Mazal & Sutherland
[2022] FedCFamC1F 866
•10 November 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Mazal & Sutherland [2022] FedCFamC1F 866
File number(s): BRC 3594 of 2021 Judgment of: BAUMANN J Date of judgment: 10 November 2022 Catchwords: FAMILY LAW – PROPERTY – BINDING FINANCIALAGREEMENT – Where the Applicant seeks a declaration that the financial agreement entered into between the parties is not binding – Courts finds the requirements of s 90G, 90UC, 90UJ are satisfied – Application dismissed Legislation: Family Law Act 1975 (Cth) ss 90G, 90UC, 90UJ, Cases cited: Hoult & Hoult (2013) FLC 93-546
Logan & Logan (2013) FLC 93-555
Division: Division 1 First Instance Number of paragraphs: 31 Date of hearing: 31 October 2022 Place: Brisbane Solicitor for the Applicant: Litigant in person Counsel for the Respondent: Mr Alexander Solicitor for the Respondent: Pharmacis Canning Lawyers ORDERS
BRC 3594 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MAZAL
Applicant
AND: MS SUTHERLAND
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
10 november 2022
THE COURT ORDERS:
1.That the Applicant’s Application that the financial agreement entered into between the parties dated 8 October 2013 is not binding, be dismissed.
2.That the financial agreement entered into between the parties dated 8 October 2013 be declared binding upon the parties.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Mazal & Sutherland has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
The Applicant Mr Mazal (aged sixty nine years) and the Respondent Ms Sutherland (also aged sixty nine years) were in a genuine domestic relationship from approximately December 2009 until June 2019.
On or around 3 October 2013, the parties signed a “Part VIIAB Financial Agreement” (“the financial agreement”).
The unrepresented Applicant seeks an order, in effect, that the financial agreement is not binding and as a result, wishes to pursue an application for property adjustment orders against the Respondent. The Respondent, represented at the trial of the threshold issue by Mr Alexander of Counsel, seeks an order that the financial agreement is binding, with the result that the Applicant cannot pursue any action for property settlement.
This discrete issue proceeded to trial on 31 October 2022 and for the reasons which follow, the Application by the Applicant shall be dismissed.
Principles to be applied
It is well settled that the onus of proof lies on the party who seeks to establish that a financial agreement is binding (Hoult & Hoult (2013) FLC 93-546). In this case the Respondent must establish the existence of the prescribed matters set out in s 90G of the Family Law Act 1975 (Cth) (“the Act”) and, of particular relevance in this case, s 90G(1)(b) and (c) which provides that:
(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);
It is important to note that, although often such advice is given at the time in writing, the Act does not prescribe advice to be given in writing.
However, as referred to at [44] and [45] by the Full Court (May, Thackray and Strickland JJ) in Logan & Logan (2013) FLC 93-555:
44.The Full Court in Hoult determined that the onus of proof lies on the party who is seeking to establish that a financial agreement is binding (see paragraph 60 of the reasons for judgment of Thackray J and paragraph 254 of the reasons for judgment of Strickland and Ainslie-Wallace JJ). Thus, that party must establish the existence of the prescribed matters including the provision of the requisite legal advice to both parties. In this case then it is the husband who bears this onus of proof.
45.Importantly though, Thackray J in Hoult (with the concurrence of Strickland and Ainslie-Wallace JJ) indicated (paragraph 62) 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)”. His Honour continued in paragraph 63:
This forensic obligation is properly conceptualised as the burden of introducing evidence and should not be confused with the burden of proof as a matter of law and pleading. For a discussion of the difference see Purkess v Crittenden (1965) 114 CLR 164 especially at 167-168 per Barwick CJ, Kitto and Taylor JJ and 170-171 per Windeyer J.
In this case, the initial onus rests on the Respondent, and it was open to her, to rely upon the certificate signed by Ms B (the Applicant’s lawyer) and for the Court to treat it “at least as prima facie evidence of compliance with the requirement to provide legal advice” and this can be “bolstered” by recitals in the agreement which might have the effect of confirming (and the parties acknowledging) that the requisite legal advice was given (Hoult and Logan).
In Hoult, at [101], it was explained that if the Respondent in this case satisfied the initial onus, the evidentiary burden then would pass to the Applicant to establish on the evidence that the presumption of fact that the requisite advice was given, has been displaced. Furthermore, at [279] of Hoult it was said:
279.It also must not be forgotten that, as Justice Thackray has correctly pointed out in paragraph 100 above, it was only necessary for the trial judge to be satisfied that the advice referred to in s 90G(1)(b) had been given, and the certificate can be a sufficient evidentiary foundation for that finding; it was unnecessary for the trial judge to ascertain the “content of the legal advice”…
Arising from the evidence set out above, the findings which follow applying these principles, are compelled in my view.
The evidence
The evidence in this Application consisted of:
(a)the affidavits of the Applicant filed 19 March 2021, 12 May 2022, and 5 October 2022. Although it may have been open for Counsel for the Respondent to raise objections to some of the lay opinions; speculations; and “submissions” contained in the Applicant’s affidavits, Mr Alexander was not instructed to do so. Mr Alexander did not require the Applicant for cross-examination;
(b)the affidavit of the Respondent filed 23 September 2022. The Applicant briefly cross-examined the Respondent;
(c)oral testimony given in response to a subpoena issued by the Applicant to the solicitor who signed the certificate under s 90UJ(1)(c) about providing advice to the Applicant; and
(d)three Exhibits tendered during the hearing, being:
(i)the signed financial agreement;
(ii)contents of the file maintained for the transaction by Ms B;
(iii)the file note (which was in the handwriting of Ms B) but typed and marked Exhibit 2 for accuracy, marked as Exhibit 3.
The agreement
The formation and process of signing the financial agreement is in dispute, with issues arising being the subject of findings from paragraph 13, however the financial agreement contained at least the following provisions of relevance to the discrete issue, namely:
(a)the recitals confirm that the parties were at the time living “in a de facto relationship (F); had kept their assets and respective incomes separate (I); intended to remain financially independent in the future (J); had not made a contribution to the other parties’ separate property (L, M, N and O); and expressed an intention to contract out of subdivisions B and C of Division 2 of Part VIIIAB of the Act (P);
(b)at Recital Q, the parties acknowledged inter alia:
a.The necessity for them to review their financial arrangements from time to time and their intention to review this Agreement in 18 to 24 months, and if necessary update this Agreement
(c)clause 4 provided the parties remain “solely entitled to” their separate property to the “exclusion” of the other party, and “are each free” to use their respective separate property “towards the purchase of other separate property”;
(d)clause 5 related to “any joint property or joint liability, which they will acquire, establish and deal with during their relationship”. Neither party asserts any joint property of any significance was acquired during the relationship;
(e)clause 7 acknowledges that s 90UH of the Act applied to the agreement and operated to relieve a party from any future claim for maintenance;
(f)clause 9 provided that if the parties separated, they could not apply for maintenance or “seek an order from a Court inconsistent with this Agreement”;
(g)clause 12 provided for “the legal basis of agreement” and specifically at (g) agree and acknowledge that:
(g)This Agreement is legally binding on them as a Financial Agreement pursuant to section 90UC of the Family Law Act, and will operate:
(i)In relation to all financial matters dealt with herein in substitution for their rights under the Family Law Act, at common law, in equity, and/or under any other law…
(h)importantly, at clause 13 the parties acknowledge that:
(a)Before signing this Agreement, they each received independent legal advice from a lawyer separately, as certified in the signed Settlement attached to this agreement as to:
(i)The effect of this Agreement on their rights; and
(ii)the advantages and disadvantages, at the time of that advice, of making the Agreement.
(iii)Either before or after [Ms Sutherland] and [Mr Mazal] signed this Agreement, each [Ms Sutherland] and [Mr Mazal] was provided with a signed Statement by their respective lawyers, staying that the advice referred to in paragraphs 14(a)(i) and 14(a)(ii) was provided to that party;
(iv)A copy of the Statement referred to in sub-paragraph 14(b) that was provided to [Ms Sutherland] is given to [Mr Mazal] or to a lawyer for [Mr Mazal];
(v)A copy of the Statement referred to in sub-paragraph 14(b) that was provided to [Mr Mazal] is given to [Ms Sutherland] or to a lawyer for [Ms Sutherland];
(vi)In the preparation of this Agreement, [Ms Sutherland] has been represented by [Ms E], Principal of [F Lawyers] and [Mr Mazal] understands and acknowledges that [F Lawyers] do not represent him in relation to this matter, nor has that firm made any representations to him concerning this Agreement;
(vii)In the preparation of this Agreement, [Mr Mazal] has been represented by [Ms B] Lawyer of [C Street, Suburb D] and [Ms Sutherland] understands and acknowledges that [Ms B] do not represent her in relation to this matter, nor has that firm made any representations to her concerning this Agreement.
(i)clause 15 provides an acknowledgment that the parties agree that:
(a)They are giving up and waiving rights that may have substantial value by entering this Agreement;
(b)There is no material inequality in their bargaining power;
(c)They have each been absolutely free to accept or reject the terms of this Agreement without coercion or fear; and
(d)Neither of them has relied upon any representation or promise in making this Agreement except those expressly stated in it.
(j)Schedule A to the Agreement identifies the “separate property and separate liabilities” of the Respondent at the date of the Agreement with an estimated value of $1,397,133 and Schedule B identifies the “separate property and separate liabilities” of the Applicant at the date of the Agreement with an estimated value of $2,200. The Applicant does not contend in these proceedings that the Respondent failed to accurately disclose her property at the time (also acknowledged at clause 16).
The creation and execution of the financial agreement
Based on the evidence earlier referred to I make the following findings:
(a)In or about August 2013, the Respondent was considering buying a larger home with more living space and thought it prudent to ask the Applicant “to sign a BFA to preserve my current and future assets”. The Applicant says “the first I knew the Respondent wanted me to sign documents was on 22 September 2013” when the parties were in a car “driving back from Bunnings having purchased paint for the new property”. I prefer the evidence of the Respondent that she first mentioned her desire for an agreement to protect her assets in a conversation at the G Street property, although it is possible the need for the Applicant to attend on 23 September 2013 to sign an agreement, was mentioned when back in the car on 22 September 2013;
(b)It is not possible on the evidence to be certain who contacted Ms B to make an appointment for the solicitor to see the Applicant. I accept the Applicant’s evidence he did not make the appointment. The Respondent says she cannot recall making an appointment although one was made for 23 September 2013, the Respondent speculating it may have been made by her solicitor, Ms E;
(c)On 20 September 2013, Ms E (of F Lawyers) forwarded to Ms B a financial agreement. The letter sending the agreement requested “your client insert any relevant information omitted from his Schedule of Assets and liabilities at Schedule B”. The financial agreement sent at that time had not been signed by the Respondent;
(d)On 23 September 2013, I find as directed by the Respondent, the Applicant attended on Ms B. I accept that before this appointment the Applicant had not met Ms B;
(e)During the consultations on that day (more particularly discussed below), the Applicant signed the financial agreement without variation, in the presence of Ms B. He also signed, but it was not dated, an acknowledgment that he had received “a copy of a signed financial agreement between me and [Ms Sutherland]”. I accept at the time the Applicant had signed that “receipt” he had not received a copy of the signed financial agreement – simply because as at 23 September 2013, the Respondent had not signed the financial agreement;
(f)On 30 September 2013, Ms B forwarded the financial agreement signed by the Applicant, to Ms E, the solicitor retained by Respondent;
(g)On or about 8 October 2013, the Respondent executed the financial agreement in the presence of Ms E. Ms E signed the certificate under s 90UJ(i)(c). On balance, it seems likely that Ms E inserted the date as “8/10/2013” in the receipt already signed by the Applicant;
(h)On 12 October 2013, Ms E sent to Ms B a “certified copy of the fully executed Binding Financial Agreement for your client”;
(i)On 18 October 2013, Ms B sent a letter to the Applicant to “Street G, Suburb D”, with a certified copy of “your financial agreement under Part VIIIAB of the Family Law Act dated 8 October 2013” and recommended he “keep the document in a safe place”. The Applicant says he never received the letter or a copy of the document;
(j)The Applicant says the only discussion he had with the Respondent after he had signed the documents was when she asked him whether he had signed the documents and he replied that he had;
(k)The parties separated on 5 June 2019 and the Respondent signed the separation declaration (in the form attached to the financial agreement) on 5 June 2019 which the Applicant received on 7 June 2019. The letter, the Applicant says (and I accept) enclosed a copy of the financial agreement. The Applicant says that was “the first time I had seen the document since my meeting with [Ms B]” that he “had signed in 2013”;
(l)On or about 1 October 2020, Ms B received a request from solicitors then acting for the Applicant, for a copy of the complete file – referring to an earlier letter to the Applicant from Ms B dated 14 August 2019 attaching some documents; and
(m)On 18 March 2021, the Applicant filed an Application in the Federal Circuit Court of Australia (as it was then known) seeking a declaration that the financial agreement was not binding. This Application was transferred to Division 1 of the Federal Circuit and Family Court of Australia on 16 December 2021. The matter was, on 25 May 2022, listed for trial as earlier noted, on the threshold issue of whether the financial agreement was binding on the parties.
Evidence of Ms B
The Applicant alleges that he did not receive advice from Ms B, who he also claims was not independent, as to the effect of the financial agreement on his rights and the advantages and disadvantages of him making the agreement.
Ms B appeared in response to a subpoena served upon her by the Applicant and gave oral evidence. She was not cross-examined by Mr Alexander for the Respondent. I make these findings about the evidence of Ms B, namely:
(a)As her office and the office of Ms E are in the same locality, at times they refer people to each other for independent legal advice;
(b)She received the unsigned financial agreement and read it before the Applicant attended her office on 23 September 2013;
(c)She is not aware of who made the appointment for the Applicant to consult her;
(d)She cannot recall how long the consultation went but thought it was longer than the fifteen minutes claimed by the Applicant;
(e)She completed in her own hand, on that day, the document titled “client profile – family law matters”, dated 23 September 2013. She was aware the Applicant was born in Country H; was aged sixty years at the time; and wrote down his address, mobile number and email, from she believes information given to her in the consultation by the Applicant;
(f)She has little independent recollection now (nine years later) of the consultation, but relies on her handwritten diary note, marked Exhibit 2, which says:
23.9.2013
Went through agreement with client in detail:
•Advised no claim on [Ms Sutherland]’s property or estate
•No claim for spouse maintenance
•He does not have any other property than disclosed
•Signing away his rights under Family Law Act. Explained if longer relationships claim increases – he not interested
His last relationship was 18 years and he just walked away.
Can look after himself.
(g)On that basis she deposed that:
(i)she cannot recall if the Applicant told her he had read the document before the consultation. The Applicant says he did not read it. He does not say he informed Ms B of that fact;
(ii)she did explain the financial agreement in detail to the Applicant including what the effect of the agreement was, and that he would have no claims on the Respondent’s property or estate;
(iii)she informed the Applicant he could not claim spouse maintenance and that he was signing away his rights under the Act;
(iv)the Applicant told her he had no other property than disclosed in the financial agreement and she cannot recall the Applicant raising any concerns about the assets disclosed by the Respondent;
(v)she explained to the Applicant the longer the relationship continued the more likely any claim he had would increase, but that the Applicant informed her he was not interested in making a claim and that his last relationship was for eighteen years and he just walked away. He said he can look after himself; and
(vi)she received payment for her fees of $330, but cannot recall how the payment was made to her. She acknowledged that an account issued 30 September 2022 and may have been sent to the address given as set out in the client profile.
The Applicant put to Ms B that the only advice she gave him on the day was that the effect of the agreement was, words to the effect, “this is so you can’t claim anything from [Ms Sutherland] in relation to her property”. Ms B denied that was the limit of her advice on the day.
Discussion
The parties were in a de facto relationship and made a written agreement covering the matters set out in s 90UC(2) of the Act, and as such, pursuant to s 90UC(1) the financial agreement is a Part VIIAB financial agreement, as was so expressed.
To be binding, subject to s 90UJ(1A), the requirements set out in s 90UJ(1) must be complied with, namely:
(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…
I am satisfied that:
(a)the financial agreement is in writing and was signed by the parties;
(b)the Applicant obtained independent legal advice from a legal practitioner. I am not satisfied that the way in which the appointment appears to have been made raises any questions as to the independence of Ms B. There is no evidence that Ms B had ever met or been retained by the Respondent previously. Even if, as the Applicant asserts, he did not pay the fee of $330, I am not satisfied the payment so made challenges the independence of Ms B;
(c)as to the question of the advice given, prima facie the execution of the certificate established that the required advice was given. However, I make the further findings as to the advice given on that day by Ms B;
(d)when the financial agreement, after execution by the Respondent and with the certificate given by her solicitor Ms E, was returned to Ms B on 12 October 2013, that constituted satisfaction of s 90UJ(1)(ca), the financial agreement having been received by Ms B as the legal representative for the Applicant;
(e)that Ms B did send a copy of the completed financial agreement to the Applicant on 18 October 2013 at the address given by the Applicant on 23 September 2013. The document refers to that address for both parties (noting at the time the relationship was intact). The Applicant knew he had signed a document, but did not seek a further copy from Ms B until 2019 – after the relationship ended. Even if the letter of 18 October 2013 went astray (or was shredded as the Applicant speculated without any evidence) it matters not; and
(f)unless the parties signed a document contemporaneously, any “receipt” for a copy could only be given after the second person has signed – meaning the first person would need to sign a receipt thereafter. The Act requirements are satisfied when, as happened here, a signed copy is returned to the other party’s legal practitioner. Although it is not clear who affixed the date “8 October 2013” in the receipt section, it is of no moment and does not convince the Court to be troubled.
I am satisfied that the requirements of the Act were satisfied.
Of course, notwithstanding the prima facie effect of the certificate of independent advice given by Ms B, if the Court is satisfied no advice in effect was given to the Applicant before he signed financial agreement, the Court could set aside the agreement.
It is because of the case advanced by the Applicant that he properly caused a subpoena to issue to his solicitor.
I listened carefully to the evidence of Ms B. The diary note is very concise. It might have been more prudent, as it seems often occurs in practice, to have a more detailed diary note and, through an abundance of caution, confirm the advice in writing to the client and even have them acknowledge the receipt of such advice. This would include much more engagement by the legal practitioner – with, I speculate, the need to charge more than $330, even in 2013.
However, the lack of such evidence does not of itself mean the Court should not accept the direct evidence, given under oath, by an experienced solicitor.
This is especially so where the Applicant at least says he got advice, accurately in my view, as to the effect of the financial agreement on his future rights.
It is also a relevant context to observe that when the agreement was made in September 2013, the parties had been together for less than four years; were keeping their finances separate; and the comparative asset positions revealed in Schedule A and Schedule B on the financial agreement of the Respondent $1,397,133 and the Applicant $2,200 at the time would have meant any claim the Applicant had at the time was minimal.
As a result, the “disadvantages” to the Applicant was that if the relationship continued (as it actually did), his claim would possibly increase from minimal to something more. The note of Ms B and her evidence satisfy me that she advised the Applicant of this possible future “disadvantage”. I accept his response at the time was he was “not interested” and had walked away from a longer relationship before with nothing and could look after himself. Apart from relationship harmony, it is hard to see any advantages in the Applicant signing the agreement.
Conclusion
The Applicant has not satisfied me there is any basis to set aside the financial agreement.
I will, as the Respondent seeks, order that the financial agreement entered into, signed and dated 8 October 2013, is binding upon the parties.
The financial positions of the parties are significantly different, and although the Applicant has been wholly unsuccessful, it is a matter for the Respondent whether she wishes to seek an order for costs against the Applicant.
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) provide how such an application, if pressed, can be pursued.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 10 November 2022
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