Millington & Millington

[2007] FamCA 687

FAMILY COURT OF AUSTRALIA

MILLINGTON & MILLINGTON [2007] FamCA 687

FAMILY LAW - PROPERTY - Binding financial agreement

Family Law Act 1975  s 75(2) s 90D;  s 90F;  s 90G;

Applicant: Mrs Millington

Respondent: Mr Millington

File Number: MLF 4696 of 2003

Date delivered: 29 June 2007

Place Delivered: Melbourne

Judgment of: Carter J

Hearing Date: 1 June 2007

Representation

Counsel for the Applicant: Mr Dickson

Solicitor for the Applicant: C E Family Lawyers

Counsel for the respondent: Mr Atkinson

Solicitor for the respondent: Taussig Cherrie & Assoc

Orders

1. That the husband’s Form 2 Application filed 21 November 2006 be dismissed.

2. That par (1) of the wife’s Amended Form 1 Application filed 30 April 2007 be dismissed.

3. That par (1) of the wife’s Form 2A Amended Response filed 30 April 2007 be dismissed.

4. That the hearing of the parties’ substantive applications be fixed for trial as a one-day case in the defended list on 8 August 2007.

5. That the wife have leave to file a further amended Form 1 Application within seven days of this day, specifying (inter alia) and with particularity the grounds under s 44(3) to be relied upon.

6. The husband file any Amended Form 1A Response to be relied upon within 14 days after service of the wife’s further Amended Application.

7. That the wife file an affidavit of evidence-in-chief and any further affidavits to be relied upon on or before close of business 10 June 2007.

8. That the husband file and serve and affidavit of evidence-in-chief and any further affidavits to be relied upon on or before close of business 23 July 2007.

9. That all interim applications be otherwise dismissed save as to any issues as to costs.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:   MLF 4696 OF 2003

Mrs Millington

Applicant

and

Mr Millington

Respondent

REASONS FOR JUDGMENT

1. Ms Millington (“the wife”) seeks amongst other things an order that Mr Millington (“the husband”) pay her spousal maintenance of $1,750 per week.  The husband opposes that application.  It is his contention that the parties entered into a Financial Agreement which dealt with the question of the wife’s spousal maintenance and which is a bar to a further application.

The Law

1. Part VIIIA of the Family Law Act 1975 (Cth) (“the Act”) provides for financial agreements which may deal with some or all of the property, maintenance and financial resources of a husband and wife. It sets out how such agreements are to be made and in what circumstances they will be binding. This Part also deals with how parties to a financial agreement may terminate that agreement; the circumstances in which the Court may set aside a financial agreement or a termination agreement; how the Court determines the validity and effect of financial agreements and termination agreements.

2. Prior to the commencement of Part VIIIA it was open to parties to enter into agreements pursuant to s 86 and 87 of the Act. This is no longer possible unless the agreement was made prior to the commencement of Part VIIIA of the Act.

3. The sections which are most relevant to the present case are s 90D;  90F;  and 90G.

4. Section 90D is in the following terms:

   “SECTION 90D FINANCIAL AGREEMENTS AFTER DIVORCE ORDER IS MADE

   90D(1) [``Financial agreement'']

   If:

   (a) after a divorce order is made in relation to a marriage (whether it has taken effect or not), the parties to the former marriage 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 90B or 90C) 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.

   90D(2) [Specified matters]

   The matters referred to in paragraph (1)(a) are the following:

   (a) how all or any of the property or financial resources that either or both of them had or acquired during the former marriage is to be dealt with;

   (b) the maintenance of either of them.

   90D(3) [Incidental or ancillary matters]

   A financial agreement made as mentioned in subsection (1) may contain matters incidental or ancillary to those mentioned in subsection (2).

   90D(4) [Termination of previous agreement]

   A financial agreement made as mentioned in subsection (1) may terminate a previous financial agreement made as mentioned in that subsection, or a financial agreement made as mentioned in subsection 90B(1) or 90C(1), between the same parties.”

5. Section 90F provides as follows:

   “SECTION 90F CERTAIN PROVISIONS IN AGREEMENTS

   90F(1) [Agreement cannot limit court's power if subsec (1A) applies]

   No provision of a financial agreement excludes or limits the power of a court to make an order in relation to the maintenance of a party to a marriage if subsection (1A) applies.

   90F(1A) [Party in need of government income support]

   This subsection applies if the court is satisfied that, when the agreement came into effect, the circumstances of the party were such that, taking into account the terms and effect of the agreement, the party was unable to support himself or herself without an income tested pension, allowance or benefit.

   90F(2) [Provision for property to continue in ownership of party]

   To avoid doubt, a provision in an agreement made as mentioned in subsection 90C(1) or 90D(1) that provides for property or financial resources owned by a party to the agreement to continue in the ownership of that party is taken, for the purposes of that section, to be a provision with respect to how the property or financial resources are to be dealt with.”

6. Section 90G is in the following terms:

   “SECTION 90G WHEN FINANCIAL AGREEMENTS ARE BINDING

   90G(1) [Requirements for binding agreement]

   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 

   (iii) (Repealed) 

   (iv) (Repealed) 

   (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.

   90G(2) [Orders for enforcement]

   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.

The Hearing

1. Mr Dickson of counsel appeared on behalf of the husband and Mr Atkinson of counsel appeared on behalf of the wife.  The hearing was conducted by oral submissions and at the conclusion of the case I reserved my decision.

2. As well as the various applications and responses, the following affidavits were filed:

On behalf of the Husband

·The husband’s affidavits filed 21 November 2006 and 21 March 2007.

·The husband’s Form 13 Financial Statement filed 5 January 2007.

·The affidavit of Mr P filed 28 May 2007.  Mr P is a valuer who prepared a valuation at the request of the husband’s solicitors of the former matrimonial home at N.

On behalf of the Wife

·The affidavit of the wife’s solicitor filed 24 January 2007 registering the Child Support Agreement.

·The wife’s Form 13 Financial Statements filed 25 October 2006 and 18 May 2007.

·The wife’s affidavits filed 29 January 2007;  4 April 2007;  18 May 2007;  and 1 June 2007.

·The affidavit of Dr F filed 11 April 2007.  Dr F is the wife’s medical practitioner.

·The affidavit of Mr B filed 18 May 2007.  Mr B is a valuer who was engaged by the wife’s solicitors to value the former matrimonial home at N.

·The affidavit of Dr C filed 25 May 2007.  Dr C is the wife’s treating psychiatrist.

1. It is convenient to note here that Mr Dickson very properly informed me that he had become aware of an unreported decision of Collier J handed down on 29 March 2006 in a matter of J & J.  Mr Dickson had not been able to obtain a copy of this judgment, however, I was able to locate it and when I did, made a copy available to both counsel.  The citation is J & J [2006] FamCA 442. I will refer in due course to this judgment.

Background

1. The husband and the wife are both aged 49.  They married on 29 January 1980, having lived together since 1977 or 1978.  The marriage was dissolved by a decree nisi made 20 July 2004 which became absolute on 21 August 2004.  There are three children of the parties’ union who are all over the age of 18 years.

2. There were proceedings in this Court relating to financial matters which commenced in 2003 and which were resolved by orders being made by consent on 21 July 2004.  The most significant of those orders required the wife to pay the husband the sum of $197,500 and contemporaneously with that payment, the husband was required to transfer his interest in the former matrimonial home to the wife.  The wife was required to indemnify the husband against and to refinance the then mortgage secured over the matrimonial home.  The parties agreed that the husband would pay to the wife adult child maintenance in respect of their second oldest child, which was to continue until he completed tertiary education.  The parties also entered into a child support agreement with respect to their youngest child pursuant to which the husband was to pay the wife the sum of $350 per week together with school fees and “other associated expenses”.  The orders also provided that the amount of $25,000 of the property retained by the wife was attributable to the provision of spousal maintenance for her.

3. On 22 August 2005 the wife filed an application for spousal maintenance in the Federal Magistrates Court, seeking amongst other orders, spousal maintenance in the sum of $500 per week.  The matter came before O’Dwyer FM on 5 June 2006.  Mr Indovino of counsel appeared on behalf of the wife and Mr Wilson of counsel appeared on behalf of the husband.  The parties were able to compromise the matter and entered into final orders, pursuant to which the husband was to maintain health insurance cover for the two younger children “at the previous level of cover with Australian Unity until each child (was) financially independent or no longer eligible to be covered as a dependent child by Australian Unity.”  The wife’s application was otherwise dismissed and by consent, it was further ordered that each party bear his or her own costs.  Relevantly, there is a notation to the orders which is as follows:

   “The parties intend to execute a Financial Agreement as soon as the wife is able to do so (on or shortly after 13 June 2006).”

4. On 6 June 2006 the husband signed the alleged Agreement and his solicitor signed the Certificate of Independent Legal Advice.  That Agreement was sent under cover of a letter dated 9 June 2006 by the husband’s solicitors to the wife’s then solicitors (see Annexure “REM2” to the husband’s affidavit filed 21 November 2006).  I note that the Certificate of Independent Legal Advice was dated 6 June 2006, however, the alleged Agreement itself was not dated.

5. Under cover of a letter dated 14 June 2006 the wife’s then solicitors forwarded to the husband’s solicitors a copy of the alleged agreement signed by the wife with a completed Certificate of Independent Legal Advice.  (See Annexure “REM3” to the husband’s affidavit filed 21 November 2006.)  I note that the Certificate of Independent Legal Advice was dated 13 June 2006 and the alleged agreement is dated 6 June 2006.

6. The accompanying letter was in the following terms:  (omitting formal parts):

   “We enclose one part of the Financial Agreement signed by our client.  We retrain a counterpart signed by both parties.

   We look forward to receipt of the payment of $20,000 on or before 6 July 2006 pursuant to paragraph 4.”

7. On 23 June 2006 the husband’s solicitors wrote to the wife’s then solicitors requesting advice as to the method of payment of the sum of $20,000 and also requesting a copy of the Financial Agreement signed by both parties (see Annexure “REM4” to the husband’s affidavit filed 21 November 2006).

8. The husband’s solicitors were advised by letter dated 29 June 2006 that the solicitors who had been previously acting for the wife no longer acted for her and that they would file a Notice of Ceasing to Act shortly.  The letter went on to say:

   “We are presently instructed that our client does not wish to proceed with the Financial Agreement and requires that a copy of [Dr K’s] report be provided to her immediately so that she can consider her position further.”  (See Annexure “REM5” to husband’s affidavit filed 21 November 2006.)

9. On 5 July 2006 the husband’s solicitors wrote directly to the wife confirming that the husband wished to proceed with the Financial Agreement (see Annexure “REM6” to husband’s affidavit filed 21 November 2006).

10. On 14 July 2006 Messrs Taussig Cherrie and Associates wrote to the husband’s solicitors advising that they had commenced to act for the wife.  Amongst other things it was said in that letter that the wife did not consider herself bound by the alleged agreement.  She was said at the time to be a recipient of the New Start Allowance and that she continued to receive that allowance.  It was asserted that she did not have the ability to support herself without the benefit of an income-tested allowance or benefit.  (See Annexure “REM7” to husband’s affidavit filed 21 November 2006.)

11. By letter dated 27 July 2006, the husband’s solicitors wrote to the wife’s solicitors requesting a copy of the counterpart Financial Agreement signed by both parties (see Annexure “REM8” to husband’s affidavit filed 21 November 2006).  A further letter in similar terms was sent by the husband’s solicitor on 18 August 2006 and in this letter it was also reiterated that the husband was in a position to proceed with settlement (see Annexure “REM9” to husband’s affidavit filed 21 November 2006).

12. Annexure “REM10” to the same affidavit is a copy of a letter dated 21 August 2006 from the wife’s solicitors to the husband’s solicitors in which notice was given that instructions had been received to issue an application for spousal maintenance.  Additionally, the wife claimed that the husband had not complied with “certain orders” which had been made at the Federal Magistrates Court on 5 June 2006, which related to the children’s health insurance cover.

13. On 23 August 2006 the husband made arrangements to deposit the capital sum of $20,000 referred to in the alleged Agreement into the bank account into which child support for the youngest child was paid.  Advice of this was given to the wife’s solicitors by letter dated 23 August 2006 (see Annexure “REM11” to husband’s affidavit filed 21 November 2006).

14. Under cover of a letter dated 30 August 2006 the wife’s solicitors returned that money, reiterating that the wife did not consider herself bound by the Agreement allegedly reached on 5 June 2006 (see Annexure “REM12” to husband’s affidavit filed 21 November 2006).

15. The wife’s Form 1 Application was filed on 25 October 2006.  It was accompanied by a Financial Statement sworn by the wife on the same day.  The wife’s application sought:

    “1.That the Respondent pay to the applicant the sum of $1,750 per week commencing immediately.

    2.Such further or other orders as this Honourable Court deems appropriate.”

16. A Response by way of Form 1A was filed on behalf of the husband on 21 November 2006.  The thrust of that Response was that the wife’s application be dismissed and that she pay the husband’s costs.

17. On 21 November 2006 an Application in a Case was also filed on behalf of the husband which sought orders in similar terms to his response.  An affidavit by the husband which had been sworn or affirmed on 20 November 2006 was also filed on 21 November 2006.

18. On 29 January 2007 the wife caused to be filed a Form 2A Response to the husband’s Application in a Case seeking that it be dismissed and that he pay to her the sum of $1,750 per week maintenance “commencing immediately”.  Further orders were sought which I need not detail for present purposes.  The proceedings came before Cronin J on 11 April 2007 and orders were made by consent, which amongst other things required the parties to make file and serve any amended Applications and/or Responses and any further affidavits upon which they sought to rely on or before 18 May 2007.  The proceedings were adjourned for hearing of the interim issues and for directions in the Judicial Interim Hearing List on 1 June 2007, the matter not having been reached when it was before Cronin J.

19. On 30 April 2007 the wife caused to be filed an Amended Application for Final Orders together with an Amended Response to an Application in a Case.

20. The matter came before me on 1 June 2007 as a result of the orders made by Cronin J on 11 April 2007.

21. In the event, the only matter which was able to be dealt with concerned the alleged agreement.

Discussion

1. The first step is to consider whether there is a binding agreement within the meaning of the Act.

2. To my mind a combination of s 90G(1)(a) and (e) envisages that the agreement is to be incorporated in a single document which is to be signed by both parties, after which the original document is given to one of the parties and a copy is given to the other. It does not envisage an exchange of parts of contract as takes place in, for example, conveyancing transactions. So much, to my mind, emerges from the plain wording of these two subsections.

3. The correspondence makes it clear that what happened was that the solicitors for the husband forwarded to the wife’s solicitors, in duplicate, the proposed Financial Agreement which was undated, and signed by the husband.  It also bore the Certificate of Independent Legal Advice which had been signed by the husband’s solicitors and dated 6 June 2006.  Provision was made in that document for the wife to sign and for her solicitor to complete and date the relevant Certificate of Independent Legal Advice.  It was then clearly envisaged that one party would be given the original and the other party would have the copy (see Annexure “REM2” to husband’s affidavit filed 21 November 2006).

4. If that had been done the proposed Financial Agreement would to my mind have met the criteria contained in s 90G(1).

5. However, instead of procuring the wife’s signature to the Agreement forwarded by the husband’s solicitor and completing the Certificate of Independent Legal Advice, the then solicitors for the wife forwarded to the husband’s solicitors “one part of the Financial Agreement signed by (their) client”.  That “part” was dated 6 June 2006 and contained by way of annexure the Certificate of Independent Legal Advice signed by the wife’s solicitor and dated 13 June 2006.  The document in question did not contain the husband’s signature nor the Certificate of Independent Legal Advice signed by the husband’s solicitor.  (See Annexure “REM3” to husband’s affidavit filed 21 November 2006.)

6. The letter dated 14 June 2006 to which I have just referred went on to note that the wife’s then solicitors retained “a counterpart signed by both parties.”  It could therefore be suggested that there is or was in existence a document which was signed by both the husband and the wife but there is no evidence that that document had annexed to it the relevant Certificates of Independent Legal Advice signed and dated by both the solicitors.

1. Clearly the husband was not provided with a copy of an Agreement signed by both parties.

2. In J & J, Collier J said:

   “19.To my mind, the words that appear in s 90G(1) ‘if and only if’, are words of real significance. They have a meaning. They import a requirement for a level of compliance, if the agreement is to be binding, that is clearly a standard or level above and beyond what might be described as substantial compliance. Those words ‘if and only if’ make it clear that each of the parties must ensure that that which is required to be contained and dealt within the agreement, and the annexures to it, is in fact contained appropriately and completely. Compliance must therefore be a full compliance satisfying the statutory requirements.

   20.Something approaching full compliance, or something that if looked at in a less than strict light, might come close to establishing compliance, is not enough.  Clearly, the legislation intended that if this method of parties resolving their differences was to be used without any supervisory power of a Court, in a situation where parties’ rights were to be affected, then that which was to be done had to be done fully in compliance with that which the statute set out and required.”

3. With respect I totally agree with his Honour. I would also add that the use of the word “and” at the end of each of the subparagraphs of s 90G(1) makes it clear that each of the matters set out in the subparagraph must be contained in the agreement if it is to be a binding financial agreement under the Act.

Conclusion

1. In my view there is no binding agreement between the husband and the wife within the meaning of s 90G(1) of the Act.

2. For the sake of completeness I will deal with the other significant submissions which were made in respect to s 90F of the Act.

3. The  terms of the documents in question make it clear that it was the intention to oust the jurisdiction of the Court in relation to the wife’s maintenance.  That cannot be done if the Court is satisfied that the circumstances of the party in question were such that, taking into account the terms and effect of the Agreement, he or she was unable to support himself or herself without an income-tested pension, allowance or benefit.  The operative time is when the Agreement comes into effect.  According to par 9 of the proposed Agreement it was to become operative “forthwith upon execution.”

4. It was not a matter of controversy that the wife was in receipt of a New Start Allowance. Nor was it controversial that this allowance was an income-tested pension, allowance or benefit in the sense used in s 90F(1A). I have to say that the conditions upon which a New Start Allowance may be granted appear to be quite generous, at least so far as assets are concerned. Mr Dickson told me, without objection from Mr Atkinson, that the asset test disregarded the principal residence of any applicant, regardless of value and further that the applicant could have up to $161,000 worth of “non-principal residence assets”.

5. It was his submission that in these circumstances the mere fact that someone was in receipt of a pension did not necessarily lead to a finding that that person was unable to support himself or herself.

6. Mr P, the husband’s valuer, prepared an updated valuation in respect of the property owned by the wife and gave as his opinion that its current market value was $1,639,000.  Mr B, the wife’s valuer, reported his opinion that the market value of the property was $1,450,000.  On any analysis it is a very valuable asset.  However, the wife, according to her Form 13 Financial Statement also has very significant liabilities including a mortgage over the property in question.  She had anticipated that her mortgage payments as from 14 June 2007 would be about $1,062 per week.  Other expenditure as set out in Part N of her Financial Statement for herself totalled $462 per week.  Her income totalled $847 per week.  This included child support for the parties’ daughter estimated at $367 per week, and adult child maintenance for one of the parties’ sons in the amount of $150 per week.  The wife’s other sources of income comprised the New Start Allowance of $227 per week and Family Tax Benefit A & B of $103 per week.

7. It was the wife’s case that she was unable to support herself without the New Start Allowance and given the income and expenditure noted, I have to say I agree.

8. It must be recalled that the test in s 90F(1A) requires that the terms and effect of the Agreement are to be taken into account in determining whether the party is unable to support himself or herself without the income-tested allowance. It does not refer to or include property and financial resources, as does for example, s 75(2)(b).

9. The proposed Agreement noted that the amounts provided for the maintenance of the wife was the amount of $20,000 which was to be paid within 30 days of the date of the proposed Agreement, together with the sum of $25,000 referred to in par 16 of the orders made 21 July 2004.  In consideration of those two matters the wife was to waive and relinquish for all time any right or entitlement she may have to seek maintenance for herself.

10. One of the submissions made by Mr Dickson was that the wife could have supported herself, subject to rearranging her finances.  He rather colourfully paraphrased the situation as being one where the wife could not support herself and keep the house.

11. The purpose of s 90F, as explained in the revised Explanatory Memorandum was to ensure that people could not “agree away their obligation to maintain the other party, with the effect of increasing the burden on the Social Security system”. (See par 150.)

12. That said, it may seem ironic that a person can live in a million-dollar home and still receive the New Start Allowance.  However, this is permitted under the conditions upon which this allowance is granted.

13. The question of the wife being required to rearrange her financial affairs may well be a matter of considerable importance for future applications. As I have already noted s 75(2)(b) requires the Court to take into account the property and financial resources of each of the parties (amongst other things). However, this is not the test in s 90F(1A) and that and other submissions by Mr Dickson are matters for future argument and submissions.

14. Accordingly, if it were necessary for me to determine this issue, I would hold that s 90F(1A) applies and the power of the Court to make an order in relation to maintenance for the wife has not been excluded or limited.

Other Matters

1. The wife filed an amended Application for Final Orders and an amended Response to the husband’s Application in a Case on 30 April 2007.

2. Paragraph 1 of both documents is in the following terms:

   “1.That pursuant to the provision of s 44(3B)(c)(ii) of the Family Law Act 1975 (Cth) this Honourable Court find that the financial agreement signed by the applicant in June 2006 is invalid and that the applicant be able to proceed with her application for spousal maintenance …”

3. This part of the wife’s application is totally misconceived.  Section 44(3B) does not empower the Court to make a finding that a financial agreement is invalid, and as foreshadowed at the hearing, par (1) of the wife’s Amended Application and Amended Response will be struck out.

4. Directions will need to be made for the further hearing of the remaining interim applications and I will call on counsel for their assistance in this regard.  Otherwise, I would propose to dismiss the husband’s Form 2 Application filed 21 November 2006.

I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carter.

Associate:                 

Date:    29 June 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as MILLINGTON & MILLINGTON