Min & Orton
[2022] FedCFamC1F 131
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Min & Orton [2022] FedCFamC1F 131
File number(s): SYC 1579 of 2021 Judgment of: REES J Date of judgment: 11 March 2022 Catchwords: FAMILY LAW – FINANCIAL AGREEMENT – Application by the husband to rectify a financial agreement – Where the agreement makes reference only to Part VIIIAB and section 90UB of the Family Law Act 1975 (Cth) – Where the husband asserts the agreement was to have effect on the termination of a de facto relationship and on the termination of a subsequent marriage – Issue as to the common intention of the parties at the making of the agreement – Where the husband failed to advance “clear and convincing proof” that the agreement does not embody the final intention of the parties – Application dismissed. Legislation: Family Law Act 1975 (Cth) ss 90B, 90KA, 90UB, 90UJ(3) Cases cited: Graham & Squibb (2019) FLC 93-892
Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336
Pukallus v Cameron (1982) 180 CLR 557
Division: Division 1 First Instance Number of paragraphs: 55 Date of hearing: 10 March 2022 Place: Sydney Counsel for the Applicant: Mr Cummings SC Solicitor for the Applicant: Clinch Long Woodbridge Lawyers Counsel for the Respondent: Mr Batey Solicitor for the Respondent: Browns The Family Lawyers ORDERS
SYC 1579 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ORTON
Applicant
AND: MS MIN
Respondent
ORDER MADE BY:
REES J
DATE OF ORDER:
11 MARCH 2022
THE COURT ORDERS:
1.That the application for rectification of the agreement executed on 1 August 2013 between the husband and the wife be dismissed.
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 Min & Orton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REES J:
Mr Orton (“the husband”) and Ms Min (“the wife”) entered into a Financial Agreement (“the agreement”) on 1 August 2013. That agreement was expressed to be a “Part VIIIAB Financial Agreement under Section 90UB of the Family Law Act 1975 (Cth)”.
Section 90UB of the Family Law Act 1975 (Cth) (“the Act”) makes provision for parties who contemplate entering into a de facto relationship to enter into a binding financial agreement.
Relevantly, for present purposes, the agreement provided for the payment of the sum of $50,000 to the wife on separation and dealt with her rights to spousal maintenance.
Section 90UJ(3) of the Act provides:
A Part VIIIAB financial agreement ceases to be binding if, after making the agreement, the parties to the agreement marry each other.
The parties married in 2014 and separated in 2020.
On 8 March 2021, the wife filed an application seeking a division of the property pool of the marriage. By way of interim relief, she also sought an order for interim spousal maintenance in the sum of $1,090 per week.
On 17 May 2021, the husband filed a Response to Initiating Application, seeking rectification of the agreement so that the agreement also referred to both Part VIIIA and s 90B of the Act.
The husband’s contention is that the agreement was intended to refer both to the contemplation of a de facto relationship and the contemplation of marriage.
Unless rectified, as the husband seeks, the agreement executed on 1 August 2013 is not, by virtue of the provisions of s 90UJ(3), binding and the jurisdiction of the Court to hear and determine the wife’s applications is unaffected.
The husband has filed Points of Claim and the wife has filed a Response to Points of Claim.
The wife relied on an affidavit sworn by her on 3 March 2022 and an affidavit by the solicitor who acted for her in relation to the agreement, Mr C.
The husband relies on an affidavit sworn by him.
THE LAW
There is no dispute that the Court has power to rectify an agreement. Broadly, the power exists to rectify an agreement so that it represents the common intention of the parties to it. Section 90KA of the Act provides, relevantly:
The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a)subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b) has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court;
…
In Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, Mason J stated, in relation to rectification:
What is of importance is that the purpose of the remedy is to make the instrument conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately. And there has been firm insistence on the requirement that the mistake as to the writing must be common to the parties and not merely unilateral…
In Pukallus v Cameron (1982) 180 CLR 557 Wilson J stated:
…there must be an intention common to both parties at the time of the contract to include in their bargain a term which by mutual mistake is omitted therefrom…
The second principle governing the rectification of a contract which is material to this case is that which requires the plaintiff to advance “convincing proof” that the written contract does not embody the final intention of the parties. The omitted ingredient must be capable of such proof in clear and precise terms. The Court must not assume for itself the task of making the contract for the parties.
(Footnotes omitted)
In Graham & Squibb (2019) FLC 93-892, the Full Court stated:
A written contract is presumed to correctly record the agreement of the parties to it and, in order to displace that presumption, a party seeking rectification of the contract must advance “clear and convincing proof” it does not embody the final intention of the parties (see Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 345; Pukallus v Cameron (1982) 180 CLR 447 at 452, 456 (“Pukallus”); Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350). For that purpose, the parties’ mutual intention is the relevant feature of the evidence, as there is no room for rectification of the contract if the contrary intention is not shared (see Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at 710; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 655, 660).
Thus, in the circumstances of the present dispute, the husband bears the onus of demonstrating that it was the common intention of both of the husband and the wife that the agreement into which they entered was to be operative both in the event of an end to their de facto relationship and also in the event that they married and the marriage ended.
I turn firstly to evidence of each of the husband and the wife as to their intentions and, relevantly, to the instructions they each gave their respective solicitors prior to entering the agreement.
The husband deposed that, before they started to live together, he said to the wife:
I want to protect my assets for my daughters, they are not for you if we break up or if I die, we need to do a pre-nup, called a BFA. You can get a solicitor to look at what I want. I know you want to get married, I won’t do it unless my assets are protected.
The wife disputes that evidence. She deposed that they had a conversation where the husband said to her:
If we are going to live together full-time you are going to need to sign an agreement.
and
I won’t let you move in unless we do the agreement.
The wife deposed that she had a number of conversations with the husband where she said she wanted to be married and he told her that he didn’t want to marry her. She deposed that he used expressions like “Once bitten, twice shy”. That evidence is consistent with the husband’s instructions to his solicitor on 27 May 2013.
On 5 September 2012, the husband sent an email to his solicitor stating:
[The wife] and I are contemplating the next stage of our 5 year relationship.
If we live together I think I should have a binding financial Agreement.
…
On 27 May 2013, the husband had a conference with his solicitor. The solicitor’s file is in evidence. The solicitor wrote:
…
Not living together
She wants to get married but [the husband] not so keen
On 5 June 2013, the husband’s solicitor wrote a letter to the husband enclosing a draft of the agreement and stating:
…
I hope things will fall into place as you want. As you will have to realise, an Agreement in this form will be terminated if you proceed to marry but obviously if you and [the wife] decide to marry and fix a date a Pre-Nuptial Agreement in anticipation of marriage can be prepared and completed.
That letter was not put to the husband and there is no evidence that he had read it. However, the letter is evidence of the husband’s solicitor’s understanding of his instructions. The letter is not consistent with the husband’s assertion that it was always intended that the agreement would have effect both on the termination of a de facto relationship and on the termination of a subsequent marriage.
On 1 August 2013, the solicitor wrote to the husband confirming his instructions in the following terms:
…
I note your instructions that the relevant facts surrounding this matter include but are not limited to the following:
3.You have had a relationship with [the wife] since October 2007 but you have not lived together in a de facto relationship bu [sic] living together in a de facto relationship after the execution of the Agreement.
4.You wish to have financial certainty in the event of a breakdown of your relationship;
5.You wish to define your financial rights and responsibilities during the relationship and in the event of a breakdown of your relationship;
…
The letter concluded:
I confirm my advice as to the advantages and disadvantages of entering into a Pre-Cohabitation Financial Agreement and that on the instructions provided by you the provisions of the Agreement appear to be fair and reasonable to both you and [the wife], in circumstances where you are going to enter into a de facto relationship and could look forward to a long term de facto relationship.
In cross-examination, the husband conceded that he had received and read the letter.
There is no mention in the letter of any instructions from the husband about marriage or the contemplation of marriage. This letter is not consistent with the husband’s evidence that he had instructed his solicitor that the agreement was to cover both eventualities. It is, however, consistent with the wife’s assertion that the agreement was only intended to cover the breakdown of a de facto relationship.
Although the husband said in cross-examination that he gave instructions to his solicitor that the agreement was also to cover the eventuality of a breakdown of marriage, he was unable to recall when he had done so and nothing in the solicitor’s file records such instructions.
The solicitor for the husband did not give evidence in these proceedings although his file has been tendered.
The wife consulted her solicitor, Mr C, on 20 May 2013. She had a draft of the agreement. Mr C deposed that the wife told him that she and the husband would not be getting married, that she would like to marry but the husband did not want to marry. Mr C deposed:
Having received instructions that [the wife] and [the husband] did not plan to marry there was no further discussion as to marriage. My advice to [the wife] was based entirely upon the parties entering a de facto relationship and at all times I advised [the wife] that the agreement related to her entering into a de facto relationship, not a marriage.
Mr C’s file note is in evidence. It makes no reference to marriage or the prospect of marriage.
Mr C wrote to the wife on 21 May 2013 confirming his advice to her. Mr C stated, inter alia:
…
Binding financial agreements may be entered into by married or de facto couples. For married people, they can be entered into before marriage, during marriage or after divorce. For de facto couples they can be entered into before entering into a de facto relationship, during a de facto relationship or after the ending of a de facto relationship. It is important to note that an agreement entered into before marriage must be made in anticipation of marriage otherwise the agreement has no effect. It is also important to note that an agreement entered into whilst in a de facto relationship automatically terminates upon marriage.
…
Thus it is clear that Mr C was alert to the need for any agreement which is intended to include both the end of a de facto relationship and the end of a marriage to be explicit as to those terms.
Nothing in Mr C’s letter of advice supports the husband’s contention that the wife intended to enter into an agreement that contemplated marriage.
Mr C suggested a number of changes to the draft and wrote to the wife confirming his advice to her that the agreement was not in her best financial interests and that she was likely to do better if, after separation, the Court were to determine her entitlements.
Mr C’s file notes are in evidence. Nothing in the file notes suggests that there was any further discussion between the wife and Mr C about the possibility of marriage or that the agreement should include the contemplation of marriage.
In cross-examination, Mr C said that he was aware of the references in the recitals to the agreement to the breakdown of marriage but he took the view that those references were superfluous and of no effect.
The document was signed on 1 August 2013.
Turning then to the words of the agreement:
The agreement is titled “Part VIIIAB Financial Agreement under section 90UB of the Family Law Act 1975 (Cth)”. Nowhere in the document is there any reference to Part VIIIA or section 90B of the Act.
Recital C states:
[The husband] and [the wife] commenced a relationship in October 2007 and intend to commence living in a de facto relationship after the execution of this Agreement.
The words in italics were added in hand writing and initialled by the parties and their solicitors. In cross-examination, the husband agreed that those words were inserted by the wife’s solicitor, that he read them before he signed and that he “never gave a thought” to insisting that further words be inserted to make it clear that the agreement was also intended to refer to a contemplated marriage.
Recital N relevantly, states:
… [The parties] want an Agreement to eliminate, as much as possible, any future impediment to their cohabitation…
Recital O states:
[The parties] intend their relationship to be permanent but nevertheless wish to define their financial rights and responsibilities during the relationship and marriage and subsequently in the event that they separate.
Recital Q states:
[The parties] wish to avoid the difficulties, delay and expense they understand may be experienced in resolving the financial issues consequent upon the breakdown of the relationship and marriage.
Recital R states:
[The parties] desire to enter into a Financial Agreement to preclude claims of any nature relating to financial matters that either has, or may have, against the other pursuant to the Property (Relationships) Act 1984 (NSW), the Family Law Act 1975 (Cth) and/or otherwise at law or equity in the event:-
(a)the relationship ends;
(b)the marriage irretrievably breaks down and terminates; or
(c)one of the parties dies.
…
Recital HH states:
This Agreement contains the entire understanding and agreement of the parties… No other document or oral agreement has any force or effect except for any document required to be executed for the purpose of this agreement.
The “operative parts” of the agreement make no mention of any contemplation of marriage.
I do not accept the submission on behalf of the husband that the reference to marriage in some of the recitals constitutes proof in “clear and precise terms” that both the husband and the wife at all times intended that the agreement would bind the parties in the event that they married and separated.
Those references are only one part of the evidence.
The evidence to the contrary is more compelling:
·The file of the husband’s solicitor contains no reference to any instructions by the husband that the agreement was to operate in the event of marriage.
·The letter from the husband’s solicitor to the husband dated 5 June 2013 clearly advises the husband that the agreement ceases to have effect if the parties marry.
·The letter from the husband’s solicitor to the husband of 1 August 2013 refers to the parties’ intention to enter a de facto relationship.
·The evidence of the wife’s solicitor was that he gave the wife no advice about her rights after marriage because no marriage was in contemplation.
·The letter from the wife’s solicitor dated 21 May 2013 advised the wife that the agreement would terminate if the parties married.
·The clear terms of Recital C make no reference to contemplation of marriage.
The husband has not established that, at the time the agreement was executed, he and the wife had “an intention common to both parties at the time of the contract to include in their bargain a term which by mutual mistake is omitted therefrom…”.
The husband’s application for rectification will be dismissed.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 11 March 2022
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