsistent the one with the other and it is this concurrent existence of inconsistent sets of rights which explains the doctrine: because they are inconsistent neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit of enjoying the other, a benefit denied to him as long as both remained in existence.
In the present circumstances, the analogy is apt. Here Ms Manner has sought to enjoy the benefits cast upon her by the financial agreement. Her reasons for so doing are not to the point. Having made the decision to call on performance of the agreement, and having accepted its performance (as subsequently agreed between the parties), there is a very strong argument that she should not now be heard to assert rights which are inconsistent with that choice. That is especially so where her own conduct in representing her affirmation of the financial agreement through her insistence on its performance was, according to her own evidence, nothing more than a sham because she did not consider the agreement binding and she always intended to pursue a property settlement with Mr Manner. This is a matter which weighs heavily, in my view, against exercising the s.90K(1) discretion in Ms Manner’s favour.
In my view, having regard to the matters I have just discussed, whilst the question of delay is at best for her a neutral factor, Ms Manner’s affirmation of the financial agreement and its operation as between the parties tell strongly against the grant of discretionary relief pursuant to s.90K(1) of the Act.
I decline to set the financial agreement that I have found exists between the parties aside.
Should the financial agreement be held to be binding pursuant to s.90G(1A)?
Pursuant to s.90G(1A) a financial agreement is binding on the parties to the agreement if, amongst other things the Court is satisfied that it would be unjust and inequitable if the agreement were not binding on the parties to the agreement (disregarding any changes in circumstances from the time the agreement was made).
In Hoult & Hoult (above) the Full Court said of ss.90G(1A) and (1B):
288. The interpretation of s 90G(1A)(c) was considered by the Full Court in [Parker & Parker (2012) FLC 93-499]. We need not repeat Justice Thackray's summaries of the three judgments given, but we agree that the most that can be gleaned from that decision is that first, the fact that a party has not received the prescribed legal advice does not alone render s 90G(1A) inapplicable, and second, it is authority for the proposition that the operation of the discretion in paragraph (e) is not confined to “technical” breaches. The trial judge here also adopted that interpretation and we find no error in that approach.
289. However, as identified by Justice Thackray, the decision in Parker provides no assistance in understanding what the discretion does entail, and in particular in identifying the factors to be taken into account in exercising the discretion. It is to these issues that this aspect of this appeal is directed.
290. The trial judge correctly identifies in paragraph 9 of his reasons for judgment that the plain words of s 90G(1A) “envisage a broad discretion vested in the Court in circumstances where the pre-conditions to the exercise of that discretion prescribed otherwise in s 90G(1A)(a) to (e) are established" . His Honour continued, again correctly in our view, that “[o]nce that discretion is enlivened, nothing within the section suggests, in terms, any restriction on the matters that might inform it.”
291. We are also ad idem with the trial judge that “the Court is required to inquire into the facts and circumstances surrounding the agreement so as to arrive at a conclusion as to whether those facts and circumstances justify the Court exercising the discretion inherent in paragraph (e) of [s 90G(1A)]" (paragraph 8 reasons for judgment). We would only add the necessary rider that it is the facts and circumstances surrounding the making and performance of the agreement which are relevant.
…
307. We have referred to the fact that his Honour in paragraph 57 provided a range of factors that it would be appropriate to consider when exercising the discretion. The only factor that we suggest is not available is the last one, but if there is to be a list of factors identified we would prefer the following, all of which are to be found in his Honour's reasons:
· The terms of the section, the nature of a financial agreement as a creature of the Act, and the place of Part VIIIA within the overall scheme of the Act.
· The nature and extent of the non-compliance with the requirements of s 90G(1).
· The facts and circumstances surrounding the making of the agreement including, in particular, if one of the parties has complied with all of the mandatory requirements necessary to render the agreement binding.
· How the parties have acted subsequently in relation to the agreement (bearing in mind that changes of circumstances cannot be considered).
I am satisfied that it would be unjust and inequitable if the agreement were not binding upon the parties to the agreement for the following reasons.
As I have found above, Ms Manner received the necessary legal advice before she entered into the agreement. It is a want of legal advice on Mr Manner’s part that informed my decision that the agreement was not otherwise binding pursuant to s.90G(1) of the Act. Nonetheless, it is Mr Manner that seeks to insist upon the binding nature of the agreement, not Ms Manner.
The inquiry to be made pursuant to s.90G(1A)(c) is not as to whether the bargain reflected in the financial agreement is a good one or bad one from the point of view of the party applying to have it found to not be binding. Parties are free to make bad bargains, provided they do so in accordance with the requirements of the Act: Hoult & Hoult at [309] – [310].
I have discussed the circumstances in which the parties came to make the financial agreement above. I have found that the agreement was made in circumstances which, for the purposes of s.90K(1)(e) might be said to be unconscionable. That is a matter of some importance.
But, for the further reasons I have expressed, that unconscionability does not lead to the agreement being set aside. The insistence of Ms Manner of performance of the financial agreement is also an important matter. Her conduct subsequent to the making of the agreement, and until her solicitor’s letter of November, 2009, can only be seen as consistent with a view that she considered the agreement binding upon Mr Manner. Indeed, were it not for a lack of legal advice on his part, the financial agreement would be otherwise binding.
In the circumstances just described, and having regard to s.90G(1A)(c), the purposes to be served by allowing parties to arrange their affairs by agreement as permitted by Part VIIIA of the Act, the nature and extent of the non-compliance with s.90G(1) in this case, the parties’ subsequent affirmation of the financial agreement and Ms Manner’s acceptance of the benefits conferred upon her by that agreement, I find that it would be unjust and inequitable if the agreement were not binding on the parties.
Conclusion
Mr Manner applies for an order that the financial agreement is binding upon the parties pursuant to s.90G(1B). There is no demonstrated reason not to make the declaration. I will make that declaration.
By operation of s.90G(1A) of the Act and the findings I have made above, the financial agreement is binding upon Mr and Ms Manner.
Accordingly, I make the orders set out at the commencement of these reasons.
I certify that the preceding two hundred and twenty-three (223) paragraphs are a true copy of the reasons for judgment of Judge Jarrett
Associate:
Date: 18 November 2015
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